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Lorraine Mitchelmore, Royal Dutch Shell PLC’s Canadian president, says carbon-capture-and-storage technology won’t be widely adopted until there is a price on carbon.Chris Bolin

A senior oil executive is urging federal and provincial governments to put a significant price on carbon dioxide to encourage the industry to reduce emissions even as it increases production and accesses new and growing markets.

In an interview Monday, Royal Dutch Shell PLC's Canadian president, Lorraine Mitchelmore, said the country needs to address what often appear to be the competing goals of improved environmental performance and greater output of oil and gas, and "carbon management" must be part of that approach.

Shell last week announced it would build a $1.35-billion carbon-capture-and-storage (CCS) project at its Scottford upgrader, with Ottawa providing $120-million and Alberta $745-million.

But Ms. Mitchelmore said CCS technology won't be widely adopted unless there is a price on carbon – either through a tax, a cap-and-trade system or regulations on emissions.

"Right now it would need a real significant price, but we see that with the learning and the technology you bring to bear, we see that coming down. But you will need a carbon price," Ms. Mitchelmore said in an interview from Charlottetown, where she had addressed the federal, provincial and territorial energy ministers.

The Harper government has categorically rejected calls to adopt a carbon price, and accused New Democratic Party Leader Thomas Mulcair of backing a ruinous carbon tax, even though the NDP in fact supports the kind of cap-and-trade approach once favoured by the Conservatives.

"It is the policy of the government of Canada not to introduce carbon pricing," Natural Resources Minister Joe Oliver said. "That is something the NDP has advanced; we consider that a tax on everything and therefore, on everyone."

The energy ministers are meeting this week as part of a joint federal-provincial effort that led to Ottawa streamlining its environmental approvals process for resource projects, and handing over major responsibility to the provinces.

Several of the premiers, led by Alberta's Alison Redford, have urged the adoption of a national energy strategy, though Prime Minister Stephen Harper is less interested in a grand plan and more committed to making progress on individual issues.

Ms. Mitchelmore has been a prominent proponent of a national energy strategy that would address Canada's need to access fast-growing Asian markets while driving industry innovation and collaboration in pursuit of improved environmental performance and greater competitiveness.

She said the CCS project, called Quest, is an example of the kind of collaboration that is needed between government, industry and universities, and part of Shell's goal to reduce greenhouse gas emissions from its oil sands operations to per-barrel levels below those of the average crude used in North America.

In a speech to ministers Monday, she noted Canada is falling behind some competitors, notably Australia, in its global share of the energy trade, and has been far too reliant on one market, the United States.

"Strengthening Canada's economic position in a massively and rapidly changing world depends in large part on a collaborative and innovative approach to trade, energy, and the environment."

Editor's note: Lorraine Mitchelmore's title has been corrected from the headline of an earlier online version of this story.