In a political fight that seems destined to go many rounds, the first one went to the prime minister. He emerged from the high-stakes first ministers’ meeting with many of Canada’s premiers — including Conservative ones like Doug Ford — singing his praises. Even Smith had to concede that Mark Carney’s performance had won over the room, describing him as a “dramatic improvement” over his predecessor.
That’s because Carney didn’t take the bait that Smith so obviously laid out around pipelines. Instead, he smartly called the bluff she’s been getting away with for years now. Smith has talked up and down about her government’s commitment to decarbonizing oil production in Alberta, one that involves reaching net-zero province-wide by 2050. As you read the official communiqué from the meeting, it becomes clear that this is where Carney is going to dig in for the real fight — and where Smith is least prepared to defend herself.
“First Ministers agreed that Canada must work urgently to get Canadian natural resources and commodities to domestic and international markets,” it reads, “such as critical minerals and decarbonized Canadian oil and gas by pipelines, supported by the private sector, that provide access to diversified global markets, including Asia and Europe. First Ministers also agreed to build cleaner and more affordable electricity systems to reduce emissions and increase reliability toward achieving net zero by 2050.”
No new pipelines without decarbonization, in other words. This immediately shifts the onus to the oil industry, which has been slow-playing its promised investment in carbon capture and storage technology for years now. If it doesn’t finally move ahead there, the conversation around new pipelines is effectively over — and the blame will fall squarely on them. This also makes it more difficult for Smith and Conservative Party of Canada Leader Pierre Poilievre to continue their recent campaign against industrial carbon pricing, given its obvious role in decarbonizing upstream oil and gas production.
Not everyone is buying what Carney is selling here, mind you. Catherine Abreu, the director of the International Climate Politics Hub, described the idea of decarbonized oil and gas as “a complete contradiction in terms, and a dangerous lie that Canadian government after Canadian government has tried to spin under the spell of industry lobbying.” This tracks with the broader environmental movement’s longstanding skepticism of carbon capture and storage, which is informed by the underwhelming performance of early-stage projects. It’s worth noting, I think, that the performance of early-stage wind and solar were equally dispiriting. Technologies can and often do improve with time and scale.
More to the point, if Canada is willing to sink billions in tax credits into EV factories in Ontario and Quebec, the same sort of opportunity should probably be afforded to Alberta’s largest industry — especially if we’re trying to prevent the Alberta separatist movement from escaping political containment. Yes, these large carbon capture and storage projects might fail, just as some of the battery plants in central Canada already seem to have. But carbon capture technology also might succeed — and if it does, that’s an unalloyed boon to both our economy and environment.
Either way, Carney isn’t biting on Smith’s demands for new pipelines “in every direction.” Instead, he’s moving the conversation onto political ground that’s far more favourable to his government, both in terms of the raw politics and its enduring (if evolving) commitment to fighting climate change. He will, as Smith demanded, create the conditions for a more rapid assessment of infrastructure projects. But it’s clear that one of those conditions will be the net-zero targets that Smith and Alberta’s oil and gas industry have repeatedly committed themselves to. If they can’t or won’t reach them, they’ll finally have to come out and say as much.
If I had to guess, the only new oil export project we’ll end up seeing is another expansion of TMX, one that can be accomplished with upgrades to the existing line and some dredging of Vancouver’s Burrard Inlet, an idea that has been mooted by Carney and supported by BC Minister of Energy and Climate Solutions Adrian Dix. That’s in part because the combination of the increasingly imminent arrival of peak demand for oil will make new infrastructure projects, like a revived Northern Gateway (which have to operate for decades to deliver an adequate economic return), a non-starter for the private sector. It’s also because OPEC’s declining interest in artificially supporting prices raises the prospect of another price war like the one in 2014 that devastated the Canadian oil patch.
Carney knows all of this, and understands it better than any elected official in the country. His real interest, I suspect, is building the sorts of projects that will best position Canada in the low-carbon economy that so clearly lies ahead. But he also understands that getting into a pitched battle with Alberta by explicitly crushing its pipeline dreams gets in the way of that objective — and helps advance Smith’s political agenda in the process. Sometimes, the best way to win a fight is by not fighting it at all.
