Mark Carney has certainly changed the dial on the oilsands discussion.
Ottawa has all but abandoned the idea of a cap on oilsands emissions — and now it’s willing to consider a West Coast pipeline if it carries so-called “decarbonized oil” (a ridiculous phrase, given that the crude would contain just as much carbon as it always has). As a result, Danielle Smith is suddenly all in on carbon sequestration, calling it a “grand bargain” if she can secure a pipeline as part of the deal.
There seems to be no point in repeating, yet again, that the oil industry does not need more new pipelines. The status of pipelines is not what’s holding the oilsands back from returning to the golden era of 2000s mega-investment. Alberta’s oilsands simply aren’t the world’s best place to put big money into oil — now or in the future.
But if you cling to the pipeline myth, you get to indulge the fantasy that all it takes is another pipe to unlock untold riches. You can’t use facts to fight a delusion, though I keep trying.
I’m not too worried, though — so long as we can keep the government from getting involved in this pipeline project beyond just the approvals for it.
That means: no subsidies, no government guarantees on shipping volumes, and a real “open season” where companies make long-term binding commitments to use it. It’s clear that if we stick to those limits on government involvement, few companies will sign up. The cost of building a new line is massive — just look at TMX. A revived Northern-Gateway-like project would be no different. Northern Gateway’s original cost estimates were in the same ballpark as TMX’s early projections — meaning this new line would end up just as expensive as TMX’s final price tag, if not more.
Meanwhile, Enbridge has lower-cost expansion options, and Enbridge connects to the Capline system — with 1.2 million barrels per day of capacity from the US Midwest to Louisiana and massive export capability. That system currently has about a million barrels per day of spare capacity. Connecting to Capline offers effectively unlimited capacity to export our crude through the Gulf Coast to anywhere in the world.
If shippers have to face the real cost of a new pipeline — not the highly subsidized tolls on TMX — they’ll use those existing systems instead. Because it’s cheaper. And it doesn’t take someone with a PhD in economics from Oxford to understand that.
Mark Carney can push through the approvals with his “nation-building” Bill C-5, giving cabinet the power to sidestep required reviews. But it won’t matter if the economics don’t support the project. So, sure — whatever.
At any rate, Smith has been as consistent as her predecessors in selling the fantasy of untold riches — if only we had another pipeline. On carbon sequestration, though, she’s been anything but consistent. She’s now fully on board, but as recently as last summer, she released a Deloitte report concluding that carbon sequestration for the oil sands was so uneconomic that companies would rather shut down production than invest in it. Deloitte reached that conclusion even assuming high subsidies from both the federal and Alberta governments.
So, according to Smith, carbon sequestration is so uneconomic that companies would shut down rather than do it — but if they get a pipeline, suddenly it makes sense?
I’m sorry, that makes no sense.
Here’s the fundamental problem: the savings oilsands companies expect in industrial carbon tax reductions from carbon capture don’t justify the capital they’d need to spend to achieve those reductions. Their solution? You and I — the taxpayers — cover most of the capital costs, while they pocket the carbon tax savings.
Worse, they want guarantees that the industrial carbon tax won’t go down. If it does, they want the government — again, taxpayers — to top them up for the difference. Imagine that: we’re being asked not only to pay to build the infrastructure but also to insure their revenue stream against policy changes they’ll likely be lobbying for.
And that’s not the only risk. Oil companies know full well that as global decarbonization accelerates, demand — and prices — for crude could collapse. That would leave some of these facilities stranded. And who would eat that loss? The party that put up most of the money: taxpayers.
As Oxford climatologist Myles Allen puts it, “The case for CCS [carbon capture and storage] boils down to waste disposal.” And yet we’re being asked to subsidize how companies dispose of their waste — and take on the financial risk. There is absolutely no reason taxpayers should be doing that. None.
Isn’t the obvious solution on the other side of the ledger — the industrial carbon tax? Raise it for the oilsands to the point where carbon capture becomes economically viable. Use industrial carbon tax revenues from companies still emitting to help reward those who are actually sequestering. It would be a stronger incentive than anything currently on offer, while avoiding public money going into facilities that may or may not have a long life.
Instead, Ottawa and Alberta seem eager to keep throwing taxpayer money at the problem.
A “grand bargain,” indeed.
No more TMX-scale boondoggles. No blank cheques for carbon sequestration. Raise the carbon tax until sequestration makes economic sense. Hold the industry accountable.
Let’s get the oilsands companies off the backs of the taxpayer.
Comments
Completely agree with getting industry off of the public money milk train. The scenario to date simply proves that actions that result in profit for industry can be rationalized easily by those profiting, even our "illustrious" new PM. Yes, he is better than PP would have ever been in that position, but we are arguing as to which one of the representatives of the Business Party is preferable.
"As a result, Danielle Smith is suddenly all in on carbon sequestration, calling it a 'grand bargain' if she can secure a pipeline as part of the deal."
CCS in the O&G sector 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)
"'Not be tolerated': Alberta files formal response to proposed oilsands emissions cap" (Calgary Herald, 05-Feb-24)
Smith talks out of both sides of her mouth.
Smith complains that an emissions cap will constrain production. (One of Smith's nine demands is that Ottawa abandon its proposed emissions cap.) I.e., oilsands production growth will continue to outstrip emissions reductions efforts. If CCS works as advertised, Smith should have no problem with an emissions cap.
