Oilsands agreement will be one of most ‘important economic contributors to Canada’: federal minister

Federal minister Tim Hodgson joins Alberta Primetime's Michael Higgins to discuss the Pathways Carbon Capture Project.

The environmental sector is reacting to a new memorandum of understanding (MOU) reached between Alberta, the federal government and five oil sands producers to pave the way for the Pathways Carbon Capture Project. Federal minister Tim Hodgson joined Alberta Primetime’s Michael Higgins to discuss what it took to reach this deal.

This interview has been edited for clarity and length.

Michael Higgins: After several years of discussions over the Pathways project, what did it take to get these five oil sands companies to agree to this MOU?

Tim Hodgson: It took a lot of discussion and a lot of looking for common ground. What we have common ground on between the federal government, the provincial government and the five oil sands players is that for Canada to be a clean and conventional energy superpower, we need to show Canadians and our customers that we will produce our natural resources in the most environmentally responsible way.

They understand that if we are the first country in the world to fundamentally reduce the carbon intensity of an entire industry, and we’re leading in producing the largest carbon capture and storage project in the world, if the world needs our oil, they want to buy oil from someone who produces it responsibly in partnership with First Nations. That’s the commitment we’re making. When we do that, Canadians say that’s a grand bargain that makes sense.

MH: In reaching the MOU, how big of a policy shift do you consider when it comes to how your government deals with climate?

TH: I think a lot of people unfortunately want to pick and choose from the MOU to push a particular agenda. I really would like all your viewers to focus on the entirety of the MOU. What it does is it creates a shared path between the federal government, the provincial government and the producers around how we get to the best possible outcome for Canada.

What this MOU does in its entirety is it creates some of the most stringent methane reduction rules in the world. It creates, for the first time, a high-functioning carbon market in Alberta. It creates a pathway forward for inter-ties between the Alberta grid and the B.C. and Saskatchewan grids, so we can share renewables more efficiently. It lays out a path for the introduction of zero-emitting baseload power from nuclear energy coming onto the Alberta grid over time.

As part of that, it lays out a path for producing more oil from Alberta while at the same time dramatically reducing emissions from the industry as a whole on a per-barrel basis. In its entirety, that is a win. That is the right way to move forward in an environmentally responsible way.

MH: Should this bring an end to the degree of disgruntlement coming out of our province over past policies embraced by your government? What does it say about the relationship?

TH: My mother was born in Alberta, many of my family members live in Alberta, I’ve spent a lot of time there, but I’m not an Albertan, so I don’t purport to tell Albertans what they should think. What the federal government believes in is cooperative federalism. We believe in looking for things we can agree to do together, not looking for things to disagree about.

I think you’ve seen that spirit of cooperative federalism from this government. I think that’s why you hear the premier of Alberta say she’s never been so optimistic about Alberta’s place in Canada. I was out at Stampede last week, and it is a palpably different feeling. I’m not going to speak for Albertans, but what I was told over and over again is Albertans feel heard. Albertans feel like there is a place for them in Canada and that this government is listening to the desires of Alberta. I think that’s a good thing for Canada.

MH: Making Pathways a reality will cost billions of dollars. Who do you see covering the bill, even operational costs?

TH: Pathways will be paid for partly through taxation incentives. It’ll be paid for through carbon pricing because we’ve now got a price on carbon, but it’ll be paid for ultimately by the producers. They see the economics of, “If we produce our oil in an environmentally responsible way, we can make a reasonable return on that.” That creates prosperity in Alberta, that creates royalties that pay for healthcare in Alberta, pay for education in Alberta, pay for the services that the provincial government provides. It also creates jobs and it creates federal tax dollars as well.

At the end of the day, this development will be one of the most important economic contributors to Canada over the next several decades. It is the single biggest creator of new GDP that we see today and that is a win for us. It also creates an opportunity for us to help our allies who are desperate to diversify their sources of oil. We hear that from our allies in Japan, allies in Korea, the Indian government, and from many of the governments in Asia that they desperately would like to buy more of our oil and diversify away from less reliable and more volatile sources of energy.

MH: Why should Canadians have confidence that the Pathways carbon capture project will become a reality and ultimately deliver as promised?

TH: I think the grand bargain that was talked about between the federal government, the provincial government, and the producers is that what goes hand in hand with the pipeline is Pathways. The pipeline is an opportunity to create wealth for Albertans, for all Canadians and for the shareholders of those companies. They go hand in hand. If there is a new pipeline, there will be Pathways, and I think people should feel good about that.