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Smart regulations, tax incentives key to unlocking capital

ASC Connect explores innovation opportunities from Net-Zero challenges.

ASC Connect 2021
ASC Connect 2021 included a panel conversation on opportunities in energy. - Photo courtesy Alberta Securities Commission
ASC Connect 2021 included a panel conversation on opportunities in energy. - Photo courtesy Alberta Securities Commission

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The federal government’s proposed tax credit for investments in carbon capture, utilization and storage (CCUS) projects is the “COVID vaccine” for reaching net-zero emissions by 2050, attendees at ASC Connect 2021 heard. 

“That’s our vaccine, because that unlocks a lot of money to start investing in CCUS in the short term,” said panelist Dawn Farrell, chancellor at Mount Royal University and former CEO of TransAlta. 

“We are just on the verge of a big investment boom in CCUS and that will definitely create a huge dent in the targets that the federal government has set,” she predicted, saying such a tax incentive would be the equivalent to policies promoting ethane in the mid-1970s by then premier Peter Lougheed, which kickstarted Alberta’s petro-chemical sector. 

She also equated it to the incentives in the United States that accelerated wind farm technology while driving down the costs for wind turbines. 

“Tax incentives for carbon reduction are the biggest lever in my view,” Farrell said. 

Farrell was one of three experts on a panel called Opportunities in Energy, at ASC Connect 2021, an annual event hosted by the Alberta Securities Commission. This year, ASC Connect focused on the trends and opportunities affecting Alberta’s capital market. 

More than 600 attendees participated in the virtual event, including c-suite executives, advisors and industry experts.

[Related reading: Investors, industry leaders discuss ESG at ASC Connect]

All three panelists agreed Canada can’t meet its “ambitious” climate change targets by 2030 and 2050 without the use of hydrocarbon energy, which CCUS makes possible.

Ottawa hopes to introduce its investment tax credit for CCUS projects by next year, which will provide much-needed capital to advance this technology, the panel said. Carbon sequestration is viewed as an integral part of Alberta’s environmental and economic future.

Tristan Goodman, president of the Explorers and Producers Association of Canada, called the transition to a zero-emissions economy nothing short of a “renaissance” for oil and gas.

“There’s no question as we look into the future, we’re seeing some great opportunities across the sector… oil and gas is going to go through nothing less than a rebirth,” he said.

Goodman believes the change in the industry is fundamental, rather than “simply following a commodity price cycle,” he said. “These are folks who have realized that we’re going through an energy transition, there is a serious change in the way people are going to develop all sorts of energy used in the future.”

Panelist Kevin Krausert, CEO and co-founder of Avatar Innovations, pointed to carbon capture and methane emissions technology as “the quick short-term wins,” to lowering our greenhouse gas emissions, which he believes will require collaboration, innovation, risk capital and multiple technologies.

“Frankly, I think reaching a net-zero economy is going to be the Apollo project of our time, it is going to take an all-hands-on-deck approach for business, the scientific community, technological as well as the financial markets,” he said. “Certainty and clarity from both the regulators and the financial markets, is going to be a critical factor for us to reach this audacious goal.”

Other key take-aways from the discussion include:

  • Alberta and Canada have many components needed to transition to a new economy, including a regulatory structure, a carbon price, Alberta’s entrepreneurial spirit and a mindset about net zero that was never there before. All that’s missing is the capital investment. 
  • Environmental, Social and Governance (ESG) standards must not equate with killing fossil fuels, as many environmental groups are pushing for, but rather include investing in companies and technologies that reduce carbon emissions.
  • The “social” needs to be put back into ESG, including gender equality when it comes to equal pay for equal work.
  • There are multiple pathways to net zero, and Alberta’s oil and gas expertise is an integral part of the solution.
  • Oil and gas companies are already starting to transition to energy companies and must continue to do so to survive. They can capitalize on the opportunities in today’s global energy crisis to diversify from fossil fuels and complete the necessary transition.

To watch this session, or any of the other panel discussions, ASC Connect 2021 is available for playback at the ASC website.

The Alberta Securities Commission (ASC) is the regulatory agency responsible for administering the province's securities laws. It is entrusted to foster a fair and efficient capital market in Alberta and to protect investors. As a member of the Canadian Securities Administrators, the ASC works to improve, coordinate and harmonize the regulation of Canada's capital markets.

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