2025 will be the year for oil sands companies to “fish or cut bait” on the C$16.5-billion carbon capture hub they’ve been pitching in Northern Alberta, Natural Resources Minister and possible Liberal leadership candidate Jonathan Wilkinson told the Calgary Herald in a year-end interview.

“It’s a pretty important year,” Wilkinson told Herald columnist Chris Varcoe, more than three years after the Pathways Alliance consortium first proposed the massive project, a new 400-kilometre pipeline that would carry carbon from more than 20 oil sands projects to a permanent repository in Cold Lake.

“We need to stop pushing this out,” he added. “We need to fish or cut bait soon.”

The Pathways Alliance has long touted carbon capture and storage (CCS) as the technology that will enable its six members, which account for about 95% of Canada’s oil sands output, to continue and expand production in a low-carbon world. If it’s ever built, the carbon capture hub that Pathways calls a “foundational” project will store about 10 to 12 million tonnes of carbon per year, a small share of the 86.5 megatonnes the oil sands produced in 2022, according to the federal government’s annual emissions inventory.

And that’s only if it delivers as advertised. In September 2022, the Institute for Energy Economics and Financial Analysis concluded that 10 of the world’s 13 “flagship, large-scale” CCS projects had fallen short of expectation, with seven of them underperforming, two failing outright, and one of them mothballed.

IEEFA also reported CCS operators were selling off nearly three-quarters of the carbon dioxide they captured each year for Enhanced Oil Recovery (EOR), a process by which CO2 is injected into depleted wells to extract more oil. In November 2023, the federal government stepped back from a pledge that taxpayer subsidies would exclude CCS projects devoted to EOR.

Around the same time, the Regina-based International CCS Knowledge Centre acknowledged it would be extremely difficult for CCS to meet a 2035 decarbonization deadline based on the current state of the technology. “This blows my mind,” IEEFA analyst David Schlissel said at the time. “It’s hypocritical. These guys have been hyping 90%, 95% capture, and now it’s, ‘well. we really can’t do it that fast, it’s not tested, it’s not certain’.”

None of which has stopped oil sands producers from demanding ever more lavish taxpayer subsidies before they commit their own money to the Pathways project. Then-Cenovus Energy CEO Alex Pourbaix opened bidding in July 2021 with a demand for $50 billion, maintaining for years after Ottawa announced its CCS subsidy that fossil fuel markets were too volatile to justify private investment without more intensive subsidies. In February 2024, analysts at the Wood Mackenzie energy consultancy warned the Pathways project could be “scuppered” without what would amount to permanent taxpayer support.

“The overarching question is who between government and industry is willing to underwrite the political risk… over a project that will take three to five years to build after sanctioning and need to operate for 20 to 30 years,” WoodMac’s director of CCUS economics, Peter Findlay, said at the time.

“The real challenge for Canadian CCUS then is not insufficient incentives—they are some of the most attractive in the world—but the uncertainty of their existence throughout project life,” he added. “The value of most of these incentives could be changed by political whim at any point during the project life—even going to zero.”

Pathways “has consistently said government incentives aren’t sufficient to make a positive final investment decision (FID) for the massive project,” the Herald’s Varcoe wrote last week.

But “Ottawa created an investment tax credit to cover up to half of the capital costs for CCUS projects,” he added. “It’s also promised to offer carbon contracts for difference (CCFDs) through the Canada Growth Fund—the key federal entity to issue them—that could lock in the future carbon price for such initiatives, providing long-term investment certainty.”

The provincial government, meanwhile, “created the Alberta Carbon Capture Incentive Program, providing a 12% grant for all CCUS projects. It’s estimated the entire program will cost the provincial treasury between $3.2 billion and $5.3 billion by 2035, but trigger about $35 billion in investment”—if fossil companies come to the table.

Meanwhile, amid warnings that the Pathways megaproject may be allowed to proceed without an environmental assessment, eight Alberta First Nations are insisting on a review under the federal Impact Assessment Act. The project’s boundaries lie entirely within the province of Alberta, but the communities say the project’s potential impact on reserve land and Indigenous territory means it should be subject to federal review.

“This is a massive and unprecedented project,” the eight communities wrote in a letter last month to Environment Minister Steven Guilbeault. “(It) carries with it non-negligible, novel, and irreversible adverse impacts.”