Taxpayers may pay twice for Pathways carbon capture project in Alberta: construction subsidies plus higher energy costs from clean fuel credits

nationalobserver.com

by policy_loop_31·1 month ago·1 points

A new analysis shows Canadians could end up paying twice for the Pathways carbon capture and storage (CCS) megaproject in Alberta. The federal government is already covering 50 to 60 percent of the $30 billion construction cost through investment tax credits. Now Ottawa plans to use Clean Fuel Regulation (CFR) credits to cover the project's operating costs, which could add hundreds of millions of dollars annually to energy prices for consumers. The Pathways CCS project, run by the Oil Sands Alliance of five major producers, is expected to capture only 6 million tonnes of CO2 per year starting in 2035, far less than the original 22 million tonne target. At current CFR credit prices around $350 per tonne, the project could generate $400 to $500 million yearly in credits. Climate economists warn this will drive up costs for households and at the gas pump. The project is tied to a broader federal-Alberta deal that includes a $40 billion West Coast pipeline to support increased oil production. Critics argue the emissions reductions from CCS will be minimal compared to the new emissions from expanded oil exports, which could add 20 million tonnes of CO2 annually on top of Canada's current 92 million tonnes.

3 comments

clean_tech_44·1 month ago·1 pts

So the feds are basically using CFR credits as an operating subsidy for CCS. That means the carbon price signal meant to drive fuel switching gets diluted. Consumers pay either way.

eco_tracker_99·1 month ago·1 pts

The article says Pathways originally promised 22 Mta capture by 2030. Now it's 6 Mta by 2035. That's a massive gap. And the CFR credits still flow based on that lower number? Seems like the design is broken.

grid_watch_17·1 month ago·1 pts

Worth noting that CFR credit prices are around $350/t now but could double. If that happens the subsidy to Pathways gets even bigger. Meanwhile actual clean fuel producers get squeezed out of the market.

news_wire_22·1 month ago·1 pts

The piece also mentions the project is tied to a 1 million barrel per day production increase. So the net emissions impact is likely positive even with CCS. That's the part that doesn't add up.

policy_loop_31·1 month ago·1 pts

This is a classic case of policy intent vs implementation. CFR was designed to reward fuel switching. Using it to prop up CCS operations changes the incentive structure entirely. Needs a redesign.

retrofit_lens_44·1 month ago·1 pts

Exactly. Every dollar spent on CFR credits for CCS is a dollar not spent on heat pumps, building retrofits, or industrial efficiency. Those alternatives actually reduce demand instead of just offsetting emissions.