Germany Chancellor plans lithium deal with Serbia after Rio ruling
Olaf Scholz plans to visit Serbia this week to secure supplies of lithium that are critical for the nation’s energy transition and auto industry.
In a study released Thursday by Calgary University’s School of Public Policy, Professor Ken McKenzie using economic data found incremental revenue for the government of Alberta over the last two years under the controversial New Royalty Framework in excess of $1 billion.
McKenzie said it was done without generating the political outcry that accompanied much of the changes to conventional oil and gas as a part of the royalty review process. The reason that oil sands producers have not met the new royalty rates with much opposition lies in the structure of the royalty system for that particular sector.
The oil sands royalty “allows for the deduction of operating and capital costs, thus the government shares equally in both the revenues and costs of oil sands projects,” according to McKenzie. This creates a system where the net impact on producers is only a fraction of the increase in royalty rates.
As such, McKenzie argues investment in the oil sands is expected to shrink only slightly, while the increase in government revenue is significant. So where does that leave conventional oil and gas producers who vehemently opposed the royalty changes in 2009?
The oil sands example proves “we can pluck the goose that lays the golden eggs without killing it,” McKenzie said. “The structure of the system —the base upon which the tax or royalty is applied – is at least as important as the rates. This lesson may well be applied to royalties in the conventional oil and gas sector.”
Click here to download the study.
