For years now, the oil and gas industry has tried to push back against the well-documented suggestion its operations are subsidized by the public. But now, it seems, it’s trying a different strategy: begging for the biggest subsidies imaginable when it comes to carbon capture and storage technology.
In what looks like a co-ordinated campaign, the CEOs of Canada’s large oilsands companies have come out strongly in favour of federal support for investments in CCS projects. And while they haven’t been openly confrontational — Cenovus CEO Alex Pourbaix suggested Ottawa should “keep an open mind” about the idea — there’s an implicit threat looming just behind the gentler facade of their request: either the government gives them billions of dollars for carbon capture technology or it can forget about meeting its climate targets.
Jason Kenney, Alberta’s unofficial threatener-in-chief, clearly spelled it out at a recent press conference. “If the federal government wants to set these ambitious targets, the very first thing they need to do is support us with a $32-billion investment in carbon capture, utilization and storage.” And in a more recent tweet about Cenovus’s plan to invest in carbon capture technology, he suggested: “Alberta is ready. Where is Ottawa?”
Kenney is about the worst possible salesperson you could find when it comes to asking the Trudeau government for money. But despite his predictable truculence, the federal government is exploring the possibility of creating a tax credit similar to one in the United States that would encourage the development of large-scale carbon capture technology. Previous attempts to capture carbon have been more expensive science projects than cost-effective ways to reduce carbon dioxide emissions, but there’s an opportunity to thread an important needle here — one that Ottawa seems willing to at least entertain.
That opportunity doesn’t look anything like Kenney or the oilsands CEOs seem to think, though.
Carbon capture technology can’t be used as a licence to continue with business as usual, which means projects intended to enhance oil production — one of the industry’s priorities — should be off the table. Instead, any federal investment in carbon capture technology should be made with an eye towards using it as a pathway to a new business model, one in which carbon is a cost that’s attacked as aggressively as any other.
But here’s the good news for Kenney and the oil and gas industry, even though they don’t see it that way: there’s already an incentive in place for Alberta’s oil and gas companies to invest in carbon capture technology. It’s called the federal carbon tax, and as it rises towards the $170-per-tonne target by the end of the decade it will make the economics on carbon capture better with each passing year.
"If we look at the goals for 2030 and the carbon price, there is definitely a moment in the next decade when the economics work," Alison Cretney, managing director of the Energy Futures Lab, a non-profit research group, told Reuters earlier this year.
If Kenney wants to turbocharge those economics even more and attract more low-carbon capital to his province, he can restore the tax on large carbon polluters that the Alberta NDP implemented back in 2018. Under the NDP’s Carbon Competitiveness Incentive Regulation (CCIR), oilsands facilities were benchmarked against each other, which meant the best-performing ones received credits and the biggest polluters paid the biggest price. In the process, it created a race to the top — one where the best-performing facilities were encouraged to get even better, while the worst ones were penalized for lagging so far behind.
But when the UCP formed government and introduced the watered-down Technology Innovation and Emissions Reduction Regulation (TIER), it reversed that incentive structure — especially for new projects.
“TIER makes emissions-reducing innovation less advantageous than it would be under CCIR, since the better performing your new facility is, the lower your emissions credits will be every year for as long as the policy remains in place,” University of Alberta professor and Climate Change Advisory Panel chair Andrew Leach wrote in 2019. “The signal is backwards.”
According to Leach, that shift from CCIR to TIER represents a transfer of “hundreds of millions of dollars per year” to the highest-emitting facilities in the province, thereby reducing the value of the kind of innovative technology the oil and gas industry says it wants to create. If Kenney wants to stimulate a genuine boom in the energy sector, one that will create new jobs and investment rather than simply filling the coffers of oil companies and the provincial treasury, he should reverse that shift and restore the CCIR.
But that would require him to acknowledge both the logic of carbon taxes and the good work the NDP government did in using it to drive innovation.
So, when the federal government inevitably refuses his demand for a blank cheque worth more than $30 billion, we’ll get the usual mixture of victimhood and grievance-mongering instead. If only there was a way to capture and store all of that under the ground somewhere.
Comments
Big oil companies raking in billions of dollars in profit neither need nor deserve our tax dollars for clean-up, reclamation, and emissions control. Standard costs of doing business. Polluter-pay.
