Alberta
The Technical Pitfalls and Political Perils of “Decarbonized” Oil
By Ron Wallace
The term “decarbonized oil” is popping up more and more in discussions of Canada’s energy politics. The concept refers to capturing and storing carbon dioxide (CO₂) generated during oil production and processing, thereby reducing greenhouse gas emissions, in order to support the continued strength of Canada’s oil and natural sector, the nation’s number-one export earner and crucial to the economies of Alberta and Saskatchewan. Projects like the Weyburn Carbon Capture, Utilization and Sequestration Project in Saskatchewan have demonstrated the idea’s technical feasibility by sequestering 1.7 million tonnes of CO₂ annually while producing incremental oil.
The key question now is whether this type of process can be dramatically scaled up – by anywhere from six to over 20 times – to facilitate what Alberta Premier Danielle Smith has termed a “grand bargain”: using carbon capture and storage (CCS) to gain a greenlight from the federal government for a new oil export line to the West Coast, enabling Alberta to continue growing oil production and generating jobs while advancing Ottawa’s climate goals. Prime Minister Mark Carney may be prone to hedging and ambiguity, but he has now made it clear that any such pipeline will indeed be contingent on Alberta proving it can “decarbonize” its oil
production.
The Pathways Alliance, a group of six producers representing 95% of Canada’s oil sands production, has designed a $16.5 billion CCS network to capture and store CO₂ from up to 20 facilities, aiming for 11 million tonnes per year in Phase 1 and a breathtaking 40 million tonnes in Phase 2. Pathways is intended to help build consensus in favour of a new oil export pipeline that could enable up to 25% growth in Alberta’s oil production – generating possibly $20 billion per year in export revenues.
While credible critics, including the Institute for Energy Economics and Financial Analysis (IEEFA) and energy economist Jennifer Considine, highlight the high costs, uncertain revenues and poor returns from several other attempts at large-scale CCS, Alberta’s UCP government appears to view it as the way out of its current impasse with Ottawa. It believes the profits generated from exports of Alberta’s decarbonized oil could themselves help finance the CCS facilities required for the “grand bargain” to be sealed.
Smith has been keeping up the political pressure, recently announcing that Alberta will fund and lead the effort to submit a formal pipeline application to the Carney government’s new Major Projects Office. Major obstacles remain, but none is more serious than Carney maintaining predecessor Justin Trudeau’s suite of anti-energy policies, particularly the draft oil and natural gas emissions cap, as part of his government’s intention to meet net-zero targets by 2050 (although Carney has recently indicated some flexibility in this view). Smith argues that this is effectively an “unconstitutional” production cap that threatens Alberta’s economic future, vowing to challenge it legally if Carney doesn’t shelve it.
Smith’s government at the same time is pursuing a more conciliatory tactic, offering to help advance federal climate objectives through CCS in order to speed up pipeline approvals under Carney’s Bill C-5. In this track, there is a question as to whether Alberta may be walking into an economic and technological trap that it will regret.
That is because the “grand bargain” would create two different classes of oil in Canada, operating under different sets of regulations and resulting in different cost structures. Western Canada’s crude oil producers would shoulder costly and technically challenging decarbonization requirements – plus the threat of federal veto over any new oil projects that weren’t similarly “decarbonized”. Canadian-produced oil would enter international export markets at a significant if not ruinous competitive disadvantage, risking not only profitability but market share. Eastern Canada’s oil refiners, meanwhile, would remain free to import fully “carbonized”
oil at the lowest prices they could get from countries with significantly looser environmental standards.
The Alberta oil sands currently generate 58% of Canada’s total oil output. Data from December 2023 shows Alberta producing a record 4.53 million barrels per day as major oil export pipelines including Trans Mountain, Keystone and the Enbridge Mainline operated at near capacity. The same year, Eastern Canada imported on average about 490,000 barrels per day by pipeline and sea from the United States (72.4%), Nigeria (12.9%) and Saudi Arabia (10.7%). Since 1988, imports by marine terminals along the St. Lawrence River have exceeded $228 billion, while imports by New Brunswick’s Irving Oil Ltd. refinery totalled $136 billion from 1988 to 2020.
The economic viability of large-scale CCS projects remains completely unproven; indeed, attempts to date in other jurisdictions have performed poorly. Attempting to “decarbonize” Alberta’s oil, then, makes little economic sense; it appears to be based more on the Carney government’s ideological objectives set to achieve global climate objectives.
The question thus becomes why Alberta is agreeing to a policy that could trap its taxpayers in a hugely expensive and unfair system that could imperil consideration of any new pipelines for Canadian oil exports, especially when private capital already largely remains on the sidelines.
Not only Albertans but Canadians generally need to carefully reconsider any “grand bargain” that hinges on “decarbonization” of western Canadian oil, because doing so threatens the economic viability of Alberta oil production and associated export pipelines – without meaningfully reducing global CO 2 emissions. And if industry proves unable to raise the vast capital required to construct the CCS projects, while lacking the cash flow to cover the steep ongoing costs needed to operate them, then where is the money to come from? At a time when Canada’s fiscal trajectory is so worrisome, the shortfall had better not be made up through public subsidies.
