Record profits from oil should be invested in climate action: minister

Canada’s big oil companies are making record profits this year and should be using some of that extra cash to invest in things that curb their greenhouse gas emissions, Environment Minister Steven Guilbeault said Thursday.

His remarks come a week after Cenovus CEO Alex Pourbaix told analysts during a company conference call that a new federal tax credit isn’t good enough to convince the major oilsands producers to start building a proposed carbon capture and storage project.

Carbon capture and storage traps emissions at their source and funnels them back underground or into products that can permanently store them, such as cement. The technology is controversial, with many climate scientists arguing its unproven, expensive and allows fossil fuel production to continue.

The new refundable investment tax credit introduced in the recent federal budget is worth 50 to 60 per cent of the investment for carbon capture, and 37.5 per cent for transportation, storage or use of the emissions.

Projects that go to enhanced oil recovery — where the captured emissions are used to squeeze more oil out of the ground — won’t qualify.

The tax credit will provide an estimated $2.6 billion over the next five years, and $1.5 billion annually after that until 2030.

Last year, the Canadian Association of Petroleum Producers asked Ottawa to design the tax credit so it pays for 75 per cent of the cost of carbon capture projects.

Pourbaix said the industry will need more than what was offered to move on the investments.

But Guilbeault said in an interview Thursday that isn’t going to happen.

“We won’t be putting even more and more money on the table,” he said. “They have to invest as well.”

He said Pourbaix’s comments are disappointing and that it’s time for industry to come to the table to show what it plans to invest to protect its future in a world where demand for oil and gas diminishes.

“We want to invest in your sector to ensure that the sector and workers still have jobs, 10, 15 years from now, when more and more, the world will be moving toward a low-carbon future,” Guilbeault said. “So we’re putting our money where our mouth is, and we think that they should do the same.”

And he said they have the money to do it. The same day Pourbaix talked about the tax credit, Cenovus reported its best first-quarter profit ever, of $1.6 billion. A year ago, profits were $220 million.

Cenovus has not yet responded to a request for comment.

The company is not alone, with the price of oil being driven up by the war in Ukraine, pandemic-related supply chain issues and surging demand as pandemic lockdowns ease. Imperial Oil reported first quarter profits of $1.17 billion, its best first quarter in 30 years. On Thursday, Canadian Natural Resources Ltd. reported profits of $3.1 billion, compared with $1.38 billion a year ago.

“These companies are making record profits, they should be investing some of them into ensuring that they have a future,” Guilbeault said.

Last week, Pourbaix said oil prices rise and fall so decisions about investing in carbon capture can’t be based on current prices.