Capturing taxpayer dollars and storing them with oil and gas corporations

Canadian Dimension magazine: Fall 2009

The Harper government’s climate change policy is largely defined by having no real policy at all while priming heavy emitters like tar sands operators with tax breaks and other perks. That’s why there’s good reason to question the federal government’s keen interest — and $650 million in new clean energy funding — to develop carbon capture and storage (CCS) projects. Is this really a climate program or just a way to promote the tar sands and add to the $1.4 billion of federal subsidies enjoyed by Canada’s oil and gas industry each year?

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The benefit of CCS technology, as with most technologies, depends very much on how it’s used (and if it will work). The concept is simple: capture carbon dioxide from emission sources and pump them deep underground. CCS would be welcome news if it helps reduce Canada’s greenhouse gas (GHG) emissions — but not so welcome if it simply provides the justification for allowing tar sands exploitation to keep increasing and emitting ever-greater amounts of GHGs. 

There is good reason to be suspicious.

The federal government has been spending almost as much money promoting the oil and gas industry as it does on fighting climate change, despite exhortations from the OECD, among others, to cut the industry off the dole.  A petition filed to the Auditor General by Ecojustice in 2007 estimated that the federal government would spend about $1.6 billion in fiscal 2008-2009 for all climate programs (including ill-advised ones) compared to $1.4 billion on oil and gas subsidies. The Minister of Finance, in response to a related petition, estimated that tar sands companies would get about $300 million annually in the period 2007-2011 from a single subsidy, the Accelerated

Capital Cost Allowance.

Under a business-as-usual scenario, the federal government projects tar sands GHG emissions to increase by almost 80 million tonnes per year by 2020 (relative to 2006), and amount to 12% of all Canadian emissions by then. The Canadian Association of Petroleum Producers estimates that CCS will provide 20 million tonnes of emission reductions per year by 2020. But a net 60 million tonne increase in the tar sands (if all CCS benefits are applied to it) is hardly part of a GHG reduction strategy. The best way to reduce GHGs is to avoid creating them in the first place by addressing our individual dependency on fossil fuels and moving our economy in a greener direction. 

The $650 million in federal funding for CCS is in addition to $250 million previously committed and $2 billion the Alberta government has announced. Interest in CCS is partly spurred by the U.S. Administration’s desire to curtail the import of high carbon content oil, such as that from the tar sands.   

It’s already clear, however, that CCS will not be feasible for tar sands operations, at least not at the GHG-heavy extraction stage (mining or steam-assisted removal). CCS is more likely to be commercially viable at the bitumen upgrading and refining stages (or for other activities like coal-fired power plants), where emissions are more concentrated. Oil companies will presumably be looking for GHG reductions at these downstream stages or from trading in carbon offset programs, if the price is right. 

And, as usual, the industry will be hoping that promises of future reductions from new technologies are enough to avoid taking action now. The Canadian oil and gas industry certainly appears content, despite its multi-billion dollar profits, to have the public do the heavy lifting in developing CCS, in accordance with government polluter profits policies.

One thing is clear about CCS: before the technology succeeds in pumping GHGs deeply underground, Canadian governments will (again) be reaching deeply into taxpayer pockets to spare the industry any hardship.