Comments
Thank you for another very 'informative' article. It is good to be enlightened about things that you never understood before. We need more journalists of this calibre that believe in sharing facts.
Clever Carney! Hope he sticks to holding the oil industry to its commitments. How about addressing orphan wells while he’s at it?
Alas! Ford is raking up that old shibboleth about ‘clean’ nuclear. How many times do we have to go through the exercise of stopping the growth of nuclear power which is neither clean nor safe? Why won’t people learn?
Hhmnnn... Interesting article - I hope you're right about the gamesmanship being played here, although if pipelines or CCUS don't get built, rest assured the O&G industry, their media and Conservative politicians, deservedly or not, WILL make this all about Carney failing to support Alberta. As for CCUS, I believe you're missing the point. Even if it can remove a substantial portion of CO2 from extraction, which I doubt, it still results in massive amounts of CO2 in the atmosphere when the oil-gasoline is eventually burned! Increased extraction means, more CO2. Period - It is past time for Canada to take responsibility for its exported emissions!
Agreed that exported emissions are far from being an "unalloyed boon" to anyone.
How's this for a deal?
I take your house, and in return you give me your car.
Not sweet enough? OK, I'll chip in for gas. You only have to pay half.
PM Carney and Premier Smith take Canadians for chumps.
Maybe they're right.
Fawcett: "No new pipelines without decarbonization, in other words. This immediately shifts the onus to the oil industry…"
Max Fawcett continues to play readers on carbon capture (CCS). A false climate solution.
Taxpayers will be on the hook for well over half the costs. Industry demands a 75% subsidy.
Oh, and high-cost, energy-intensive CCS is ineffective in the oilsands. Captures a fraction of upstream emissions, zero emissions downstream, and no other pollutants.
Nowhere does Fawcett even hint that CCS in the oilsands depends on massive subsidies. Tens of billions of dollars down the drain.
Don't fall for Fawcett's deception.
What are "decarbonized barrels"?
"Decarbonized barrels" is greenwashing. There are no "decarbonized barrels". The barrels that will leave our shores via new pipelines will have the exact same carbon content as before. It's the same high-carbon dilbit that it always was. Sold at a discount because it's harder and more costly to refine.
Fawcett: "Technologies can and often do improve with time and scale."
Fawcett dangles out this false hope for carbon capture. Fails to substantiate it. Empty assurances.
Actually, we know why carbon capture will be ineffective in the oilsands (v. below). If Max Fawcett does not know, it is because he has not done his homework.
Fawcett: "Yes, these large carbon capture and storage projects might fail, just as some of the battery plants in central Canada already seem to have. But carbon capture technology also might succeed — and if it does, that’s an unalloyed boon to both our economy and environment."
CCS fails in the oilsands for material reasons. EV- and EV-battery plants — proven technology — may fail in Canada for economic reasons.
EVs work. CCS doesn't.
Fawcett: "[the government's] enduring (if evolving) commitment to fighting climate change"
Fawcett-speak for decades of Liberal duplicity and failure.
Fossil-fuel expansion is incompatible with Canada's climate targets.
Choose one or the other.
Not both.
So Geof, given that CCS has had mixed results (not negative, but less than hyped) what do you think about Alberta's Direct Air Capture initiative? Cost per tonne are estimated at < $1,000 currently, with scale-up reducing the costs way below 50% of $1600 quoted below. Could this be the carbon offset for oil sands?
Still no bargain. Still captures no other pollutants.
Why invest scarce public resources in CCS or DAC, when there are far more cost-effective climate solutions available? Cheaper ways to cut more emissions. CCS is hugely inefficient, highly energy-intensive, and expensive. Captures a tiny fraction of emissions — only from large emitters. Huge opportunity costs. DAC is even worse.
Direct air capture (DAC) projects are likely an even bigger boondoggle.
Inefficient and expensive carbon capture works only for concentrated industrial waste streams. Direct air capture (DAC) is even less practical. Because 410+ ppm CO2 is much more dilute, the challenge to remove CO2 from the atmosphere is much harder and more energy intensive.
