The oil industry has been slow to invest in decarbonisation despite the profits

Many companies are coming off a year with higher profits, not because they produced more, but because the war in Ukraine and crises in the global supply chain have pushed up global oil prices.

Environment Minister Steven Guilbeault has repeatedly said over the past year that companies should demonstrate their commitment by investing some of this money in climate initiatives. But in an interview with The Canadian Press, Cenovus CEO Alex Pourbaix said companies are also taking action. as aggressive as they can.

We are not yet at the point where we can invest billions in these projectsargued Mr. Pourbaix.

Cenovus is one of six oil sands companies in the Pathways Alliance, a consortium formed to work together to fully decarbonize production by 2050. Companies plan to spend $24 billion by 2030 to reduce emissions, including two-thirds for carbon capture and storage systems. .

But who will pay for these investments is a matter of dispute.

According to Kendall Dilling, president of the alliance, so far the consortium has spent half a billion dollars on the 1st phase of these projects.

The industry hopes the federal government will do more to match funding offered by the U.S. government to encourage the development of clean energy in this country.

The Liberal government has argued that it has already created incentives for industry, including an investment tax credit for carbon capture and storage projects, and now is the time for industry to step up its efforts.

If they are not making these investments when they are making record profits, when is the right time to make them? raised Mr. Guilbeault in an interview last September. If not now, I don’t know when.

Oil and gas companies have enjoyed record profits over the past two years thanks to rising energy prices. With decades of high inflation, corporate profit growth has come under scrutiny, with some calling for windfall taxes to absorb excess profits.

An unexpected tax dispute

A new report by the Canadian Center for Policy Alternatives found that for every dollar Canadians spent on price increases over the past two years, $0.25 went to government profits and the oil and gas sector.

However, Mr Pourbaix dismissed the idea that the industry should contribute more to the state coffers.

I think we are already contributing significantly, he said, estimating the industry will pay $10 billion to $12 billion in federal taxes this year.

Mr. Pourbaix noted that countries favoring windfall taxes in the oil and gas sector tend to have less progressive tax systems than Canada.

Andrew Leach, a professor of economics at the University of Calgary, noted that it is difficult to make comparisons between countries because the industry in Canada pays both royalties and taxes.

And while there is much debate about the merits of windfall taxes, the federal government and some experts worry that the industry is choosing not to invest those profits in carbon capture projects that would help decarbonize the oil sands.

Mr. Leach said he was concerned the industry’s strategy would create some excitement among Canadians, which would prompt the federal government to put in more funds to cover some of the investment costs.

He warned that the strategy could backfire as Canadians watch the industry post record profits and send money back to shareholders.

: ”Si les propriétaires des entreprises de sables bitumineux ne sont pas prêts à faire ce pari, pourquoi le devrions-nous?”Je pense que cela deviendrait problématique pour eux.”,”text”:”Si les Canadiens commençaient à se demander : ”Si les propriétaires des entreprises de sables bitumineux ne sont pas prêts à faire ce pari, pourquoi le devrions-nous?”Je pense que cela deviendrait problématique pour eux.”}}”>If Canadians start asking themselves, “If the owners of the oil sands companies don’t want to make this bet, why should we?” I think that could be a problem for them.

Mr. Pourbaix said that the costs will be realized in the later stages of these projects and the importance of rewarding the shareholders in the meantime.

Many Canadian oil and gas giants have chosen to do this through corporate share buybacks.

This prompted the federal government to impose a 2% share buyback tax to encourage companies to reinvest profits rather than reward shareholders.

But some conservationists want the federal government to go further.

Keith Stewart, chief energy strategist at Greenpeace Canada, said the fact that the industry won’t put money behind 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 declared.

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