Subsidies for CCS, clean-up, and reclamation violate the polluter-pay principle.
Privatize the profits, socialize the costs. The fossil fuel industry's business model.
Subsidies for CCS also undermine carbon pricing.
Carbon pricing is intended to make it more expensive to emit carbon.
CCS subsidies offset companies higher carbon costs, blunting the financial incentive.
Ideally, govts would set an increasing carbon price and let the market determine its own response. A few companies might invest in carbon capture; others might shift away from fossil fuels altogether.
If CCS is effective, efficient, and economic (it isn't), industry can pay for it.
CCS is a plan to fail at taxpayers' expense.
Net-zero upstream emissions targets are greenwashing. Capturing upstream emissions does not capture downstream (Scope 3) emissions at the consumer (combustion) end, which accounts for at least 80% of emissions from a barrel of oil. CCS does not address or capture other air pollutants.
Even if producers reduce upstream emissions to zero, this does nothing to offset or reduce downstream (tailpipe) emissions at the consumer end. The oil industry has no way to decarbonize the downstream combustion of fossil fuels, where at least 80% of the emissions from a barrel of oil occur.
If consumers are still burning gasoline, diesel, and natural gas in their car engines and home furnaces, net-zero production does not solve our emissions problem.
A plan to fail.
Carbon capture and storage (CCS) is non-economic. The two projects now online in AB required govt subsidy to the tune of hundreds of millions of dollars to capture a tiny amount of emissions — and only from large emitters.
Alberta's two CCS projects depended on hundreds of millions of dollars in subsidies to capture a small volume of emissions from large emitters. CCS is one of the most expensive and least efficient methods to reduce emissions. Enormous opportunity costs. Carbon capture does not capture other air pollutants, either. Globally, CCS projects stored 29 Mt of carbon in 2018. On the order of emissions from New Brunswick and Nova Scotia. A delay tactic to keep the oil & gas industry on life support for decades.
Carbon capture is greenwashing to perpetuate fossil fuels. CCS means fossil fuels for longer. CCS keeps us dependent on fossil fuels — not a transformative solution.
We may need CCS for hard-to-decarbonize processes like steel and cement. If carbon capture is used to extend the lifetime of the fossil fuel industry, the result will be more emissions, not less.
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Energy ecologist Vaclav Smil: "Mark my words, there’ll be no massive sequestration of carbon. There hasn’t been any, and there’ll not be any next year, or 2025, or 2030.
…The scale. We now make about 37 billion tons of CO2. 10% of that is 3.7 billion tons. Say 4 billion tons of C02, just to control 10% of the problem. This is almost exactly the amount of crude oil we produce. It took us 100-plus years to develop an industry, which is taking 4 billion tons out of the ground and with the gradient, and then taking it up and refining and using it. Now we would have to develop a new industry, which would take 4 billion tons, and store it, push it against the gradient into the ground, and guarantee that it will stay there forever. Something like this cannot be done in 5, or 10, or 15 years. And this is 10%. So, simply on the matter of scale, carbon sequestration is just simply dead on arrival."
"Vaclav Smil: We Must Leave Growth Behind" (Intelligencer – New York Magazine)
https://nymag.com/intelligencer/2019/09/vaclav-smil-on-the-need-to-aban…
Does anyone believe Kenney and the oilpatch are sincere about reducing carbon? The AB Govt reduces the already-too-low carbon costs for the highest emitting oilsands facilities.
"Top-emitting Alberta oilsands site got government relief from pollution payments, Reuters reports"
https://www.cbc.ca/news/canada/calgary/top-emitting-canada-oilsands-sit…
CCS is a scam. Shame on the federal Liberals for supporting it.
And shame on anyone for supporting the Liberals' plan to fail. Max Fawcett?
Great article, thanks. My takeaway is that we're dying out already but too many people remain self-centred, immature, stubbornly blinkered idiots. The German autobahn is an apt metaphor for the profound irrationality, but of men in particular, speaking as it does to their incipient self-destructiveness and avid competitiveness. Our entire economy and society spring from this, and although it has accomplished amazing things for all of us, the brakes now need to be applied. Ha.
