Carney's latest pipedream (fraud) explained

A forthcoming deal between the federal government and Alberta for a new oil pipeline, reportedly set to be announced Thursday, promises to ignite a political firestorm.

On Monday, CBC reported a memorandum of understanding outlining the terms of a new bitumen pipeline to the BC coast will be formally announced by Prime Minister Mark Carney and Alberta Premier Danielle Smith at a press conference on Thursday. 

Carney hinted this was his plan in September when he announced the first tranche of projects he was referring to the Major Projects Office. At the time, he said the office would develop a strategy for what he dubbed “Pathways Plus” — essentially marrying a major investment in carbon capture technology with a new pipeline to export oil from Alberta. 

In Carney’s telling, this will allow Canada to export “decarbonized oil” for decades to come — a scientifically fraudulent term because the vast majority of greenhouse gas emissions from oil come from when it is burned, not produced.

If the project proceeds, it will represent a major coup for the fossil fuel sector. After fighting emissions policies put in place by former Prime Minister Justin Trudeau for years, they have succeeded in convincing Carney to dismantle or exempt them from those policies — and secured political support to boost fossil fuel production, all in a matter of months. But the multi-billion dollar proposal carries massive risks, and environmental groups, Indigenous nations and some think tanks are all poised to fight it tooth and nail, setting Carney up for his biggest domestic challenge yet. 

What is the Pathways Alliance project?

The Pathways Alliance was formed in 2021 and is composed of Suncor Energy, Canadian Natural Resources, Cenovus Energy, Imperial Oil, MEG Energy and ConocoPhillips Canada, which collectively represent 95 per cent of oilsands production. The $16.5-billion plan involves  capturing carbon dioxide from 13 oilsands sites in northern Alberta and transporting them to an underground storage site south of Cold Lake, using 600 kilometres of pipelines. 

According to the proponents, the plan could reduce emissions by about 12 million tonnes per year by 2030, and up to 62 million tonnes per year by 2050. However, if paired with a new oil pipeline and new oil production to fill it, total emissions are actually higher than the status quo — if no carbon capture project or export pipeline were built — according to the Pembina Institute. 

“It would be difficult to characterize this as a scenario where ‘decarbonized barrels’ have been achieved,” the Pembina Institute said in October.

Further undermining the climate case for carbon capture is that Alberta wants to double oil production and wants carbon capture tax credits to be used for “enhanced oil recovery” (pumping the carbon underground to extract more oil), according to a briefing note prepared for Natural Resources Minister Tim Hodgson Canada’s National Observer received through a federal access to information request. The Pathways Alliance points to Wolf Midstream’s Alberta Carbon Trunk Line, one of Canada’s few operating CO2 pipelines, as an example of successful carbon capture technology which captures CO2 for enhanced oil recovery. 

Before anti-greenwashing rules came into effect, the alliance claimed these investments would put the industry on a path to net-zero by 2050. Those claims led to investigations from the Competition Bureau into alleged greenwashing. But Carney’s first budget indicated those anti-greenwashing rules would be watered down, which experts say will allow companies to resume misleading the public. 

The federal government offers a carbon capture tax credit that could cover up to 50 per cent of the cost of building the Pathways project, while Alberta offers a 12 per cent tax credit. Despite governments offering to pay more than half of the construction costs and after four years of talking about the plan, the companies behind the Pathways Alliance have spent more money advertising and lobbying against emissions reduction policies than actually building the carbon capture trunk line. 

The Pathways Alliance has spent hundreds of thousands of dollars on Facebook and Instagram ads, bought commercial time at premier sporting events such as the FIFA World Cup, Australian Open and 2023 Super Bowl and has splashed its ads to travellers flying on Air Canada. And no shovels have hit the ground.

Risky bet

The Pathways Alliance project carries both environmental and financial risks, as well as risks to Indigenous nations. 

The project is financially unsustainable without long-term government subsidies, according to a study published earlier this year from the Institute for Energy Economics and Financial Analysis (IEEFA). The think tank found the project is facing increasing capital costs — similar to Shell’s Quest project with operating costs growing 118 per cent since 2016 and Wolf Midstream’s Alberta Carbon Trunk Line seeing costs balloon more than 60 per cent since 2020. 

The business model of a carbon sequestration project is essentially this: companies capture and store carbon dioxide, earn credits for doing so, sell the credits to others and generate revenue. The revenue is used to recoup construction costs, pay for the energy used to capture and transport carbon dioxide, monitor the storage site and more. Whatever is left over is profit. 

The Pathways Alliance project and a higher industrial carbon price, which reporting suggests will be a part of the MOU announced Thursday, go hand in hand. If there is a higher industrial carbon price, the Pathways project could earn more from the carbon dioxide it manages to capture, potentially putting it on stronger financial footing. 

However, hundreds of experts have been warning the federal government for years that carbon capture projects routinely fail to reach their stated capture targets and the technology remains largely ineffective.  

Athabasca Chipewyan First Nation Chief Allen Adam, whose territory would be affected, has previously said with his nation’s treaty rights on the line, he will fight the project. One of his concerns is that the Pathways Alliance is using a “project splitting” strategy with the Alberta Energy Regulator (AER) — a tactic to divide its megaproject into 126 smaller segments for the regulator, which minimizes consideration of cumulative impacts. 

The Athabasca Chipewyan First Nation and Ecojustice requested the AER require a comprehensive environmental impact assessment to study the entire project but the groups were denied. 

In August, the Fort Chipewyan Métis Association requested, for the fifth time, that the Pathways project be subjected to a federal impact assessment. 

“The Pathways Project is further taking up of lands within FCMN’s traditional territory; a landscape that is already heavily disturbed by oil sands development,” the letter reads. “If the Government of Alberta does not require a full environmental impact assessment for the Project, then it is the responsibility of the Federal Crown to ensure that project-specific impacts are adequately assessed, mitigated and accommodated where mitigation and management is not possible.”

Carbon dioxide pipelines are also environmentally risky and pose threats to the health and safety of those who live near them. In 2020, 45 people were hospitalized and 200 people had to be evacuated after a CO2 pipeline ruptured in Mississippi. Because CO2 is colourless, odorless and an asphyxiant, it can be lethal if a pipe bursts and a cloud of carbon dioxide smothers a town. 

Canada already has five major CO2 pipelines stretching a combined 464 kilometers, according to the Canada Energy Regulator. 

According to data from the US Department of Transportation, there have been at least 76 reported safety incidents related to the 50 American CO2 pipelines since 2010.