Canada’s biggest oilsands companies have announced a conditional C$24.1-billion investment in a carbon capture and storage facility and pipeline along with other emissions reduction projects, just a week after an analysis showed them receiving $15 billion in federal subsidies so far this year.
The Pathways Alliance, a consortium of the country’s six largest oilsands companies, said Friday it is getting ready to spend $16.5 billion before 2030 on a massive proposed carbon capture and storage (CCS) facility that is the centrepiece of its net-zero-by-2050 pledge, plus another $7.6 billion on other emissions reductions projects, The Canadian Press reports.
But despite record profits this year, and even after the $7.1-billion CCS tax credit announced in the last federal budget, the companies are still looking for more from taxpayers before they pull the trigger on the project.
“Over the life of the project, probably two-thirds of your costs are operating costs. And so the (tax credit) helps enormously on the construction side, on the capital side, but we’re still working with governments on ways to shore up some support on that operating cost side,” said Pathways Alliance President Kendall Dilling.
He told CP additional government support will be necessary to keep Canada’s oil and gas industry competitive with other jurisdictions, some of which are already significantly subsidizing carbon capture and storage.
“Particularly the U.S., where the Inflation Reduction Act contains significant incentives for all kinds of clean tech development but also some very aggressive support for CCS,” he said.
But in a report issued earlier this month, Environmental Defence Canada says the fossil industry has already received ample federal funding this year. The $15 billion is just a little bit shy of the $18 billion Ottawa shelled out last year, making Canada the biggest financier of international fossil fuel investment among the 23 countries that pledged to phase out that funding during last year’s COP 26 climate summit in Glasgow.
Last month, the Pembina Institute projected that Canada’s oil and gas sector will take home $152 billion in profits in 2022 due to the war in Ukraine and the resulting commodity price boom. The report criticized the Pathways Alliance for not moving faster to meet its climate commitments in light of its windfall profits.
Environment and Climate Minister Steven Guilbeault has also said he wants to see more details from industry on what it is doing with its profits to achieve its emissions reduction targets.
“If they 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?” Guilbeault asked CP in September. “If not now, then I don’t know when.”
But the fossils have not yet made a final investment decision on a carbon capture megaproject that would aim to capture CO2 emissions from more than 20 oilsands facilities in northern Alberta and store them safely underground, delivering an estimated 10 million tonnes of emissions reductions per year, CP writes.
On Friday, the group said it has already completed pre-engineering work and is consulting with Indigenous communities along the route of a proposed 400-kilometre pipeline that would carry captured CO2 to the storage hub. The group says it has also completed nine carbon capture feasibility studies involving member companies at oilsands sites.
But industry said it needs not just financial, but also regulatory certainty. It is concerned about the federal government’s promised cap on greenhouse gas emissions from the oil and gas sector, and considers the government targets for the sector to be “aggressive” and “unrealistic”.
While the Pathways Alliance claims it can reduce greenhouse gas emissions from production by 22 million tonnes by 2030—an approximate 30% reduction from current levels, excluding the roughly 80% share of emissions that occur after their product is shipped to its end user—the federal government wants Canada’s oilpatch to reduce by 42% below 2019 levels.
“If not done well, policy can disincent investments in these kinds of (carbon capture) projects moving ahead,” Dilling said.
“We as an industry are committed and ready to go about decarbonizing our production as fast as it is technically, economically, and executionally feasible to do so,” he added. “All we need is government support to work with us—we don’t need a big stick forcing us to do it.”
However, Dilling said he’s confident that both industry and government have a vested interest in seeing the proposed carbon capture project move ahead.
“We’ll figure out a formula that works to allow us to proceed. It’s a huge opportunity for Alberta, and for Canada,” Dilling said. “Frankly, there’s no other project that I’m aware of that can deliver this scale of greenhouse gas emission reduction by 2030.”
Pathways Alliance member companies include Canadian Natural Resources Ltd., Cenovus Energy Inc., ConocoPhillips Canada, Imperial Oil Ltd., MEG Energy Corp., and Suncor Energy Inc.
The group says it plans to apply for regulatory approval for its CO2 transportation line and storage network in late 2023. It says it could begin injecting carbon as early as 2026.
The main body of this report was published by The Canadian Press on October 14, 2022.