From Canada Action

By Cody Battershill 

A new Ontario-wide survey conducted by Nanos Research on behalf of Canada Action finds strong public consensus that Canadian oil and gas revenues are critical to jobs, economic growth, and trade – and that Canada should lean into its energy advantage at home and abroad.

“Our polling feedback shows that a majority of Ontarians recognize the vital, irreplaceable role oil and gas has to play in our national economy. Canadians are telling us they want to see more support for the oil and gas sector, which is foundational to our standard of living and economy at large,” said Canada Action spokesperson, Cody Battershill.

The online survey of 1,000 Ontarians shows that more than four in five (84 per cent) respondents believe oil and gas revenues are important for creating jobs for Canadians and building a stronger economy. Additionally, four-in-five (80 per cent) support Canada developing a strategy to become a preferred oil supplier to countries, while Ontarians are more than eight times as likely to support as to oppose Canada supplying oil and gas, provided it remains a major source of energy worldwide.

“Building new trade infrastructure, including pipelines to the coasts that would get our oil and gas resources to international markets, can help Canadians diversify our trading partners, maximize the value of our resources, and secure a strong and prosperous future for our families,” Battershill said.

Also, nearly four-in-five (79 per cent) of Ontarians say oil and gas revenues are important for keeping energy costs manageable for Canadians.

“Our poll is just one of many in Canada since the start of 2025 that show a majority of Canadians are supportive of oil and gas development. It’s time we get moving forward on these projects without delay and learn from the lessons of our past, where we saw multiple pipelines cancelled to the detriment of Canada’s long-term economic success.”

Cody Battershill – [email protected]

Canada’s climate change strategy is now joined at the hip to a pipeline. Two pipelines, actually — one for oil, one for carbon dioxide.

The MOU signed between Ottawa and Alberta two weeks ago ties a new oil pipeline to the Pathways Alliance, which includes what has been billed as the largest carbon capture proposal in the world.

One cannot proceed without the other. It’s quite possible neither will proceed.

The timing for multi-billion dollar carbon capture projects in general may be off, given the retreat we are now seeing from industry and government on decarbonization, especially in the U.S., our biggest energy customer and competitor.

But if the public, industry and our governments still think getting Canada’s GHG emissions down is a priority, decarbonizing Alberta oil, gas and heavy industry through CCS promises to be the most cost-effective technology approach.

New modelling by Clean Prosperity, a climate policy organization, finds large-scale carbon capture gets the biggest bang for the carbon tax buck.

Which makes sense. If oil and gas production in Alberta is Canada’s single largest emitter of CO2 and methane, it stands to reason that methane abatement and sequestering CO2 from oil and gas production is where the biggest gains are to be had.

A number of CCS projects are already in operation in Alberta, including Shell’s Quest project, which captures about 1 million tonnes of CO2 annually from the Scotford upgrader.

What is CO2 worth?

Clean Prosperity estimates industrial carbon pricing of $130 to $150 per tonne in Alberta and CCS could result in $90 billion in investment and 70 megatons (MT) annually of GHG abatement or sequestration. The lion’s share of that would come from CCS.

To put that in perspective, 70 MT is 10% of Canada’s total GHG emissions (694 MT).

The report cautions that these estimates are “hypothetical” and gives no timelines.

All of the main policy tools recommended by Clean Prosperity to achieve these GHG reductions are contained in the Ottawa-Alberta MOU.

One important policy in the MOU includes enhanced oil recovery (EOR), in which CO2 is injected into older conventional oil wells to increase output. While this increases oil production, it also sequesters large amounts of CO2.

Under Trudeau era policies, EOR was excluded from federal CCS tax credits. The MOU extends credits and other incentives to EOR, which improves the value proposition for carbon capture.

Under the MOU, Alberta agrees to raise its industrial carbon pricing from the current $95 per tonne to a minimum of $130 per tonne under its TIER system (Technology Innovation and Emission Reduction).

