Canada’s oil companies won’t do what they promise; instead, they will bide their time, waiting for Poilievre.

If money talks, then Canada’s oil and gas companies should have a lot to say right now. While commodity prices have softened recently, they are still on track to post one of their most profitable years yet, one that will see record output with record revenue. But while they have been vocal about returning money to shareholders and paying off debt, they have been conspicuously quiet about anything to do with climate change. That’s because, like new report of the Pembina Institute shows, they have barely spent any money on it.

Take for example Canada’s largest tar sands companies, which formed the Pathways Alliance over a year ago and very loudly. proclaimed their shared commitment to reach net-zero emissions by 2050 and eliminate 22 megatons of greenhouse gases by the end of this decade. Getting anywhere near that target will require building multiple carbon capture and storage projects, but none of those companies have made a final investment decision yet. Instead, they funneled their growing cash flows to investors, with more than $10 billion going to share buybacks and dividends in the second quarter of 2022 alone, a 400 percent increase on what they spent in the second quarter of 2019.

Emissions reduction efforts, on the other hand, still amount to a rounding error for these companies. Canadian Natural Resources expects to return $14 billion to its shareholders between 2021 and 2022, but spent just $84 million in emissions reduction research and development efforts last year. That’s still better than MEG Energy, which indicated in a climate disclosure quiz that it invested $200,000 in emissions reduction initiatives in 2021, a pittance given that it bought back $139 million of its own shares between April and June of this year.

As the Federal Minister for the Environment and Climate Change, Steven Guilbeault, said saying The Canadian Press, “If (oil and gas companies) don’t make those investments while making record profits, when would be a good time for them to make those investments? If not now, then I don’t know when.”

So what is the delay? According to the companies and their spokesmen, it is the government’s fault. “The Pembina Institute’s expectations that Pathways Alliance companies will make final investment decisions on these multi-billion dollar projects before governments have finalized the regulatory frameworks to support them are unrealistic,” Pathways Alliance President Kendall Dilling told me. in an emailed statement.

Those frameworks include the federal government proposed tax credit for carbon capture and storage projects, which was announced earlier this year and will be finalized in upcoming legislation. While it would give companies a 60 percent credit on costs related to direct air capture and 50 percent on carbon capture and storage, oil companies clearly expect even better terms. “We also cannot ignore that decarbonization projects in Canada are competing for capital with similar projects in the United States, which now has a significantly more favorable investment climate thanks to the Reduce Inflation Act,” Dilling said.

But as the Pembina Institute report pointed out, this is a red herring, designed to extract more concessions from a government that has already offered more than enough. “The US incentives for CCUS are unrelated to the need to decarbonize existing Canadian oil sands operations, since Canadian oil sands operations cannot be transferred to the US, and therefore cannot be transferred to the US. there is a reasonable justification for Canada to consider more subsidies for CCUS.”

Ironically, the biggest thing standing in the way of these major investments in carbon capture and storage is not the Trudeau government, but what the Conservative leader pierre polièvre he has promised what his government would do if elected. He has made it very clear that one of his first tasks as prime minister would be to eliminate the carbon tax, and that would destroy the economics of any carbon capture project in Canada.

Just ask Michael Belenkie, the CEO of Entropy, a carbon capture company created by Advantage Energy. As the saying the balloon and mail“It has the potential to be a bait and switch, where people put billions of dollars into projects, and then after a regime change, there’s a new government in place or public opinion changes, the tax on carbon disappears.

Mark Cameron, vice president of external relations for the Pathways Alliance, hinted at this risk in his own comments towards balloon and mail. “There is a very active intention to move forward with these projects, but that’s not the same as being able to make funding commitments today, not knowing what the conditions will be three years from now when it’s really time to start building. ” he said.

If money talks, then Canada’s oil and gas companies should have a lot to say right now, writes columnist @maxfawcett.

In three years, of course, it will happen that the next federal elections will take place. There are ways the federal government can mitigate this risk before then, including so-called “contract for difference” that would pay project developers if the carbon tax were weakened or eliminated. The Trudeau government should move quickly on that front, if only to pour some political and economic concrete into its signature climate policy.

But it should also draw attention to the bluff of oil and gas companies clamoring for more incentives and subsidies. If they continue to waste time, the government has other options it can turn to: a windfall tax, for example, or a more aggressive schedule for its tar sands emissions cap. It should also remind them that a Poilievre government, and his commitment to scrapping the carbon tax, would be even worse for the decarbonization push they are supposedly committed to making. Either way, the time for talking is about to end.

Leave a Comment