A dump truck works near an oil sands extraction facility near Fort McMurray, Alta. on June 1, 2014. With a price tag estimated to be $16.5 billion, the Pathways project would see six Alberta oil sands companies build a world-leading carbon capture and storage network in northern Alberta.JASON FRANSON/The Canadian Press
Adam Sweet is director for Western Canada at climate-policy organization Clean Prosperity.
In business, as in politics, timing is everything. You can have the best project or policy plan, but miss the moment for action, and a winning idea is doomed to history’s dustbin.
These moments can be rare and fleeting, especially when operating at the intersection of environment, economy and federal-provincial relations. Interests rarely align, but when they do, it is incumbent on leaders to step up and act, lest the opportunity slip away. For Alberta’s low-carbon economic future, and for Canada’s long-term prosperity, that moment has arrived.
The Globe and Mail reported on Monday that the federal government’s Canada Growth Fund (CGF) has quietly put forward a deal offering support to build the Pathways Alliance megaproject. It’s the first time the growth fund has put forth a specific proposal for Pathways.
With a price tag estimated at $16.5-billion, this project would see six Alberta oil sands companies build a world-leading carbon capture and storage network in Northern Alberta. Pathways would reduce oil sands emissions by 22 megatonnes a year by 2030, the equivalent of taking 90 per cent of all cars and trucks off the road in Alberta. The project would redefine Alberta’s place in a global low-carbon economy, shaping the long-term sustainability of our oil sands.
While the details of the proposal are not public, some support for Pathways already exists. By my calculation, the project would likely receive more than $8-billion through Ottawa’s tax credit that covers up to 50 per cent of the costs for carbon capture, storage and utilization investment, and about $2-billion from a similar program covering 12 per cent from Alberta’s government. With approximately two-thirds of the project’s capital requirements covered, in addition to the CGF’s proposal, the question is: When could there ever be a deal this good for Alberta’s energy companies again?
It is vital that the three main players in this project – the government of Alberta, the Pathways Alliance and the federal government – work together to get shovels in the ground immediately. The alternative is to wait and do nothing, letting this opportunity to decarbonize a vital part of our economy pass us by, protecting today’s capital but risking the economic future of generations to come. Let us be clear: When it comes to our economic future, doing nothing leads to nothing getting done. And getting nothing done is frankly un-Albertan.
While the moment before us is about Pathways, the impact of this project could be far-reaching. Industry stakeholders have been clear in conversations that Pathways is the key to unlocking decarbonization in the broader energy sector, as many firms are waiting to see if this project happens before they go forward with their own.
Landing this project, especially if the CGF deal goes through, could represent one of the largest reinvestments of federal money back to Alberta. This is money that Albertans have paid into the federal treasury through our hard work and federal taxes. If getting federal money reinvested into Alberta to support the energy sector doesn’t represent a successful Alberta-first strategy, I don’t know what does.
In response to those who argue against the deal on grounds of fiscal prudence, I agree that less government spending is almost always better for our country. But the stark realpolitik of the situation is that the money is on the table and, if it’s not spent in Alberta, it could easily be spent in other provinces.
Also, contrary to what some may think, energy companies cannot be expected to invest in this project without the prospect of a sufficient return. Alberta’s energy resources belong to Albertans, and we have chosen over the decades to essentially contract out their development, marketing and sales to these companies. To ask them now to expend billions of dollars in capital to deliver an additional public good – carbon capture and storage – without additional public support is akin to asking a contractor to take on a major change order for no additional fee.
At the same time, it’s incumbent on the companies, and especially their boards, to recognize that failing to invest in decarbonization while returning billions to investors through dividends and share buybacks is not in the long-term interests of their shareholders. That’s a risky strategy in a world where global investors and markets are increasingly demanding low-carbon products.
Let’s ensure the long-term sustainability of Alberta’s energy sector by undertaking a decarbonization project that will bring tremendous benefits today and tomorrow.
After years of discussion, the time is now. Let’s get Pathways done.