CAPP calls for royalty credits
Report from oil and gas producers urges NDP to create a new program
Alberta’s oil and gas producers are calling on the provincial government to create a new royalty credit program as part of its submission to the climate change advisory panel, which is due to report before the world climate change summit in Paris in December.
The submission released Fri- day by the Canadian Association of Petroleum Producers suggests Alberta’s NDP government set a target for technology investment over the next 10 years.
The report contains 32 recommendations, none of which would constrain growth in overall production or increase costs for industry members without corresponding tax or royalty credits.
“Ultimately, I think the government will need to take a balanced approach,” said CAPP president and chief executive Tim McMillan in an interview.
“Where we are today is in a low price environment where we have seen some substantial costs added to our industry through corporate tax, through the climate fee that has doubled as well.
Finding more efficient ways to operate is where our industry is at with our internal work and I think it would serve us well to be looking for efficient and effective ways to operate in all regards, in the climate file as well.”
CAPP has estimated that tax increases and the doubling of carbon fees to $30 per tonne by 2017 initiated by the New Democrat government could add nearly $ 800 million to industry costs over the next two years.
McMillan said the clean infrastructure royalty credits CAPP is seeking would be similar to a program in British Columbia where producers are allowed to claim up to 50 per cent of the costs of qualifying road and pipeline projects against their royalty payments.
Simon Dyer, Alberta director for the Pembina Institute, said he agrees with CAPP that technology is important and that royalty and climate change initiatives should be linked, but he disagreed with CAPP’s contention the industry has made acceptable progress on its own in reducing greenhouse gas emissions.
He said he’s surprised CAPP takes no position on a broadbased carbon tax such as the one in B.C., although prominent CAPP members have endorsed the idea.
And he disagreed strongly with CAPP’s position that natural gas should be favoured as a replacement fuel for coal- fired power plants, noting that renewable energy is the better choice.
“Most of what CAPP outlines here are royalty credit and program areas that amount to public subsidies for the oil and gas sector to reduce pollution,” he said.
A new EKOS Research Associates poll commissioned by Pembina found more than 50 per cent of Albertans support stronger climate change policies. Half of Albertans polled thought a carbon tax is the way to go.
More than a third of the recommendations in the CAPP report concern the Climate Change Emissions Management Fund, the body charged with spending Alberta’s rising carbon levies.
CAPP recommends the CCEMF be “reframed” to focus on projects delivering long-term significant emission reductions, that unspent contributions be better managed, that the fund have more open calls for projects and a “less burdensome” application process, that the tech fund not be used for municipal energy efficiency programs and that barriers be removed to funding projects outside the province.
CAPP’s report endorses cogeneration, where power plants are added as a natural fit to oilsands or other development, “starting with a commitment to building both northeast and northwest transmission lines without further delay.”
The association also recommended the government work with industry to reduce methane emissions from existing sources in a manner that doesn’t negatively affect competitiveness. It says a research institution that isn’t focused only on oilsands should be created to coordinate public and private research into extraction and environmental technologies.
The review panel, led by University of Alberta economist Andrew Leach, is to provide advice to the provincial government on how to price carbon, how to grow the renewable energy sector, how to promote energy efficiency and how to reduce reliance on coal-fired electricity.
The work of the climate panel is happening in tandem with a separate royalty review led by ATB Financial CEO Dave Mowat.
Most of what CAPP outlines here are royalty credit and program areas that amount to public subsidies for the oil and gas sector to reduce pollution.