- Canada, Alberta and five major oil sands producers have signed a non-binding agreement targeting 6mn tonnes a year of carbon capture by 2035.
- The CCS project is explicitly linked to a proposed 1mn barrel/day pipeline to Canada’s west coast and expanded oil sands production.
- Binding company commitments, cost allocation, regulatory approvals and a final investment decision remain outstanding.
Canada’s federal government, Alberta and the country’s largest oil sands producers have agreed a framework to advance the Pathways carbon capture project, completing a political compact that links emissions reductions to new oil production and export capacity.
The non-binding memorandum covers Canadian Natural Resources, Cenovus Energy, ConocoPhillips Canada, Imperial Oil and Suncor Energy. Together, the Oil Sands Alliance members account for about 95% of Canadian oil sands production.
The companies intend to capture and permanently store a net 6mn tonnes of carbon dioxide annually by 2035. Shared pipelines, compression facilities and a storage hub are expected to be operational by the beginning of 2032. Individual company obligations will be set out in definitive agreements targeted for signature by 15 November.
The governments and producers also share an objective of finding a further 5mn tonnes of annual emissions reductions by 2040 and another 5mn tonnes by 2045. These later reductions could come from expanded CCS, electrification, efficiency or other technologies and operating practices.
The agreement is inseparable from plans for a 1mn barrel/day pipeline from Alberta to Canada’s Pacific coast, intended to increase exports to Asian markets and reduce dependence on the US. The memorandum describes the pipeline, production growth and emissions projects as “mutually dependent”.
Ottawa has said federal support for the export pipeline depends on oil producers progressing Pathways. In return, the governments have committed to maintain fiscal and regulatory frameworks supporting both CCS and greater oil output.
The policy package includes extended provincial capital support, clarification of the federal CCUS investment tax credit and possible federal mechanisms to assist with CCS operating costs. Producers meeting their project milestones can also benefit from slower tightening of Alberta’s emissions-intensity benchmarks, reducing their future carbon-compliance costs.
That represents progress on the revenue problem that has held back Pathways. Oil producers first proposed the project in 2022 but resisted taking on its full cost, initially estimated at about C$16.5bn. The current agreement phases and reduces the near-term scheme rather than resolving its economics through a straightforward investment commitment.
Environmental groups argue that the bargain asks taxpayers to support emissions reductions that profitable producers should finance themselves. The Pembina Institute said the 6mn tonne project was roughly half the scale of the earlier core proposal and criticised commitments to provide further operating support and incentives for oil production.
The scale should also be kept in context. Canada’s oil sands emitted approximately 89mn tonnes of CO₂ equivalent in 2023. A 6mn tonne reduction would equal about 7% of that historical total, before considering the effect of future production growth.
For the UK, Pathways illustrates both the value and danger of industrial CCS policy. Large capture networks require durable carbon price or contract support because they do not normally generate sufficient standalone revenue. Yet public support becomes politically vulnerable if it is seen principally as underwriting expansion of the emitting industry.
The Canadian compact has aligned the parties around a timetable. It has not yet produced binding commitments or a final investment decision. That is where the balance between emissions ambition, producer responsibility and public risk will become clear.