If CCS is ineffective in the oilsands, as the AB Govt admits, why even talk about it?
Smith's & Carney's "grand bargain" is a fraud.
Smith proposes taxpayer-funded carbon capture (CCS) in the oilsands (Pathways Alliance) — a solution both she and the industry knows won't work — in exchange for another pipeline (likely also subsidized).
If taxpayers cough up 75% of the cost for the Pathways Alliance scam, that clears the way for a new pipeline. Also, possibly funded by taxpayers.
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.
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!
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.
NB: 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)
"Let’s get the oilsands companies off the backs of the taxpayer."
Amen to that!
However, some daylight needs to be cast on this technology too. So far, it's shown some troubling failures, mainly in dangerous leaks from deep underground storage, in not enough case studues to justify an entire technology, and in a lack of return on investments mainly due to egregiously high upfront costs.
For all this talk about building up the Canadian economy there is a massive vacuum in accountability and due diligence specifically on all these new politically motivated fossil fuel projects. Climate risk alone would kill every current fossil fuel project on the planet. Added to that is the fact there are no viable business cases, no professional, independent environmental or financial risk assessments and no honest, independent analyses of long term demand in export markets.
[Note to Danielle Smith et al: OPEC is biased in the extreme toward the oil-is-forever meme. That bias leads them to ignore or fudge electrification and renewable energy data from China, SE Asia and the global south in the reports you love to quote.]
Hubris and political rhetoric is overpowering common sense. That will be to the country's economic detriment and the well being of citizens, especially today's youth who will pay more for the consequences of today's decisions than anyone else.
Belot: "I’m not too worried, though — so long as we can keep the government from getting involved in this pipeline project beyond just the approvals for it.
"That means: no subsidies, no government guarantees on shipping volumes, and a real 'open season' where companies make long-term binding commitments to use it. It’s clear that if we stick to those limits on government involvement, few companies will sign up."
"… Mark Carney can push through the approvals with his “nation-building” Bill C-5, giving cabinet the power to sidestep required reviews. But it won’t matter if the economics don’t support the project. So, sure — whatever."
No. Not sure — whatever.
Neoliberalism is all about governments propping up markets.
Whether or not there is a business case for the pipeline does not matter. Industry-captured governments will fill the gap. Supply the funds necessary to keep the fossil-fuel industry going and profits to shareholders flowing.
When it comes to the fossil fuel industry, our governments have demonstrated for decades that they are not rational actors or good financial managers.
There are two O&G parties in Ottawa, not one. The Liberals give us no hope or expectation that they will finally see the light and abandon their support for O&G.
No one should hope or assume that economic considerations and good sense will prevail. Belot's confidence is woefully misplaced.
The only reason to invoke C-5 is to build the wrong kind of projects — fossil-fuel projects and other damaging infrastructure — that would otherwise run up against Canada's environmental laws.
Wake up, Canada! The Liberal/Conservative corporatocracy is stealing your grandchildren's future.
Belot: "Here’s the fundamental problem: the savings oilsands companies expect in INDUSTRIAL CARBON TAX REDUCTIONS from carbon capture don’t justify the capital they’d need to spend to achieve those reductions. Their solution? You and I — the taxpayers — cover most of the capital costs, while they pocket the carbon tax savings.
Worse, they want GUARANTEES THAT THE INDUSTRIAL CARBON TAX WON’T GO DOWN. If it does, they want the government — again, taxpayers — to top them up for the difference. Imagine that: we’re being asked not only to pay to build the infrastructure but also to insure their revenue stream against policy changes they’ll likely be lobbying for."
Belot misses the mark here.
The O&G industry wants to repeal the industrial carbon altogether. Eliminating the market for carbon credits that would supposedly make CCS economic.
On March 19, 2025, 14 CEOs representing the four largest pipeline companies and 10 largest oil and natural gas companies published an open letter to Canada's political party leaders urging them to remove all restraints on O&G industry production and pollution. Including repealing the industrial carbon price.
Full letter: http://www.tcenergy.com/open-letter-to-party-leaders
"Oilpatch CEOs call on Ottawa to declare energy crisis to fast-track development" (Financial Post, Mar 19, 2025)
"The letter also urged the federal industrial carbon tax be repealed, suggesting it handicaps the sector's competitiveness and that Ottawa should leave it up to provincial governments to set 'more suitable' carbon regulations, which is a position that would seem to signal cracks have emerged in the sector's previous consensus around carbon pricing.
"Signatories to the letter included the chief executives of Canada's largest oil and gas producers, Canadian Natural Resources Ltd., Suncor Energy Inc., Cenovus Energy Inc. and Imperial Oil Ltd., as well as the heads of the four largest pipeline companies, including Enbridge Inc. and TC Energy Corp."
"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)
Say wot ... Hello-o-o-o???
Here we have an argument that as long as it doesn't cost "me and mine" in dollars, it's OK to turn up the heat on the machine cooking the planet?
Maybe the author of the piece could be invited to comment on his thinking on that score.
With his rationale, why should any pollutant or instrument of harm not be allowed, as long as government isn't directly paying for it.
I'm bitterly disappointed in the environmental cred Oil Can Carney projected prior to being elected. And I'm sick unto death of the phantom of useful CCUS ... not to mention that Alberta has any intention at all of reducing emissions in any way, shape or form.
And then again, he was the only credible alternative to PP. Let's just hope his successor can't grip the fevered brains of consumers of counter-factual information as well as he did.