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IN Tune: The Outer Limits: Exploring the Cost (Opportunity) of Canada’s Net Zero Pathways

Research & Strategy April 01, 2022
Research & Strategy April 01, 2022

 

IN Tune is a podcast featuring Equity Research analysts from BMO Capital Markets. Our episodes explore key emerging themes, trends, and issues which are important to our institutional clients globally.  


This episode is hosted by Jared Dziuba, CFA, Oil & Gas Market Specialist


Oil & Gas Thematic Analyst Jared Dziuba discusses the BMO Energy Research Team’s latest IN Front report: “Outer Limits: Exploring the Cost (Opportunity) of Canada’s Net Zero Pathways.’” We engage in a comprehensive discussion about the potential cost of the Canadian oil industry’s net zero ambitions as it relates to carbon abatement technology deployment, and its implications on the financial health of producers and shareholders.

Jared emphasizes that Canada’s oil sands producers are uniquely positioned to execute on net zero ambitions given global leadership in R&D and deployment of technology including Carbon Capture, Use, and/or Sequestration (CCUS), and that while the costs are high, they are well within the free cash flow generating capacity of producers without impeding on planned growth in cash returns to shareholders. Despite this, he also explains why industry critics are irresponsible to suggest that the industry bear the full burden of costs associated with these large-scale, capital-intensive net-zero technologies aimed at achieving collective social goals despite ongoing consumer demand for oil products, given the consequence of severe erosion of shareholder returns, as well as deterioration of investor confidence and competitiveness in global energy markets. Finally, Jared points out that the ‘Pathways’ alliance among the top six oil sands producers is actively fortifying action plans, and that a pending announcement of government CCUS tax incentives may provide a catalyst to finally convert ambition to action.


TRANSCRIPT

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