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Commodity costs have stabilized, together with trade fortunes, placing danger squarely within the coverage class
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One other federal election is over, capping extra moments of tension, uncertainty and unpredictability for Canada’s oil and gasoline trade.
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The 2021 election marketing campaign delivered new coverage proposals about local weather motion and curbing emissions, and extra speak about selling carbon seize and storage know-how and hydrogen improvement.
And ultimately, it caused one other Liberal minority authorities.
“Now we have had an understanding of the place this authorities desires to go … there’s a continued deal with us to enhance our GHG emissions,” Tristan Goodman, president of the Explorers and Producers Affiliation of Canada, mentioned Monday night.
“The No. 1 factor we want is stability and certainty as a result of we all know what the insurance policies are.”
With the oil and gasoline trade recovering from a pandemic-driven downturn final yr, producers and oilfield service companies are actually in search of coverage certainty as commodity costs have stabilized, together with trade fortunes.
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Canada, the world’s fourth-largest oil producer, has already set a goal of attaining net-zero emissions by 2050. The way it will get there can be crucial for the sector.
“The largest factor we want is simply visible and vocal assist for the trade,” mentioned Andy Mah, CEO of Calgary-based Benefit Oil & Fuel.
“It’s (about) confidence that the regulatory and financial-fiscal setting is supportive of the vitality trade — and never towards it.”
The largest factor we want is simply visible and vocal assist for the trade
mentioned Andy Mah, CEO, Benefit Oil & Fuel
Voting ends in Monday’s election confirmed Liberal Chief Justin Trudeau on monitor for his second minority authorities.
After a tumultuous marketing campaign in 2019 left the trade on the centre of a polarizing climate-energy debate, many within the oilpatch had anticipated a repeat efficiency this summer season. The oil and gasoline sector accounted for 26 per cent of all emissions within the nation two years in the past.
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However political, enterprise and vitality analysts be aware the sector wasn’t caught up within the marketing campaign crossfire because it was within the final election — and that ought to make future collaboration simpler to realize.
“So long as these guidelines don’t hold altering, corporations are advantageous simply hunkering down and never being within the limelight,” mentioned analyst Jeremy McCrea of Raymond James.
Heading into the marketing campaign, the Liberals had already pledged to introduce a tax credit score to advertise carbon seize, utilization and storage (CCUS) for the sector, a key know-how for producers to get to net-zero emissions.
The Liberals’ present local weather program will see the nationwide value on carbon rise to $170 per tonne by the top of this decade, up from $40 a tonne, whereas a brand new federal clear gas commonplace is predicted to come back into play in 2022.
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As a part of its platform, the Liberals vowed to place in a “decisive plan” to verify the oil and gasoline sector hits net-zero emissions by 2050. Trudeau promised to introduce five-year targets on trade to achieve the objective.
The platform additionally mentioned it could set 2025 and 2030 emissions milestones for the sector, primarily based on the recommendation of an advisory physique.
The Liberal celebration additionally set its sights on lowering methane emissions; it promised to require producers to chop their methane emissions by at the very least 75 per cent by 2030.
Whereas most main oilsands gamers have already adopted the net-zero goal, the interim objectives will create extra coverage uncertainty, mentioned Dan Tsubouchi, chief market strategist at funding agency SAF Group in Calgary.
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“That’s the wildcard. We don’t know what the (interim) quantity is,” he mentioned.
The Conservative Social gathering platform had vowed to alter Invoice C-69, the Impression Evaluation Act, and repeal Invoice C-48, the Trudeau authorities’s ban on oil tankers off the northern coast of British Columbia. Erin O’Toole’s Conservatives additionally mentioned they’d introduce a tax credit score to speed up the deployment of CCUS.
Whereas vitality and local weather points had been mentioned by the 2 events and the NDP and Greens, oil and gasoline points didn’t resonate as they did in 2019, mentioned Mount Royal College political scientist Duane Bratt. He expects one other Liberal authorities means the established order will prevail.
“Trans Mountain remains to be getting constructed, carbon taxes are nonetheless being collected, there’s nonetheless co-operation with the provincial authorities on carbon seize,” he mentioned. “It appears just about just like the previous has.”
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For Calgary Chamber of Commerce CEO Deborah Yedlin, the incoming Liberal authorities might want to present significant assist for oilsands corporations to achieve their net-zero goal, if they’re to achieve success.
“We wish to see a sound local weather technique that doesn’t strand the vitality belongings that we’ve got. And meaning supporting the vitality decarbonization that has to occur,” she mentioned.
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After the divisive debates surrounding pipelines and local weather coverage over the previous decade, will we lastly see a interval of stability surrounding Ottawa-oilpatch relations? That is still to be seen, because the vitality transition picks up pace.
On the similar time, it is a interval of bettering power for the oilpatch following a turbulent 18 months, with strong commodity costs anticipated.
“The oil and gasoline trade is in nice form. The money flows have by no means been higher … and our Canadian corporations are well-positioned to profit,” Tsubouchi added.
“I don’t suppose for one second it’s a commodity danger (that’s forward). It’s coverage danger.”
Chris Varcoe is a Calgary Herald columnist.
cvarcoe@postmedia.com
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