Oil companies’ record profits should be invested in climate action: Guilbeault

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OTTAWA — Canada‘s major oil companies are making record profits this year and should use some of that extra money to invest in things that reduce their greenhouse gas emissions, Environment Minister Steven Guilbeault said Thursday.

His remarks come a week after Cenovus CEO Alex Pourbaix told analysts on a conference call that a new federal tax credit was not enough to convince major oil sands producers to start build a carbon capture and storage project.

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Carbon capture and storage traps emissions at their source and sends them back underground or into products that can store them permanently, such as cement. The technology is controversial, with many climate scientists arguing that it is unproven, expensive and allows fossil fuel production to continue.

The new refundable investment tax credit introduced in the recent federal budget represents 50-60% of investment for carbon capture and 37.5% for transport, storage or use of emissions.

Projects that go to enhanced oil recovery – where captured emissions are used to extract more oil from the ground – will not be eligible.

The tax credit will provide approximately $2.6 billion over the next five years, and $1.5 billion per year thereafter until 2030.

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Last year, the Canadian Association of Petroleum Producers asked Ottawa to design the tax credit to cover 75% of the cost of carbon capture projects.

Pourbaix said the industry will need more than what has been offered to move investment forward.

But Guilbeault said in an interview Thursday that won’t happen.

“We’re not going to put even more money on the table,” he said. “They also have to invest.”

He said Pourbaix’s comments are disappointing and it’s time the industry came to the table to show what it plans to invest in to protect its future in a world of declining oil and gas demand. – and the relentless demand for oil and gas is falling faster.

“We want to invest in your sector to ensure that the sector and workers still have jobs, 10, 15 years from now, as the world increasingly moves towards a low carbon future,” said Guilbeault. “So we put our money where our mouth is, and we think they should do the same.”

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And he said they had the money to do it. On the same day Pourbaix talked about the tax credit, Cenovus reported its best first-quarter profit in its history 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 higher by the war in Ukraine, pandemic-related supply chain issues and rising demand as pandemic shutdowns unfold. relax. 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, up from $1.38 billion a year ago.

“These companies are making record profits, they should invest some of it to secure a future,” Guilbeault said.

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Last week, Pourbaix said oil prices were going up and down, so decisions about investing in carbon capture could not be based on current prices.

“Oil prices right now are obviously very attractive, but we probably know that before this project comes on stream, we’ll probably test the bottom of those prices again,” he said.

The oil and gas sector produced more than a quarter of Canada’s total emissions in 2020. Ottawa currently estimates that the sector must reduce its emissions by nearly 40% below 2020 levels by 2030 if Canada is to meet its target. current emissions.

According to an RBC analysis released last week, reducing oil sands emissions by 40% by 2030 will cost between $45 billion and $65 billion.

Guilbeault said the industry has invested in reducing emissions. Although production increases mean that overall emissions have increased, emissions per barrel have fallen by 11% between 2005 and 2020 across the industry, and in the oil sands alone they have fallen by 12%.

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“So they’ve invested in efficiency over the past few years and more than a few,” he said. “I think the question now is, is that 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 pursue the tax credit because the technology is untested, expensive and a massive subsidy for the oil and gas industry.

At a committee hearing in Ottawa earlier this week, NDP MP Laurel Collins asked Guilbeault to hear that plea.

“It’s absolutely the wrong direction,” she said. “Why don’t you listen to them? »

This report from The Canadian Press was first published on May 5, 2022.

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