Oilsands executives insist they are all about reducing emissions and will make big investments in green technology, but they maintain there is nowhere yet to invest that money.
Many companies are having a year of windfall profits not because they produced more product, but because the war in Ukraine and crises in the global supply chain have driven up global oil prices.
Environment Minister Steven Guilbeault has said many times over the past year that companies need to prove their commitment by investing some of that hard cash in climate initiatives.
But in an interview with The Canadian Press, Cenovus CEO Alex Pourbaix said the companies are acting “as aggressively as (they) can.”
“We are not yet at the point where we can invest billions in these projects,” Pourbaix said.
Cenovus is one of six oil sands companies in the Pathways Alliance, a consortium created to work together to fully decarbonize their production by 2050. The companies plan to spend $24 billion by 2030 to reduce emissions , two-thirds of which for carbon capture and storage systems.
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However, who will pay for these investments is a point of contention.
So far, the consortium has spent half a billion dollars on Phase 1 of these projects, according to alliance president Kendall Dilling.
The industry hopes to see the federal government do more to match the funding offered by the US government to encourage clean energy development in this country.
The Liberal government argued that it had already created incentives for industry, including an investment tax credit for carbon capture and storage projects, and that now was the time for the acting industry.
“If they’re not making these investments when they’re making record profits, then when would be a good time for them to make these investments?” Guilbeault said in an interview last September.
“If not now, then I don’t know when.”
Oil and gas companies have posted record profits over the past two years thanks to soaring energy prices. At a time when inflation has been at high levels for decades, corporate profit growth has come under scrutiny, with some calling for windfall taxes to capture excess profits.
In a new report from the Canadian Center for Policy Alternatives, senior economist David Macdonald found that for every dollar Canadians spent on rising prices over the past two years, 25 cents went to oil sector profits. and gas.
However, Pourbaix rejected the idea that the industry should contribute more to government coffers.
“I think we’re already contributing significantly,” he said, estimating the industry will pay between $10 billion and $12 billion in federal taxes this year.
Pourbaix said countries that have opted for windfall taxes on the oil and gas sector have much less progressive tax systems than Canada.
However, Andrew Leach, an economics professor at the University of Alberta, said it’s difficult to make comparisons between countries because in Canada the industry pays both royalties and taxes.
And while there is much debate about the appropriateness of windfall taxes, the federal government and some experts are concerned that industry is choosing not to invest those profits in carbon capture projects that would help decarbonize the oil sands.
“I would worry that their strategy here is, ‘We can get Canadians excited about this and that will get the federal government to put more money in to cover some of the investment costs,'” Leach said.
He warned that this strategy could backfire as Canadians watch the industry rake in record profits and send cash back to shareholders.
“If Canadian started asking, ‘Well, if the owners of the oil sands companies aren’t willing to make this bet, why should we?’ so I think it becomes problematic for them.
Pourbaix said the expenses will come in the later phases of these projects and in the meantime, shareholders need to be rewarded.
Many Canadian oil and gas giants have chosen to do this through corporate share buybacks.
This prompted the federal government to introduce a 2% stock buyback tax to incentivize companies to reinvest profits rather than reward shareholders.
But some advocates want to see the federal government go further.
Keith Stewart, senior energy strategist at Greenpeace Canada, said the fact the industry won’t put money behind its climate change rhetoric is a good reason to introduce a windfall tax.
“They are still waiting for the government to come and pay them,” he said.
© 2023 The Canadian Press