A Canadian law targeting greenwashing has begun to stamp out much of the oil industry's claims relating to climate pursuits, for better or worse, but environmental policy in general may be at risk as the ruling Liberals show signs of cracking.
Companies must now show proof when making representations about climate and emissions targets, according to the law that took effect from 20 June. Any claim "not based on adequate and proper substantiation in accordance with internationally recognised methodology" could result in penalties of up to C$15mn ($11mn), or "triple the value of the benefit derived from the anti-competitive practice".
This compelled prominent oil sands producers and carbon capture and storage (CCS) venture Pathways Alliance to delete content from their websites the same day, citing the "significant uncertainty" and the risk of litigation that the new law has brought. Leading oil province Alberta's premier, Danielle Smith, said she expects the new law to have the opposite of its intended effect by stifling "many billions in investments in emissions technologies — the very technologies the world needs".
And the political winds might be blowing in her favour as her federal opponent, prime minister Justin Trudeau and his Liberal party, struggle to recover from a steady slide in the polls. Opposition leader Pierre Poilievre has been reaping the benefits of Trudeau's fall from grace, as evinced by the surprise by-election win for his Conservative Party in Toronto last week. This is the first time that a Conservative has won this particular seat — in what had been a Liberal stronghold — since 1988, but Trudeau has no plans to step aside ahead of the next general election that will take place on or before 20 October 2025.
The federal government hopes oil industry concerns will be offset by other aspects of the new law, which include the passage of important carbon capture, utilisation and storage (CCUS) investment tax credits (ITC) that energy companies have been waiting for since they were announced more than three years ago. Eligible expenditures will now receive a refundable ITC of 60pc on capital costs for direct air capture, 50pc on other capture equipment and 37.5pc for money spent on capital relating to carbon transportation, storage or usage. The benefits apply to expenditures between January 2022 and December 2040 but are halved starting in 2031 to encourage investment sooner rather than later.
Polarising effect
Less than one week later, Shell announced final investment decisions (FIDs) for two projects in Alberta that stand to benefit from these ITCs. The Polaris project will capture up to 650,000 t/yr of CO2 from the company's 114,000 b/d Scotford refinery and chemicals complex. And a joint venture between Shell and Calgary-based ATCO EnPower announced an FID for its Atlas Carbon Storage Hub, which will be connected to Polaris by a 22km pipeline. Both projects are to be operational by the end of 2028. But the CCUS ITC, along with other federal and provincial programmes and regulations, have "created an environment that makes the Polaris investment possible", Shell tells Argus.
Pathways says it is pleased the ITCs are now legislated, but that it will scrutinise how they are implemented as it considers moving forward with its massive C$16.5bn CCS project in the heart of Alberta's oil sands region. Pathways includes Canada's six leading oil sands producers, together accounting for 95pc of the province's 3.3mn b/d of oil sands production. That is likely to grow to 4mn b/d within 10 years, the Alberta Energy Regulator says. Capturing carbon will be vital for firms to get to that level while staying under a federally-proposed cap on emissions.
| Alberta tar sands raw production | '000m³ | ||||
| 2022 | 2023 | 2024 | 2025 | 2033 | |
| Mineable | 257.1 | 261.9 | 266.6 | 271.6 | 279.5 |
| In situ | 270.0 | 280.2 | 293.4 | 309.3 | 348.8 |
| Total | 527.1 | 542.1 | 560.0 | 580.9 | 628.3 |
| Total mn b/d | 3.32 | 3.41 | 3.52 | 3.66 | 3.95 |
| — Alberta Energy Regulator | |||||
