Cenovus Energy Inc. (NYSE:CVE) has raised concerns over the level of financial assistance provided by the Canadian government for the oil sands industry’s ambitious C$16.5 billion carbon capture system, according to a report by Bloomberg.
The federal government’s proposed tax credits, which cover only half of the capital costs and Alberta’s 12% subsidy, still need to meet Cenovus’ expectations. Although Canada provides operational cost support through contracts guaranteeing a profitable carbon price, the attached emissions cap has faced criticism from energy producers.
During an investor day presentation, Rhona DelFrari, Chief Sustainability Officer at Cenovus, voiced these apprehensions, citing findings from a study conducted by the Bank of Montreal. She underscored the complexity of Canada’s approach, contrasting it with the more straightforward strategy adopted by the United States.
Canadian oil sands producers have joined forces to propose a carbon capture system, intending to reduce emissions by 22 million metric tons by 2030 and achieve carbon neutrality by 2050. However, despite an impending submission of regulatory documents, uncertainties persist regarding unclear draft tax credit regulations and a need for a better understanding of carbon price guarantees.
In response to the criticism, a spokesperson for Natural Resources Minister Jonathan Wilkinson emphasized the government’s substantial support, citing a recent Mackenzie Wood report. According to the report, Canada’s CCUS (carbon capture, utilization, and storage) incentives surpass those in the United States in terms of both value and certainty.
As the dialogue between Cenovus and the Canadian government continues, the fate of the proposed carbon capture system remains uncertain.
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