Pathways Alliance hasn’t started building its massive carbon capture and storage (CCS) project in northern Alberta. Its business model and the case for cutting greenhouse gas emissions from the oil sands are already crumbling.
A recent Institute for Energy Economics and Financial Analysis (IEEFA) study looked hard at the numbers behind the project. They don’t look good.
The problem is that costs are skyrocketing, and the project faces limited options for increasing volumes and revenue.
Pathways Alliance includes Suncor Energy, Canadian Natural Resources, Cenovus Energy, Imperial Oil, MEG Energy and ConocoPhillips Canada. Together, they represent 95 percent of tar sands oil production.
To make money, Pathways needs to sell carbon credits for more than the cost of capturing and storing the carbon.
Looking for handouts
These big oil players are lobbying hard for public money to subsidize the project. A 50 percent federal government tax incentive worth $5.7 billion is on the table.
At the same time, Albertans might be handing over between $3.2 billion and $5.3 billion in provincial government carbon capture incentives.
According to study author Mark Kalegha, an energy finance analyst, publicly available financial details for the Pathways project are scarce.
However, by examining the numbers at two already operating carbon capture facilities in the province, the Alberta Carbon Trunk (ACTL) and Quest, Kalegha concluded that Pathways would waste public funds with no significant benefit to the planet.
Misguided investment
“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,” wrote Kalegha in the study’s executive summary. “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.”
Greenwashing
CCS projects are looking more and more like expensive exercises in greenwashing. In the US, some of carbon capture’s biggest cheerleaders are starting to second guess the technology. At a meeting last February, ExxonMobil CEO Darren Woods told shareholders that the company needs to cut costs in half to make CCS viable .”And frankly, we’re at the very early stages of the technology and the technology development,” Wood said.
In an article for Scientific American, Jonathan Foley, executive director of the non-profit Project Drawdown, said existing carbon capture technology uses a lot of energy, is expensive and will barely make a dent in planet-warming emissions.
“More fundamentally, the biggest problem with industrial carbon capture schemes is that they are largely a ploy by Big Oil to delay action to phase out fossil fuels,” Foley writes. “These projects give fossil fuel companies a greenwashing boost, cloaking pollution underneath fake environmental responsibility, helping them claim that they are taking serious climate action, all the while continuing to build out additional fossil fuel infrastructure and rake in trillions in profits.”
