Canada’s new energy and natural resources minister championed the energy sector Friday, calling on governments and industry to work together to build the Pathways Alliance’s proposed carbon capture project.
In a keynote speech to the Calgary Chamber of Commerce, Tim Hodgson pitched his government’s vision of Canada as an energy superpower — exporting oil and gas to the world for decades to come — and pledged to be a voice for Alberta and Western Canada at the cabinet table.
“We need infrastructure that gets our energy to tidewater and to trusted allies — diversifying beyond the US,” he said. To do this, the federal government will fast-track approvals of projects in the “national interest” with Prime Minister Mark Carney’s promised policy of “one project, one review,” less red tape and more certainty, Hodgson said.
“I think he was trying to set a tone that says, ‘We’re going to change the system’,” said Richard Masson, an executive fellow at the University of Calgary’s School of Public Policy and the former CEO of the Alberta Petroleum Marketing Commission
Masson said Hodgson’s speech signalled that the government is “going to focus on getting things done and make it more attractive for private-sector development and investment.”
Alberta Premier Danielle Smith has been relentless in her calls for the federal government to abandon its proposed regulations to cap oil and gas sector emissions and scrap the Impact Assessment Act, among other environment and climate policies. Carney recently opened the door to making changes to these key policies to move projects forward.
Hodgson’s speech doesn’t reference these two policies by name but leaves that question open, said Masson and Martin Olszynski, an associate professor and chair in energy, resources and sustainability at the University of Calgary. Oil and gas is the country’s largest emitting economic sector and the draft regulations would require oil and gas companies to cut emissions by 35 per cent below 2019 levels by 2030.
“He didn’t explicitly say what he was going to do, but I think there is … a recognition that some of this stuff has to change or they won’t achieve their objectives,” Masson said, referring to the goal of reducing emissions and exporting energy.
To Olszynski, Hodgson’s speech suggests “a willingness to discuss and even adjust current policies … but it will be backstopped with an intention to still meet some of those goals.”
Hodgson, in his speech, placed particular emphasis on the $16.5-billion Pathways Alliance project to capture carbon dioxide from 13 oilsands sites in northern Alberta and send it to an underground storage site south of Cold Lake through 600 kilometres of pipeline.
“We will invest in carbon capture, methane reduction and other technologies to ensure Canadian oil and gas is not only produced responsibly, but is the most competitive in the world,” Hodgson said.
“This government will not be a government of talk, but a government of action. We need the same from the province of Alberta and the Pathways Alliance.”
The Pathways project is undergoing regulatory reviews for over 100 different segments, but on the business side, the project is still awaiting a final investment decision. A global think tank, the international Institute for Energy Economics and Financial Analysis, found the project’s business model is shaky.
Masson said the federal government has a lot of work to do to establish certainty for investors. The potential for a cap on oil- and gas-sector emissions and uncertainty around carbon credits would “complicate everything to the point where nobody would be willing to invest.”
“It’s going to take getting everybody in a room and sorting out where the real barriers are,” Masson said.
According to Hodgson’s speech, his government is ready to do the work to create certainty and turn Canada into an energy superpower, but needs a willing partner.
“We need to demonstrate to our customers outside the US, and to our fellow Canadians, that we are a responsible industry — and this government believes Pathways is critical to that reality,” Hodgson said.
Hodgson played up his Western roots and business background for the oil and gas crowd, particularly his time as a board member at MEG Energy, and at Goldman Sachs, where he brokered the Alliance Pipeline deal to move natural gas from northwestern Alberta and northeastern British Columbia to the American midwest.
He also pointed to his time as board chair of Hydro One and belief that Canada’s future depends on integrated electricity grids.
“Our new government will quickly work with provinces and territories on east-west transmission and better integrate our systems,” Hodgson said, adding this is part of Carney’s stated goal of creating one economy, not 13.
This idea of an east-west transmission grid is a clear priority for the federal government and a big deal, both in terms of energy security and decarbonization goals, Olszynski said.
“A lot of people are waiting with bated breath to figure out what’s the direction this government is going to go in,” Olszynski said.
“We’re starting to see the contours of that here … I’ll be watching to see how the province responds and how industry responds now.”
Natasha Bulowski,
Local Journalism Initiative Reporter
Canada’s National Observer
