Lennie Kaplan was a senior manager in the fiscal and economic policy division of the Ministry of Treasury Board and Finance, where he worked on cross-ministry initiatives evaluating the fiscal and economic impacts of federal and provincial energy and climate change policies.The April 1 deadline for a tri-lateral agreement between the Carney Liberal government, the Smith government, and the Pathways Carbon Capture and Storage (CCS) project partners has come and gone, and it does not appear there has been any meaningful progress made on advancing the Pathways CCS project to a final investment decision (FID). I believe that the spectre of the Carney-Smith net zero emissions (NZE) agenda is a major factor in keeping the Pathways CCS project in relative limbo.The net present value (NPV) of oil sands projects owned by the Pathways partner companies (i.e. Canadian Natural Resources Limited, Cenovus Energy, ConocoPhillips, Imperial Oil, and Suncor Energy), estimated at nearly $415 USD billion, could be effectively wiped out under the Carney-Smith net zero emissions (NZE) agenda.Under current oil demand levels, the NPV of oil sands projects owned by Pathways partner companies are estimated at $414.8 USD billion. However, with NZE Scenario oil demand levels, the NPV of oil sands projects owned by Pathways partner companies becomes negative, at an estimated negative $42.5 USD billion..While Liberal Prime Minister Mark Carney and Alberta Premier Danielle Smith are enthusiastic and unabashed supporters of NZE, the Pathways partner companies are actually doing their extensive NZE due diligence before making any long-term decisions, such as agreeing to major increases in Alberta carbon taxes and investing in the Pathways CCS project. The Pathways partner companies are focusing on the “long game,” not short-term political optics and slogans like NZE that the federal and Alberta governments are throwing around. Why would Pathway partner companies accept an NZE which could leave them with a risk of impaired or stranded assets down the road? It makes no economic and financial sense.In light of even more evidence of the negative impact of Carney-Smith NZ on the oil sands, I surmise that the federal Liberal government and the Smith government are going to have to put a lot more public money on the table before the Pathways CCS project proceeds. In my opinion, scrapping the Carney-Smith NZE, before it is too late, seems to be a much better policy solution all around for Albertans and Canadians. Lennie Kaplan was a senior manager in the fiscal and economic policy division of the Ministry of Treasury Board and Finance, where he worked on cross-ministry initiatives evaluating the fiscal and economic impacts of federal and provincial energy and climate change policies.
