"The time is right for Canada to push the gas pedal on the oilsands and on its potential.”

The oilsands is an industry marked by megaprojects. The federal government has just rolled out a new “productivity mega deduction.”

Alberta and the energy sector hope Ottawa’s latest move will unleash an investment boom in the oilsands, one that rivals the surge of spending and production that flowed after similar changes were made in the 1990s and early 2000s.

“All of the stars are aligning,” said Heather Exner-Pirot, director of natural resources, energy and environment at the Macdonald-Laurier Institute.

“The time is right for Canada to push the gas pedal on the oilsands and on its potential.”

As part of his Canada Investment Summit on Tuesday, Prime Minister Mark Carney announced a key federal incentive, one that will allow many businesses to immediately deduct the costs of new investments in capital assets.

The changes will expand the amount of capital assets covered by the deduction from 15 per cent to more than 65 per cent. It will include oil and gas pipelines, software, R&D, rail tracks, bridges and roads.

“Capital assets related to a new pipeline, including capital equipment used in oil production, are newly eligible . . . and position us to expand our energy superpower status,” John Fragos, press secretary to federal Finance Minister François-Philippe Champagne, said in a statement.

For industry leaders, this is a significant measure with the potential to help trigger more production.

It is also a welcome step for the provincial government, which wants to see a new West Coast pipeline built, and oilsands companies to make substantial investments to increase production.

“They have listened to the business community on the importance of investment attraction,” said Alberta Jobs and Economy Minister Joseph Schow, who was in Toronto as part of the province’s delegation at the summit.

“We want to see this pipeline going from Alberta to British Columbia and the coast, but then you’ve got to have something to fill it, which means new exploration for the producers in Alberta.“

Speaking at a panel at the investment forum, Suncor Energy CEO Rich Kruger noted finding oil in the oilsands isn’t difficult — it has among the world’s largest proven reserves — but developing it can be a challenge.

Previous government policies have contributed to holding back industry development over the previous decade.

“But those are changing, including announcements earlier today. And so, after 42 years in this industry . . . I am as encouraged or optimistic today as I’ve ever been for what our future holds,” Kruger said.

“Accelerated depreciation, capital cost allowances that were announced today, (and) streamlined, more efficient project approvals — those are all part of ensuring a global competitiveness in the oil and gas world.”

Combined with anticipated changes to provincial royalties that will be designed to encourage new production, the federal changes could see oilsands operators make a positive final investment decision (FID) on greenfield projects, said Exner-Pirot.

“It’s very important and very significant,” she said.

The changes build on the most recent federal budget’s so-called “productivity super deduction,” which accelerated the incentives on a smaller range of investments in capital assets.

The new move will make the immediate expensing of eligible investments permanent, reducing the marginal effective tax rate on new business investment in the country to 6.4 per cent from about 13 per cent, less than half the U.S. rate, according to the federal government.

University of Calgary economist Trevor Tombe said the change was the top item on his list of ways Canada could increase its productivity and per-capita GDP growth.

“Accelerating the ability of firms to write off their capital investments, that is especially important for capital-intensive sectors, and there are a few sectors more capital intensive than oilsands production in Alberta,” Tombe said in an interview.

“If we think back to the 1990s, it was policies like this that really facilitated the remarkable growth of the sector.”

In 1996, the Alberta and federal governments announced plans to unleash oilsands investment, with the Klein government adopting a generic royalty regime for projects and the Chretien government providing accelerated federal writeoff of capital costs to new developments.

Between 1992 and 2015, oilsands capital investment totalled $262 billion and production hit 2.5 million barrels per day, easily surpassing early government targets.

Capital investment in the oilsands, which reached $34 billion in 2014, fell after oil prices tumbled last decade, and sat at $14 billion a decade later, according to data from the Canadian Association of Petroleum Producers.

Today, Alberta has proposed a 1,200-kilometre pipeline to the southern British Columbia coast, estimated to cost between $35.2 billion and $43.7 billion — with the federal government on board. The proposal is before the Major Projects Office for consideration as a project of national significance.

As part of a memorandum of understanding between industry and the two governments, the Oil Sands Alliance would also move forward with the long-awaited Pathways carbon capture network in northern Alberta.

More investment in increased production from Oil Sands Alliance members, such as Canadian Natural Resources, Suncor Energy, Imperial Oil and Cenovus Energy, will be needed to make it happen.

The alliance said it welcomes Tuesday’s federal step as Canada seeks to attract more investment in the economy, including the energy sector, although the group is seeking more clarity on the deduction announcement.

There hasn’t been a major new oilsands project announced in the past decade, noted alliance president Kendall Dilling at a carbon capture conference in Edmonton on Tuesday.

“We are seeing action . . . this new accelerated writeoff in the federal tax code, which is one of the key pillars we’ve been talking to them about,” Dilling said.

“There’s a few more things that need to happen until there will be FIDs, but I have really, really high confidence at this moment that we are on the path of governments and industry (being) aligned in an objective to grow.”

Canada’s aspiration of becoming an energy superpower, the new tax incentives and ongoing steps to speed up regulatory timelines are being noticed across the sector.

“For a capital allocator and investor, that presents opportunities today that I wouldn’t have considered a few short years ago,” Kruger said.

“We’re dusting off those project inventories. We’re updating those. We’re looking at how we would approach market in those, and it’s a very different environment today.”

Chris Varcoe is a Calgary Herald columnist.