Cenovus CEO blasts carbon tax, questions value of Pathways carbon capture project

CALGARY — The CEO of Cenovus says Ottawa’s carbon tax is continuing to undermine investment in Canada’s energy sector and should be scrapped.

Jon McKenzie told an audience at the Global Energy Show that Canada has spent the last decade piling on new costs and regulations on the oil and gas sector, while competing oil-producing nations have expanded both investment and production.

“Over the past decade, we have continued to add incremental regulatory burdens and costs to the industry,” McKenzie said, citing carbon taxes, methane regulations, and permitting delays, as among many other red tape issues.

“We have done all of this under the belief that we are climate leaders. The reality is we are not leading if no one else is following.”

McKenzie argued the carbon tax has failed to achieve its stated purpose of encouraging emissions-reduction investments and instead functions as a growing cost of doing business for Canadian energy producers.

“The carbon tax does not incent decarbonization projects. It is simply a cost of doing business in Canada that has to be absorbed by the producer,” he said, adding investment has now shifted to competing jurisdictions such as the US and the Middle East.

Cenovus CEO warns 'myopically focused' climate policies are pushing investment out of Canada

“The world has not demanded one less barrel of oil, not one less MCF of natural gas,” McKenzie said.

“If customers were willing to pay for decarbonized barrels, we would certainly see the right pricing signals and we would not require government interference.”

His criticism of the carbon tax comes after the memorandum of understanding (MOU) on energy signed between Ottawa and Alberta included the proposed Pathways carbon capture and sequestration project, which is expected to cost between $20 billion and $30 billion.

McKenzie questioned whether the government and energy sector were getting sufficient value from such a large cost.

“The reality is this is a project with no revenue,” he said, adding the current estimate of the cost for carbon capture and sequestering one tonne of carbon dioxide was between $1.5 and $2 million dollars.

He noted the project is expected to reduce emissions by approximately 16 megatonnes annually, a small fraction of the roughly 57,000 megatonnes of carbon dioxide emitted globally each year.

“For twenty to thirty billion dollars of spend, we will reduce global emissions by 0.021%,” he said.

“It’s difficult to imagine anybody would believe that this is a good use of funds, regardless of their political orientation.”
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