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Oilsands companies want Pierre Poilievre to save them

Oilsands companies keep saying they can't reduce their emissions because of "uncertainty" around carbon capture and storage investments. Guess who's causing it? Photo by kris krüg / Flickr (CC BY-NC-ND 2.0 DEED)

It’s been nearly two years since the Pathways Alliance, a consortium of Canada’s major oilsands companies, was created with the express purpose of achieving “net zero by 2050.” At least, that’s what it keeps saying its purpose is. With each passing day, it gets harder to avoid the conclusion that the real objective is to buy time with advertising campaigns and other public expressions of its good intentions until the next federal election. If that yields a new Conservative government that can relieve the industry of its responsibilities to the environment, the millions fossil fuel firms have spent on advertising and government relations consultants will yield billions in savings on the emissions they won’t have to reduce — or pay for.

That’s the cynical take, anyway. The less cynical one is that the companies want to proceed with these projects but are unwilling to call out the real impediment standing in their way: Pierre Poilievre’s Conservative Party of Canada. For all of the industry’s talk about “uncertainty” in federal policies around climate change and carbon pricing, the biggest source of uncertainty right now is coming from Poilievre and his promise to “axe the tax.” The threat of a future Poilievre government eliminating the federal carbon tax means oilsands companies can’t bake a rising price on carbon into their economic modelling, which makes emissions reduction efforts increasingly valuable. It’s why they keep asking for something called “carbon contracts for difference,” a financial instrument that will effectively lock in a rising price on carbon even if a future government cancels it.

They need Pierre Poilievre insurance, in other words, not that they’d ever say that out loud. Take Cenovus Energy, one of the biggest oilsands companies in Canada. Its CEO, Jon McKenzie, told investors on a recent earnings call that it won’t hit its own stated emissions reductions targets for 2030 without immediate progress on major carbon capture and storage projects. “There’s no doubt that to reach the 2030 targets of what’s doable, we need to move on that today… But we can’t move on those targets until we get the certainty from the levels of government that we’re currently negotiating with that allow for certainty and investment in these kinds of projects.”

Rhona DelFrari, Cenovus’s chief sustainability officer, echoed that talking point this week. “We’re also dealing in Canada with significant policy uncertainty right now,” she told the Calgary Herald’s Chris Varcoe. “The result is a lack of clarity that companies need to make long-term, multi-decade, multibillion-dollar decarbonization investment decisions.”

And yet, despite many billions in federal incentives and the promise of a rising price on carbon, those decisions are still not being made. There are really only two possible explanations: the industry doesn’t want to risk making them or it doesn’t think it will have to if it waits long enough. Neither is nearly close to good enough.

The oilsands industry keeps saying it can't proceed with carbon capture and storage projects because of "political uncertainty." What its leaders won't say is the name of the politician who's actually creating it: Pierre Poilievre.

The federal government isn’t the problem here, as much as industry representatives want to pretend otherwise. It’s been extremely transparent about its intentions, whether that’s financial support for carbon capture and storage projects or the creation of an emissions cap on the oil and gas sector. Bill C-59, the legislation enabling Ottawa’s multibillion-dollar carbon capture and credit incentives, has already been tabled in the House of Commons and is in the midst of committee review in the Senate. And while the Trudeau team made the political decision to carve out carbon tax exemptions for home heating oil, no such relief will be forthcoming for Canada’s largest industrial emitters.

Federal Natural Resources Minister Jonathan Wilkinson is clearly getting annoyed with the oil and gas industry’s ongoing filibuster and its obvious impact on Canada’s decarbonization efforts. “It is now time for the industry to start to show actual progress on the ground,” he said last month in an interview with the Calgary Herald. His press secretary, Carolyn Svonkin, reiterated that message earlier this week. “He is getting more frustrated as they continue to drag their heels, despite the federal government delivering on everything that is promised.”

But Canadians should be just as frustrated here. This is, after all, an industry with a track record of not living up to its lofty promises. The management framework for conventional oil and gas liabilities that the Alberta government announced in 2020 included a promised annual spending quota for cleanup work, one that would begin at $700 million in 2023 and rise to $992 million by 2027. Alas, despite two years of record profits, this talk proved to be predictably cheap. As University of Calgary professors Martin Olszynski and Sara Hastings-Simon noted in a recent op-ed, “The unsurprising result is that this year’s spending didn’t increase, while the forecast increases for subsequent years have all mysteriously vanished. Meanwhile, the liability crisis remains essentially unchanged.”

The playbook, then, seems pretty obvious. Stall for time, make big promises and continue with business as usual for as long as humanly possible. If and when the bill finally comes due, someone other than the current generation of corporate executives and shareholders will have to pay it. For an industry that likes to talk about how ethical its operations are, this is a very bad look — one that will only get worse with the passage of time. If only they cared as much about things like that.

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