$100 million for energy research? Why not invest $100 billion, instead?

The energy transition is an existential threat to the Canadian hydrocarbon sector and this is no time for innovating on the cheap

Ottawa committed $100 million over four years to help lower greenhouse gas emissions and environmental impacts from oil and gas production, as well as support cleantech expansion. Critics say the industry should fund such research itself. There is a good argument, however, that this is exactly the type of funding Canada should provide to the hydrocarbon sector and the amount should be much higher than a measly $25 million annually.

When the subsidy was first announced in the 2019 budget, “our reaction was to point out the hypocrisy in the government’s reaffirmed commitment to phasing out fossil fuel subsidies (a commitment first made in 2009), and then offer new handouts,” says Julia Levin of Toronto-based Environmental Defence.

Source: Energy Futures Lab.

Is this a handout or an investment in a “future-fit” – as the Energy Futures Lab folks like to call it – hydrocarbon sector? Is the Trudeau Government subsidizing the fossil fuel status quo or supporting research that will help the industry adapt to the energy transition and prepare for a net-zero emission, post-combustion future?

These are the fundamental questions Ottawa, the industry, and particularly the Alberta government, must address. And, frankly, which they have done a very poor job of addressing to this point.

If the country sees no future in hydrocarbons, if Canadians truly believe that the energy future will be powered only by clean electricity, “green” hydrogen, and biofuels and that Canada’s abundant oil and gas reserves should eventually be left in the ground, then we should acknowledge that and not spend another brass loonie on what must surely be a sunset industry.

Or, Canadians can be more creative and imagine a different energy future, one where hydrocarbons become the feedstock for materials manufacturing (for example, bitumen into carbon fibre) or clean-burning fuels (for example, natural gas into “blue” hydrogen).

Energi Media has already made a modest contribution to a new Canadian narrative for the energy future with The Energi Declaration and the Hydrocarbon Vision. Thursday’s funding announcement for the Clean Resource Innovation Network (CRIN) is consistent with that new vision.

Why investing in CRIN is essential to Canada’s energy future

Unless you’re plugged into the energy sector, you’ve probably never heard of CRIN. “CRIN is a network, we are the glue, the connector of all the incredible innovation bodies across Canada,” is how Joy Romero describes it. She is the CRIN chair and also VP of technology and innovation for Canadian Natural, the largest oil sands producer.

The network includes university researchers, oil and gas companies (large producers spend hundreds of millions each year on research and development), governments and their research agencies, innovators, and investors that are involved, in one way or another, in the commercialization of new energy technologies.

Dr. Sara Hastings-Simon is an expert on Canadian and American government support for energy technology innovation. She argues that many, perhaps most, new energy technologies would not exist were it not for public funding. The Americans, in particular, pour billions into scientific research and commercialization activities despite the militant free-market, anti-government rhetoric spouted by US oil and gas boosters.

Canada doesn’t have the resources of the American government, so we have to be a bit more clever with taxpayer dollars, which is why CRIN is so important. In fact, it could be argued that $25 million a year isn’t nearly enough. As the world stands on the brink of significant disruption in the global energy system, now is not the time for a leading energy-producing country to pinch pennies.

What will CRIN do with the funding? According to its website, the money will be spent in four ways:

  • $5 million to support digital technology, value-added products, and reducing the “environmental footprint” of oil and gas production;
  • $25 million for technology competitions, in which teams of innovators propose solutions to thorny technical problems and compete to have their projects funded;
  • $50 million to commercialize new technologies by partnering with oil and gas companies;
  • $20 million for CRIN to manage and further develop Canada’s energy “innovation ecosystem.”
Source: Alberta Innovates.

There’s a lot to unpack in that list, but “technology competitions” deserve a shout out. Alberta Innovates and Emissions Reduction Alberta, both provincial agencies, fund a number of these competitions.

For example, Alberta Innovates launched the $15 million Carbon Fibre Grand Challenge in January that has attracted research teams from all over the world, including leading Canadian scientists. The agency estimates that turning bitumen into fuel yields $27 billion of value per year, but using it to make carbon fibre could triple or quadruple that number. And commercial production in Alberta is likely only five to seven years away, according to Energi Media interviews with agency managers.

“Canada is undergoing a transition to a low-carbon and clean-growth economy. Working with industry and the Clean Resource Innovation Network is an important part of our plan to reduce emissions, accelerate clean growth, create jobs, and reach our net-zero climate-change commitment by 2050,” Environment and Climate Change Minister Jonathan Wilkinson said in a press release, neatly summing up the benefits of the CRIN funding.

If the benefits to Canada are that significant, and we think they are, why not spend $100 billion over four years? Ok, maybe suggesting $25 billion a year – 7% of the total 2019 government of Canada expenditures – is over the top. But the energy transition is an existential threat to the Canadian hydrocarbon sector – and the energy industry in general – and this is no time for innovating on the cheap.

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