Varcoe: Canada’s oilsands producers losing patience with feds on CCUS

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Canada’s pure sources minister is rising weary of ready for the oilsands sector to start out constructing one of many world’s largest carbon seize networks.

However emotions of frustration are additionally rising on the opposite aspect.

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One of many nation’s largest oilsands producers mentioned Tuesday it’s nonetheless not seeing sufficient readability round promised federal incentives for the Pathways Alliance group to start out constructing its $16.5-billion carbon seize and storage community in northern Alberta.

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The proposed growth is a foundational a part of the sector’s plan to realize net-zero emissions by 2050.

An govt with Cenovus Power, one of many members of the alliance of oilsands producers, mentioned that coverage certainty can be being affected by a collection of federal initiatives, such because the incoming emissions cap on the Canadian oil and gasoline sector.

“These large initiatives take plenty of thought they usually take plenty of time. That’s why I do get a bit pissed off after I hear some politicians and others publicly state that we should always have already got shovels within the floor for the Pathways CCS undertaking,” mentioned Cenovus Power’s chief sustainability officer Rhona DelFrari.

“With what we all know immediately . . . the federal government funding partnerships in Canada aren’t sufficient for large-scale CCS to proceed within the oilsands.”

The remarks had been made on the firm’s investor day in Toronto, lower than every week after leaders with the Pathways Alliance met nearly with federal Pure Assets Minister Jonathan Wilkinson.

The back-and-forth volley between the Trudeau authorities and the sector is centred on the group’s large carbon seize, utilization and storage (CCUS) undertaking, and the extent of federal incentives which are required to see it proceed.

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The proposed growth might finally join greater than 20 oilsands services in Alberta by way of a CO2 pipeline to an underground storage hub close to Chilly Lake.

A last funding resolution hasn’t been made, though planning work continues.

The Pathways Alliance contains Cenovus, Suncor Power, Imperial Oil, MEG Power, Canadian Pure Assets and ConocoPhillips Canada.

DelFrari famous vital engineering, environmental fieldwork and session with Indigenous communities have already been accomplished in preparation for “imminent regulatory purposes.”

Nonetheless, there’s a “lack of readability” across the draft laws surrounding the federal funding tax credit score for carbon seize initiatives — anticipated to cowl as much as 50 per cent of capital prices for tools on such developments — that will forestall corporations from accessing its full worth, she mentioned.

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The businesses additionally want to grasp how guarantees of federal carbon contracts for distinction will work. Such agreements are supposed to offer long-term certainty to producers on the longer term nationwide worth of carbon, which is slated to go as much as $170 a tonne by 2030.

DelFrari mentioned Canada is adopting a posh “stick-based method with some carrots thrown in,” not like the USA, which has a simple incentive for CCUS initiatives based mostly on every tonne of saved CO2.

“To start with, we are able to’t begin development of the CO2 pipeline or sequestration hub with out regulatory approval, and that course of, as I discussed, continues to be underway,” she mentioned.

“With out aggressive fiscal incentives, our nation dangers being neglected as large-scale emissions discount investments are developed and deployed elsewhere the place they get one of the best returns.

“We’re additionally dealing in Canada with vital coverage uncertainty proper now . . . The result’s a scarcity of readability that corporations must make long-term, multi-decade, multibillion-dollar decarbonization funding selections.”

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The blunt discuss comes after Wilkinson publicly chastised the oilsands group in an interview final month with the Calgary Herald.

The pure sources minister referred to as out the oilsands group, saying it wanted “to begin to present precise progress on the bottom” and never merely run a public relations marketing campaign about its proposed decarbonization plans.

On Tuesday, the pure sources minister’s press secretary mentioned Wilkinson delivered the identical message to the oilsands group final week, and the alliance members know the required particulars of the federal funding tax credit score, which has not but been formally handed.

“He’s getting extra pissed off as they proceed to tug their heels, regardless of the federal authorities delivering on all the pieces that’s promised,” mentioned Carolyn Svonkin.

“To ensure that talks to stay extra productive, they should do extra of their homework.”

Discussions proceed between the oilsands trade and the federal and Alberta governments. The provincial authorities has beforehand pledged to offer a 12 per cent grant on eligible capital prices for CCUS initiatives.

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“We want the federal authorities to do its half and step up with helps for capital and working prices,” Alberta Power Minister Brian Jean mentioned Tuesday in an announcement.

With the oilpatch the most important emitting sector within the nation, and the federal authorities needing to see progress from all sectors to achieve its 2030 and 2050 local weather targets, each side might want to strike a deal briefly order.

Nonetheless, till they’re all are on board, anticipate the testy negotiations to proceed, each in non-public and in public.

“These CCUS initiatives are completely large undertakings, by way of logistics and prices. They’re additionally completely going to be wanted,” mentioned Marla Orenstein, director of the Pure Assets Centre on the Canada West Basis.

“Whereas there was plenty of goodwill on each these sides . . . when it comes all the way down to the precise particulars of implementation, the cracks begin to present.”

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@postmedia.com

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