Fate of giant carbon capture project still uncertain, but Pathways Alliance hopeful for deal with feds

Despite growing frustrations and prolonged negotiations with the federal government, a consortium of Canada's largest oilsands companies is optimistic about having a "line of sight" in securing the certainty it needs from Ottawa to advance its proposed $16.5-billion carbon capture pipeline project.

The Pathways Alliance is not expecting any new commitments in the upcoming federal budget, but is instead working through the details of what's already been announced to support the development of carbon capture and storage projects.

The prolonged talks are drawing criticism for too much partisanship and dithering by both sides and not enough action toward decarbonizing the oilsands and helping the country reach its climate targets.

The companies have yet to make a firm investment to advance the project over a lack of certainty from Ottawa.

The oilpatch represents the largest share of greenhouse gas emissions in the country and the Pathways project would be one of the largest carbon capture projects in the world. The oilsands companies are aiming for a 32 per cent reduction from 2019 emissions levels by 2030 — which is only possible if the Pathways project goes forward on time.

In an interview, Pathways president Kendall Dilling maintained the project is on track to be operational by 2030 as long as talks with the federal government wrap up by the end of the year.

"There is a degree of frustration on both sides that this conversation has been taking a long time. We all want to just put it to bed and say 'We're there. Let's move forward and do this,' said Dilling.

"All the pieces are on the table. It's a question of just running them to the ground" to understand the exact financial details, he said.

The federal government has proposed an investment tax credit, although Parliament has yet to pass the legislation. 

The federal government also offers carbon contracts for difference, supported by taxpayers, which help guarantee a carbon tax for heavy emitting industries. 

That's key because right now, there's a risk that a change in government or shift political attitude could result in the price of carbon being reduced or wiped out altogether. With certainty on the future price of carbon, project developers can know if it makes financial sense to invest in facilities that will reduce emissions in order to lower their carbon tax bill.

So far, only one such contract has been signed, with Calgary carbon-capture company Entropy.

"We see a line of sight with all the instruments that have been proposed to a package that will work and it's really just a question now of taking the uncertainty away from several of those elements that are still fairly nascent in development," Dilling said.

Passing the tax credit legislation is critical for all types of heavy-polluting industrial companies throughout the country to take action and commit large amounts of money to build these projects, said Claude Létourneau, president of Svante, a Vancouver-based carbon capture company.