The federal environment minister is urging Canada’s oil companies not to drop cash following their promises to tackle climate change.
Steven Guilbeault said the country’s major oil companies had promised to do something about greenhouse gas emissions, but instead they had split most of their record profits among shareholders.
This was at least the third time in the past six months that Guilbeault’s disappointment spilled over as the oil company’s profits skyrocketed. This time, his criticism came in the form of a video posted to Twitter as the major petroleum producers began posting their third-quarter earnings.
“We put our money where our mouths are,” Guilbeault said in an interview. “I’m not sure they are.”
The first earnings report from the sector came on Friday from Imperial Oil, reporting profits of $2 billion for the third quarter and $6.2 billion for the first nine months of 2022. with $1.7 billion in the first nine months of 2021.
The company said it plans to spend $1.5 billion buying back shares and increasing its dividend by 30% quarterly.
Cenovus, Suncor and Canadian Natural Resources will announce their earnings next week.
Those four companies, along with MEG Energy and ConocoPhillips Canada, make up the so-called Pathways Alliance, an alliance formed to tackle climate action in oil.
The global oil price surge in early 2022 was largely due to Russia’s invasion of Ukraine, and Canadian companies reaped the benefits.
In the first six months of 2022, Pathways companies recorded profits in excess of $22 billion. This compares to less than $6 billion in the first six months of 2021.
A spokesman for the Union would not respond to Guilbeault’s call on Friday, saying the union would not comment on members’ financial decisions.
Two weeks ago, the group said it would spend $24 billion over the next eight years on emissions reduction projects, but was seeking more financial help from Ottawa before starting operations.
Companies could get some of what they’re asking for next week when Finance Minister Chrystia Freeland talks about her shrinking budget. She could use it to adjust tax credits for carbon capture and storage technology she introduced last spring.
Technology that captures emissions from industrial sources and sends them back underground is important to oil and gas companies as it is a key part of how they can continue to produce their products. while still meeting emission reduction requirements.
The current tax credit – essentially to offset half the cost of capital investment – will cost Ottawa about $2.6 billion over the next five years and $1.5 billion a year for the next four years.
Oil companies asked for up to 75% coverage and were not satisfied with the proposed 50%.
Canada may be forced to up its game as the US Inflation Reduction Act has more generous incentives for carbon capture technology.
Guilbeault said Friday he doesn’t know what the tax credit plan is, though he acknowledged US dynamics have changed the domestic picture.
“Of course we’re looking at what the US has done,” he said. “… It’s a competitive investment world, we understand that. But at the same time, I mean, the oil companies are in Canada. And they can’t do deflationary projects. emissions in the US if they believe in the future of their companies, they have to invest in decarbonisation in Canada.”
Guilbeault said projections suggest that by 2050 the world’s oil demand will be a third less than it is today and it will all have to come from sources that do not generate additional emissions through production.
“Will there be room for one of the highest-emitting forms of oil if they don’t invest in decarbonisation? I don’t think so.”
This report by the Canadian Press was first published on October 29, 2022.