Tim McKay is president of Canadian Natural Resources; Alex Pourbaix is president and CEO of Cenovus Energy; Bij Agarwal is president of ConocoPhillips Canada; Brad W. Corson is chairman, president and CEO of Imperial Oil; Derek Evans is president and CEO of MEG Energy; Mark Little is president and CEO of Suncor Energy.
Former U.S. Treasury Secretary Timothy Geithner, who led the American economy through the global financial crisis, often said “a plan beats no plan.” Today we need a plan to tackle one of the most pressing challenges of our time: climate change.
The Oil Sands Pathways to Net Zero Alliance, which comprises companies that operate 95 per cent of oil sands production, has announced a plan that will contribute significantly to meeting Canada’s 2030 Paris commitments and its 2050 net-zero goal.
The comprehensive Pathways Alliance plan calls for a reduction of 22 megatonnes of CO2 per year by 2030 out of its current annual emissions level of 68 megatonnes, with further reductions in order to reach the goal of net zero by 2050.
All the major oil sands competitors have agreed collectively to these goals and – most importantly – have already embarked on the collaborative efforts and major investments needed to achieve them. This collaboration is already recognized as globally unprecedented by leading industry experts, such as Daniel Yergin.
Achieving our 2030 goal will require close collaboration with both federal and provincial governments. Canada needs a regulatory process that allows us to build carbon capture, transportation, and sequestration infrastructure as soon as possible. Reaching the goal of net zero by 2050 requires new technologies – many of which are still in the development stage – that will enable the production of energy from hydrogen, biofuels, and small modular reactors and allow for the capture of carbon dioxide directly from the atmosphere.
To meet the ambitious 2030 target, more than 100 engineers and technical experts from Pathways Alliance companies are developing applications for underground storage space, designing new carbon-capture technology, developing state-of-the-art emissions-reduction technology, and engaging local Indigenous communities and municipalities along the proposed pipeline route to make sure we’re ready to start construction as planned. The first phase of the plan would invest more than $20-billion in the Canadian economy and create 15,000 to 20,000 construction jobs between now and 2030.
What policy measures are needed to enable this massive investment in emissions reducing technology?
Chris Severson-Baker of the Pembina Institute argues that “a cap on emissions that provides a predictable target and clear compliance costs can support investment decisions.”
The oil sands industry is already subject to an emissions cap in Alberta, and the Pathways Alliance supports the idea of realistic caps, having announced ambitious reduction goals of our own. More importantly, we have a credible plan to achieve them. But as we see in Europe and other leading jurisdictions, major industry and government collaboration are key.
The Pembina Institute suggests specific numbers that are simply unachievable by 2030 without shutting down large parts of the industry. We believe any solution needs to be holistic. It needs to support the effort to make Canadian oil production one of the lowest-emitting in the world while also preserving jobs and innovation. Caps need to be developed in close collaboration with industry and must be based on what is technologically feasible.
The Pathways Alliance plan builds on the comprehensive and stringent policies that Canada has already put in place to drive down emissions. These existing tools, such as carbon pricing, methane regulations, and clean fuel standards, already set a high bar for compliance and will help ensure that the oil and gas sector can meet a realistic emissions target.
Equally important, the federal government has promised new policies that will accelerate the reduction of emissions. The last federal budget committed to bring forward an investment tax credit to support carbon capture, utilization, and storage (CCUS). Some question why companies need access to tax credits. Quite simply, this technology is very capital-intensive and Canada is competing internationally for investment in emissions-reducing technology.
Countries such as the Netherlands and Norway are providing public support of up to three-quarters of the cost of significant carbon capture investment. The United States’ 45Q tax credits are far greater than the financial supports Canadian governments have provided for CCUS to date. If we want Canada to be a world leader in reducing emissions through carbon capture, we need government policy that supports a competitive investment environment.
As recent geopolitical tensions have shown, there is a vital need to ensure greater security and stability of the world’s oil supply, as long as it is needed, and that it comes from stable, democratic countries that are committed to addressing climate change. Canada has an incredible opportunity to help provide for global energy security while being a leader in producing clean energy.
With the proper policy, regulatory and investment framework in place, the Pathways Alliance plan can help lead Canada to a clean energy industry and achieving the goal of a net-zero future.
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