I watch all the posturing of men in political power, and the constant hectoring of those aspiring to that, and am reminded of an Olympic sport, Japanese, can't remember the name of it, where the two guys hilariously jumped in a circle around each other in delicious anticipation, and when one actually struck the other with a kick usually, they both screamed orgasmically. I see this as another metaphor of how those kind of men naturally want to fight and win, and have succeded in essentially ruling the world, in various ways, but those literally otherworldly egos, (which is how women see it btw), insatiable as they are, have now reached their limits too.
So personally, the only hope I see for real change is in giving women much more power because it's only fair and because they've always been better at the big picture, which is what's desperately needed now. And whatever Trudeau's many failings, I think he is honestly paving the way for Chrystia Freeland for example. Her general kindergarten teacher demeanor may rouse the legions of misogynists out there, as Rachel Notley and the NDP did, preventing her, but it's starting to look like we're all going to need a mother going forward....if we'd labelled our all-important environment FATHER Nature from the beginning? But wait, that's the "God" idea isn't it....ok, so forget that. What we need is a sea change, or a "she" change.
I agree 100% that CCS is a sham, but I didn't get the sense that the feds are supporting it, at least not outright. I did note that the federal carbon tax will eventually rise to $170 / tonne, too slow in my view, but a significant decarbonization influencer, nonetheless. I note that this time, Max Fawcett did not trot out the other scam that he supported in previous articles: blue hydrogen.
I think Trudeau / Libs got the message that they cannot go any further up the pro-carbon path without consequences, now counted as two minority governments in a row. The onus is not just on the Libs, who cannot be trusted, but also weighs heavily on the party that holds the balance of power -- the federal NDP -- to get national policy in line with adequate climate action. To date, the only climate legacy Trudeau has is lofty rhetoric followed by both weak action (no National Climate Plan, no Transition Plan, no universal support beyond limited spot grants) on actual clean energy projects or a national clean power grid, and outright contradiction (TMX), with the carbon tax being the only exception.
If Chrystia Freeland understands this, then all the more power to her to change it. But if she continues to be the same old two-faced Liberal Party politician on climate and placing donors over the public good, then that presents a quandary on who to vote for to keep the barbarians (Conservatives) out of office. The NDP? Sure, but please guarantee they will receive enough votes to actually attain power and do good things, learn that holding power is different than opposing it, and to also convince their hard-nosed industrial union supporters to support clean energy projects over filthy energy projects. The Greens? Surely that's a joke given the fact they are blind to the outside world while they devour themselves from the inside.
Our job is not just to hammer away on the flaws of politicians, but to also hammer away on the over-consumption running rampant in the society around us, notably to chip away at the demand for fossil fuels. Note that the price of oil is rising, as is the tax and royalty revenue flowing to government coffers. But also take note that there is a price ceiling consumers are not willing to puncture, mainly because they can't afford to. Those who try are many, and they have created one of the largest sets of consumer debt in history. High fossil energy prices cause recessions in producing jurisdictions as demand falls. Anyone who buys a big fossil burning vehicle today is crazy. Any family that moves to the cheaper exurbs and suddenly realizes half their waking hours will be spent commuting on the freeways in multiple cars (and working extra hours to pay for them) clearly hasn't done the math, whether financially or in placing a value on their precious time.
We need to continue urging senior governments to develop a detailed climate mitigation plan, but also to take action on adaptation to the effects of extreme weather events. We need to vocally and electorally support sustainable urbanism, the Missing Middle in housing, multi-use zoning that fosters walkable neighbourhoods, transit -- lots and lots of transit, improved building codes for energy conservation, and the full-scale electrification of the domestic economy. Fight CCS and the oil sands all you want, but the most effective way to defeat them is to promote the substitution of demand for their products at home and abroad with demand for carbon-free alternatives.
Govt policy shapes the world we live in. Govt and industry determine the menu options we can choose from.
Hard for citizens to thwart Big Oil's agenda when govts throw billions of dollars at the industry to keep it on life support.
Betrayal has a face:
1) New federal minister Jonathan Wilkinson.
https://www.cbc.ca/listen/cbc-podcasts/407-west-of-centre/episode/15879…
2) Cenovus CEO Alex Pourbaix -- the direction of the oil and gas industry and the future of energy in Canada.
https://www.cbc.ca/listen/cbc-podcasts/407-west-of-centre/episode/15875…
Wilkinson and Pourbaix have much to say about taxpayer support for CCS.
