Canada's oil industry needs tax breaks and a "balanced approach" to climate policy in order to prosper as the world shifts to a lower-carbon economy, the Canadian Association of Petroleum Producers (CAPP) says.
On the eve of a federal energy strategy conference in Winnipeg, CAPP released a statement Tuesday in which it argued the oil and gas sector can prosper in the future "but only if governments choose to develop Canadian oil and natural gas with competitive policies that attract investment and spur innovation."
In Winnipeg this week, Natural Resources Minister Jim Carr will convene a two-day session on what policies and technological innovation are needed to put the country on a long-term path to an affordable, low-carbon energy economy.
In an interview, Mr. Carr said Canada's oil and gas resources remain important economic advantages, and the industry needs to innovate to tap them in a sustainable manner.
But some industry supporters and conservative politicians argue Liberal climate policies – coupled with those of the New Democratic Party government in Alberta – are stifling the sector, as is opposition to new crude pipelines needed to diversity Canada's export markets.
In an interview Tuesday, CAPP president Tim McMillan said Canada is losing the race to attract new investment to the oil and gas sector. He said governments need to ensure their carbon-pricing and other climate-change policies don't simply drive investment to other jurisdictions that have no greenhouse gas regulations.
"Canada has been a climate leader; we've had a price on carbon [in British Columbia and Alberta's oil sands sector] for over a decade," he said. "But we can't do it in a vacuum."
He said the industry should be treated as an "energy-intensive, trade-exposed" sector, with flexible carbon policies that protect industry competitiveness. Alberta is introducing a carbon pricing plan for the oil sands that would give breaks to most efficient companies. But Mr. McMillan said he could not assess its impact until the final details of the policy are released later this fall.
In its statement, CAPP called for "a national vision for oil and gas development" to emerge from this week's federal energy strategy conference, including formation of a clean-energy task force that would include a commitment to research and development and "an attractive fiscal framework" to encourage investment in innovation.
Mr. McMillan said Ottawa should consider providing an accelerated capital cost writeoff for companies that invest in the technology needed to reduce greenhouse gas emissions and make production more efficient. The former Conservative government removed the accelerated capital cost allowance from the oil sands sector as part of Canada's international commitment to remove subsidies from the fossil fuel industry.
Prime Minister Justin Trudeau has insisted his government remains committed to Canada's oil sands sector, but has, at times, appeared to question its long-term viability.
Climate-change policy experts argue Canada's long-term energy strategy should focus on two core elements: creating an emissions-free electricity sector, and then cutting consumption in transportation and heating and cooling of buildings while using electricity to replace the need for oil and natural gas.
While Mr. McMillan believes oil demand will continue to grow around the world, some analysts suggest that, within a decade, it could peak and begin to fall.
"Oil is not going to be part of the clean energy future, at least as a fuel source for transportation," said Dan Woynillowicz, policy director for Clean Energy Canada, a national advocacy group.