Alberta working with oil companies to draft new carbon reduction plan, seeks $30B in funding from Ottawa

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CALGARY — As the federal government is set to unveil new emissions reductions target at a global climate summit next month, Alberta is drawing up a $30 billion carbon reduction plan it wants Ottawa to pay for.

Alberta Premier Jason Kenney, Energy Minister Sonya Savage and their staff have been working with oil executives in the province for months to draw up a plan for massive new investments in carbon emissions-reducing technology to be deployed at oilsands facilities, electric generating stations, cement plants and other industrial plants.

The plan, which Canada’s largest oil producing province believes will reduce emissions by 30 mega tonnes by 2030 — equivalent to an 11 per cent reduction of its total emissions — and would cost $30 billion over the next 10 years and the province is asking Ottawa to pay for it, beginning in the federal government’s next budget.

“We want the federal government to step up,” Alberta Energy Minister Sonya Savage said Monday, adding the province is asking Ottawa to include a $2 billion to $3 billion per year in funding or tax breaks for carbon capture utilization and storage (CCUS) projects in Alberta over the next 10 years, or a $30-billion commitment.

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“Carbon capture and CCUS have a long lead time, it can take 4 to 5 years to get to the point where they’re even under construction. So if we want to meet our targets for 2030 and beyond, we have to get moving on them now or yesterday,” Savage said.

Officials in Edmonton say the province is making the ask of Ottawa now partly because they believe Prime Minister Justin Trudeau and U.S. President Joe Biden will jointly announce coordinated new climate measures at the Climate Leaders Summit in Washington, D.C. on April 22 to coincide with Earth Day.

The federal government is preparing to announce new 2030 climate targets at the Earth Day summit, federal officials confirmed, and carbon capture is expected to be a part of the country’s strengthened climate plan.

“Carbon capture technology creates jobs, lowers emissions and increases our competitiveness. It’s an important part of our government’s plan to get to net-zero emissions by 2050, and are working with the provinces, including Alberta, to keep Canada at the forefront of this promising technology,” Ian Cameron, spokesperson for Natural Resources Minister Seamus O’Regan, said in an emailed statement.

In February, Johnathan Wilkinson, Canada’s Minister of Environment and Climate Change, and U.S. Special Presidential Climate Envoy John Kerry met to discuss ways to “develop a work plan for bilateral climate cooperation to raise the scale and scope of climate ambition.”

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A government press release noted that Minister Wilkinson was eager to work closely with Secretary Kerry in advance of the U.S. April 22 Earth Day Summit.

Similarly, the U.S. oil and gas industry is preparing a suite of new policies that it expects will be unveiled at the April summit.

“The administration has been working behind the scenes to craft these policies but the details of them are pretty vague at this point,” said Scott Lauerman, spokesperson for the American Petroleum Institute, an oil and gas lobby group in Washington D.C.

It’s an important part of our government’s plan to get to net-zero emissions by 2050

Ahead of that summit and potential new climate targets, Alberta’s government is proposing carbon reduction plans that would help Ottawa meet its climate change targets in a way that will allow the province’s oil and natural gas sector to survive.

Alberta is unique in Canada because its 191-mega tonnes of industrial emissions are its largest source of emissions, making up roughly 70 per cent of the province’s total emissions, which amount to 273 MT. By comparison, Ontario’s industrial emissions represent roughly 21 per cent of that province’s total emissions.

Documents obtained by the Financial Post outlining Alberta’s “consolidated ask” show the province believes initiatives currently underway will reduce its total emissions by 30 million MT. Investments in CCUS would reduce the province’s emissions by a further 30 MT over the next 10 years and “catalyzes investment of $30 billion in-process innovations and Canada’s clean-tech ecosystem.”

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The province believes that CCUS will allow the province’s industrial base to reduce its total emissions in line with the Paris Agreement.

“A consolidated plan to reduce Alberta’s industrial emissions is the best way to achieve concrete reductions by 2030 and 2050. Alberta understands the need to secure jobs today and jobs tomorrow with a renewed ESG narrative in support of actual projects that can reduce some of Canada’s largest sources of emissions,” the documents state.

Savage said the province has already funded some carbon-reduction strategies with the proceeds from its carbon tax system, called the Technology Innovation and Emissions Reduction (TIER) program, but is looking for assistance from Ottawa.

On Monday, Alberta and Ottawa jointly announced the launch of a new committee to advance CCUS in the country but provided few specifics on the committee’s goals.

“Carbon capture technology creates jobs, lowers emissions and increases our competitiveness. It’s how we get to net zero,” O’Regan said in a press release.

The announcement Monday called “for the development of a comprehensive CCUS strategy and for the government to explore opportunities to help maintain Canada’s global competitiveness in this growing industry.”

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