Critics pan Alberta's proposal for oil company royalty breaks

A new pilot project that would see the province give energy companies tax breaks for cleaning up after themselves is being widely panned.

The program would grant oil and gas businesses royalty benefits if they complete old well site maintenance – something that's already legally required.

Environmental and economic experts call it a bad idea.

So do many Alberta politicians.

"We have a principle of polluter pay," NDP Leader Rachel Notley said.

"We do not give people bonuses for cleaning up after themselves."

But that's what Danielle Smith is proposing.

After asking her energy minister to find a solution to the problem in an October mandate letter, Smith's government is now looking into a three-year pilot that would see companies get breaks on new wells if they clean old ones.

The $100-million royalty credit idea comes three years after the federal government committed more than $1 billion to the cause.

"There hasn't been anything done so far to stimulate the cleanup, so we've got to do something different if we want to get these sites cleaned up," Smith told CTV News on Thursday.

But the taxpayer proposal isn't what many were expecting.

"These are obligations that these companies have and incentivizing obligations that are required by law is a fascinating discussion," said Paul McLauchlin with the Rural Municipalities of Alberta.

"There's companies that aren't paying service leases, we've got companies that aren't paying oil and gas taxes, and then this government moves forward on a liability incentive program without addressing those other two issues."

And the proposal may not be completely out of left field.

"I was lobbied actually by the premier on this program that was designed by industry two years ago," McLauchlin said.

The province tells CTV News the project is still in the development stages and more stakeholder engagement is on the way.

It promises the program will target some of the oldest sites in the province that have not produced oil and gas for many years. 

A report from Scotiabank says the plan goes against capitalist principles and would hurt the industry's reputation.

Many producers posted record profits in 2022.