Billions given to Volkswagen and Stellantis – what about oil and gas’s carbon initiatives?

Open this photo in gallery:

Deborah Yedlin is the president and chief executive officer of the Calgary Chamber of Commerce.

Much was discussed on the pancake and beer circuit during this year’s Calgary Stampede, including the strike at the Port of Vancouver, concerns over the timing and content of the clean electricity regulations and emissions cap – as well as the federal government’s subsidies to both Volkswagen VWAGY and Stellantis STLA-N for their Ontario electric-vehicle battery manufacturing facilities.

The combined incentives, along with the Ontario government’s commitment, come to almost $29-billion – more than twice the bailout for the auto sector in 2008. That irked many at the Stampede.

Suffice to say it would be hard to find an equivalent announcement by the federal government in the West, even though there are initiatives that are ready to move forward, such as the proposed carbon capture and storage project (CCS) by the Pathways Alliance, which has been under way for more than two years and follows decades of industry investment in emissions reduction.

The Pathways project, developed by the six oil sands companies, would reduce annual emissions in Alberta by 10 to 12 million tonnes by 2030. Construction of the CCS project alone is expected to require $16.5-billion of investment and will create 25,000 to 30,000 direct and indirect jobs – 10 times the job creation estimates of Stellantis. Additional decarbonization projects by Pathways will add another $7.6-billion in investment by 2030 and, along with the CCS, will result in the elimination of 22 million tonnes of CO2 from the atmosphere.

And that’s just Pathways.

Government support is often needed for projects of this magnitude, to act as catalysts and accelerate private-sector investment. Carbon capture projects are no different; companies are willing to commit billions of dollars of capital to build them, but government backing is still required, consistent with the approach taken in other jurisdictions around the world.

With that as a backdrop, the Calgary visit last week by federal Minister of Environment and Climate Change Steven Guilbeault was welcomed as an opportunity to discuss concerns regarding the impending regulations with provincial officials and industry and business associations, including the Calgary Chamber of Commerce. However, Monday’s announcement by Mr. Guilbeault regarding the phase-out of fossil fuel subsidies raises questions about Canada’s competitiveness from a regulatory perspective, particularly with regard to the U.S. Inflation Reduction Act.

Oil sands can’t meet federal emissions targets without production cuts, analysis finds

While Pathways and others in the energy sector – including TC Energy TRP-T and Pembina Pipeline, the proponents of the Alberta Carbon Grid, a carbon transportation and sequestration system – were pleased to see additional incentives to attract investment in clean energy sources such as hydrogen, the rich subsidies provided to both Volkswagen and Stellantis sent a very different message because of the speed with which they were announced.

The companies involved in developing Alberta’s carbon capture projects, which are more advanced than Volkswagen’s EV battery plant, are still waiting for clarity on the implementation of the investment tax credit that has been promised by the federal government in the past three federal budgets; details on the carbon contracts for differences program announced by Ottawa; and what the Alberta government is prepared to offer in terms of support.

Simply put, until there is clarity from both levels of government, the private sector will not risk capital and targets will be missed.

Canada’s energy sector – including the oil sands – can and will contribute to global energy security and affordability while addressing greenhouse gas emissions and advancing economic reconciliation with Indigenous communities.

Thus, the pancake lineup chatter at the Stampede was filled with concern that, if these issues are not resolved, Canada will miss an opportunity to be a world leader in the future of energy.

There is no denying that net zero is inextricably tied to electrification, but the EV battery manufacturing facilities being funded by Ottawa are not going to decrease emissions in the short term because the system needed to support this goal is decades away from being adequate.

Which is why the “and” conversation, which prioritizes energy and the environment, is important – and more realistic.

Prime Minister Justin Trudeau attended the annual pancake breakfast hosted by Calgary’s Ismaili community on the first Saturday morning of Stampede. Before he spoke, a passage from the Quran offered as a blessing included a reference to the oil from an olive tree as being neither of the East nor the West. It was an apt metaphor describing the need to foster unity – both economic and political – if we are to prosper as a country for the benefit of current and future generations.

The metaphor can be extended to the allocation of money to support decarbonization. To date, the scales are heavily tilted in favour of the East – even as billions in private capital eagerly wait to be unlocked in the West. It’s time for the scales to rebalance and ensure a different conversation at next year’s Stampede week.