If money talks, then Canada’s oil and gas companies ought to have a lot to say right now. While commodity prices have softened recently, they’re still on track to post one of their most profitable years ever — one that will see record-high production on record-high revenue. But while they’ve said a lot about returning money to shareholders and paying down debt, they’ve been conspicuously quiet about anything to do with climate change. That’s because, as a new report from the Pembina Institute shows, they’ve barely spent any money on it.
Take Canada’s biggest oilsands companies, which formed the Pathways Alliance more than a year ago and very loudly proclaimed their shared commitment to reaching net-zero emissions by 2050 and eliminating 22 megatonnes of greenhouse gases by the end of this decade. Getting anywhere close to that target will require the construction of multiple carbon capture and storage projects, but not a single one of those companies has made a final investment decision yet. Instead, they’ve funnelled their growing cash flows to investors, with more than $10 billion going towards share buybacks and dividends in the second quarter of 2022 alone — a 400 per cent 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 give $14 billion back to its shareholders between 2021 and 2022, but it spent just $84 million on emissions reduction research and development efforts last year. That’s still better than MEG Energy, which indicated in a climate disclosure questionnaire that it invested $200,000 on emissions reduction initiatives in 2021 — a pittance given it bought back $139 million worth of its own shares between April and June of this year.
As federal Environment and Climate Change Minister Steven Guilbeault told The Canadian Press, "If (oil and gas companies) don't make those investments while they're making record-level profits, then when would it be a good time for them to make those investments? If not now, then I don't know when."
So, what’s the holdup? According to the companies and their spokespeople, it’s the government’s fault. "Expectations by the Pembina Institute that Pathways Alliance companies make final investment decisions on these multibillion-dollar projects before governments have finalized regulatory frameworks to support them are unrealistic," Pathways Alliance president Kendall Dilling told me in an emailed statement.
Those frameworks include the federal government’s proposed tax credit for carbon capture and storage projects, which was announced earlier this year and will be finalized in forthcoming legislation. While it would give companies a 60 per cent credit on costs related to direct air capture and 50 per cent on carbon capture and storage, the oil companies are clearly holding out for even better terms. “We also can’t ignore that decarbonization projects in Canada are competing for capital with similar projects in the United States, which now has a significantly more favourable investment climate thanks to the Inflation Reduction Act,” Dilling said.
But as the Pembina Institute’s report noted, this is a red herring — one designed to extract further concessions from a government that has already offered up more than enough of them. “U.S. incentives for CCUS have no bearing on the need for existing oilsands operations in Canada to decarbonize — given that oilsands operations in Canada cannot be transferred to the U.S. — and there is therefore no reasonable rationale for Canada to consider further subsidies for CCUS.”
Ironically, the biggest thing standing in the way of these major carbon capture and storage investments isn’t the Trudeau government but what Conservative Leader Pierre Poilievre has promised his government would do if elected. He has made it abundantly clear that one of his first orders of business as prime minister would be eliminating 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 he told the Globe and Mail, “It has the potential to be a bait-and-switch, where people throw billions of dollars into projects, and then after a regime change — there’s a new government in place or public opinion sways — the carbon tax goes away.”
Mark Cameron, vice-president of external relations for the Pathways Alliance, hinted at this risk in his own comments to the Globe and Mail. “There’s a very active intention to move forward with these projects, but that is not the same thing as being able to make funding commitments today, not knowing what the conditions are going to be three years from now when it’s actually time to start building,” he said.
Three years from now, of course, just happens to be when the next federal election is scheduled to take place. There are ways the federal government can mitigate this risk before then, including a so-called “contract for difference” that would pay project developers if the carbon tax was weakened or eliminated. The Trudeau government should move quickly on that front, if only to pour some political and economic concrete on its signature climate policy.
But it should also vocally call the bluff of oil and gas companies clamouring for more incentives and subsidies. If they continue to stall for time, the government has other options it can turn to: a windfall profit tax, for example, or a more aggressive timeline for its cap on oilsands emissions. It should also remind them that a Poilievre government, and its pledge to eliminate the carbon tax, would be even worse for the decarbonization push they’re supposedly committed to making. Either way, the time for talking is just about at an end.
Comments
Fawcett: "Ironically, the biggest thing standing in the way of these major carbon capture and storage investments isn’t the Trudeau government but what Conservative Leader Pierre Poilievre has promised his government would do if elected. He has made it abundantly clear that one of his first orders of business as prime minister would be eliminating the carbon tax, and that would destroy the economics of any carbon capture project in Canada."
Which industry stands to profit if the carbon tax goes away? Which industry actively supports the Conservatives? Which industry funds attacks on the Liberal Govt? Which industry is whispering into Poilievre's ear?
