The federal environment minister is calling out Canada’s oil companies for failing to put cash behind their promises to tackle climate change.
Steven Guilbeault says the country’s major oil players have promised to do something about greenhouse gas emissions, but instead have funnelled most of their record-breaking profits to shareholders.
The Canadian Press says this is at least the third time in the last six months Guilbeault’s frustration has spilled over as oil company profits soar. This time, his critiques came in the form of a video posted to Twitter as major petroleum producers began releasing their third-quarter earnings.
“We’re already putting our money where our mouth is,” Guilbeault said in an interview. “I’m not sure they are.”
The first earnings report from the sector came on Friday from Imperial Oil, which reported C$2 billion in profits for the third quarter and $6.2 billion for the first nine months of 2022. That compares with $1.7 billion for the first nine months of 2021.
The company said it plans to spend $1.5 billion in share buybacks and increased its quarterly dividend by 30%. That amounted to “striking a balance” between shareholder returns and new investment, President and CEO Brad Corson said.
Big Alberta fossils Cenovus, Suncor, and Canadian Natural Resources are set to release their earnings next week, CP says. The four companies, plus MEG Energy and ConocoPhillips Canada, make up the Pathways Alliance, a consortium that has been touting its plans to tackle climate action in the oilsands, but has been notably hesitant to put real dollars behind those plans. Two weeks ago, the group said it would spend $24 billion over the next eight years on emissions reduction projects, but only if it received ever more lavish financial help from Ottawa.
Global oil prices surged early in 2022, largely due to the Russian invasion of Ukraine, and Canadian companies reaped the benefits. In the first six months of 2022, the Pathways companies recorded profits in excess of $22 billion. That compared with less than $6 billion in the first six months of 2021.
An Alliance spokesperson would not respond to Guilbeault’s callout Friday, saying the consortium doesn’t comment on members’ financial decisions.
The companies may get some of the new subsidies they’re asking for later this week when Finance Minister Chrystia Freeland tables her fall mini-budget. She might use it to tweak the tax credit for carbon capture and storage technology she introduced last spring, even though Guilbeault has vowed that wouldn’t happen in a moment of record fossil profits.
The technology that traps emissions from industrial sources and funnels them back underground is critical to oil and gas companies, feeding their hope that they can continue to increase oil and gas extraction while meeting emissions reduction requirements. But that potential is still far off, according to an analysis published last month. The Institute for Energy Economics and Financial analysis found that 10 out of 13 “flagship, large-scale” CCS projects around the world, accounting for about 55% of global carbon capture capacity, either underperformed, failed outright, or had to be mothballed.
The Trudeau government’s tax credit—mostly to cover half the price of capital investments—will cost Ottawa about $2.6 billion over the next five years and $1.5 billion annually for four years after that, CP reports. Oil companies led by Cenovus Energy CEO Alex Pourbaix had demanded up to 75% and declared themselves happy with the proposed 50%.
The latest buzz in Ottawa is that Canada may be forced to up its game because of carbon capture tax credits in the United States’ Inflation Reduction Act. But two weeks ago, Iron & Earth Executive Director Luisa Da Silva told a Parliamentary committee that Canada is already overspending on CCS, while neglecting the skill development workers will need to enter the low-carbon work force.
Guilbeault said Friday he did not know what the plan is for the tax credit, though he acknowledged the U.S. incentive changed the domestic picture.
“Of course we’re looking at what the U.S. has done,” he said. “… It is a competitive investment world, we understand that. But at the same time, I mean, the oilsands companies are in Canada. And they can’t do emission reduction projects in the U.S. If they believe in the future of their companies, they have to make those investments in decarbonization in Canada.”
Guilbeault said projections show by 2050 the world’s demand for oil will be less than one-third what it is today, and all of it will have to come from sources that don’t add emissions through production.
“Will there be a place for one of the highest emitting forms of oil if they don’t make those investments in decarbonization? I don’t think so.”
The main body of this report was first published by The Canadian Press on October 29, 2022.