Agreed on all points, but .. a few disorganized thoughts follow :) ..
on transportation think there is an opportunity for public investment to shift the paradigm on cars and roads to help us solve three problems - reduce consumption, reduce emissions and address transport-network climate mitigation, but we need to think big as the public purse is not bottomless and we don't have a lot of time.
Simply put, we need to be bold and come up with something better: three overly simplistic thoughts - build a new publlcly owned weather-bombproof network of electric trains, build publicly owned telecommuting infrastructure, and force vehicle manufacturers to bumper-to-bumper warranty all new cars for 20 years.
The main goals here -
1. Evolve past conventional roads and transportation paradigms by building something (or some things) better - focus our collective brainpower on that - the result that roads become the least convenient, least safe and most expensive option for commuting, and
2. Force manufacturers to prioritize keeping a car on the road for twenty years, this would mean that obsolescence engineering targets would need to triple in a lot of cases, it would also mean that vehicle modules and components would need to be made fixable and upgradeable - especially if the manufacturers were both shouldering these costs and looking to differentiate their offerings from competitors, and
3. Build out publicly owned fibre-optic networks for telecommuting and use those same corridors for publicly owned high-speed, and weather-bombproof high-speed electric rail.
Of course roads cannot go away, we will need to continue to patch up our roads until this new network can supplant/eclipse them, but as climate destabilizes we don't want continue to be digging a deeper and deeper climate hole into which pour more and more public funds to prop up these increasingly fragile concrete altars to Henry Ford's one hundred and twelve year old creation.
Great comments on the right track, so to speak.
Some thoughts:
1. Urbanists (architects, planners, urban designers, engineers, landscape architects ...) have been espousing an answer for decades: Walkable communities. This means that one can walk or take a short non-automobile ride to work, school, offices, parks, recreation complexes, etc. This will require urbanizing the suburbs, which can be done gently using rail transit as a catalyst. Multiple use zoning is essential so that commercial isn't separated too far from residential.
2. Mandating long warrantees will no doubt be challenged in court by manufacturers and will add to the price tag of goods. It could be tried, but the consumer seems to always gravitate to the cheapest products and services. With a narrow focus on emissions it may be better to put public funds into lowering the demand for roads / cars / oil. See #1 + 3.
3. Totally agree. Clean power + communications + rail are all possible in a single corridor. Crossing provincial boundaries with a vital federal project "in the national interest" shouldn't pose many legal challenges by provinces (though some may try). Such challenges should be easily defeated using the strong precedence of the very quick Supreme Court of Canada decision confirming the federal government's jurisdiction and boundary-crossing rights of the Trans Mountain pipeline expansion project (Alberta >>> BC). Ironically, a carbon-saturated project with huge environmental risks, notably to marine ecosystems and the coastal economy, could pave the legal way for major zero emission projects at the national scale.
Just playing devil's advocate, here:
-- No amount of electric commuter trains will deal with the "rural situation."
-- One thing I noticed when we had a winter-time power outage lasting 2 weeks (more for some people, less for others), was that ppl with cell phones were left incommunicado, as the cell towers ran out of power.
Only those with old copper lines were able to maintain contact with the likes of 311, etc.
Those of us with water heaters that didn't rely on electricity avoided frozen and broken water pipes. Others, not so much.
For people in cities, public transport works -- for those who don't have disabilities precluding use.
But ppl in central and northern villages, particularly, but even some not that far from our southern border, include many poor people who can afford to drive an old beater, but couldn't with anything more expensive.
Somehow, those situations need to be part of the "fairness factor" in greening the economy.
One thing not touched upon is the "energy" companies (as oil and gas like to bill themselves" and large polluting companies using new ownership of sun and wind technologies to write down their "net" carbon production. It seems to me that net zero is as much of a farce as any of the other bogus greening measures.
The only way to get to net zero in the end, is to get to zero, period.
I'm well past sick and tired of "carrots" for the bad guys ... all the rest of us get sticks. Unless we're well enough off to make nice donations to political parties.
Frustrating that journalism about oil doesn't mention the amounts at stake. Alberta is now selling 85% more oil every day than in 2010. That's 3.84 million bbl/day. A $1 rise in the price of oil brings in another $1.4B per year. A $22 rise, brings in that $32B the industry wants - in a single year of additional profits.
