Canada's big oil companies are making record profits this year and should be using some of that extra cash to invest in things that curb their greenhouse gas emissions, Environment Minister Steven Guilbeault said Thursday.
His remarks come a week after Cenovus CEO Alex Pourbaix told analysts during a company conference call that a new federal tax credit isn't good enough to convince the major oilsands producers to start building a proposed carbon capture and storage project.
Carbon capture and storage traps emissions at their source and funnels them back underground or into products that can permanently store them, such as cement. The technology is controversial, with many climate scientists arguing it is unproven, expensive and allows fossil fuel production to continue.
The new refundable investment tax credit introduced in the recent federal budget is worth 50 to 60 per cent of the investment for carbon capture, and 37.5 per cent for transportation, storage or use of the emissions.
Projects that go to enhanced oil recovery — where the captured emissions are used to squeeze more oil out of the ground — won't qualify.
The tax credit will provide an estimated $2.6 billion over the next five years, and $1.5 billion annually after that until 2030.
Last year the Canadian Association of Petroleum Producers asked Ottawa to design the tax credit so it pays for 75 per cent of the cost of carbon capture projects.
Pourbaix said the industry will need more than what was offered to move on the investments.
But Guilbeault said in an interview Thursday that isn't going to happen.
"We won't be putting even more and more money on the table," he said. "They have to invest as well."
He said Pourbaix's comments are disappointing and that it's time for industry to come to the table to show what it plans to invest to protect its future in a world where demand for oil and gas diminishes — and demand for unabated oil and gas diminishes faster.
"We want to invest in your sector to ensure that the sector and workers still have jobs, 10, 15 years from now, when more and more, the world will be moving toward a low-carbon future," Guilbeault said. "So we're putting our money where our mouth is, and we think that they should do the same."
And he said they have the money to do it. The same day Pourbaix talked about the tax credit, Cenovus reported its best first-quarter profit ever, of $1.6 billion. A year ago, profits were $220 million.
Cenovus has not yet responded to a request for comment.
The company is not alone, with the price of oil being driven up by the war in Ukraine, pandemic-related supply chain issues and surging demand as pandemic lockdowns ease. Imperial Oil reported first quarter profits of $1.17 billion, its best first quarter in 30 years. On Thursday, Canadian Natural Resources Ltd. reported profits of $3.1 billion, compared with $1.38 billion a year ago.
"These companies are making record profits, they should be investing some of them into ensuring that they have a future," Guilbeault said.
Last week, Pourbaix said oil prices rise and fall so decisions about investing in carbon capture can't be based on current prices.
"Oil prices right now are obviously very attractive, but we know probably before that project is ever in service, we'll probably test the bottom end of those prices again," he said.
The oil and gas sector produced more than one-quarter of Canada's total emissions in 2020. Ottawa is currently estimating the sector must cut its emissions almost 40 per cent from 2020 levels by 2030 if Canada is to meet its current emissions target.
An RBC analysis released last week said cutting oilsands emissions 40 per cent by 2030 will cost between $45 billion and $65 billion.
Guilbeault said the industry has invested to cut its emissions. Although production increases mean overall emissions have risen, emissions per barrel are down 11 per cent between 2005 and 2020 industry-wide, and in the oilsands alone they're down 12 per cent.
"So they have invested in efficiency over the last few years and more than a few," he said. "I think the question now is, is it enough? And the answer to that is clearly no."
Earlier this year, more than 400 climate scientists wrote to Finance Minister Chrystia Freeland urging her not to proceed with the tax credit because the technology is unproven, expensive and a massive subsidy to the oil and gas industry.
At a committee hearing in Ottawa earlier this week, NDP MP Laurel Collins demanded Guilbeault hear that plea.
"This is absolutely the wrong direction," she said. "Why are you not listening to them?"
This report by The Canadian Press was first published May 5, 2022.
Comments
Guilbeault: "We want to invest in your sector to ensure that the sector and workers still have jobs, when more and more, the world will be moving toward a low-carbon future."
No logic.
Invest in the solution, not the problem.
