November 4, 2022, Calgary, Alberta
The Canadian Association of Petroleum Producers (CAPP) is encouraged by a number of key items identified in the federal government’s Fall Economic Statement.
First, is the federal government’s willingness to partner on investment in carbon capture projects and the stated strong commitment to reaching a more competitive position with the United States to encourage those carbon capture projects to get in Canada. We will continue our work with the federal government as it develops the Canada Growth Fund along with other initiatives on CCUS and clean technology to create an environment that will support the oil and natural gas industry’s planned multi-billion-dollar investments into lowering emissions. This includes exploring how the Investment Tax Credit proposed for clean energy can be applied to the electrification of upstream oil and natural gas operations, an innovation which can have a significant impact on lowering emissions from the industry.
Second, we support the increased funding to the Impact Assessment Agency of Canada (IAAC), the Canada Energy Regulator (CER) and other federal departments focused on accelerating the review process for major projects. An efficient and transparent review process is critical to the rapid development of carbon capture and other energy infrastructure projects that can support Canada to play a larger role in providing lower-emission, responsibly produced oil and natural gas to our allies and trading partners around the globe.
However, the industry is concerned about the proposed 2% tax rate proposed on share buy backs from publicly traded companies. The 2% tax rate is double than what is being considered in the United States and may have the unintended effect of discouraging investment into Canadian-run businesses while putting the shareholder returns of Canadian investors at risk. We will be exploring the impact of the proposed additional tax more deeply and engaging with the government in the coming months, with the goal of preserving the value of Canadian companies and protecting a tool that provides income to investing Canadians.
It should be stated, Canada has one of the best-in-class royalty and taxation frameworks in place to ensure Canadians get full value for their oil and natural gas resources. The industry has put billions back into Canadians’ pockets this year in the form of share buybacks and dividend payments. This is on top of the estimated $35 billion to $40 billion in domestic capital investment and, according to a recent analysis from Peters & Co, the $50 billion expected to be paid to governments in Canada in 2022. These contributions to the Canadian economy support hundreds of thousands of jobs and help fund infrastructure, healthcare, schools, roads and critical social programs across the country. Canada’s oil and natural gas industry is proud to be a foundational pillar of the country’s economy and a source of opportunity and prosperity for all Canadians.
We will take the necessary time to review the details of these added measures announced today. We look forward to continued collaboration with both the federal and provincial governments to help Canada meet its climate commitments.
– Lisa Baiton, CAPP President & CEO
About CAPP – The Canadian Association of Petroleum Producers (CAPP) is the trusted voice for companies, large and small, that explore for, develop and produce natural gas and oil throughout Canada. CAPP’s member companies produce about 80 per cent of Canada’s natural gas and oil. CAPP’s associate members provide a wide range of services that support the upstream oil and natural gas industry. Together CAPP’s members and associate members are a solution-oriented partner to Canada and the world’s needs for safe, secure, reliable, affordable and responsibly produced energy, and an important part of a national industry with revenues from oil and natural gas production of about $116 billion a year. CAPP supports industry efforts to continue to reduce upstream GHG emissions and play a role in support of Indigenous participation and prosperity. As a non-partisan organization, CAPP works with all governments and all parties to ensure that our industry is long-standing.
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