Audrey Mascarenhas, president and chief executive of Questor Technology, a company that aims to eliminate methane emissions from flaring: "So in Canada, because we focused [our efforts] on CO2, and we spent a lot of time trying to figure out how we can remove CO2 and turn it into something useful or sequester it. That is expensive, because CO2 in the atmosphere has kind of reached its maximum state of randomness or entropy. So when you try and take it out of the atmosphere it's like trying to reverse gravity, you're going to take energy to do it. So if you approach climate change from just the CO2 part, you're doing the toughest thing first and yes, it is expensive." [When you approach it from air quality and methane and because methane's 86 times worse than CO2 in the next 20 or 25 years. And we know that our goals and targets for the next 20 to 25 years, it just presents such a solid business case to deal with the methane."]
"Methane emissions are worse than CO2. Why tackling it could be a 'win-win' for Canada's energy industry — podcast" (Down to Business podcast, Financial Post, Oct 16, 2019)
"The New Climate Gold Rush: Scrubbing Carbon From the Sky" (NYT, 2024)
"The [carbon dioxide removal] technology, which did not exist until a few years ago, is still unproven at scale.
"There are a few dozen facilities operational today, including ones in Iceland and California. But the biggest of these capture only a sliver of the greenhouse gases humans produce in one day. Even if hundreds more such plants were built, they would not come close to counteracting even 1 percent of annual carbon dioxide emissions.
"'Let's not pretend that it's going to become available within the time frame we need to reduce emissions,' said former Vice President Al Gore …
"Last year a United Nations panel cast significant doubt on the industry's ability to make a difference. 'Engineering-based removal activities are technologically and economically unproven, especially at scale, and pose unknown environmental and social risks.'
"… Critics argue that carbon dioxide removal is a dangerous distraction that will perpetuate the behavior that is causing the climate crisis.
"'Carbon capture will increase fossil fuel production, there's no doubt about it,' said Mark Z. Jacobson, a professor of civil and environmental engineering at Stanford University. 'It does not help climate one bit.'
"… Pulling greenhouse gases out of the air is also expensive. Today, it can cost as much as $1,000 per ton to capture and sequester carbon dioxide. Many analysts say the price would need to drop to around $100 a ton for the industry to take off."
"Mark Carney’s grand climate bargain comes into view"
What sort of bargain is this? Where is the compromise? What does the O&G industry give us in exchange?
The O&G industry gets BOTH taxpayer-funded CCS AND new pipeline(s).
In return for taxpayer-funded CCS, the O&G industry gets new pipeline(s).
Taxpayers get the bill. For both.
Some bargain.
Smith's "grand bargain" does not involve any new effective climate policy or measures. On the contrary, it involves repealing just about all federal climate policy:
"In a letter to Carney in May, Smith called on the federal government to repeal a cap on oil and gas emissions, eliminate the federal system for pricing industrial emissions and withdraw clean electricity regulations. She also opposes the federal government's zero-emission vehicle sales targets and ban on single-use plastics.
"Is another 'grand bargain' necessary to build another pipeline?" (CBC, Jun 03, 2025)
CCS is a scam. As the Alberta Government is well aware:
In 2024, the Alberta Govt advised Ottawa that carbon capture (CCS) cannot be counted on to meet emission targets:
"Alberta's formal response to Ottawa's [emissions cap] proposal says … oilsands production has already risen above the forecasts that were used to establish the proposed 100-megatonne limit and that the technology needed to bring emissions down enough doesn't yet exist."(Calgary Herald, 05-Feb-24)
The main purpose of CCS? To provide political cover for fossil-fuel expansion and new projects.
CCS, itself energy-intensive, cuts a fraction of upstream emissions at high cost.
How high?
The 1st phase of the Pathways Alliance project, budgeted at $16.5B, will store up to 12M tonnes (Mt) of carbon per year by 2030. So goes the advertising, anyway.
That works out to $1,375 per tonne of emissions reduced. If it comes in on budget. Which it won't.
Premier Smith suggests a price tag of $20 billion.
That works out to $1,667 per tonne of emissions reduced.
Premier Smith was up in arms about a consumer carbon price of $170 per tonne by 2030, as planned by the Trudeau government. Pathways Alliance cost is 10 times higher. At least.
Some bargain!
Grossly under-reported oilsands emissions (2023) totalled 89 Mt (nominal).
