CPPIB-owned carbon capture and storage project threatened by cost challenges
The Canada Pension Plan Investment Board (CPPIB) is risking Canada's national retirement fund on risky, expensive, ineffective carbon capture and storage (CCS) projects that prolong the use of fossil fuels. The Alberta Carbon Trunk Line is a prime example.
This week, the Institute for Energy Economics and Financial Analysis (IEEFA) released a report arguing that the profitability and sustainability of CCS facilities in Alberta are threatened by cost increases and failing to live up to projected emissions reductions. The IEEFA report includes an analysis of the Alberta Carbon Trunk Line (ACTL), a CCS project operated by Wolf Midstream-- which is wholly owned by CPPIB.
The ACTL consists of a 240-km pipeline that transports captured carbon dioxide (CO2) from a fertilizer plant and refinery near Edmonton and transports it to the Clive oil field to stimulate fossil fuel extraction via enhanced oil recovery operations. The ACTL commenced commercial operations in June 2020 following a $305 million investment from CPPIB and significant subsidies from the Alberta and federal governments.
CPPIB includes Wolf Midstream in its "Sustainable Energies" portfolio, with two CPPIB Managing Directors sitting on the company's board. CPPIB regularly touts the ACTL as a profitable climate solution that's essential to decarbonization.
But the IEEFA analysis finds that:
the ACTL has seen operating costs increase from $30.44 per tonne of net CO2 captured in 2020 to $49.25 per tonne in 2023— a more than 60% increase in three years that's far higher than Wolf's projections;
the ACTL has failed to achieve its projected rates of CO2 capture by nearly 33%;
by supplying captured CO2 to the Clive oil field for enhanced oil recovery operations, the ACTL paradoxically increases overall emissions, as the captured CO2 is used to produce more oil, causing more CO2 to be released into the atmosphere.
IEEFA concludes that unprofitable CCS projects like the ACTL will struggle to bring lasting economic benefits and are dependent on public subsidies to maintain operations. The ACTL's lack of demonstrated success and heightened financial risks indicate public investments in CCS are unlikely to yield desired environmental or economic benefits.
With national media reporting the Pathways Alliance’s flagship project as a “big money loser”, we have to ask: why does CPPIB continue to gamble the Canada Pension Plan on high-risk CCS projects?