Invest in a just transition, not in a sunset industry.
Invest in renewables and sustainability (smart urban design, public transit, home retrofits, community gardens, urban trees and parks). Ensure Canada's new economic sectors have jobs 10, 15 years from now.
Why prolong the pain and perpetuate the problem?
If and when the world moves toward a low-carbon future, the O&G sector will shed its workforce, no matter how many billions of public dollars govt throws at it. Tax dollars down the drain.
Ottawa is just postponing the day of our salvation. Putting the industry on life support won't save it.
As Canada's Environment Commissioner recently reported, Ottawa's plans for a just transition are a shambles:
"Commissioner chides Ottawa for non-existent 'just transition' plan
"DeMarco said the govt has done little to prepare for an expected wave of layoffs in the energy sector as the country moves away from fossil fuels like coal, oil and natural gas in the coming years.
"DeMarco said the govt has long promised to produce some sort of 'just transition' plan to help affected workers with income and pension support and job retraining. He said the govt has been 'slow off the mark,' has taken 'little action' and is woefully 'unprepared' for possible mass unemployment.
https://www.cbc.ca/news/politics/environment-commissioner-emissions-red…
"Despite repeated promises to table legislation to initiate a 'just transition' for energy workers facing unemployment as Canada shifts to a greener future, DeMarco said he found little evidence that the Liberal govt has done any meaningful work on this issue.
"[NDP Leader Jagmeet] Singh said that workers need to be at the centre of any govt action on climate.
"'We can't leave workers behind and there's no plan in what the Liberals have proposed,' he said. 'It's a complete failure.'"
https://www.cbc.ca/news/politics/liberal-ndp-alliance-singh-criticism-c…
The Liberals' climate plan is to funnel billions of public dollars into the pockets of largely foreign shareholders of multi-billion-dollar multi-national corporations reporting record profits.
Guilbeault has no plan for a just transition.
Guilbeault: "So we're putting our money where our mouth is, and we think that they should do the same."
Federal subsidies for fossil fuels far exceed support for renewables and sustainability.
Energy companies should either shift into renewables or close their doors.
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Guilbeault: "These companies are making record profits, they should be investing some of them into ensuring that they have a future."
Current windfall profits are a red herring. Wrong argument.
Clean-up, reclamation, and emissions reduction are all standard costs of doing business. No way should taxpayers be on the hook for industry's business expenses. Polluter pay.
The O&G industry's idea is to shift as much of its business costs to taxpayers as possible. The Liberals are complicit.
Why don't we pay for Cenovus Energy's pencils and paper too? Poor CEO Alex Pourbaix probably needs a new jet as well.
Staggering sense of entitlement in the O&G industry.
Privatize the profits, socialize the costs. The fossil fuel industry's business model.
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Article: "Last week, Pourbaix said oil prices rise and fall so decisions about investing in carbon capture can't be based on current prices."
O&G companies reporting record profits propose a BS climate solution with taxpayers picking up most of the tab. Brigandage and misuse of public funds. End of story.
Did it never occur to Mr. Pourbaix that he should set funds aside from his windfall profits and use them to cover his business expenses? Save for a rainy day?
Why should taxpayers pay these guys a dime?
Article: "Guilbeault said the industry has invested to cut its emissions. Although production increases mean overall emissions have risen, emissions per barrel are down 11% between 2005 and 2020 industry-wide, and in the oilsands alone they're down 12%.
Nominal oilsands emissions intensity has decreased in part because a smaller share of bitumen is being upgraded at home in favor of more raw dilbit exports. This simply transfers emissions to U.S. refineries. An accounting maneuver.
NRCan acknowledges this sleight-of-hand:
"From 2000 to 2019, the emission intensity of oil sands operations dropped by about 33% as a result of technological and efficiency improvements, fewer venting emissions and reductions in the percentage of crude bitumen being upgraded to synthetic crude oil."
NRCan Energy Fact Book 2021-2022
Canada's O&G industry grossly under-reports its emissions of all types. The industry's GHG emission stats — and Canada's — are fiction.