Canada's nominal O&G emissions (2023) totalled 208 Mt.
$1,375 - $1,667 or more per tonne to reduce less than 14% (nominal) of under-reported oilsands emissions -- and just 6% of total O&G emissions.
Some bargain!
So do the math: In 2030, the government will fine emitters $170 per tonne. If the tax payer pays 50% of the cost of CCS, O&G industry will be paying ~$750 per tonne to capture a tonne of CO2 (vs. $170 to do nothing). Is it any surprise that the industry is dragging its feet? Surely carbon offsets could be purchased for < $170 per tonne - or sold to the government for < $750 per tonne of subsidy?
A mere 16% increase in production will offset a 14% reduction in emissions.
After which, grossly under-reported oilsands emissions continue to rise.
In return for this scam, largely funded by taxpayers, the O&G industry gets new pipelines, also largely funded by taxpayers — and the green light to keep expanding.
Huh? What?
The taxpayer (public) pays for fake emissions reductions, while the O&G industry's largely foreign shareholders walks away with the "profits".
Tens of billions of tax dollars down the drain.
Some bargain!
Carbon capture's high cost make CCS a terrible investment. Huge opportunity costs. We have cheaper ways to cut more emissions faster. Why invest limited public resources in CCS, when far more cost-effective solutions are available?
Under this CCS-for-pipelines "bargain", grossly under-reported O&G emissions would continue to rise.
To hell with climate targets.
To hell with climate.
To hell with your grandchildren.
O&G profits are more important.
PM Carney ushers in a new era of Disaster Capitalism.
Taking advantage of the Trump tariff chaos to engineer climate disaster.
Wildfires? Heatwaves? Melting glaciers? Landslides? Coral bleaching?
Bring it on!
To continue touting the usual "principled," (read purist, superior, magical thinking) NDP screed implying Liberals and Conservatives are birds of a feather in light of how many conservatives STILL somehow lurk literally everywhere, particularly in the House of Commons where the rubber hits the road, your usual spewing of reams of environmental outrage (however accurate) has become truly Shakespearean, as in "full of sound and fury, signifying nothing."
Since that's actually the conservative domain, is in fact all they f**king HAVE, we are already deluged with all the context-free and therefore pointless "information," thank you very much.
I always appreciate your commentary, Mr. Pounder.
I, for one, am continually alarmed by the prospect of CCS and am reminded of a long ago Rick Mercer rant (I paraphrase) "The problem with carbon capture and storage? It doesn't work!"
I am also upset that we continue to dole out public dollars to private O&G interests who, as you say, privatize the profits and socialize the costs of fossil fuel production.
There doesn't seem to be a way out....and now we have the Ring of Fire to contend with in Ontario. Yet another grotesque boondoggle in the name of national sovereignty, when we could just invest in the recycling and reuse of critical minerals.
CCS is a boondoggle — a fake climate solution.
The O&G industry supports CCS, but only if taxpayers pick up most of the bill. Privatize the profits, socialize the costs. The O&G industry's business model.
CCS provides political cover for fossil-fuel expansion and new projects. Climate plans based on fossil-fuel expansion and CCS are designed to fail.
The IPCC ranks CCS as one of the least-effective, most-expensive climate change mitigation options. Inefficient, energy-intensive, expensive. Requires infrastructure on a massive scale.
CCS captures a fraction of industry's upstream emissions and zero emissions downstream at the consumer end. CCS captures not one molecule of the 80-90% of emissions from a barrel of oil generated downstream by consumers. Captures no other fossil-fuel pollutants.
As the Pembina Institute notes, in the oilsands sector "most CO2 is emitted in low concentration streams, and the efforts to capture it will be challenging and expensive." Where CO2 sources are small or diffuse, e.g., in the oilsands apart from upgraders, CCS is not economical or practical.
Energy ecologist Vaclav Smil: "Mark my words, there'll be no massive sequestration of carbon. There hasn't been any, and there'll not be any next year, or 2025, or 2030."
American Petroleum Institute: "Some estimates suggest that the amount of infrastructure necessary to perform geologic storage on a meaningful level is equivalent to the existing worldwide infrastructure associated with current oil and gas production."
