Thank you, Chair, and honourable members, for the invitation to participate in this committee's study on fossil fuel subsidies.
Certainly, as Canada's largest business organization, with member companies of all sizes in all sectors and regions of the country, the chamber welcomes the interest parliamentarians have taken in this critical issue.
The G7 and G20's voluminous communiqués over the years have regularly referenced eliminating fossil fuel subsidies. Certainly it makes for a great sound bite, but unfortunately I think a lot of the nuance has been lost in the conversation. The oil and gas sector plays a critical part in Canada's pathway to net zero, since without reliable supplies of energy there will not be the political conditions to enable us to have the push for decarbonization. Additionally, we need to have an approach to fossil fuel subsidies that recognizes the regional dynamics of our country.
I mentioned earlier the need for nuance. I want to briefly unpack that with three examples that all feed into the simple point that immense capital investment is needed in the transition to net zero.
First is carbon capture utilization and storage. CCUS plays a critical role in our net-zero transition, especially when looking at the 2030 time horizon. Industry is stepping up in a major way and we are seeing collaborative initiatives, such as the Oil Sands Pathways to Net Zero alliance. CCUS is a prime example of what some would see as a fossil fuel subsidy to industry, yet CCUS is not cheap, and without this tax credit there certainly is no credible pathway towards net zero.
Second is the net-zero accelerator initiative. We welcome the government launching this fund, which has the potential to play a vital role in derisking the deployment of new technologies by oil and gas companies, and certainly others in the economy, to align with both traditional and new business lines. Again, some would take this as a fossil fuel subsidy, but I think cutting off oil and gas companies from initiatives like this would certainly make our transition towards net zero much more difficult.
The third and final example is multisector tax measures, such as capital cost allowances. The Canadian tax code is already complex enough. Blocking certain sectors from accessing these types of tax credits would only serve to complicate and in some ways distort the tax code and make capital deployment much more difficult.
In closing, as I said at the outset, I hope the honourable members of this committee will understand that the fossil fuel subsidy issue is not a binary one. Phase-outs might make for a good sound bite, but certainly we urge careful deliberation to ensure that our net-zero transition is not inadvertently made more difficult.
Thank you, and I look forward to your questions.