Even worse than the yawning fiscal risks, such an approach risks splitting the country into two economic zones: a West burdened by costly decarbonization requirements making Alberta’s oil some of the world’s least profitable to produce, and an East benefiting as before from cheaper imported oil. This is hardly conducive to national unity. It is time for Alberta to reconsider the “grand bargain”.
The original, full-length version of this article was recently published in C2C Journal.
Ron Wallace is a former Member of the National Energy Board.
Alberta’s government is engaging with Albertans on increasing speed limits on rural highways.
Starting Nov. 7, Albertans can share their views on modernizing speed limits on divided highways through an online survey running until Dec. 12. The survey will ask how Albertans view raising the speed limit by 10 km/h on various highways from 110 km/h to 120 km/h.
“Alberta’s government is investigating how to safely increase speed limits on divided highways, and if Albertans support increasing speed limits. We are investing more than $1.5 billion this year alone to improve highway safety and upgrade infrastructure across the province. We want Albertans to be able to drive the speed limit that the highways are designed for. Modern vehicles combined with public awareness mean we can explore higher speed limits.”
The survey will provide Albertans with the opportunity to provide input on which highways they would prioritize having a speed limit increase, their views on restricting commercial trucks from using the far-left lane on highways with three or more lanes and any other feedback that would improve driving experiences on provincial highways.
Following a review of the survey results, Alberta’s government plans to conduct a mini-trial of a 120 km/h speed limit to assess the impacts of higher speed limits on divided highways. The trial will include strong monitoring to assess driving behaviour.
Alberta’s government reminds motorists to slow down and drive to the conditions. Speed limits are set for ideal conditions. When roads are wet, icy or when there is reduced visibility, motorists should slow down.
Quick facts
- Alberta’s provincial highway network includes more than 64,000 lane kilometres of highways, about 11,700 lane kilometres of which are divided.
- The posted speed limits of Alberta’s divided highways range from 100 to 110 km/h, although the posted speed limits on segments passing through cities, towns and First Nation lands can be as low as 50 km/h due to factors such as signalized intersections, pedestrians and local access.
Related information
- The survey is available online.
A new Class Size and Complexity Cabinet Committee has been struck to address classroom challenges.
Taking action on class size and complexity
Classrooms in Alberta continue to grow and are becoming increasingly complex, and immediate action is needed to address these issues in the public education system. To meet these issues head on, the Class Size and Complexity Cabinet Committee has been created. The cabinet committee will help guide government policy and deploy resources to deal with class sizes and classroom complexity.
“We are committed to providing world-class education, and we’re building schools and funding education at a rate unprecedented in this province. This committee will help us address the concerns of teachers, parents and students around class sizes and complexity.”
Throughout November, Alberta’s government will continue work with school boards to collect data on class sizes and classroom composition. The cabinet committee will use this data to direct resources to the classrooms that need it the most. Starting in January, this data will be made available and released annually.
The Class Size and Complexity Cabinet Committee will be co-chaired by the Premier of Alberta and the Minister of Education and Childcare. It will also include non-voting members representing school boards, administrators and a teacher representative of the ATA. The committee will also hear from school boards, academic experts, teachers, educational assistants, complex needs specialists and parents to inform its decisions and guide this vital work.
“We heard teacher concerns, and we are providing solutions. The Class Size and Complexity Cabinet Committee will help us take immediate action and ensure teachers and students are given the support they need to succeed.”
In June 2025, Alberta’s government established the Aggression and Complexity in Schools Action Team to provide advice on addressing classroom complexity. The report has been received and will be released soon. Over the coming months, the cabinet committee will start rolling out solutions informed by the action team’s recommendations. In addition, the committee will guide the creation of a new inclusive education policy framework.
“The work of this committee will support teachers in responding to the growing complexity in our classrooms. We will ensure that the voices of the contributors to the initial work guide
solutions that truly improve the educational experience for students and the educators who serve them.”
“I appreciate the government’s recognition of the impact of classroom complexity and their commitment to working collaboratively for improvement. Supporting teachers ultimately improves classroom conditions and student outcomes.”
Using data collected, this cabinet committee will also guide Alberta’s government in executing its commitment to hire 3,000 new teachers and 1,500 new educational assistants over the next three years. They will also assist in identifying and prioritizing where new schools and modulars should be built, advancing the government’s commitment to invest $8.6 billion to build 130 new schools, and provide 109 modular classrooms in the growing communities that need them urgently.
Quick facts
- Members of the Class Size and Complexity Cabinet Committee include:
- Danielle Smith, Premier of Alberta
- Demetrios Nicolaides, Minister of Education and Childcare
- Jason Nixon, Minister of Assisted Living and Social Services
- Rick Wilson, Minister of Mental Health and Addiction
- Searle Turton, Minister of Child and Family Services
- Lynnette Anderson, chief superintendent, Edmonton Catholic Schools
- Nicole Buchanan, chair, Red Deer Public Schools
- Marilyn Dennis, former president of Alberta School Boards Association
- Mike McMann, superintendent, Fort Vermilion Schools and President, College of Alberta School Superintendents
- Joanne Pitman, chief superintendent, Calgary Board of Education
- Dr. Elissa Corsi, Alberta Teachers’ Association
- Only Cabinet members are voting members. Additional guests will be invited to attend and share their expertise at the discretion of the chairs.
- School boards will be required to submit data on Alberta classrooms by Nov. 24.
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