Study: Tar Sands Producers' Plans For "Carbon Capture" Impossible w/o 10s Of Billions In Continuous Gov Subsidies
Pathways Alliance’s flagship carbon capture and storage project is not financially feasible without massive and consistent subsidies. This is according to the most recent analysis of the venture, conducted by the Institute for Energy Economics and Financial Analysis (IEEFA), which identified multiple financial challenges. The Pathways Alliance, a lobby group representing Canada’s six largest tar sands oil producers, proposed a massive carbon capture and storage (CCS) hub based near Cold Lake, Alberta, in 2022. The build-out includes a 400-kilometer pipeline network connecting the CCS hub with 13 tar sands facilities. The group’s members are responsible for approximately 95 percent of the tar sands’ annual output.
“The growing realization that carbon capture and storage projects are likely to require permanent government subsidies resets the discussion about the viability of CCS as a tool to effectively reduce carbon emissions,” Mark Kalegha, the IEEFA’s energy finance analyst for Canada and author of the report, said in a statement. “Public funding of CCS is a costly gamble that may not yield tangible returns on Canada’s journey towards achieving net-zero emissions,” Kalegha stated. “This is a financial risk the government should reconsider taking on.”
Among the study’s key findings, the IEEFA determined that the total costs — such as interest, insurance, depreciation, and taxes — for existing commercial-scale carbon capture plants in Alberta are approaching thresholds that threaten profitability. In addition, operating costs are increasing at roughly twice the rate of the amount of carbon dioxide that’s captured.
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Whether storing such a large amount of CO2 is safe is a vitally important but unanswered question. The release of an estimated 100,000 to 300,000 tons of CO2 at Lake Nyos, Cameroon, in 1986 killed about 1,700 people and 3,500 livestock animals. The rupture of a CO2 pipeline near Satartia, Mississippi, in 2020, resulted in dozens of hospitalizations, the town’s evacuation, and a chaotic emergency response that underlined the public’s unfamiliarity with large-scale carbon dioxide poisoning. A May 2024 article in The Narwhal revealed that Pathways Alliance made it clear to the federal government that it fully expects to depend on federal government subsidies in the tens of billions of dollars. And, in a letter to several federal ministers — including then-Finance Minister Chrystia Freeland and Environment Minister Steven Guilbeault — Pathways requested the government cover 50 percent of its estimated operating costs. The same letter also asked if the project would be eligible to generate Clean Fuel Regulation (CFR) for bitumen and crude oil exported using carbon capture technology. Pathways also demanded the federal government forgo an environmental impact assessment. At the provincial level, Pathways broke its project into 126 parts to avoid triggering an automatic environmental assessment.
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https://www.desmog.com/2025/02/26/pathways-carbon-capture-project-is-not-viable-expert-warns/