The biggest bang for the buck

Using a price of $130 to $150 per tonne, Clean Prosperity looked at two main pathways to GHG reductions: fuel switching in the power sector and CCS.

Fuel switching would involve replacing natural gas power generation with renewables, nuclear power, renewable natural gas or hydrogen.

“We calculated that fuel switching is more expensive,” Brendan Frank, director of policy and strategy for Clean Prosperity, told me.

Achieving the same GHG reductions through fuel switching would require industrial carbon prices of $300 to $1,000 per tonne, Frank said.

Clean Prosperity looked at five big sectoral emitters: oil and gas extraction, chemical manufacturing, pipeline transportation, petroleum refining, and cement manufacturing.

“We find that CCUS represents the largest opportunity for meaningful, cost-effective emissions reductions across five sectors,” the report states.

Fuel switching requires higher carbon prices than CCUS.

Measures like energy efficiency and methane abatement are included in Clean Prosperity’s calculations, but again CCS takes the biggest bite out of Alberta’s GHGs.

“Efficiency and (methane) abatement are a portion of it, but it’s a fairly small slice,” Frank said. “The overwhelming majority of it is in carbon capture.”

From left, Alberta Minister of Energy Marg McCuaig-Boyd, Shell Canada President Lorraine Mitchelmore, CEO of Royal Dutch Shell Ben van Beurden, Marathon Oil Executive Brian Maynard, Shell ER Manager, Stephen Velthuizen, and British High Commissioner to Canada Howard Drake open the valve to the Quest carbon capture and storage facility in Fort Saskatchewan Alta, on Friday November 6, 2015. Quest is designed to capture and safely store more than one million tonnes of CO2 each year an equivalent to the emissions from about 250,000 cars. THE CANADIAN PRESS/Jason Franson

Credit where credit is due

Setting an industrial carbon price is one thing. Putting it into effect through a workable carbon credit market is another.

“A high headline price is meaningless without higher credit prices,” the report states.

“TIER credit prices have declined steadily since 2023 and traded below $20 per tonne as of November 2025. With credit prices this low, the $95 per tonne headline price has a negligible effect on investment decisions and carbon markets will not drive CCUS deployment or fuel switching.”

Clean Prosperity recommends a kind of government-backstopped insurance mechanism guaranteeing carbon credit prices, which could otherwise be vulnerable to political and market vagaries.

Specifically, it recommends carbon contracts for difference (CCfD).

“A straight-forward way to think about it is insurance,” Frank explains.

Carbon credit prices are vulnerable to risks, including “stroke-of-pen risks,” in which governments change or cancel price schedules. There are also market risks.

CCfDs are contractual agreements between the private sector and government that guarantees a specific credit value over a specified time period.

“The private actor basically has insurance that the credits they’ll generate, as a result of making whatever low-carbon investment they’re after, will get a certain amount of revenue,” Frank said. “That certainty is enough to, in our view, unlock a lot of these projects.”

From the perspective of Canadian CCS equipment manufacturers like Vancouver’s Svante, there is one policy piece still missing from the MOU: eligibility for the Clean Technology Manufacturing (CTM) Investment tax credit.

“Carbon capture was left out of that,” said Svante co-founder Brett Henkel said.

Svante recently built a major manufacturing plant in Burnaby for its carbon capture filters and machines, with many of its prospective customers expected to be in the U.S.

The $20 billion Pathways project could be a huge boon for Canadian companies like Svante and Calgary’s Entropy. But there is fear Canadian CCS equipment manufacturers could be shut out of the project.

“If the oil sands companies put out for a bid all this equipment that’s needed, it is highly likely that a lot of that equipment is sourced outside of Canada, because the support for Canadian manufacturing is not there,” Henkel said.

Henkel hopes to see CCS manufacturing added to the eligibility for the CTM investment tax credit.

“To really build this eco-system in Canada and to support the Pathways Alliance project, we need that amendment to happen.”

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