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Premier Danielle Smith says the province is tired of being “the punching bag of the federal government,” blasting Prime Minister Justin Trudeau for insinuating Alberta needs to boost its financial assistance to get carbon capture projects built.
However, the premier also points out her government is considering measures that could aid such developments, including looking at an investment tax credit or letting petrochemical developments that include carbon capture tap into Alberta Petrochemicals Incentive Program grants.
Smith’s comments come after Trudeau pushed the province to use its growing budget surplus to increase government aid for new carbon capture, utilization and storage (CCUS) projects.
“It’s offensive for them to act as if, somehow, we haven’t been investing in this area,” Smith said in an interview, noting the province has put about $2 billion into carbon capture initiatives dating back to the Stelmach government 15 years ago.
“We absolutely have — and we will continue doing more.”
Speaking with Reuters last week, Trudeau asserted Alberta is hesitating on “investing in anything related to climate change. But CCUS is one of those tangible things…
“I think there’s a role for provinces with surpluses, with the capacity to be investing in their future and their workers’ future,” the prime minister said.
Such words triggered anger within the provincial government, which is already gearing up for a tussle with Ottawa over the oilpatch emissions cap.
Billions of dollars in CCUS developments have been proposed in the province in the past two years that would help industries to decarbonize.
Yet, companies haven’t moved ahead as Ottawa and the province bicker over the level of financial aid provided by each government needed to trigger such major capital investments.
Alberta posted a $3.9-billion surplus last year and is expecting to see that figure top $12 billion for the current fiscal year. A study by RBC Economics pointed out nearly all provinces reported sizable budget surpluses last year, including Ontario, Quebec and British Columbia.
“We have a prime minister who plays favourites and treats different parts of the country in a different way,” Smith said.
“This is the thing that I think Albertans are tired of — is that we continue to be the punching bag of the federal government and this Liberal prime minister, in particular, for political reasons.”
A statement Tuesday from officials in the office of federal Natural Resources Minister Jonathan Wilkinson adopted a conciliatory tone about carbon capture, saying it will work with Alberta and “welcome any further investment in this technology from the provincial government.”
The rumble over CCUS funding has been building for months.
In April’s federal budget, Ottawa created a new investment tax credit that would cover up to 50 per cent of CCUS project spending, although it fell below what the Canadian Association of Petroleum Producers had requested.
The budget document stated Ottawa would engage with provinces and expect they would further strengthen financial incentives to accelerate CCUS adoption; the Kenney government rejected the call.
Since the federal investment tax credit was unveiled, the U.S. has increased its own incentives for CCUS initiatives, eclipsing Canada’s offerings.
Michael Belenkie, CEO of Advantage Energy Ltd. and subsidiary Entropy Inc., which is moving ahead on carbon capture and storage developments, said it’s ironic to hear the prime minister’s criticism. He noted the company is still waiting for details on how to claim the federal tax credit and for Ottawa to provide more certainty on the future price of carbon.
“I don’t think the prime minister’s comments are necessarily anchored in any facts, so much as a negotiating tactic to try and push Alberta,” Belenkie said.
The two sides may not be that far apart.
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Smith indicated the province is considering steps to encourage such decarbonization investments. She’s asked Environment Minister Sonya Savage to examine the issue and report back “to see whether there is a need … for us to consider how we might bridge the gap in the investment climate between us and America.”
The province currently provides grants to new petrochemical projects through its APIP program and that could be expanded. Asked if the province would look at its own investment tax credit, Smith said: “We would integrate them, if that was possible.”
Bob Masterson, CEO of the Chemistry Industry Association of Canada, said there are more than $20 billion of petrochemical projects announced for Alberta that require CCUS. Only new developments are currently eligible for APIP grants.
Since the federal investment tax credit was announced, the new U.S. incentives have been bolstered and are now worth at least four times more than Ottawa’s assistance, he added.
“The premier and the prime minister (were) trading barbs about who’s responsible for making this happen — and the answer is both,” Masterson said.
The Pathways Alliance, a group of oilsands producers that have pitched a $16.5-billion carbon capture and storage network in Alberta, has been pushing for additional incentives from the province.
“What we haven’t seen is a major provincial program along the lines of the federal investment tax credit, but frankly there’s been a lack of dialogue between the federal and provincial governments — that’s been part of the problem,” said Pathways Alliance vice-president Mark Cameron.
It’s critical that Alberta and Canada are competitive to attract carbon technology investments to meet incoming federal emissions targets. The timing of any action, however, remains unclear.
“I’ve asked Minister Savage to make a presentation to our cabinet and caucus before we go back into session. So, I don’t know if that work will be completed in time for the budget,” Smith said.
“But it’s a priority for me.”
Smith wasn’t sure what the costs would be for any assistance program, although she said the province’s Technology Innovation and Emissions Reduction program generates significant funds that could be tapped.
Scott Norlin, an analyst with energy consultancy Wood Mackenzie, said the province made changes recently to TIER that support CCUS projects and tapping the fund for any future provincial assistance would make sense.
Chris Varcoe is a Calgary Herald columnist.
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