It should be obvious that the O&G industry and its financial backers remain fundamentally opposed to climate action that impairs its profits and shortens its lifespan. Anything beyond mere window dressing.
The O&G industry's public commitments to net-zero are greenwashing. The industry has no intention of meeting any climate targets.
Let's not deceive ourselves.
The O&G industry's duplicity is not exactly news:
"Oil Executives Privately Contradicted Public Statements on Climate, Files Show" (NY Times, Sept. 14, 2022)
"The documents, subpoenaed in a House investigation of climate disinformation, show company leaders contravening industry commitments.
"A Shell station in Houston. An internal email in 2020 said the company’s announcement of a pathway to net zero emissions had 'nothing to do with' its business plans.
"Documents obtained by Congressional investigators show that oil industry executives privately downplayed their companies’ own public messages about efforts to reduce greenhouse gas emissions and weakened industry-wide commitments to push for climate policies.
"Internal Exxon documents show that the oil giant pressed an industry group, the Oil and Gas Climate Initiative, to remove language from a 2019 policy statement that 'could create a potential commitment to advocate on the Paris Agreement goals.' The Paris Agreement is the landmark 2015 pact among nations of the world to avert catastrophic global warming. The statement’s final version didn’t mention Paris.
"At Royal Dutch Shell, an October 2020 email sent by an employee, discussing talking points for Shell’s president for the U.S., said that the company’s announcement of a pathway to 'net zero' emissions — the point at which the world would no longer be pumping planet-warming gases into the atmosphere — 'has nothing to do with our business plans.'"
https://www.nytimes.com/2022/09/14/climate/oil-industry-documents-disin…
"Report labels oil and gas companies’ climate pledges ‘grossly insufficient’" (May 25th 2022)
https://www.nationalobserver.com/2022/05/25/news/report-labels-oil-and-…
"Eight oil and gas companies are planning hundreds of expansion projects in the coming years, even as the world is already on track to burn through its remaining carbon budget."
"Exxon CEO 'deeply apologetic' for lobbyist’s unfiltered comments in leaked video" (Bloomberg, Jul 01, 2021)
"The lobbyist said the company supports a carbon tax publicly because the plan to curb climate change would never gain enough political support to be adopted
"Exxon Mobil Corp.’s Chief Executive Officer Darren Woods says the company is 'deeply apologetic' over comments caught on camera in a secret filming by Greenpeace that show one of the oil giant’s lobbyists saying a carbon tax the company has promoted for years is unlikely to happen."
https://calgaryherald.com/news/world/exxon-ceo-deeply-apologetic-for-lo…
Fawcett: "Getting anywhere close to that target will require the construction of multiple carbon capture and storage projects, but not a single one of those companies has made a final investment decision yet."
Understandably, fossil fuel companies do not want to pay for climate solutions that won't work. Like carbon capture and storage.
The O&G industry certainly will not pay for climate solutions that will work. Like shifting away from fossil fuels into renewables and mass electrification. That solution sidelines the O&G business.
Fawcett should stop promoting carbon capture and storage (CCS) as a climate solution. CCS is a delaying tactic. Not just doomed to fail, but designed to fail. Its primary purpose is to provide political cover for O&G expansion and new projects.
CCS captures a tiny fraction of emissions at high cost — only from large emitters. Viable, if at all, only for large CO2 streams. Not economic where sources are many, small, and diffuse. E.g., oilsands mines. Methane leaks. Tailpipes.
Capturing upstream emissions does nothing to reduce the 80–90% of emissions generated from a barrel of oil downstream at the consumer end. CCS does not capture other pollutants.
Subsidies for CCS and SMRs undermine carbon pricing. Carbon pricing is intended to make it more expensive to emit carbon. CCS subsidies offset companies' higher carbon costs, blunting the financial incentive.
CCS will be essential ONLY in sectors difficult to decarbonize. Processes like steel and cement. Not for the fossil fuel industry, where energy alternatives are readily available.
Expensive, inefficient, and energy-intensive, CCS for O&G simply perpetuates the fossil fuel regime. CCS means fossil fuels for longer. More emissions, not less. A plan to "green" fossil fuels, not get off them. CCS keeps us dependent on fossil fuels — not a transformative solution.
"'Everyone is positioning. So it's a poker game,' said one oilpatch executive.
"'The poker game isn't around the fact Kenney and the feds aren't going to pay — they are definitely going to pay. It's a matter of the dollars that everybody is asking for.'"
