Canada’s largest oil sands companies say they are ready to pledge $16.3 billion to create the world’s largest underground carbon capture project but a lack of commitment from the federal government to guarantee the development’s long-term success is leading to cold feet from investors.
Pathways Alliance, a consortium of some of Canada’s largest players in the oil business including Cenovus and Suncor, says the first phase of investing has secured funding to move ahead with the project.
The underground carbon capture facility is expected to cut 22 million metric tons of emissions by 2030, equivalent to taking 4.7 million cars off the road.
However, the project faces uncertainty due to the lack of long-term government support, which could jeopardize its viability and competitiveness.
Pathways Alliance has been seeking commitments from the federal and provincial governments to provide stable and predictable policies, such as carbon pricing, tax credits and clean fuel regulations, that would ensure the project’s economic feasibility and environmental benefits.
“The real challenge for Canadian (carbon capture) then is not insufficient incentives — they are some of the most attractive in the world — but the uncertainty of their existence throughout project life,” said Wood Mackenzie analyst Peter Findlay in a report on the status of the project.
“The value of most of these incentives could be changed by political whim at any point during the project life — even going to zero.”
The federal government has expressed interest in supporting carbon capture projects as part of its climate strategy, which aims to achieve net-zero emissions by 2050.
The announced in July 2021 an $81.5-million call for expressions of interest to fund research, development and demonstration projects in CCUS technologies. In November 2021, it also proposed a refundable investment tax credit valued at $2.6 billion over five years, starting in 2022–23, to encourage the development and adoption of CCUS technology.
However, these measures may not be enough to address the risks and challenges faced by the Pathways Alliance and other carbon capture projects in Canada.
According to the Wood Mackenzie report the value of most of these incentives could be changed or eliminated by political decisions at any point during the project’s life.
