It’s the argument that just won’t die. For more than a decade, Alberta’s oil and gas industry talked up its commitment to reducing emissions and being an “ethical” supplier of oil and gas, and that talk has ramped up in recent weeks as Russia’s invasion of Ukraine roiled energy markets.
As Alberta Energy Minister Sonya Savage tweeted recently, her province “produces energy with the highest environmental standards and is right next door. We are the solution to U.S. energy security, not Venezuela, Iran or Saudi Arabia.”
But now, with the federal government setting an ambitious emissions reduction target for the oil and gas industry of 42 per cent below current levels by 2030, we all get to see if they can actually walk the walk. And they have a lot further to go than they’d like to admit.
The notion that Alberta has the highest environmental standards in the world is practically an article of faith in the corporate towers of downtown Calgary, and it’s one the provincial government trades in almost daily. A New York Times ad paid for by the War Room — or “Friendly Energy,” the name of its latest branding effort — declares: “Our industry is a clear and indisputable global leader in environment, social and governance (ESG) standards.”
But is it?
Yale’s Environmental Performance Index, which ranks countries using 32 performance indicators across 11 issue categories, puts Canada 20th overall — well behind Norway and the United Kingdom, which also produce meaningful volumes of oil and gas, and marginally ahead of the United States.
That’s actually overstating things, too.
When you strip out things like lead exposure and waste management and focus on what really matters to ESG investors — climate change — Canada ranks 37th. That’s a far cry from the United Kingdom (2nd), Norway (6th), or even the United States (15th). Yes, it’s better than Venezuela (44th), Russia (57th) and Saudi Arabia (130th), but those aren’t places that routinely pride themselves on having the best environmental regulations in the world.
Now, it’s time for the ethical oil crowd to put up or shut up. The good news for them is the new federal plan includes a tax credit for carbon capture and storage technology, the details of which have yet to be released. But it’s a safe bet it will match, or at least resemble, the 45Q tax credit in the United States that offers carbon capture projects up to $50 per tonne of CO2 that’s sequestered permanently.
That won’t come close to covering the entire cost of decarbonizing Canada’s oilsands, which has been estimated at $75 billion. But the good news is the industry has more than enough cash to cover the difference. With oil prices trading comfortably above US$100 a barrel and the industry producing the same 1.3 billion barrels it cranked out in 2021, it would cost them less than $50 a barrel to cover the estimated $75-billion cost of eliminating greenhouse gas emissions by 2050.
Opinion: Now it’s time for them to brag about the size of their climate ambition — and do something about it, writes columnist @maxfawcett.
That’s just in one year, too. If the industry decided to spread out this cost over, say, a decade, it would be less than $5 a barrel. When the average operating cost in Canada is around $35 a barrel, that leaves plenty of room for margin — and profit.
As Prime Minister Justin Trudeau said in his address at the GLOBE Forum taking place this week, “If there’s any oil and gas sector in the world that can do this, it’s Canada’s.” He’s not wrong, but that’s as much a dare as it is an expression of pride, and it’s one the oil and gas industry now has to respond to. Will it rise to the challenge and truly earn its self-appointed title as an ethical source of energy? Or will it shrink from the moment and continue to do business as usual?
Only the industry and its leaders can answer that. For decades, they have bragged about the size of Alberta’s oil reserves. Now it’s time for them to brag about the size of their climate ambition — and do something about it. As the prime minister said, “this is no time for excuses.” Amen to that.