An oilsands facility is reflected in a tailings pond near Fort McMurray, Alta., in July, 2012.Jeff McIntosh/The Canadian Press
Ottawa is committed to getting a carbon capture project built in Alberta’s oil sands as part of a broader plan to reduce emissions from the sector and ultimately work toward a new oil pipeline, says Tim Hodgson, Canada’s Natural Resources Minister.
While there are still “a few things to work out” with the Pathways Alliance – a group of oil sands producers that is proposing the carbon capture plan – and the Alberta government, Mr. Hodgson said construction on the project could begin very soon after those details are ironed out.
The Pathways initiative is a 400-kilometre-long pipeline that would transport carbon trapped at oil sands facilities to an underground hub near Cold Lake, Alta., with the aim of reducing emissions by 22 megatonnes a year.
Prime Minister Mark Carney announced Thursday that the plan will be referred to the federal Major Projects Office, which has the task of determining and advancing projects of national importance.
Asked whether there is the potential for a new oil pipeline to the coast in the next few years, Mr. Hodgson said if Pathways is built and there is support for such a project in the jurisdictions it would traverse and with First Nations, “that’s what we’re working towards.”
Pairing progress on Pathways with a new pipeline reflects what Alberta Premier Danielle Smith has called a “grand bargain” in talks with the federal government.
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Mr. Hodgson said Ottawa and Alberta agree that Pathways would be a nation-building project.
“It will be the first time a country has said they will essentially dramatically reduce the carbon footprint of their oil industry,” he said.
“If we are prepared to do that, we’re on board with growing our oil sands.”
Mr. Hodgson would not comment on whether the federal government is in talks with industry to scrap the oil and gas emissions cap in return for environmental concessions, as a Thursday Reuters report based on three unnamed sources said.
“I’m not going to negotiate in public. We are focused on results, not how we get there,” Mr. Hodgson said.
“I am focused, as the Minister of Energy, on making sure we are a clean and conventional energy superpower … and making sure we do that in an environmentally responsible way, which means we need to be low risk, low cost and low carbon.”
Alberta Utilities and Affordability Minister Nathan Neudorf said Friday that in his discussions about energy policy with Mr. Hodgson, there have been “quite a number of things that seem like they’re going in the right direction,” including the potential scrapping of the emissions cap.
“I’m looking forward to the real actions that they will be taking out of these great conversations,” Mr. Neudorf said.
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Mr. Carney announced the first projects that will be reviewed for fast-track approval under Ottawa’s Building Canada Act in Edmonton, where Liberal MPs were gathered for a caucus retreat ahead of the return of House of Commons sittings Monday.
The five projects being referred to the new Major Projects Office include LNG Canada Phase 2, which would expand the liquefied natural gas export facility at Kitimat, B.C. Also on the list are modular reactors at Ontario’s existing Darlington Nuclear Generating Station; an expansion by the Port of Montreal in Contrecoeur, Que.; Saskatchewan’s Foran McIlvenna Bay copper mine project; and the Red Chris Copper and Gold Mine expansion in B.C.
In addition to the initial projects, the government also announced that there are “several strategies” for projects that could be “truly transformative” for Canada but require further development, including the Pathways project.
The Pathways carbon capture initiative has been floating around since 2021. It is meant to play a key role in the pledge by the Pathways Alliance to bring emissions to net zero by 2050.
The main roadblock to the plan is financial.
Despite a federal investment tax credit that would cover up to 50 per cent of the project’s capital costs, and Alberta’s additional 12-per-cent capital-cost subsidy, Pathways Alliance members have expressed reluctance to proceed because of revenue uncertainty.
Ottawa has been trying to provide greater certainty through a mechanism generally known as carbon contracts for differences (CCfDs), which involves the government taking on revenue risk by prepurchasing or otherwise guaranteeing the value of carbon credits.
But the federal government – and the Canada Growth Fund, the agency mandated with offering CCfDs – has to this point balked at the amount of revenue risk Pathways has asked it to take on. Based on both the project’s size and the desired level of credit-value certainty, it could be well above $10-billion.
Mr. Hodgson would not comment on whether the federal government is in negotiations with Pathways on CCfDs.