"Varcoe: Alberta's turn to ante up in carbon capture 'poker game' with Ottawa" (Calgary Herald, Apr 15, 2022)
https://calgaryherald.com/opinion/columnists/varcoe-albertas-turn-to-an…
"Canada’s oil and gas companies [have] been conspicuously quiet about anything to do with climate change. That’s because, as a new report from the Pembina Institute shows, they’ve barely spent any money on it."
Climate activists should be wary of the Pembina Institute's outsize role in these negotiations. Is Pembina an environmental group (ENGO)? Or a controlled opposition group?
ENGOs almost universally oppose carbon capture subsidies for the O&G industry. The Pembina Institute is the lone exception.
"There is staunch opposition from some environmental groups to the idea of Ottawa subsidizing CCUS projects in the oilsands.
"The Pembina Institute has backed the role of carbon capture and storage and the federal tax credit but doesn’t support increasing it.
"Varcoe: Canada 'falling behind' in race to attract carbon capture investments" (Sep 07, 2022)
https://calgaryherald.com/opinion/columnists/varcoe-canada-falling-behi…
"Are Canada's carbon capture plans a 'pipe dream'?' (National Observer, 20-Jan-22)
"Leading climate scientists and academics are calling on the federal government to abandon a proposed tax credit that gives big polluters a break for investing in carbon capture technology.
"The experts say the planned carbon capture utilization and storage (CCUS) tax credit will lock in fossil fuel use and risk ruining Canada's chances of meeting emission reduction goals.
https://www.nationalobserver.com/2022/01/20/news/are-canadas-carbon-cap…
Unlike most ENGOs and the 400+ scientists and academics who signed an open letter in January 2022 advising against federal support for carbon capture (CCS) in the O&G sector, the largely corporate-sponsored Pembina Institute has long supported both carbon capture in Canada's O&G sector and massive public subsidies to fund it.
Pembina supports what appears to be a reasonable policy compromise between two polarized positions: the oil industry and environmental groups. So a 50% tax credit for CCS becomes the reasonable or moderate position.
"Environmental think tank the Pembina Institute says capturing and storing CO2 from oilsands facilities, refineries and gas plants could reduce Canada's emissions by 15 Mt by 2030.
"'There is a significant role for carbon capture in decarbonizing the O&G industry,' said Simon Dyer, the Pembina Institute's deputy executive director. 'We don't know any details about the investment tax credit yet. But we don't oppose those sorts of investments to sort of kickstart that industry.'"
"Carbon capture tax credit a divisive topic; opinions split over potential benefits" (Canadian Press, March 30, 2022)
https://www.thestar.com/business/2022/03/30/carbon-capture-tax-credit-a…
"Some environmental groups lambasted the feds for the new measure, but Jan Gorski of the Pembina Institute said the 50% level was appropriate. Combined with other federal policies, such as a national price on carbon and the incoming clean fuel standard, it will provide an incentive for companies to invest."
"Varcoe: Federal incentive for carbon capture puts ball back in Alberta's court" (Apr 08, 2022)
https://calgaryherald.com/opinion/columnists/varcoe-federal-incentive-f…
Pembina's own reports cast doubt on CCS's efficacy in the oilsands:
The Pembina Institute acknowledges that in the oilsands sector "most CO2 is emitted in low concentration streams, and the efforts to capture it will be challenging and expensive."
"Public Policy Forum urges government to help finance oil and gas emission reductions" (March 17, 2022)
https://www.corporateknights.com/energy/public-policy-forum-urges-gover…
So why should taxpayers shell out tens of billions of dollars for it?
Pembina has long promoted oxymoronic "responsible" oilsands development and collaborated with industry on failed climate plans.
"Meet the green group that the oilpatch can work with" (Financial Post, April 21, 2016)
https://financialpost.com/commodities/energy/meet-the-only-green-group-…
Former Pembina director, self-styled "pragmatic environmentalist", Ed Whittingham is an industry collaborator and climate contrarian -- on the wrong side of many climate issues. His advocacy for false climate plans and new oilsands pipelines puts him in opposition to IPCC and IEA reports. He also supports carbon capture.
Who elected Pembina to speak for Canada's climate movement and make bad deals with industry? Why is Pembina supporting plans to fail?
Watch this organization very carefully.
Thanks for this Geoffrey; I didn't know that about the Pembina Institute, just assumed they were progressive and relatively speaking, they ARE, so they're like the Liberal Party.
I maintain, however, that these people are still progressive, which means open and adaptive despite not being sufficiently progressive politically but their collaboration with the NDP reflects that. This is still a democracy and we still have to bring people along, still need "social license" to act, which is indeed far more complicated and actually tortuous under the circumstances, but is finally in motion.
