If oil giants are reluctant to invest in carbon capture, why should taxpayers?

National Observer

26-06-2025

When Prime Minister Mark Carney announced that the feds would be interested in pipeline projects for ' decarbonized oil,' the folks at the Pathways Alliance must have felt their hearts skip a beat. The oilsands consortium took it as a sign that the federal government might embrace a pitch by Alberta Premier Danielle Smith to approve a new pipeline to the west coast in exchange for a carbon capture and storage project the producers have talked about since 2022, but never started.
Pathways president Kendall Dilling told the Globe and Mail he's feeling optimistic as he sees a 'real, renewed interest in getting past some of the barriers that have been slowing infrastructure down in this country.' And Smith said this week a private-sector pitch to build the pipeline is close.
Pathways' grand plan is to capture carbon dioxide from oilsands production facilities and pipe it to an underground storage facility in Cold Lake, Alta., thereby preventing its release to the atmosphere where it adds to global warming.
Oil produced this way is billed in industry circles as 'decarbonized' even though — critically — the end product will produce as much carbon pollution as any barrel of oil ever did when burned in cars, ships, planes or factories without carbon capture technology, also known as Scope 3 emissions. Climate scientists were quick to call bullshit when feds used the euphemism in a list of projects that might be considered in the 'national interest.' Among the naysayers was none other than Simon Donner, co-chair of the federal government's own Net-Zero Advisory Body, who called the notion ' Orwellian.'
While applying the term 'decarbonized' to the end product is disingenuous, cutting the substantial emissions from oil production is still significant. Oil and gas producers are Canada's most egregious carbon polluters, and of those, the oilsands giants are among the worst of the worst. So there is a valid argument to be made for cutting emissions during the production phase, at least until the world transitions to clean energy.
But if the oil giants are as convinced as they claim to be about the efficacy of carbon capture and storage, why isn't the Pathways project already up and running? First, it's hugely expensive; an anticipated $16.5 billion before the inevitable cost overruns. Second, it's a relatively new technique with a spotty record.
And finally, the companies know oil is a sunset industry — with peak oil just around the corner, they can no more justify billions for carbon capture than they can new oilsands plants. Oil is predicted to reach peak demand sometime between 2030 and 2050, depending on who you ask and trust. Their runway is simply too short to justify spending on carbon capture, so they are looking to us to pay.
If Canada's oil giants are reluctant to invest in carbon capture, why should the feds foot the bill? @adriennetanner.bsky.social writes
Industry claims the grants and tax credits on offer from the feds is not enough and that funding from a carbon credit market created just for them is too risky. And Smith, for all her whining about the lack of federal support for Alberta's oil and gas industry, hasn't coughed up sufficient cash either, possibly because many in her party are climate change deniers who don't believe carbon is worth capturing. Former Energy and Natural Resources Jonathan Wilkinson said late last year that Pathways is 'probably looking for something more from the government of Alberta.'
Aside from the huge dollar figures, carbon capture projects also have a spotty track record. Although it's widely regarded as a part of the climate change solution and the technology is improving, there have been some spectacular failures.
The Pathways website boasts that Alberta has experience and expertise building and operating large-scale CCS projects, citing Shell's Northern Alberta Quest Carbon Capture and Storage facility as a star example. But if Quest is a success, which became a matter of debate when Greenpeace revealed that Alberta allowed Shell to sell phantom carbon credits to juice the numbers, there are plenty of others with even bigger problems.
A carbon capture project at Saskatchewan's Boundary Dam was an utter flop; Archer-Daniels-Midland, an American agribusiness project with a carbon capture project in Decatur Illinois, was forced to shutter after it leaked; and Sleipner, Equinor's flagship CCUS project in Norway admitted last year that defective monitoring equipment caused it to overbill its ability to capture and store carbon and storage by about 28 per cent.
Of all these, the potential for leaks is perhaps most concerning. Carbon capture is only worth the massive investment if the carbon injected deep into underground wells stays there forever. That means monitoring the sites in perpetuity and repairing them if things go sideways. All this at a time when Alberta is still struggling to clean up or even seal off the original oil wells.
The federal government has bent over backwards developing complex economic incentive programs to try to make the Pathways Alliance project happen and may even greenlight a new pipeline to further sweeten the pot.
But it's not clear why the federal government would trust the oil companies to pony up their share of the money for carbon capture, given they haven't so far. A Pembina Institute study last fall found oil companies in Canada are dumping money into increasing production and have not yet made 'meaningful investments' in emission reduction projects.
A new pipeline to further aid the extraction of some of the world's dirtiest oil is a costly mistake for the climate. And trusting that the Pathways Alliance partners will fund a carbon capture project and get it operational soon enough to mitigate the damage is a longshot bet.