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Even in an industry where competent communicators are about as rare as Liberals in downtown Calgary, Cenovus Energy CEO Alex Pourbaix’s comments stood out. After announcing a $1.6-billion profit in the first quarter of 2022 — one that allowed his company to triple its dividend to shareholders — he rattled his can in the direction of the federal government over its tax credit for carbon capture and storage (CCS) projects. “These are multibillion-dollar projects,” he told analysts on a conference call Wednesday. “We have to have certainty that they are investable, and that we can manage those investments over the entire commodity price cycle.”

Translation: Ottawa needs to make its existing CCS tax credit, which is already worth billions of dollars, even more generous. Beginning in 2022, companies like Cenovus are able to claim a credit of up to 60 per cent for direct air capture projects and 50 per cent for more conventional carbon capture technology. But Pourbaix and the other members of the Oil Sands Pathway Alliance, which includes the six major oilsands producers, apparently have their eyes on the even more generous incentives in Norway, where the government is covering as much as two-thirds of the up-front cost on a major new CCS project.

There’s a catch here, though, one that people like Pourbaix would probably rather not mention: the Norwegian government has a much bigger stake in the companies it’s subsidizing. The Longship project will sequester carbon dioxide from two potential sources (a cement factory and a waste-to-energy plant co-owned by the City of Oslo) through a pipeline and into permanent storage under the North Sea by a trio of oil companies led by Equinor. And the Norwegian people still control 67 per cent of Equinor, along with an equivalent proportion of its profits.

In Canada, on the other hand, companies like Cenovus and the rest of the oilsands players are owned entirely by private shareholders. Those shareholders are doing very well right now and stand to do even better in the future as fossil fuel companies continue to pay down debt and direct even more of their massive free cash flows to dividends and stock buybacks. Imperial Oil just posted the highest first-quarter profit in over 30 years, one that will allow it to buy back up to $2.5 billion of its own shares.

Don’t just take it from me. RBC Capital Markets estimated the four largest oilsands companies will generate $47 billion in free cash flow (that is, cash after funding its operating activities) in 2022 and 2023. That’s basically two-thirds of the total estimated cost of the transition to net-zero emissions for all of the oilsands companies — in just two years. Meanwhile, the transition itself is expected to play out over more than two decades.

So yes, they can easily afford to pay for their carbon capture and storage projects. But the disconnect between their ongoing campaign for more corporate welfare and the reality of their record profitability raises an important question: is it time for the taxpayer to get a bigger piece of the action?

A pro-oil investment firm CEO named Shubham Garg seemed to inadvertently provide an answer to that question in a recent tweet. “Canadian oil companies enjoy much higher ‘free cash flow’ during times of high commodity pricing when compared to peers in other countries,” he wrote. “Large tax pools further reduce the tax burden and make a very compelling case for investing in [Canadian] O&G.”

CEOs like Pourbaix have been making that case to investors lately, which fundamentally undermines their appeal for more government subsidies. "I suspect, over the long term, much as we've seen in other jurisdictions, we're going to require a real collaboration," he said during his recent quarterly conference call. But collaboration isn’t a one-way street, and if companies like Cenovus want more government money, they should be asked to give the government a bigger share of their success. According to recent data from Rystad, Norway’s government has received nearly $100 in revenue per barrel of oil produced so far this year. In Canada, it's less than $20.

So yes, it’s time for a real collaboration between industry and government on carbon capture technology. Maybe that takes the form of a joint venture between the Oil Sands Pathway Alliance companies and the federal government, one where the taxes paid are informed by the price of oil these companies receive. Or maybe it’s a windfall tax on their profits, one whose revenues are funnelled back into renewable energy and low-carbon solutions in Canada.

What it absolutely cannot be is the sort of blank cheque that CEOs like Pourbaix seem to be looking for right now. Their recent (and record) profits speak for themselves, and their ongoing attempts to cry poverty should fall on deaf ears. If the government's billion-dollar carrots don’t get them to move more quickly on emissions reductions, maybe it’s time for the sticks.

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when is it going to become embarrassing to still be yammering on about Canada stopping mass handouts to Texas oil barons?
maybe MSM should comment daily that only 3% of Canadian oil cos are owned by Canadians or that royalties minus subsidies amount to negative contribution by the richest companies in history. but wait, all our MSM are owned by corporations who get massive handouts too! oops!

Fawcett failed two weeks ago to convince us that taxpayer support for carbon capture (CCS) is necessary or justified. Today we are haggling over the price. Taxpayers don't owe the oil industry a dime.

Headline: "It’s time for Ottawa to call the oil industry’s bluff"
The time to call the oil industry’s bluff was before Ottawa surrendered to the O&G industry on the CCS tax credit.

With the principle established that taxpayers are liable for the O&G industry's CCS costs, why not let taxpayers fund it entirely? Why should industry pay at all? Why not let O&G companies continue to fill its shareholders pockets with windfall profits?
Why burden O&G companies with any business expenses? Why not let taxpayers pick up the costs for oil well clean-up and oilsands reclamation? For Suncor's pencils and paper? No doubt Mr. Pourbaix could use a new private jet. No problem.
Messrs. Fawcett, Wilkinson, and Trudeau can hardly argue against corporate welfare now. They have already surrendered on the principle.

Privatize the profits, socialize the costs. The fossil fuel industry's business model.

