$35 billion for 12 megatonnes of carbon—Canada’s indulgence economy is a terrible deal for taxpayers
Commentary10 July 2026Emissions flow from a factory’s smokestacks in Toronto, Jan. 8, 2025. Cole Burston/The Canadian Press. 10 Jul 26In the late medieval church, a sinner of sufficient means didn’t need to. . .
Commentary10 July 2026Emissions flow from a factory’s smokestacks in Toronto, Jan. 8, 2025. Cole Burston/The Canadian Press. 10 Jul 26In the late medieval church, a sinner of sufficient means didn’t need to stop sinning. He could purchase an indulgence—a certificate remitting the penalty for sins already committed—and carry on with his conscience cleared and his ledger balanced. The practice so scandalized a German monk that it helped launch the Reformation. Canada has now constructed its own indulgence economy around the oilsands, and Ottawa has gone a step further than Rome ever managed. The federal government isn’t merely tolerating the market for absolution. It’s guaranteeing the price of indulgences with taxpayer money. The Pathways Alliance project—a carbon capture network linking roughly 20 oilsands facilities to a storage hub near Cold Lake—is the centrepiece of the recent Canada-Alberta memorandum of understanding. Its capital cost hasalready climbed past $20 billion, and a reasonable estimate of 30 years of operating costs adds another $14 billion to $18 billion once inflation is accounted for. Call it a $35 billion enterprise to capture, at best,10 to 12 megatonnes of carbon dioxide per year. The financial architecture deserves more scrutiny than it’s received. The project’s economics require a carbon price somewhere north of $130 per tonne, which is why the MOU commits Alberta toraising its industrial carbon priceto precisely that level. The trouble is that Alberta’s TIER market is so oversupplied with credits that they’verecently tradedbelow $20 per tonne—a fraction of the headline price. Ottawa’s answer is carbon contracts for difference. The two governments will jointly backstopup to 75 million tonnes of creditsbetween 2030 and 2040, paying the Pathways companies the gap whenever the market price falls short of a negotiated strike price. Strip away the financial engineering, and the structure is simple: if polluters won’t pay enough for absolution, taxpayers will top up the collection plate. Canada’s Pathways Alliance project, a $35 billion carbon capture initiative, represents an indulgence economy where taxpayers subsidize costly emissions reductions. The project’s financial structure relies on inflated carbon prices and government support, ultimately redistributing costs from oilsands shareholders to the public. Alternative investments in emissions reduction could yield far greater benefits at a fraction of the cost. The prioritization of this project over more effective climate solutions is a misguided approach to achieving social license for the fossil fuel industry. The federal government isn’t merely tolerating the market for absolution. It’s guaranteeing the price of indulgences with taxpayer money. Strip away the financial engineering, and the structure is simple: if polluters won’t pay enough for absolution, taxpayers will top up the collection plate. Pathways isn’t really climate policy that happens to fail a cost-benefit test. It’s the negotiated price of social license for new export pipelines. The incidence of these costs lands in predictable places. Industrial emitters who buy the credits will pass compliance costs to consumers; the contracts for difference draw on federal and provincial treasuries financed at government borrowing rates; and the 50 percent investment tax credit covers half the capture equipment before a single tonne is stored. The subsidies don’t reduce the project’s cost. They redistribute it—from oilsands shareholders to everyone else. All of which would be defensible if the project bought emissions reductions at a reasonable price. But it doesn’t. Stack the capital charges and operating costs against the tonnage, and the all-in cost of abatement plausibly exceeds $200 to $250 per tonne—and the record of Alberta’s two existing commercial facilities, where costs have doubled or ballooned by 60 percent, suggests the risk runs in one direction. Compare that to the alternatives. Ottawa’s own analysis pegs its enhanced methane regulations at an average of $48 per tonne, among the cheapest large-scale reductions available anywhere in the economy. Modelling of the American Inflation Reduction Act found power-sector decarbonization at $36 to $87 USD per tonne. On the merits, a dollar spent through Pathways buys perhaps a quarter of the abatement it would buy elsewhere. The strongest case for the project concedes most of this. Its defenders argue that carbon capture is the cheapest way to decarbonize oilsands processing, specifically, since fuel switching would require carbon prices of $300 to $1,000 per tonne. That’s true as far as it goes. It simply relocates the question: why should decarbonizing this particular sector, at nearly any cost, rank ahead of cheaper reductions everywhere else? The atmosphere is indifferent to which smokestack a tonne comes from. Canadian policy, increasingly, is not. Consider what $35 billion dedicated to emissions reduction—unconstrained by the political imperative to launder it through one industry—could actually purchase. It could build the east-west transmission interties that would let hydro-rich provinces displace gas-fired power in Alberta, Saskatchewan, and Nova Scotia—infrastructure that economists have recommended for decades. It could fund nuclear capacity that generates electricity and revenue for 60 years. It could electrify hundreds of thousands of buildings, finish the methane job, or purchase verified international reductions at a fraction of domestic costs. The distinction between these options and Pathways isn’t merely price per tonne. Transmission lines, reactors, and retrofitted buildings are productive assets—they generate power, reduce bills, and compound economic value long after the initial outlay. Carbon capture infrastructure produces nothing. It’s a disposal system, a $35 billion apparatus for burying a waste product, with every dollar of its revenue conjured by regulation rather than by anyone’s willingness to pay for what it makes. There’s a more honest way to describe what’s happening. Pathways isn’t really climate policy that happens to fail a cost-benefit test. It’s the negotiated price of social license for new export pipelines—the big, expensive thing that must be built so that other things may be built—dressed in the accounting language of emissions reduction. Reasonable people can debate whether that bargain serves the national interest. Taxpayers can’t debate it honestly until it’s priced as what it is: a side payment, not a climate program. Dante reserved a specific place for those who trafficked in sacred things. The simoniacs of the Eighth Circle are buried upside down in baked rock, flames licking their feet, punished for treating the holy as merchandise. Whatever one thinks of climate policy as a moral enterprise, there’s something instructive in the old warning. When absolution becomes a commodity—and when the state guarantees its price—the result isn’t virtue. It’s a market in the appearance of virtue, underwritten by everyone who never sinned in the first place. Trending Articles1Canada’s carbon pricing wipes out Alberta oilsands’ edge in attracting investment dollars for new pipeline: Study2The biggest financial transfer in Canada that nobody talks about3The Carney government’s expanding power to identify Canadians online, access their data—and punish them4Canadian dollar reaches 14-month low, near 70 cents to the U. 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