If Jason Kenney wants a $ 32 billion subsidy for Big Oil, he should pay it

For years, the oil and gas industry has tried to reject the well-documented suggestion that its operations are subsidized by the public. But now, it seems, he’s trying a different strategy: asking for the biggest subsidies imaginable when it comes to carbon capture and storage technology.

In what appears to be a coordinated campaign, the CEOs of Canada’s large oil sands companies have spoken out strongly in favor of federal support for investments in CCS projects. And although they have not been openly confrontational, the CEO of Cenovus, Alex Pourbaix He suggested Ottawa should “keep an open mind” on the idea: There is an implicit threat looming just behind the softer facade of their request: Either the government gives them billions of dollars for carbon capture technology or they can forget about it. to meet your climate goals.

Jason Kenney, Alberta’s menacing unofficial chief, made it clear at a recent press conference. “If the federal government wants to set these ambitious goals, the first thing it must do is support us with an investment of $ 32 billion in carbon capture, use and storage.” And in a more recent cheep On Cenovus’ plan to invest in carbon capture technology, he suggested: “Alberta is ready. Where is Ottawa?

Kenney is the worst possible salesman to come across when it comes to asking the Trudeau government for money. But despite its predictable truculence, the federal government is exploring the possibility of creating a tax credit similar to that of the United States that would encourage the development of large-scale carbon capture technology. Previous attempts to sequester carbon have been more expensive science projects than profitable ways to cut carbon dioxide emissions, but there is an opportunity to thread an important needle here – one that Ottawa seems at least keen to entertain.

Yet that opportunity is nothing like Kenney or the oil sands CEOs.

Carbon capture technology cannot be used as a license to continue business as usual, which means that projects aimed at improving oil production, one of the industry’s priorities, should be off the table. . Instead, any federal investment in carbon capture technology must be made with a view to using it as a path to a new business model, one in which carbon is a cost that is attacked as aggressively as any other.

But this is the good news for Kenney and the oil and gas industry, although they don’t see it that way: There is already an incentive for Alberta oil and gas companies to invest in carbon capture technology. It’s called the federal carbon tax, and as you get closer to the goal of $ 170 per tonne by the end of the decade, the economics of carbon sequestration will improve with each passing year.

“If you look at the 2030 targets and the price of carbon, there is definitely a time in the next decade when the economy works,” said Alison Cretney, CEO of the Energy Futures Lab, a nonprofit research group. told Reuters at the beginning of this year.

If Kenney wants to further boost that economy and attract more low-carbon capital to his province, he can restore the tax on big carbon polluters than Alberta’s NDP. implemented in 2018. Under the NDP’s Carbon Competitiveness Incentive Regulation (CCIR), oil sands facilities were benchmarked against each other, meaning that the best performers received credits and the biggest polluters paid the highest price. In the process, he created a race to the top, one in which the best performing facilities were encouraged to improve further, while the worst were penalized for falling so far behind.

But when the UCP formed a government and introduced the relaxed Emission Reduction and Technological Innovation Regulation (TIER), it reversed that incentive structure, especially for new projects.

Opinion: When the federal government inevitably rejects Jason Kenney’s demand for a blank check worth more than $ 30 billion, we’ll get the usual mix of victimization and claim, writes columnist @maxfawcett. #ABpoli # Oil and gas

“TIER makes innovation in emissions reduction less advantageous than it would be under the CCIR, as the better the performance of your new facility, the lower your emissions credits will be each year as long as the policy remains in place.” University of Alberta Professor and Andrew Leach, Chairman of the Climate Change Advisory Panel wrote in 2019. “The signal is backwards.”

According to Leach, that move from CCIR to TIER represents a transfer of “hundreds of millions of dollars per year” to the province’s highest emitting facilities, reducing the value of the kind of innovative technology that the oil and gas industry says. gas. wants to create. If Kenney wants to stimulate a genuine boom in the energy sector, one that creates new jobs and investment rather than simply filling the coffers of oil companies and the provincial treasury, he should reverse that shift and restore the CCIR.

But that would require you to acknowledge both the logic of carbon taxes and the good job the NDP government did in using them to drive innovation.

So when the federal government inevitably rejects your demand for a blank check worth more than $ 30 billion, we will get the usual mix of victimization and tort claim. If only there was a way to capture and store all of that underground somewhere.



Reference-www.nationalobserver.com

Leave a Comment