Canada’s Pathways Alliance ‘stagnating on emissions pledges’

Canada’s Pathways Alliance is failing to make good on its pledges to get the nation’s oilsands operations to net zero by 2050, posing a possible threat to asset owner capital as competition for low-emission energy gathers pace.

This is the conclusion of a report from the Pembina Institute clean energy think tank, which examines the gap between the climate pledges made by the Canadian oilsands companies and their actions.

The Pathways Alliance is an industry group that represents some 95% of production in Canada’s oilsands and consists of six oil majors (Suncor, Cenovus, Conoco Phillips, Canadian Natural Resources, Imperial Oil and MEG Energy) plus two oilsands organisations.

While the alliance announced a three-phase plan for oilsands operations to be net-zero by 2050 last year, there has been no significant decarbonisation investment decisions made by its members, according to Pembina, and most of its plans remain undisclosed.

It comes at a time when business and finance alliances are increasingly coming under fire for stagnating on climate pledges.

According to Andrew Logan, senior director of oil and gas at climate investor group Ceres, while investors welcomed the initial launch of the Pathways Alliance as a “significant step in the oil and gas industry’s decarbonisation journey”, the opening commitments from members were truly only “down payments” on what must become “detailed, actionable decarbonisation strategies”.

“Those have so far not materialised,” he says. “The companies’ bills are now coming due, and they will need to develop specific, realistic, time-bound transition plans if they hope to maintain investors’ confidence in their long-term net zero goals.

“Companies should take advantage of the robust cash flows generated by today’s high oil prices, which could fund the investments they will require to meet the rising wave of decarbonisation. Investors view climate change with real urgency, and the industry is running short on time to decarbonise.”

Changing tides

It is unclear for now what members’ record cashflows ($152bn by the end of the year) will be used for except buybacks and dividend payments.

In the meantime, by 2030, Canada’s oil and gas sector will be subject to global competition for low-emissions energy, Pembina argues, as global demand for oil declines: “A trend identified even by oil firms,” the report states.

“Companies that make deep and rapid emissions reductions now will be best-placed to prosper in the low-emissions, high-competition worlds of 2030, 2050 and beyond. Those that do not risk leaving behind significant underfunded financial and environmental liabilities – such as clean-up of the tailings ponds,” the report states.

Pembina highlights that while the alliance claimed new investments in carbon capture, utilisation and storage (CCUS) technology would make up half its 2030 goal, and that this would receive a boost in April when the Canadian federal budget allocated a 50% investment tax credit for CCUS projects, members had begun publicly indicating that additional government funding would be required.

According to a press statement issued by Pathways Alliance president, Kendall Dilling: “We are progressing with our ambitious emissions reduction plans as quickly as we can while we pursue the economic and regulatory certainty from governments that will enable us to deploy billions of dollars in capital between now and 2030 and beyond to achieve our 2050 net-zero goal.”

Dilling said that “significant work” was indeed underway, citing engineering studies on its foundational CCS project – including specific capture facilities – were on track, and that expectations by the Pembina Institute that companies make final investment decisions on multi-billion-dollar projects before governments had finalised regulatory frameworks to support them was “unrealistic”.