Oilpatch reacts to phasing out of 'inefficient' fossil fuel subsidies

Ottawa's plan to phase out what it calls "inefficient" fossil fuel subsidies has earned a tepid reaction in Alberta's oilpatch, with leaders pleased with exceptions for carbon capture although concerned that confusion over the plan might cause delays in crucial investment.  

Earlier Monday, the federal government released a long-awaited framework that explains how the new restrictions work, and outlines several exceptions. 

Federal dollars can still flow to fossil fuel projects, for example, if they support abated fossil fuels — oil and gas projects which capture production emissions through carbon capture. 

Projects that have a credible plan to achieve net-zero emissions by 2030 can also be supported. 

That's good news for those in the business who'd wondered whether a clean investment tax credit, for example, might be considered an industry subsidy. 

"What this announcement, to me, does is it says supporting carbon capture, supporting other measures to reduce the greenhouse gas intensity of energy production going forward, will not be considered an inefficient fossil fuel subsidy," said Richard Masson, an executive fellow at the University of Calgary's School of Public Policy and chair of the World Petroleum Council in Canada. 

"That's important because we need to have enough clarity about our policies that companies invest billions of dollars really soon if we're going to meet any of our national emissions targets."

Industry groups 'pleased' but want more detail

In emailed statements, both the Canadian Association of Petroleum Producers (CAPP) and the Pathways Alliance—a consortium that represents 95 per cent of oilsands production—said their groups were "pleased" the announcement recognized the importance of public-private partnerships in meeting climate targets. 

Still, Monday's announcement comes as those in the oilpatch have expressed growing frustration at what one CEO has described as Ottawa's all-talk, no action approach to industry initiatives like carbon capture and storage.

Deborah Yedlin, president and CEO of the Calgary Chamber of Commerce, expressed concern the announcement could add to the confusion and "[strand] private investment in decarbonization due to uncertainty."

"There's some things in what's been outlined that are encouraging, the support for [carbon capture and storage] is clearly there," said Yedlin in an interview with CBC News.

"But then it needs to be backed up with concrete measures, whether it's permitting, timeframes, application processes, the tax credit clarification … those are the pieces that we still need to find."

Carbon Capture, Utilisation and Storage (CCUS) technology traps and stores pollution from production underground. It hasn't been proven at a massive scale yet and remains relatively expensive. 

In a statement, CAPP said the federal government needs to "move swiftly to provide Canadian oil and natural gas producers with policy and regulatory certainty to expand the deployment of emissions-reductions technologies."

"With the United States investing heavily in such technologies, Canada must remain competitive," said the statement from Lisa Baiton, CAPP's president and CEO.