Oilsands emissions on track to outpace reductions from Pathways project: economist

“We could see a fairly significant increase in emissions,” Sawyer said, adding changes to Alberta’s carbon pricing system announced earlier this year “didn’t materially fix the market” in a way that would motivate industry to invest in emissions reduction.

Oilsands and thermal heavy oil production contributed 92 million tonnes of CO2 emissions in 2024, according to the federal government’s latest national inventory report released this year.

In October, the Pembina Institute think tank published a report calculating Canada’s emissions trajectory under three scenarios: current measures, current measures with Pathways and a “Grand Bargain” with both Pathways and the new pipeline going ahead.

The third scenario was found to have the highest absolute oilsands emissions — 89 megatonnes annually by 2035. That’s 19 per cent higher than the “current measures with Pathways” scenario.

That study was done before Pathways’ targets were scaled back. Janetta McKenzie, director of the oil and gas program at the Pembina Institute, said the group is crunching new numbers now.

“Bottom line, we’re likely to see oilsands emissions continue to rise over the next five, 10, 15, 20 years,” she said.

“Nothing that’s been announced … suggests that there’s a real attempt to constrain oilsands emissions and see them reduce over time.”

The Alberta and federal governments signed a sweeping energy accord late last year that, among other things, set out conditions for a new West Coast oil pipeline to move ahead. They agreed the pipeline would be conditional on Pathways being built, and vice versa.

Earlier this month, the province submitted its proposal for its pipeline to the federal major project office, which aims to speed along infrastructure projects deemed in Canada’s national interest. The same day, the governments signed a non-binding agreement with the companies behind Pathways.

The Pathways memorandum of understanding was made public on Monday.

“It really was just formalizing that this thing is going ahead — but it did formalize a much smaller ambition,” Sawyer said.

Pathways is being pursued by Cenovus Energy, Imperial Oil, Suncor Energy, Canadian Natural Resources and ConocoPhillips. It involves a pipeline network that would carry carbon emissions from several sites in northern Alberta to an underground storage hub near Cold Lake, Alta. The companies would be responsible for trapping emissions from their respective sites.

The new million-barrel-a-day pipeline Alberta is pursuing to southern B.C. is to be developed, built and operated by federal Crown corporation Trans Mountain Corp. As it stands, the federal and Alberta governments are to take on 90 per cent of the new pipeline’s costs, which the province projects will run as high as $43.7 billion.

The carbon capture project is also likely to depend on big government spending, Sawyer said. It had been projected to cost $16.5 billion as of 2022. At an energy conference last month, the CEO of Cenovus said the cost is likely in the range of $20 billion to $30 billion.

“We typically call (carbon capture, utilization and storage) a wild card technology, meaning there’s some reason why it’s not commercial now, why it is not being deployed everywhere,” Sawyer said. “It has a bunch of uncertainty associated with it.”

He said he’d rather see other tools, like a stronger industrial carbon pricing regime, used to drive down oilsands emissions, but governments have “taken all the tools out of the tool box.” So, in the absence of other meaningful options, Sawyer said Pathways is worth pursuing.

Ottawa offers investment tax credits for carbon capture and has agreed to provide financing to support operating costs “through various mechanisms” that could include updates to its Clean Fuel Regulations.

Alberta is working to formalize its own carbon capture incentive program and has also agreed to “implement financial supports to encourage the oil production growth required to underpin” the new West Coast oil pipeline and planned expansion projects.

“We’re now talking about a pretty big public financing package for the oilsands sector, which is very well established and very profitable, but clearly doesn’t see the path to doing the type of expansion that Premier (Danielle) Smith or the Prime Minister would like to see out of them,” said McKenzie.

Meanwhile, a group of concerned rural landowners, farmers and Indigenous communities said it was “deeply alarmed” by news of the Pathways project taking a step forward. No CO2 Pipelines Alberta said in a news release that they’re worried about the safety, health and environmental effects of having pressurized CO2 running through pipelines underneath their land.

“This agreement was signed behind closed doors, without the consent of local landowners, rural residents, municipalities or Indigenous communities living within the project area.”

This report by The Canadian Press was first published July 14, 2026.

Companies in this story: (TSX:CVE) (TSX:IMO) (TSX:CNQ) (TSX:SU)

Lauren Krugel, The Canadian Press

by The Canadian Press

Oilsands emissions on track to outpace reductions from Pathways project: economist

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