The CEOs of the major oilsands companies in Calgary were reluctant to talk during a federal election campaign. None wanted to be seen as partisan.
Canadians might presume to know their politics; after all, the oil lobby group, the Canadian Association of Petroleum Producers, has registered as a third-party election advertiser. But despite the CEOs’ usual circumspection, and after much back and forth, two of them agreed to talk to me because they know how the debate about addressing climate change puts their industry in the political crosshairs.
And they had plenty to say about the frustrations with Justin Trudeau’s Prime Minister’s Office, the vagueness and vagaries of the major political parties’ various climate plans and about a surprising stance on the carbon tax that might alarm fellow members of the Petroleum Club.
The risk of vilification
“We’re portrayed as doing the devil’s work. I mean I shaved my horns off for this meeting,” said Derek Evans, as he sat down with me to discuss the stakes for the industry in this election.
He is the CEO of a mid-sized oilsands company, MEG Energy. Evans says his employees “feel vilified and less than worthy of being Canadians,” a further blow to morale at a company that’s laid off 52 per cent of its staff since 2014.
Cenovus CEO Alex Pourbaix represents one of the big players in the industry. He isn’t as concerned with vilification so much as what he sees as a lack of understanding about the oil and gas industry’s contributions to the nation’s economy and the advances being made in reducing greenhouse gas (GHG) emissions.
That’s why he’s speaking up when so many of the big players won’t.
Late to the conversation
Both Evans and Pourbaix admit the industry is late to the conversation.
“I think most of my peers would acknowledge that I think we probably should have engaged a lot earlier and a lot more meaningfully,” Pourbaix told me.
They know the industry — as Canada’s biggest source of GHG emissions — is seen as the villain in many debates about Canada’s struggle to meet its Paris Accord obligations, and that this has put the industry on the defensive.
The head of the Canada West Foundation, Martha Hall Findlay, says a reluctance to engage more deeply in that debate has created “significant distrust” between the industry and Canadians.
The foundation describes itself as a non-partisan policy think-tank, focusing on issues facing the West. Hall Findlay knows the stakes if industry, government and Canadians continue to talk past each other and not engage.
“We all lose, because on the oil and gas question, we need to have a really honest discussion in Canada.”
Evans says his advice to colleagues is to “stand up and speak in a non-emotional way.”
Talking to politicians
Hall Findlay believes the SNC-Lavalin situation has complicated things further.
She says it has “created a chill” for all of corporate Canada and that chill is most acutely felt in Alberta’s oil industry.
“The message from that was, wow, if you really want to get something done, you need to be there … involved in those behind-closed-door connections with the political decision-makers.”
Evans has tried to arrange a meeting with the PMO but says “the SNC-Lavalin thing started to blow up, and I’m sure that was a bigger priority than meeting with, you know, yet another western Canadian oil and gas producer.” He admits, though, “I find it quite frustrating dealing with politicians.”
Then again, it’s probably not something Evans needs to worry about.
When Justin Trudeau was speaking in Calgary last November, Evans wasn’t invited to attend a meeting with the prime minister and industry executives. He says he had no interest in going anyway. Instead, Evans joined his employees, along with thousands of others, out in the street, protesting government energy policies and lack of action on pipelines.
Pourbaix has met with PMO officials, and is careful in his description of the conversations.
The recent discussions centred around Bill C-69, the legislation overhauling the environmental assessment process.
“I think C-69 would be a great example of a situation where, although we tried to work really hard with the government, at the end of the day, their priorities on that issue differed in the end from where industry was,” Pourbaix says.
Climate change plans and oil
When asked to assess the climate plans of the various federal parties, both CEOs were circumspect.
Evans said: “I think on all of the federal plans, you know, apart from the Liberal plan, which has specificity, they’re all rather vague.”
Pourbaix’s issues with the various climate plans are rooted more in where they are focused.
“I think there’s been too much focus on what are Canada’s emissions,” Pourbaix says, adding that “GHG intensity [emissions per barrel of oil produced] is actually the more appropriate measure than absolute GHG emissions.”
Cenovus estimates it has cut its GHG emissions intensity by one-third over the past decade.
But even with those reductions, production is increasing and so emissions from the sector are also rising.
MEG’s CEO, meanwhile, is focused on achieving “net zero” emissions, something that Canada’s largest oil and gas producer, Canadian Natural Resources, has also committed to.
Evans insists it’s not just possible but that “in the next 18 to 24 months,” MEG could have a “pilot up and running that provides the runway” to that goal.
“We’ve identified a place where we think we could sequester our greenhouse gas emissions,” he said. “We think it’s large enough to handle not only ours but substantially a large component of the people in the Christina Lake area. And we think it’s doable.”
Should consumers or producers pay carbon tax?
The two CEOs also differ on carbon taxes.
Evans is not a fan of carbon taxes on consumption. He doesn’t believe they change behaviour.
I’ll get myself thrown out of the Petroleum Club for saying those sorts of things.— MEG Energy CEO Derek Evans
He does however think a carbon levy on producers provides an incentive to innovate and, therefore, leads to a reduction in GHG emissions.
And he adds, “I’m not sure it’s high enough yet … I’ll get myself thrown out of the Petroleum Club for saying those sorts of things.”
Pourbaix, on the other hand, says he’s also not opposed to carbon taxes “but I am opposed to taxes that aren’t applied at the consumer level.” He believes the biggest problem is with consumption, rather than production.
“If we implement a very onerous carbon tax and our global competitors do not, what we’re doing is we’re handicapping the Canadian economy,” he says.
An existential moment
It’s ultimately about survival.
Pourbaix warns the industry’s viability is directly tied to the country’s.
The Cenovus CEO also warns of what will happen if Canadians don’t develop a greater understanding of the energy sector.
“If we lost this industry, the implications on the country would be devastating.”
Evans puts the onus more squarely on the oil industry.
“I think it’s existential, and I think if we don’t show up as an industry and make some big changes in terms of how we’re performing our business in Canada … it’s going to be very challenging,” Evans says.
Although both avoided partisan observations, both also recognize the political debate around addressing climate change is a debate about their industry’s very future.
West of Centre is an election-focused pop-up bureau based out of CBC Calgary that features election news and analysis with a western voice and perspective.