Occidental: 1 - Canada: 0

News Report: Occidental Petroleum to buy Squamish-based Carbon Engineering for US$1.1B

Trite as it is to ask, can good news also be bad news? As much as I’ve been advocating for Canadian scientists to play a meaningful role in addressing the world’s greenhouse gasses (see prior post “Clean technology advancements, not circular taxes, is Canada's best hope to reduce global greenhouse gasses and grow our economy” May 11-23), last week’s news out of Squamish, B.C. poses a dilemma.

Carbon Engineering’s technology is understood to remove carbon dioxide from the atmosphere for storage or production as clean transportation fuel, and CEO Steve Oldham, has long made the case that to achieve future climate targets, society should find a way “to reduce the amount of carbon dioxide already in the atmosphere.” His pitch to corporate, venture and Family Office investors was that “carbon capture and storage systems cost so much that they’re only viable when governments put a price on emissions.” As Enbridge (ENB:TSX) CEO Greg Ebel will tell you, it’s tough to confidently invest in a space that’s solely reliant on government subsides.

Mr. Oldham laid out another path.

It’s not hard to see why Occidental Petroleum’s corporate venture arm was drawn to cut a cheque in 2019, following what has proved to have been wise early investment bets by both Murray Edwards and Bill Gates. Carbon Engineering’s other investors included: Airbus, Air Canada, Bethel Lands Corp, BHP Group, Chevron Technology Ventures and Toronto’s Peter Thomson.

Beyond Thomvest, it’s disappointing to see that the company didn’t attract much, if any, investment capital from Canadian VC funds. I recognize that there aren’t very many domestic Clean Tech funds in the first place, and that the track record of generalist VC “Clean Tech Tourists” is poor. These excuses need to end (see prior post “Canada can create New Economy jobs without subsidizing foreign corporate shareholders in the process” April 28-23), for the sake of us all.

The recent news that the U.S. government is going to provide capital to U.S. VC funds is a reminder that the North American investment landscape is shifting quickly.

As reported by Dan Primack, the U.S. Small Business Administration is making US$5 billion available — this year alone — to provide long term leverage to VC funds. More capital means both bigger rounds and larger portfolios. US$5 billion represents more money than the Canadian VCCI program could muster, on a per capita basis, over a four year period. Being clinical Americans, the SBIC program has a specific target:

The headlines about record venture capital investment miss that tons of that money is going into things like B2B SaaS, instead of to hard technologies and critical technologies that are vital to our global competitiveness and national security.

Bailey DeVries, the SBA's associate administrator and head of its Office of Investment and Innovation. via Axios

My capitalist libertarian side is delighted for Carbon Engineering’s management, researchers and investors. A billion dollar sale will always be notable in the Canadian clean tech space, particularly when the venture capital exit market is quieter than we’ve seen in recent years.

And yet, if this was a BC-based lithium mine or a Telecom company, the Federal government would probably block the deal; but there’s nary a peep on this deal. Even though Canadian IP is going to a Houston-based, publicly-traded firm. If Carbon Engineering has indeed produced the technology required to have an immediate and meaningful impact on the amount of carbon that’s already in the atmosphere, will Canadians regret letting it slip through our collective fingers? I know what Mel Hurtig would say.

Even for a Conservative, such as Pierre Poilievre, there’s something to chew on. If he could cancel the Liberal carbon tax, lower the cost of living and still reduce the amount of carbon in the atmosphere (in reality, not just in theory), that might have sufficient appeal to trump the traditional free market mentality that guys like he and I generally gravitate to.

Regardless, the Carbon Engineering success story is proof that Canadians can have a positive impact on the global climate market. That we can create local jobs, leverage our excellent Universities, generate wealth and attract global notice.

And that we don’t need to raise the cost of a BBQ propane tank to do so.

MRM

(this post, like all blogs, is an Opinion piece)

(photo: Chestnut vendor, New York, 1951, by Irving Penn)