At a carbon capture funding announcement, Canada’s energy minister was using rhetoric straight out of Big Oil's playbook.
On Friday, the federal government announced $21.5 million for a handful of carbon capture projects in Alberta, and while the amount isn’t going to move the needle, Energy and Natural Resource Minister Tim Hodgson’s choice of words and tone signal how Prime Minister Mark Carney’s government plans to engage with the fossil fuel industry.
Hodgson billed this as “an investment in the long-term future of the oil and gas industry” and highlighted other federal support for carbon capture, utilization and storage (CCUS).
“Every barrel of responsibly produced Canadian oil and every tonne of clean Canadian LNG can displace less clean, riskier energy elsewhere in the world,” Hodgson said at the announcement in Calgary.
“Our exports can help our allies break dependence on authoritarian regimes and help the world reduce our emissions. Canada will remain a reliable global supplier — not just today, but for decades to come. The real challenge is not whether we produce, but whether we can get the best products to market before someone else does.”
The line that Canadian oil and gas is more ethical and more responsibly produced than in other parts of the world — and that it displaces dirtier fuels elsewhere — are tried-and-true industry talking points. Similarly, the idea that Canada will inevitably remain a major oil producer or be replaced in the market by other players is a familiar oilpatch argument.
“Is that Minister Hodgson saying that, or is that somebody from the Canadian Association of Petroleum Producers?” Stephen Legault, senior manager of Alberta energy transition at Environmental Defence, asked in a phone interview with Canada’s National Observer. “Because the two, in that statement, sound indistinguishable.”
The minister’s remarks signal that Carney’s government is trying to find a way for Canada to continue on as a petro-state and is “desperately” looking for ways to somehow make it socially acceptable, Legault said.
Bitumen from Alberta’s oil sands is among the dirtiest, most water- and carbon-intensive oil in the world. Communities downstream of the oil sands live with health and environmental impacts every day.
Carbon capture and storage has become a major fixation of the oil and gas industry in recent years as it seeks social licence to continue producing despite its climate impacts.
“These are talking points that the Pathways Alliance uses to justify trying to extract billions of dollars in Canadian taxpayers’ money to clean up a mess made by the most wealthy companies in the country, and some of them the most wealthy in the world,” Legault said.
Export Canadian LNG to fight climate change
Hodgson emphasized the need to “make investments that fight climate change, so we can reduce carbon emissions and bring the lowest-cost, lowest-risk and lowest-carbon products to domestic and international markets — like we have just seen this week with the momentous opening of LNG Canada Phase 1.”
Some of Hodgson’s comments justifying Canada’s export of fossil fuels to reduce global emissions could also be lifted right out of the Conservative Party of Canada’s election campaign materials, which proposed lowering global greenhouse gas emissions by exporting more Canadian LNG to countries that currently burn a lot of coal.
However, a growing body of evidence throws cold water on the notion LNG is a lower-emission fuel than coal. A study from Cornell University, published last October, found carbon emissions from American LNG are actually 33 per cent higher than coal, when processing and shipping the LNG are taken into account. There’s also widespread skepticism about the business case for ramping up LNG production and export. In October, researchers from the U.K.-based Carbon Tracker found global markets for LNG are likely to be oversupplied by the end of the decade.
“This was not the tone of a minister of natural resources who takes climate change seriously,” Legault said.
“Two weeks ago or three weeks ago, people were terrified that their communities were going to burn down, and the fire season had barely begun. We've got record temperatures around the world right now, people are dying, and it would appear as though the Carney government is going down the same path that we might have gotten with a Poilievre government, which is to believe the rhetoric that these oil and gas companies are spewing and to believe the rhetoric that Danielle Smith is spewing.”
Legault quipped that perhaps Stephen Harper’s staff left his playbook for “ethical oil” sitting around and one of Carney’s people dusted it off.
Government ‘taking the temperature’ for Pathways investment
Hodgson delivered his remarks at Bow Valley Carbon Cochrane Ltd.’s facility, which is getting $10 million to design and install a system and pipeline to capture carbon from the Interpipeline Cochrane Natural Gas Extraction Plant, transport it and sequester it in a well.
Enbridge Inc. and Enhance Energy Inc. are getting $4 million and $5 million, respectively, for work to support separate storage hubs in Central Alberta by identifying underground reservoirs to store the captured carbon. Half a million dollars will go to a company to improve measurement, monitoring and verification of CO2 stored underground. The remaining $2 million is to investigate using small-scale carbon capture technology on diesel engines.
This $21.5 million comes from the Energy Innovation Program’s $319-million funding stream for carbon capture. The funding was introduced in Budget 2021 and will span seven years. The federal government also has a CCUS investment tax credit worth more than $5.7-billion in its first six years, according to the Parliamentary Budget Officer’s estimates.
All of this is dwarfed by a multi-billion-dollar carbon capture megaproject proposed by a consortium of Canada’s six largest oil sands producers called the Pathways Alliance. The project, with an estimated $16.5-billion price tag, would capture carbon dioxide from more than a dozen oilsands sites in northern Alberta and transport it to an underground storage site south of Cold Lake, using approximately 600 kilometres of pipelines.
Legault believes Hodsgon’s remarks are “taking the temperature” of the Canadian public to gauge what the reaction will be “when the government makes an announcement that they want to support the Pathways Alliance.”
At the news conference, Hodgson did not answer multiple questions about the Pathways Alliance’s proposed multi-billion-dollar carbon capture megaproject and whether his government will put public money on the table, other than to say the discussions are “active” and he will not “negotiate in public.”
A January 2025 study by the International Institute for Energy Economics and Financial Analysis found the Pathways project business model is shaky at best due to high costs and limited opportunities to generate revenue. The project is currently stalled awaiting an investment decision.
A ‘multi-billion-dollar CCUS industry’
CCUS is widely criticized by climate advocates for its inefficiency, high cost and the fact it risks locking in oil and gas production despite the majority of the emissions created by burning fossil fuels.
As Legault put it, these projects “tend to leave an awful lot of carbon on the table, and that's not what we need right now.”
“If carbon capture was such a great idea, then the companies should pay for it themselves. It's not like they're cleaning up a mess that the Canadian public made. They're cleaning up a mess that they made.”
Canada can develop “a world-class, multi-billion-dollar CCUS industry” if governments move quickly and strategically, Hodgson said Friday, adding that Alberta is an “MVP” in the federal government’s game plan.
New legislation grants the federal government broad powers to override environmental laws and regulations to build projects cabinet deems in the national interest, which could include a wide range of projects from ports, rail, electricity infrastructure, pipelines and carbon capture. The legislation has added fuel to conversations about new pipelines and Carney has name-dropped the Pathways carbon capture project as a possible contender.
On Friday, Hodgson said, “One of the criteria is that we honour our commitments to a clean economy and to fighting climate change, and that will be one of the key ways that we evaluate any project going forward.”
The legislation does not force the federal government to treat this or any of its factors as criteria that must be met; it just suggests it as one of many to consider.
“I really hope that the prime minister has read his own book and is able to translate the value that he talks about in his book [Value(s): Building a Better World for All], into policy on the ground for Canada and its future, because right now, we're not getting many hopeful signs,” Legault said.