"The Oil and Gas Industry in Net Zero Transitions" (IEA, Nov 28, 2023)
"A productive debate about the oil and gas industry in transitions needs to avoid two common misconceptions.
"… The second is excessive expectations and reliance on CCUS. Carbon capture, utilisation and storage is an essential technology for achieving net zero emissions in certain sectors and circumstances, but it is not a way to retain the status quo.
"If oil and natural gas consumption were to evolve as projected under today's policy settings, this would require an inconceivable 32 billion tonnes of carbon captured for utilisation or storage by 2050, including 23 billion tonnes via direct air capture to limit the temperature rise to 1.5 °C.
"The necessary carbon capture technologies would require 26,000 terawatt hours of electricity generation to operate in 2050, which is more than global electricity demand in 2022.
"And it would require over USD 3.5 trillion in annual investments all the way from today through to mid-century, which is an amount equal to the entire industry's annual average revenue in recent years."
Even climate change deniers admit that CCS is BS:
"[Climate change deniers] Robert Bryce [Manhattan Institute] and US Energy Secretary Chris Wright also seem to share opposition to carbon capture and storage, a technology widely favored by oil and gas producers, which tout it as key to reducing emissions from their operations, despite it being widely used to pull more oil from the ground. Under Wright, the US Department of Energy is considering cutting billions of dollars in funding for projects utilizing the technology.
"'There is only one reason why any of these hydrocarbon companies are doing carbon capture,' Bryce said. 'Subsidies, that's it.'
"'It will never work at scale,' he added. 'Once you get that CO2 super-compressed and you're pushing it down underground, there are very few places where you can actually sequester it. So, it's a lot of money wasted.'"
"Climate crisis deniers explain why they like US Energy Secretary Chris Wright" (National Observer, April 18 2025)
CCS is an industry smokescreen. Its main purpose is to provide political cover for O&G expansion.
If Pathways Alliance believes in CCS, let them pay for it.
They won't, of course.
If Fawcett did his homework, he would know all this.
Instead, he fills cyberspace with climate disinformation week after week.
Readers deserve better.
>> But carbon capture technology also might succeed... << Max Fawcett
Uh, excuse me Max, since when did rock that is millions of years old and subject to cracking and fracturing become a "technology"? I don't believe there is or ever will be a technology that can seal CO2 underground for eternity.
It seems to me that there are some parallels between CCUS and nuclear power. Nuclear is a profoundly expensive way to boil water, and there are unresolved high level waste issues. CCUS extends the complex methods of extracting hydrocarbons and converting them into products that produce energy when burned.
Why not simply produce electricity directly with cheap hydro, wind, solar and, albeit more complex and expensive, closed cell geothermal? If Jesus walked in the flesh today, he'd probably be a solar PV installer rather than a carpenter.
Good article Max; this was our take as well.
It's also a continuation of what was started by Trudeau and Gilbeault, not that they're given any credit for it as usual, being members of the political party that everyone seems to agree has to replace each and every one of its members before it can pass muster as a "new" government. Carney is also reading the room here.
But this bit of BS that is the seminal conservative narrative DOES raise ongoing concern about addressing the destructive tsunami of misinformation with only our media in its various states of apparently unwitting "capture."
So bring on the legislation of social media I say.
"Financial risks of carbon capture and storage in Canada: Concerns about the Pathways Project and Public Energy Policy" (Institute for Energy Economics & Financial Analysis [IEEFA], January 09, 2025)
"Cost challenges threaten the ability of a large, planned carbon capture project to achieve financial sustainability.
"The Institute for Energy Economics and Financial Analysis (IEEFA) report identified troubling cost implications for the Pathways CO2 transport and storage project and raises the concern that the Canadian federal government and the province of Alberta may be pressured to make up the likely shortfall.
"We find total costs including interest, insurance, depreciation and taxes for existing commercial-scale carbon capture plants in Alberta are approaching thresholds that threaten profitability.
"Rising project costs are not being offset by commensurate increases in CO2 capture volumes and associated revenue. Operating costs are growing at twice the rate of CO2 captured volumes.
"… Performance risk is financial risk. Without substantial efficiency improvements, the cost per tonne of CO2 captured is likely to exceed the revenue that the project can generate for each tonne captured.