Fawcett fails to mention that the O&G industry is also reaching into Albertans pockets. Premier Kenney has already offered up an offset in royalties:

"'We will be making a very important fiscal commitment on top of the federal tax credit by providing for an offset in royalties payable by the oilsands companies for their capital costs associated with CCUS.'
"'If they put billions of dollars into . . . CCUS, that would be discounted from their royalty payments to the Alberta government in future years.' …
"'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-ant...

More tax dollars forthcoming. More public dollars for private profits. More like Cenovus is going to help taxpayers fund CCUS than the other way around.

Cenovus CEO Pourbaix is worried that sky-high oil prices might not last forever. Which is why sensible people put aside $$$ for rainy days. Instead, Big Oil is filling shareholders pockets with windfall profits while fleecing taxpayers.
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"net-zero emissions for all of the oilsands companies"
False advertising. Full decarbonization of the oilsands is not realistic. Carbon capture is viable only for concentrated emissions streams. And, of course, this goal overlooks the 80-90% of emissions from a barrel of oil that occur downstream at the consumer end. So-called Scope 3 emissions also include emissions from industry supply chains — again, not captured by the O&G industry.
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Subsidizing carbon capture, clean-up and reclamation, and buying pipelines — costing taxpayers hundreds of billions of dollars — undermines carbon pricing.
Carbon pricing is supposed to make fossil fuel production more expensive and less profitable. All these fossil-fuel subsidies make fossil fuel production less expensive and more profitable.
Subsidies for carbon capture to reduce O&G industry emissions violate the polluter-pay principle. Huge opportunity costs.
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Fawcett: "Is it time for the taxpayer to get a bigger piece of the action?"
No. It's time for taxpayers to put their foot down and say no to corporate welfare for largely foreign-owned fossil fuel companies reporting record profits. Government needs to get out of the oil business. Put a realistic price on carbon, and let fossil fuel producers and consumers forge their own path.
And it's time for a new energy & climate columnist at The National Observer. I can read all the oil industry propaganda I want on Postmedia, thank you.

"... it's time for a new energy & climate columnist at The National Observer. I can read all the oil industry propaganda I want on Postmedia, thank you." - Geoffrey Pounder
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I'm inclined to agree. There isn't a shred -- not even a nanometre -- of scientific or economic literacy in Fawcett's piece. CCUS, blue hydrogen and the public funding of private fossil enterprise are not topics that will remain unharassed on this site.

It won't matter a day's skimmings off the smallest oil sands tailing pond what these so-called investments in CCUS will result in as we exceed the 'last stop' benchmark of 450 parts per million atmospheric CO2* and the Athabasca glacier, which is the source for most of the water used in the oil sands, melts and the rivers it feeds dry to a trickle in the height of summer in 40 years. The laws of physics have a tendency to deflate false economic promises about energy, something Fawcett should pay attention to. He could start with a review of the latest IPCC report, and move on to the latest glaciological studies in BC and Alberta, maybe even do a piece on planning for Alberta agriculture and urban development in the face of very low Prairie river flows.

* Recommended reading: 'Storms of My Grandchildren' by notable climate scientist James Hansen.

From an economic perspective Fawcett ignores the following facts:

(i) What goes up must come down. Didn't Alberta just come out of a recession caused by low world oil prices? The latest spikes were caused by the pandemic-induced slowdowns being incrementally reversed and the invasion of Ukraine by Russia, a major oil supplier. Spike-trough, boom-bust -- this worn out cycle causes societal vertigo. The higher the price, the lower the demand, especially when alternatives appear. Supply & demand -- who would've thought that's got anything to do with Alberta oil, Max? To believe it isn't so is like believing the TMX hype that the pipe will actually be profitable after blowing through nearly 25 big ones with no credible Asian contracts paying premium prices. Ironically, spiking the price of oil may be an effective way to lower emissions as so many people pump up, so to speak, the demand for EVs and moving to a location where walking to work is possible. The vast supply of gas tanks on the roads is the only thing backing Fawcett's conjecture today. Theoretically, all that will start to erode en masse by mid-decade as car makers really crank up the production of EVs. Even if transit investments and walkable city zoning nibble away at EV sales, the fact remains that combustion in private transport is heading out the door and is destined to take with it a very large chunk of Alberta's oil economy.

(ii) The state owning a piece of the action in public resources ... well, that ship sailed decades ago with the sale of Petro Canada to Gulf Oil (now Suncor). The short-sightedness of Alberta's conservative minded leadership and their partners in wilful ignorance in Ottawa, blocks any outright state ownership of public natural resources in the form of competitive public corporations (hydro power being the great exception). Alberta chose to sell itself to the private oil industry instead, lock, stock and public policy barrel. Otherwise, we get ... s-o-c-i-a-l-i-s-m! (Cue the shuddering and trembling.)

(iii) Renewables, through very competitive pricing, increasingly efficacious infrastructure, massive existing investments with huge growth potential, and the oncoming technological breakthroughs in things like batteries, has the potential to do serious damage to fossil fuel demand, especially when enlightened governments sweeten the pot for consumers and producers of renewables with things like grants and credits for home energy retrofits, public transit, rejigged zoning bylaws to inspire diversity in urbanism away from mass car dependency, and direct subsidies / tax breaks for wind and solar operations. THAT is where public investment should be directed.