Alberta and Ottawa signed a significant energy agreement in November, emphasizing the interdependence between pipelines and Pathways. This accord involves Alberta leading the initial planning and regulatory efforts for a potential one-million-barrel-a-day pipeline to the West Coast to support increased oilsands production and exports to Asia. However, alongside facilitating the pipeline, the agreement mandates a substantial offset for the resulting carbon emissions.
The key component introduced to offset emissions is the Pathways project, aiming to transport and store 16 million tonnes of carbon dioxide annually from the oilsands by 2045. Despite being in development for approximately four years, the project stakeholders, including the Oil Sands Alliance comprising major oilsands companies like Canadian Natural Resources Ltd., Cenovus Energy Inc., Imperial Oil Ltd., Suncor Energy Inc., and ConocoPhillips Canada, are still negotiating the cost and risk-sharing arrangements.
Pathways involves carbon capture at oilsands sites, transportation via a proposed 650-kilometre pipeline network to a storage hub, and underground injection into the Basal Cambrian Sandstone formation. Although the exact costs are yet to be finalized, the alliance estimated an initial investment of $16.5 billion by 2030. Both federal and provincial governments offer support mechanisms like investment tax credits and grant programs, but reaching a consensus on cost-sharing remains a challenge.
To ensure the economic viability of Pathways, the governments agreed to target an effective carbon price of $130 per tonne by 2040, although some environmental groups have criticized this timeline as insufficient. The inclusion of carbon contracts for difference provides investors with certainty in the evolving carbon pricing landscape, aiming to bolster private investment in clean energy initiatives like Pathways. Despite ongoing negotiations and challenges, stakeholders see the agreement as a significant step towards making the Pathways project economically feasible and attracting market interest.