CALGARY — Janetta McKenzie, director of the Pembina Institute’s oil and gas program, made the following statement in response to the President of CNRL’s reported comments that oilsands companies “should not be subject to carbon compliance costs when we are, in fact, sequestering those CO2 emissions […] In order for the oil sands to be competitive, the carbon cost should not apply to projects that have CCS”:
“Without a functioning industrial carbon pricing system, the prospect of CCS being built is extremely limited – in the oilsands, or indeed, in any sector. On face value, this statement therefore seems to misconstrue the way the system works.
“Industrial carbon pricing is based on a straightforward principle. Companies that reduce their emissions avoid the carbon price – in fact this is the point of the system. In addition, installing technologies like CCS can actually result in emissions being reduced below a facility’s allowance, thereby generating carbon credits that can be sold to higher-polluting facilities. This has two effects: it means emissions across the sector decrease at an appropriate rate, and it also incentivizes companies to invest in decarbonization technology, with the knowledge that they will be able to offset the cost of CCS investment with the guarantee of credits that they can sell in future.
“A common refrain from industry and pundits is that, unlike oil and gas pulled from the ground, carbon capture generates no saleable ‘product,’ and therefore investment in CCS – which can run into the billions of dollars – lacks a reasonable business case. Alberta’s industrial carbon pricing system is designed to do away with that concern by putting a value on captured carbon in the form of credits, but only if credit values are strong and predictable. This is why it remains imperative that, by April 1, we see an agreement between Alberta and Ottawa that upholds their MOU promise to ramp the minimum effective credit price up to $130 per tonne. This must happen by 2030, if projects like the long-awaited Pathways CCS are to be built in a reasonable timeframe.
“Aside from anything else, the vital need for strong industrial pricing is evidenced by the fact that, in the absence of effective regulation, oilsands emissions have only ever increased – now by over 150% since 2005.
“It’s odd to publicly pause a major investment due to carbon pricing and methane policy uncertainty, when clarity on those very topics is expected in less than a month. The ongoing negotiations between Alberta and the federal government include a table with oilsands producers, with the goal of reaching a formal trilateral deal. These topics can and should be addressed in these negotiations.”
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Contact
Benjamin Alldritt
Senior Communications Lead, Pembina Institute
587-328-1955
Background
Op-ed: MOU negotiations will hinge on whether Alberta comes to the table in good faith
Op-ed: Four crucial outcomes Canadians need from the Alberta-Ottawa MOU talks
