Opinion: Decarbonized oil is Canada’s climate opportunity

The recent memorandum of understanding between Prime Minister Mark Carney and Premier Danielle Smith has been framed as a historic step in Canada’s climate debates. On paper, it offers a grand bargain — Ottawa opens the door to a potential new pipeline to the West Coast and suspends the emissions cap, while Alberta raises its industrial carbon price and commits to the massive Pathways Plus carbon capture project.

The reaction has been predictably polarized. Supporters hail it as the unleashing of a “clean energy superpower,” while critics see a betrayal of climate targets that locks in fossil fuel expansion. However, this debate overlooks the physical reality that will ultimately determine our future.

We cannot stop using fossil fuels overnight, as the global economy remains physically reliant on them. Yet, we also cannot continue treating the atmosphere as a free dumping ground for humanity’s waste.

We believe there is a path that makes this agreement viable, one that respects both the laws of physics and the realities of global economics. This is a path that targets geological net zero. The idea is simple — if you take carbon out of the ground, you must put it back.

First, let’s address the laws of physics. The scientific community has known for more than 170 years that carbon dioxide is a greenhouse gas that warms the planet. The carbon dioxide we emit today was sequestered in fossil fuel reserves over tens of millions of years and will remain in the atmosphere for the foreseeable future unless we take active measures to remove it. In just a few decades, we are on track to take atmospheric greenhouse gas to those last seen in the Jurassic. 

And if you’re inclined to shrug, “well, the dinosaurs coped,” it’s not clear that they did — sudden swings in carbon dioxide concentrations coincide worryingly often with mass extinctions.

Yet, there is a future that both stabilizes the climate and allows continued use of fossil fuels in the short to medium term. That involves carbon capture and permanent storage. We can, and almost certainly will, stop global warming by decarbonizing our remaining fossil fuel use before we stop using fossil fuels entirely.

“Decarbonized oil” is not an illusion but a physical necessity. Even in the scenarios of the Intergovernmental Panel on Climate Change that meet the goals of the Paris Agreement, we are still using oil and gas — at a lower rate than today, but still a substantial one — well past 2100, and many decades after we stop temperatures rising. We stop climate change by decarbonizing fossil fuels long before we manage to phase them out altogether.

For Canada, this presents a significant economic opportunity.

Consider the Pathways Alliance, the consortium of oilsands majors proposing a massive carbon capture and storage network in Alberta. Critics see a taxpayer-funded handout while supporters see a survival strategy. Both sides miss the bigger picture: large-scale infrastructure investment is the first step toward creating a fundamentally new commodity — a decarbonized barrel of oil.

Carney has rightly identified that Canada’s national interest lies in “decarbonized barrels.” This isn’t about greenwashing the status quo but about recognizing that as the world transitions, the last barrels of oil sold will be the ones with the lowest carbon footprint. If Canada can prove it can produce energy without warming the planet, we move from being a climate villain to a provider of a valuable product.

The challenge is the cost. The Pathways project comes with a headline-grabbing price tag of more than $16 billion. It is fair to ask why taxpayers should foot the bill for profitable companies.

Let’s view the finances through a different lens — shift the focus from “who pays the bill” to “who owns the solution.” Rather than relying solely on complex tax credits and subsidies, Canada could consider a “Carbon Takeback Obligation” — a policy mandating that for every tonne of carbon dioxide generated by the fossil fuels sold, a specific percentage must be permanently recaptured and stored geologically.

This storage must be “additional.” We cannot point to existing forests, which may well burn down next summer, or passive absorption by the oceans and claim they are offsetting new oil production. The biosphere is already under immense stress. To balance the books, we need permanent, geological storage that goes beyond what nature provides.

To stay consistent with Canada’s climate targets and the Paris Agreement, this “mandated stored fraction” needs to rise from near-zero today to 10 per cent by the mid-2030s, eventually reaching 100 per cent by mid-century. By this standard, the current Pathways proposal is not ambitious enough. It focuses primarily on cleaning up operations. While this is an essential step, it is only the start. A credible path to net zero requires addressing the emissions embedded in the oil extracted, not just the energy used to extract it.

Under this model, the cost of carbon capture becomes a line item on the corporate balance sheet, driving the same relentless efficiency and innovation that the industry applies to extraction. It transforms a political battle over subsidies into a market challenge: who can store carbon most efficiently?

Canada is uniquely built to lead in this race.

Alberta’s deep saline aquifers are well-suited for long-term carbon storage. But the opportunity extends to the coasts. Off Vancouver Island, the Solid Carbon project is pioneering technology to inject CO2 into sub-sea floor basalt, where it mineralizes and turns into solid rock. It mirrors the success of Iceland’s carbon capture industry, but on a potentially vast, offshore scale.

Investing in decarbonized oil projects is not about “saving” the oil industry of the past. It is about building a vital component of the energy industry in transition. It offers the only viable path for producers to remain operational in a net-zero world, turning the existential threat of a “phase out” into the engineering challenge of “clean up or close down.”

We can continue to moralize over others’ failures to balance the carbon books, or we can get on with balancing them. If we want to continue producing fuels forever, we must prove we can get rid of the carbon dioxide they generate — forever.

Myles R. Allen is with the University of Oxford, Department of Physics.
Felix Pretis is with the University of Victoria, Department of Economics.
Andrew J Weaver is with the University of Victoria, School of Earth and Ocean Science.