Wood Mackenzie Warns That The Pathways Alliance Carbon Capture Project Faces Uncertainty

Wood Mackenzie New Research Shows The World Is On Track To Meet 2.5°C Of Warming Scenario - Carbon Herald

According to a recent report from Wood Mackenzie, as the first phase of Canada’s Pathways Alliance, valued at $12 billion, approaches its final investment decision (FID), concerns have been raised regarding the sustained availability of economic incentives for what is considered as the world’s largest carbon capture and storage (CCUS) proposal.

”While the federal government and much of the public expect producers to reduce their Scope 1 and 2 emissions, especially when profits are high, there are challenges that exist,” said Peter Findlay, director CCUS Economics for Wood Mackenzie. “The overarching question is who between government and industry is willing to underwrite the political risk of that price over a project that will take three to five years to build after sanctioning and need to operate for 20 to 30 years?”

In order to advance its emission reduction objectives, the Pathways Alliance, aspiring to become the largest cluster for upstream emissions reduction globally, is poised to play a significant role. It targets a net reduction of nearly 80 Mtpa by 2050. Phase I of the CCUS initiative aims to mitigate 10 to 12 Mtpa of CO2 emissions or more, requiring an estimated capital expenditure of $12 billion, with the FID expected in 2025.

Relevant: Wood Mackenzie Launches Lens Carbon

Findlay adds that: “The real challenge for Canadian CCUS then is not insufficient incentives — they are some of the most attractive in the world— but the uncertainty of their existence throughout project life. The value of most of these incentives could be changed by political whim at any point during the project life — even going to zero.”

The report underscores the critical need for collaboration between federal and provincial governments to address the prevailing uncertainty. Without such cooperation, the report warns, few CCUS projects are likely to progress, potentially leading to delays or even the abandonment of the Pathways Alliance, as threatened by the industry.

Relevant: Pathways Alliance Carbon Capture Hub Struggles To Move Forward

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