Uncertainty grows for Canada's largest carbon capture project amid political and policy shifts
Canada's largest proposed carbon capture and storage project faces growing uncertainty following Prime Minister Justin Trudeau's resignation, according to BNN Bloomberg.
Experts suggest this development amplifies existing concerns about energy and climate policy, with the potential for a federal election this year adding to the uncertainty.
The $16.5bn project, led by the Pathways Alliance, would capture and store carbon dioxide emissions from over 20 oilsands facilities in northern Alberta. The emissions would travel 400 kilometres via pipeline to an underground storage hub near Cold Lake.
This project is central to Pathways Alliance's commitment to achieving net-zero emissions by 2050 and would be one of the world’s largest carbon capture initiatives if completed.
Despite its ambitious scope, the project remains stalled, awaiting a final investment decision since its 2022 proposal.
Michael Bernstein, executive director of Clean Prosperity, said he doubts the project can move forward in the current political climate.
“I can’t imagine a huge project like that could really move forward in a time like right now,” he said.
Bernstein added, “When you’re looking at a project that has at least a 15-year time horizon, you want as much certainty as possible. And there’s just more uncertainty than I can remember in my whole time doing this work.”
Pathways Alliance has spent the past year lobbying for government support at federal and provincial levels. However, discussions with the Canada Growth Fund have yet to result in a project-specific agreement.
The fund did not respond to requests for comment. A spokesperson for Pathways Alliance also declined to comment on the current political situation.
Political instability poses challenges for projects of this scale.
Scott Crockatt, spokesperson for the Business Council of Alberta, believes Alberta companies remain committed to decarbonization efforts, regardless of political uncertainty.
“Most businesses who were looking at decarbonization projects... were doing it for sincere business reasons, like generating value and reducing long-term risk,” Crockatt said. “So, I actually don’t think that underlying motivation is going to change with political cycles.”
The federal Liberal government has introduced measures to support emissions-reduction technologies, including an investment tax credit for carbon capture and a mechanism to backstop carbon pricing.
However, Heather Exner-Pirot, special advisor on energy to the Business Council of Canada, pointed out that the potential election of a Conservative government could reshape this support.
Conservative leader Pierre Poilievre has opposed the consumer carbon tax and is expected to adopt a less climate-oriented agenda.
“It doesn’t sound... like they would support what you would need to do to get Pathways Alliance over the hump in the time frame we’ve been looking at,” Exner-Pirot said. “They don’t seem to be very keen on it. It’s just very expensive.”
Experts have raised concerns about the potential impact of policy changes on the project’s viability.
Deloitte Canada’s Andrew Botterill highlighted that uncertainty about industrial carbon pricing could hinder investment.
“Companies are looking for long-term certainty... and an understanding on what the market’s going to look like for the next 10 years, and 20 years and 30 years,” he said. “When they see things on the horizon that are uncertain, I think it slows the big capital spends.”
Canada’s emissions reduction plan targets a 40 to 45 percent cut in emissions below 2005 levels by 2030, aiming for net-zero by 2050. The plan requires tripling carbon capture capacity by 2030.
Initially, Pathways Alliance hoped its project would begin sequestering carbon by 2030, but Bernstein said this timeline is increasingly unrealistic.
“These projects take the better part of a decade to complete, and we just don’t have that time available,” he said. He emphasized the need for cooperation among the companies, Alberta, and the federal government, but acknowledged this goal seems distant.
“What we know at this point right now is there is no deal that works for all the parties,” Bernstein said. “It’s too bad that we don’t have one today, and that we lack clarity on whether there will ever be one.”
