Carney’s Energy Chief Pushes Oil Sands to Build Carbon-Capture Systems

(Bloomberg) — Canada’s new energy minister said it’s critical to build carbon-capture systems for the oil sands and identified crude and natural gas exports as a major priority for Prime Minister Mark Carney’s government.

“Energy is Canada’s power,” Tim Hodgson, who was first elected to Parliament last month after a career in finance, said in a speech to the Calgary Chamber of Commerce on Friday. 

“It gives us an opportunity to build the strongest economy in the G-7, guide the world in the right direction, and be strong when we show up at a negotiation table,” he said, according to his prepared remarks.

Hodgson’s speech sought to present a new approach to Canada’s energy industry, which has often complained of being unfairly targeted by excessive regulation under the Trudeau government. The resentment has shaken Canada’s national unity and opened the door for a long-shot secession referendum in oil-rich Alberta. 

Hodgson emphasized the need to get major projects built quickly and stressed the importance of a range of sectors, including critical minerals, electricity transmission, nuclear, biofuels and forestry.

But in a departure from how Canadian ministers often spoke during Justin Trudeau’s time as prime minister, Hodgson put oil and gas at the top of his list.

“The real challenge is not whether we produce, but whether we can get the best products to market before someone else does,” Hodgson said. “We need infrastructure that gets our energy to tidewater and to trusted allies — diversifying beyond the US.”

But to be competitive, Canada’s oil has to be “produced responsibly,” he said.

Carbon capture is crucial to getting this accomplished, Hodgson said, highlighting the Pathways Alliance project that would see oil sands companies partner on a carbon-capture system. Hodgson formerly served on the board of one of those companies, MEG Energy Corp.

He called on both industry and the Alberta government to work with him to get the project built.

“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,” he said.

Pathways has spent months locked in talks over public funding for the carbon-capture system. Trudeau’s government created the Canada Growth Fund and gave it a mandate to negotiate contracts to guarantee the value of carbon credits, with the goal of providing investment certainty for the private sector.

Although the Canada Growth Fund has signed some deals for carbon-capture systems, it has been unable to secure an agreement with Pathways.

More broadly, Hodgson presented himself as a bridge between the federal government in Ottawa and Alberta, noting that he grew up on the Prairies. 

“Like Johnny Cash sang – I’ve been everywhere, man,” Hodgson said. “I want you to understand that I will be a voice for Alberta and Western Canada at the cabinet table.”

He pledged Carney’s government will aim to make Canada one economy, not a series of separate regional ones, through infrastructure projects and regulatory reforms such as harmonizing carbon markets across the country. 

“We will make Canada a true conventional and clean energy superpower,” he said. “That is our promise.”

Rebecca Schulz, Alberta’s environment minister, welcomed the speech but cautioned that conflicts remain with the new government. 

“This is a very different tone than what we’ve heard from the federal Liberal government over the last 10 years,” she said, but cited Trudeau-era policies such as net zero electricity rules and an oil and gas emissions cap as lingering points of friction. “If they really want to see quick wins, they’ll abandon some of those problematic and unconstitutional policies that they currently still have on the table.”

A new possible difference also emerged when Hodgson mentioned the need to “harmonize and link” carbon markets across Canada to help reduce emissions. 

“That’s not what our industry has been asking for,” Schulz said. “That’s quite problematic, especially given how linked it is to energy development and production, which of course is an area of provincial jurisdiction.”

(Updates with Alberta environment minister’s reaction in the 18th paragraph.)

More stories like this are available on bloomberg.com