Being "purist" like the actual Green Party is now demonstrably NOT a viable option. There's obviously enormous appeal in the power of positioning oneself "beyond the fray" as much of the media and PARTICULARLY academics often do, disdaining the overt gamesmanship and competition increasingly associated with politics. But the fray is all of us, including the grubbiness of politics, so we need to "descend" back into that reality to enlist more voters. Conservatives have deliberately chipped away at the voter base to win so we have to take that on with all our might and wiles and become "bastards for progessivism" as Bill Maher said. (He's irritating but he's right about that AND the true virtues of atheism actually.) I'd suggest that Trudeau is one of those, is just playing a long game in that regard, the main point being that he's got the POWER, which is essential. And he's shown he has the stomach for it, the "breeding" and the necessary physical stamina because he runs and is actually a pugilist. And he's dead serious about the threat of climate change and truly cares about people. And he has young children.
So our best hope for progress is the Liberal Party.
Carbon capture is a mirage, always has been, and the oil companies never intended it to be anything else. It was greenwashing from the get-go, much like recycling plastic. It doesn't work worth a damn and it costs ridiculous amounts of money and it does nothing about the emissions from actually burning the damn stuff. And they know all that. They're just lying.
It doesn't matter if Trudeau subsidizes this thing or the Cons cancel that tax or what, they're not going to build CCS at any scale--maybe a bit so they can do CO2 injection into old oil wells to get even more fossil fuels out, but that's it. This is a non-issue, and the sooner we recognize it's a non-issue (and that everything that comes out of an oil company spokesbeing's mouth is a lie) the sooner we can move forward with real policies.
Real policies are going to have to face a basic fact: If we want to survive, we cannot continue with Liberal style all-things-to-all-people policies. There has to be winners and losers; the winners have to be energy efficiency, renewable energy, the planet and all the people living on it. The losers have to be fossil fuel companies. They have to go down. Period, full stop, the end.
"Has to be" is not actually the case though. "Have to go down?" No, not true either. POLICIES of whatever type are unavoidably political whether we like it or not so it ALL starts with obtaining political power.
As progressives we require government with an open mind that can change at the speed of life, which the pandemic has demonstrably shown is the Liberals. I think they're just setting the stage by appearing to be "all things to all people" because they recognize that as the ticket to getting buy-in in a democracy, recognizing that if we lose THAT (which the war in Ukraine and the big lie in the States is currently showing is terrifyingly possible), we are truly screwed.
So I'd say the oil industry has been given enough rope to hang itself and is arrogantly, predictably in the process of doing.
I said "has to" in the context of the notion of "real policies", as in ones that would actually do something about climate change. If your stated goal is to stop climate change, that is not consistent with oil companies continuing to exist as entities that sell oil. I wasn't claiming it was inevitably going to happen, just that Trudeau-style "we can stop climate change while selling masses of fossil fuels" notions are not real climate-change-stopping policies. Clearer now?
Yeah of course I know what you're saying about Trudeau and the mealymouthed sucking and blowing around "transition" and the wildly irrational continuation of subsidies that makes NO sense but then I also live in Alberta where the governments have been even more in thrall to oil companies for decades as described in Kevin Taft's book, "Oil's Deep State."
My point is that Trudeau himself and the Liberals have evolved and are now leading up to a cap on emissions after locking in with legislation their own commitment to interim targets and have collaborated with the NDP. And on the carbon capture tax credits I heard him say on the news that oil companies should maybe consider hiring more engineers and fewer lobbyists but meanwhile, as they keep ragging the puck on that, waiting for Boilievre to come through and save them by removing the carbon tax despite it being the ideal "market-based" solution introduced by conservatives, three more years of ever more alarming manifestations of climate change will take place, the war on Ukraine will push Europe to innovate, resulting in a continuous weakening of that sacrosanct social license for big oil.
If the Liberals are afraid of a CPC sweep in the next election, they should take Trudeau and the backroom boys & girls to task for scuttling electoral reform. Now Poilievre could win with less than 40% of the popular vote, and wrench a downward policy lurch all the way to blazes. The arrogance of the "Natural Governing Party" closed the door to any meaningful climate action.
There have been referendums on electoral reform provincially and it's been voted down more than once though. It CAN lead to even more gridlock and constant elections where it's in place because as usual there are several "flavours" and variations that no one can agree on.....
So there's THAT.