The price of oil has gone up $22 since September. You do the math. No, wait, I already did.
CCS used in steel and cement plants may be on the outside edges of financially viability. But there may be an easier and less costly way to eliminate carbon using existing technology.
The feds should seriously consider inviting those companies who have already developed green steel to build in Canada, and guarantee their involvement in building out resilient infrastructure, such as new electrified rail lines, train sets and buses for new or expanded urban transit systems, pylon towers in a new trans-Canada clean electricity corridor and so on.
SSAB and H2 Green Steel are two Swedish companies that have conducted extensive R&D (with Swedish government subsidies) into steelmaking using green hydrogen instead of coal as the energy source and have reduced their carbon emissions by ~97%. Both are now entering the EU and US commercial markets with the first contracts awarded to Volvo and Mercedes Benz. As of October 2020 the EU had 22 green steel plants planned or underway. The Swedes are also currently entering the US market.
Canada preferred to build pipelines and claim that tax revenue from TMX and other filthy fossil projects will pay for green infrastructure. As if. They have yet to prove any of these statements. Meanwhile, an enlightened government would invite those organizations now blowing away the carbon rhetoric smog to set up shop in Canada, in essence, partnering with Sweden. Boston Metals (developed through MIT) uses pure electrolysis to melt iron ore and alloy metals and should be another candidate invited to set up Canadian branches with the pot sweetened by direct access to government-backed projects.
I've posted this link to a very knowledgable video site before, but it's worth posting again.
https://www.youtube.com/watch?v=bZdX5Hhk9r0
Is this too creative for the feds and provinces?
Is my cynicism showing if I call "hogwash" on CCS?
It has, to me anyway, the same stink as the technology for dealing with the tailings pond waste around Ft Mac: tomorrowland, as has been promised for about as long as they have been calling it the "oil sands" as opposed to "tar sands".
I grew up in Calgary and can remember a big exhibit one year (late 1960s) at the Calgary Stampede where you could hold a lump of tar sands stock. It felt like sand I had encountered on a beach where some sort of oil/diesel/crude had washed ashore. An orangey-brown colour with a slight sulphur smell. And it was the exhibitors who called it tar sands, whether speaking or in their printed material.
Carbon capture and sequestration has yet to be demonstrated in anything beyond a tabletop capacity. The long term viability, as in sequestering it indefinitely, is even shakier. All you have to do is look at the leakage of fracking liquids into groundwater and other places to be skeptical.
LOL! I grew up in Calgary at the same time -- nearly a quarter century. I distinctly remember the smell of hydrogen sulphide (sour gas) as we children lived and played in the southwest suburbs. I swear it only eliminated an infinitesimal number of our brain cells.
I visited relatives in Alberta around that time. The stench of H2S came out of every tap, and didn't go away with boiling it to make tea.
I felt really iffy about bathing in it, but I'd hitchhiked from the west coast, and it was really dusty around the oil fields. Indeed, one of my distant relatives habitually set the table with cutlery under inverted plates, and teacups and glasses were left in the china cabinet till just before serving.
I was invited to dinner, with my grandmother ... and tried to help out in the preparations by wiping all the dust off the table, chairs and windowsills. To no avail. By the time I'd got around the room (not a large one!), new dust had taken the place of what I'd wiped away.
And polished silver tarnished really, really quickly, as well. Our hostess had given up, and purchased stainless steel cutlery.
Sour gas is highly toxic. Just check.
Dear Minister Freeland: Thank you for continuing to serve Canadians as Deputy Prime Minister and Minister of Finance... Work with the Minister of Environment and Climate Change, and with the support of the Minister of Natural Resources, to accelerate our G20 commitment to eliminate fossil fuel subsidies from 2025 to 2023, develop a plan to phase out public financing of the fossil fuel sector, including by federal Crown corporations, and eliminate flow-through shares for oil, gas and coal projects.
This might well be a toothless proposition: they didn't undertake to eliminate subsidies, they undertook to eliminate new, "inefficient" subsidies.
They purportedly eliminated "inefficient" subsidies during Catherine McKenna's tenure.
Honest Government Ad -- Carbon Capture and Storage
https://www.youtube.com/watch?v=MSZgoFyuHC8
Priceless!
CCS: (Public) Cash Capture & Storage