The future of Canada’s largest proposed carbon capture and storage project is now uncertain following Prime Minister Justin Trudeau’s announcement that he will resign after his party selects a new leader. The $16.5 billion initiative, aimed at capturing carbon emissions from Canada’s oilsands, could be jeopardized by the upcoming federal election later this year.
The project, spearheaded by the Pathways Alliance, includes some of Canada’s largest energy companies. It is designed to capture harmful carbon dioxide emissions from the oilsands, which is one of the country’s most polluting sectors. However, experts warn that the project’s future is unclear as Canada prepares for a leadership change.
Michael Bernstein, executive director of the environmental group Clean Prosperity, expressed concerns about the project’s future in a period of political instability. “A project like this, with a timeline of at least 15 years, requires certainty. But right now, there’s more uncertainty than I’ve seen in my entire career,” he told Bloomberg.
Over the past decade, major oil companies have increasingly pulled away from Canada’s oilsands, the fourth-largest oil reserve globally. The lack of pipelines and high emissions have made investing in the sector challenging. According to Rystad Energy, Alberta’s oilsands produce approximately 160 pounds of carbon per barrel, the highest of any oilfield in the world.
Despite the challenges, Alberta’s government is committed to maintaining the province’s oil production. Premier Danielle Smith emphasized that Alberta will shift away from emissions, not oil. “We’re transitioning away from emissions, not oil and gas. We’re not going to phase out production; we’re changing how we use it,” she said at the World Petroleum Congress in Calgary.
Smith’s views contrast with those of Canada’s Minister of Energy and Natural Resources, Jonathan Wilkinson. Wilkinson has supported the International Energy Agency’s prediction that global oil demand will fall to just 25 million barrels per day by 2050, a quarter of today’s demand. Smith dismissed this forecast, calling it “ludicrous.” Wilkinson argued that post-2050, oil and gas would largely be used for non-combustion purposes, such as in petrochemicals and lubricants.
Canada sees carbon capture, utilization, and storage (CCUS) as a crucial tool in reducing emissions without limiting oil and gas production. However, Canadian companies have hesitated to move forward with CCUS projects due to high costs, urging the government for more financial support. An Alberta incentive program, combined with a federal tax credit introduced in 2023, is expected to provide the necessary boost to Canada’s emerging CCUS sector.
Jean, a spokesperson for Alberta’s government, emphasized the economic potential of CCUS. “If we get it right, it will lead to another economic boom in Alberta,” he told Reuters.
Canada has committed to achieving net-zero emissions by 2050. Several companies, including Enbridge Inc. and TC Energy Corp., are backing major CCS storage hubs. However, U.S. companies are ahead in the CCUS race.
Last year, ExxonMobil acquired Denbury Inc., a leader in carbon capture, in a $4.9 billion deal. Denbury has a large CO2 pipeline network in the U.S. and uses CO2 in its Enhanced Oil Recovery operations to produce carbon-negative Blue Oil. Exxon’s CEO, Darren Woods, has stated that the company’s low-carbon business could surpass its traditional oil and gas operations within a decade, generating hundreds of billions in revenue.
Exxon’s commitment to low-carbon solutions aligns with the broader industry trend. In 2023, Schlumberger Ltd. also launched its SLB New Energy unit, focusing on hydrogen, energy storage, and other renewable technologies. SLB projects that the new unit could reach $3 billion in revenue by the end of the decade, with potential growth to $10 billion by 2030.
While Canada’s carbon capture project faces challenges, the global energy landscape is rapidly shifting toward lower-carbon alternatives. The success of CCUS projects in Canada will depend on government support, technological advancements, and the global demand for cleaner energy.
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