A closer look at the previous referendum results on electoral reform in BC and PEI reveals a slightly different conclusion, in my opinion. The 2016 referendum in PEI (non-binding) showed that 52+% favoured PR over FPTP. The 2005 BC referendum on a specific option of PR (STV) resulted in a large majority of voters (57.7%) supporting it. Unfortunately, the BC Liberal government (opposed to electoral reform) had set a 60% threshold for this referendum to pass; very ironic given that NO majority governments in Canada has ever attained that level of support. In fact, only two majority governments in Canada have managed to attain a 50%+ threshold of support (i.e. a true majority) in the last 70 years!
But the bigger issue here is that the use of referendums to gauge public support for a complex issue like electoral reform is a flawed process, for a number of reasons. First and foremost is the obvious fact that referendums favour the status quo to a huge extent; the devil you know (FPTP) versus the devil you don’t (PR).
People are generally nervous and uncomfortable with change, especially change that is unfamiliar to them. Opponents of electoral reform capitalize on this fear of change by utilizing fear-mongering, misinformation, innuendo, outright lies, and other disinformation to scare voters off voting to support proportional representation. Truth in advertising isn’t applicable to politics (pity) so there’s no recourse to these nefarious tactics.
During the last BC referendum on electoral reform, the NO campaign even ran TV ads/video ads, as well as print ads, that featured goose-stepping German soldiers; a glaringly obvious attempt to convince people that PR encourages extremism in government (it doesn’t). The BC Liberals (a misnomer if there ever was one. Sorry, I digress) actively opposed and campaigned against PR; and also participated in the disinformation campaign against PR.
Meanwhile the BC NDP government gave lukewarm support, at best, to the YES campaign; the result of lackadaisical support for PR within the party. In my opinion, the NDP wanted this referendum to fail from the start because it might mean sharing the reins of power if it passed. Premier John Horgan would have been far better off during the televised debate to confront Liberal leader Andrew Wilkinson on the coordinated Liberal/NO committee disinformation campaign than foolishly going on about “wokeism.”
“The Liberal talking points on electoral reform: a collection that belongs in an alternative facts class of its own.” – National affairs writer Chantal Hebert
Trudeau’s rejection of electoral reform was a thinly disguised attempt to cover up the rejection of the Liberal’s only (obviously preconceived) choice for electoral reform - winner-take-all ranked ballot - by both the experts and the public during the public consultation process held by the Electoral Reform Committee (ERRE). Ranked ballots are not a voting system, but rather just a tool for use in conjunction with an electoral system. The use of a ranked ballot with FPTP will only continue, exaggerate, or even exacerbate the many problems with FPTP. The Liberal party support for a winner-take-all ranked ballot system is nothing but a cynical tactic of self-preservation, as they would benefit more than any other party from such a system.
“In the end, 88% of the experts the ERRE heard (invited and vetted by all parties) and 87% the public who testified were for PR. The ERRE online survey found strong support for both the principle of PR and specific proportional systems.” (Fair Vote Canada)
Fourteen years of Canada-wide polling on electoral reform has shown majority support for proportionality in government; as well, fourteen separate committees, assemblies and commissions on electoral reform have all recommended proportional representation. In the run up to the 2015 election, three parties, Liberals, NDP and Green, supported electoral reform (63% of voters ); in particular the need for proportionality in parliament. In that context, Trudeau’s comments that there is no consensus are bogus and irrelevant.
Eventually a province (possibly Quebec) will switch to an appropriate made-in-Canada PR electoral system and then the floodgates will finally open when the people of Canada see what proportionality in politics looks like. No country has ever gone back to FPTP after experiencing PR for a few election cycles.
Lastly, democratic principles demand that the rights of the minority are protected and respected by the majority. The use of referendums by government delayed women getting the vote in Switzerland until 1971; because women being given the vote threatened the status quo and the power brokers in control. So we need to ditch electoral reform referendums and use Citizens’ Assemblies to study, investigate and consider options before making recommendations on how to move forward with introducing proportionality in our governments.
We need to give all voters the right to have their votes count and to be reflected as close as possible in the makeup of our governments.
These disgusting dirty energy corportions care only about their profits at anyones expense. It matters not what the people of Canada want but rather what these sus scrofas want. They will spare no money to but off everyone in their way. The Guardian revealed in July that the oil and gas sector has made an average of $1 trillion a year in pure profit for the last 50 years. These vast sums have provided the power to “buy every politician, every system” and delay action on the climate crisis, said Prof. Aviel Verbruggen, the author of that analysis.
The energy crisis is proving extremely profitable for oil companies, even without subsidies. In the first six months of 2022, five leading companies — BP, Shell, ExxonMobil, Chevron and Total — made adjusted profits of nearly $100 billion. The figure is the same sum that rich nations had promised to poor nations to help deal with the climate crisis by 2020, but failed to deliver.
Scofas to the core.