"An unprofitable carbon capture project will struggle to bring lasting positive economic benefits to host communities and become dependent on external financial subsidies to maintain operations.
"Even under optimal conditions, the Pathways project may struggle to break even, and real-world operations are rarely optimal.
"Large-scale public investment in CCS is misguided. The technology has struggled to achieve meaningful emissions reductions or prove its long-term viability. The lack of demonstrated success and heightened financial risks indicate public investments are unlikely to yield the desired environmental or economic benefits.
"Government officials face a choice. Subsidize and perhaps over-subsidize the project, or invest in more tenable renewable energy alternatives. If the project goes forward, the primary emitters (polluters) should bear the financial burden and the risk for pollution prevention."
https://ieefa.org/resources/financial-risks-carbon-capture-and-storage-…
"Financial risks of carbon capture and storage in Canada" (Institute for Energy Economics & Financial Analysis [IEEFA], January 09, 2025)
"Cost challenges threaten the ability of a large, planned carbon capture project in Alberta to achieve financial sustainability, according to a new report from the Institute for Energy Economics and Financial Analysis (IEEFA). The report shows that the Pathways Alliance plans to capture carbon dioxide (CO2) … faces multiple financial challenges.
"The IEEFA report, Financial risks of carbon capture and storage in Canada … identifies troubling cost implications for the Pathways CO2 transport and storage project and raises the concern that the Canadian federal government and the province of Alberta may be pressured to make up the likely shortfall. Given the scope of the project and its reliance on government subsidies for survival, it is likely Canadian taxpayers would be left to pay for the majority of the project for years to come.
"'The growing realization that carbon capture and storage projects are likely to require permanent government subsidies resets the discussion about the viability of CCS as a tool to effectively reduce carbon emissions. Public funding of CCS is a costly gamble that may not yield tangible returns on Canada’s journey towards achieving net-zero emissions. This is a financial risk the government cannot afford.'
"… The economics of CCS projects in general are shaky. If the cost to capture a tonne of carbon exceeds the revenue that can be expected to be generated from that process, then such a project cannot be said to be commercially viable."
https://ieefa.org/resources/financial-risks-carbon-capture-and-storage-…
Thank you Geoffrey for your wealth of information and knowledge on this topic! I for one really appreciate your insights and diligent research.
Thank you also for pointing out the obvious, but seldom mentioned, truth that to continue to burn fossil fuels is to abandon our grandchildren’s future. Canadians, and Americans, need to wake up and stop giving in to the demands of the likes of Alberta Premier Danielle Smith, Saskatchewan Premier Scott Moe and President Donald Trump who espouse unfettered, continued burning of fossil fuels. These three are essentially shills for the O&G industry. They are climate deniers as evidenced by their actions and their continual braying for more pipelines, more O&G infrastructure and more drilling and fracking. The skies the limit with these people and to hell with the environment and the future, especially their grandchildren’s future. I don’t know how climate deniers look their children and grandchildren in the eye!
I’m so disgusted with this attitude and the climate denialism coming from them and the O&G industry. I will continue to fight for my grandchildren’s future and vow to be more vocal about this ruse of deception perpetrated on the public.
I’m happy to see that PM Carney isn’t at least outright giving in to the pipeline demands of Danielle Smith and company. It is a smart political move, but I’m not happy to see the Canadian government continue to shovel BILLIONS of taxpayers’ dollars at CCS; which is a failed technology (so far at least and not likely to improve much in future) and placing our hopes for decarbonizing the country on it while ignoring the emissions created when the fossil fuels are burned, is pure folly and frankly irresponsible and deplorable. However, maybe PM Carney is just playing the “long game” that has to be played right now to quell the separatist movement in Alberta and Saskatchewan. Unfortunately, I don’t think the majority of Albertans will come to their senses anytime soon, but will continue to act against their grandchildren’s future. There is one thing for certain: their grandchildren won’t be thanking them for their greed and shortsightedness when they are faced with a terrifying dystopian future in a few decades due to the impacts of runaway climate change.
Hopefully, Albertans will start to come to their senses when peak oil arrives in a few years and they’re left high and dry because of their failure to transition to a renewable energy and low carbon future. I will not shed a tear for them.
WTF is decarbonized oil?