Canada’s Carbon Tax Hinders Pipeline Plans, Cenovus CEO Says
(Bloomberg) — Cenovus Energy Inc.’s CEO says a planned oil pipeline off Alberta’s west coast requires Canada to move away from stricter climate policies and encourage more oil production from new projects.
The Alberta government wants to build a new oil export pipeline that could carry 1 million barrels of crude oil per day to global markets. This would require “greenfield” oil sands developments, as opposed to the simple expansion of existing fields that the industry has been doing for more than a decade, Jon McKenzie said on a call with analysts on Wednesday.
The higher costs of new oil sands projects mean less stringent environmental rules are needed to make the economy work; This includes rethinking the industrial carbon tax.
“We have to be very thoughtful about the set of policy environments that actually allow us to grow and fill a pipeline,” he said. “We must have a competitive market that allows for green space development.”
The comments come as the governments of Premier Mark Carney and Alberta Premier Danielle Smith are negotiating a higher carbon tax on industrial emissions and details of a carbon storage project to reduce the environmental impact of the oil sands. The two politicians agreed to a memorandum of understanding last year supporting a pipeline as well as other policies such as a C$130 ($95) carbon tax per metric tonne of emissions.
Bloomberg News reported Monday that the two governments were haggling over a variety of issues, including how quickly the tax would rise to C$130. The longer it takes, the less financial burden on oil producers.
But McKenzie wants the tax repealed. “The industrial carbon tax is unique to Canada,” he said, giving oil companies a stronger incentive “to invest outside Canada.”
“If we materially erode our social welfare network over the next 15 years, negligibly reducing the impact of climate change over the next century will do the country no good.”
More stories like this available Bloomberg.com
