The president of the industry group building Canada’s largest carbon capture and storage (CCS) project has confirmed that the endeavour, still in its early phases, will be scaled back significantly, after previously advertising massive emissions reductions.

Despite this, Kendall Dilling qualifies the reduction as being minor. 

“It is slightly smaller than what had been initially spoke [sic], and over a slightly extended timeline,” Dilling, president of the Oil Sands Alliance (formerly called Pathways Alliance), said during a fireside chat at the Carbon Capture Canada conference, held in Edmonton from 14-17 September.  

Dilling insisted the Pathways project, which has been estimated to cost between $20 – $30 billion CAD, and which will require considerable funding from Canadian taxpayers, “is still a huge project” that will be operating at full capacity by 2035.

When the carbon capture project was first announced in 2021, Pathways Alliance initially promised ‘net zero’ emissions from oil sands production by 2050, with a 22 megatonne per annum (MTA) reduction by 2030. Pathways ran an aggressive advertising campaign promoting their net-zero promise, which prompted a Competition Bureau inquiry into allegations of false or misleading advertising. A public transit agency in Montreal pulled Pathways advertisements after DeSmog inquired about the organization’s claims. 

Earlier this year, Canada’s federal government and the government of Alberta agreed to a memorandum of understanding (MOU) in which Oil Sands Alliance committed to far less ambitious emissions reduction goals.

When asked why the government agreed to a less ambitious project, Carolyn Svonkin, director of communications for Tim Hodgson, Canada’s Minister of Energy and Natural Resources, told DeSmog that the reduced figure was the “project’s consistent goal since this federal government was formed, and since negotiations on the Canada-Alberta MOU began.”

The Carbon Capture Canada conference is the largest event for the industry in Canada, and regularly draws industry leaders, lobbyists, and high-ranking members of the federal government, as well as various provincial and territorial governments.

In an interview at the conference with DeSmog, Dilling said that “the first phase has been scaled now at six million tonnes a year, but the infrastructure is still being built to be expandable to the original capacity.” He added, “So it’s more just a question of timeline as opposed to the actual capacity of the project.”

Shifting Numbers and Timelines

The timeline of the project has already shifted considerably, and construction hasn’t yet started.

Environmental watchdogs say it’s troubling that Canada’s oil industry is scaling back its ambitions at a time when the impacts of climate change, including a summer of out-of-control wildfires in Canada, are accelerating.

“The first phase of the project initially was supposed to capture 12 megatonnes per year by 2030,” Janetta McKenzie, director of the oil and gas program at the Pembina Institute, told DeSmog in an interview. 

“We’re now talking about six megatonnes a year by 2032,” said McKenzie. “The first phase is half the size, and the initial goal was net zero by 2050 and now we’re talking about 16 megatonnes per year in total by 2050, so it is a meaningfully smaller project now.

“The Pathways project has had a pretty volatile history,” said McKenzie, noting that the Pathways project was first announced five years ago.

Since 2021, Oil Sands Alliance has made a number of different claims about the emissions reduction capacity of its proposed Pathways project, on a variety of different timelines. When the project was first announced, the Oil Sands Alliance suggested it would eliminate 68 MTA of emissions from oil sands production.  

By 2023, Pathways Alliance indicated that the first phase of its project would reduce tar sands carbon dioxide emissions by between 10 and 12 MTA by 2030, and 40 MTA by 2050.

The latest projections are lower still: six million tonnes by the mid-2030s, and the possibility of an additional 10 million tonnes by 2045. As recently reported by The Narwhal, this represents a 77 percent drop in the project’s own stated goals for emissions reductions.

Who Pays for CO2 Pipelines?

Whether the project is ultimately realized still depends primarily on who might finance it, and how.

But the problem according to McKenzie is instability in the industrial carbon pricing regime in Alberta as much as in Canada.

“The price has really plummeted over the last few years,” said McKenzie. “Credit prices have ranged from the high teens through the $20 per tonne range, and that’s very low. You’re not doing carbon capture when credits are trading at $25 a tonne.”

McKenzie noted that conference speakers were already concerned they would need industrial carbon prices at $130 a tonne to move forward with their projects.

“There’s a huge gap between what might be needed to generate value for carbon capture, and incentivize companies to do it, and what the actual price is, which is very, very low.”

As to who will pay for it, there’s additional concern the project may be wholly dependent on public money.

“There is a growing realization that carbon capture and storage projects are likely to require permanent government subsidies, which should lead to questioning of the viability of CCS as a tool to effectively reduce carbon emissions,” said Mark Kalegha, an energy finance analyst focused on Canada, who works for the Institute for Energy Economics and Financial Analysis (IEEFA).

“Our analysis of operational and financial reports from two large scale CCS plants in Alberta – ACTL and Quest – revealed rising project costs that were not being offset by commensurate increases in CO2 capture volumes and associated revenues,” said Kalegha in a statement to DeSmog. 

Another major concern is that the carbon capture project has been tied to a proposed pipeline to the west coast. Aly Hyder Ali, Environmental Defence Canada’s senior program manager for oil and gas, notes that project carries its own environmental, as much as economic, risks.

“The Pathways carbon capture and storage project is a bad bet for Canada,” said Ali in a statement to DeSmog. “It will require tens of billions of dollars in public support, while capturing only a small portion of the emissions from oil sands production.”

Ali added that the Pathways project would have no impact on the emissions released from the combustion of the oil produced and exported via the proposed pipeline.

“The Pathways project, … will not come close to compensating for the new west coast oil pipeline, which could add up to 28 MTA of greenhouse gas emissions every year,” said Ali. 

Ultimately, Dilling assured the audience at the carbon capture summit that Pathways is “supporting the national consensus to give us that license to grow the oil sands to build pipelines, to access the markets”.