Alberta
Alberta’s Massive Carbon Capture and Storage Network clearing hurdles: Pathways Alliance
From the Canadian Energy Centre
By Will GibsonPipeline front-end engineering and design to be complete by end of year
Canada’s largest oil sands companies continue to advance a major proposed carbon capture and storage (CCS) network in northeast Alberta, including filing regulatory applications, conducting engineering and design, doing environmental surveys and consulting with local communities.
Members of the Pathways Alliance – a group of six companies representing 95 per cent of oil sands production – are also now closer to ordering the steel for their proposed CO2 pipeline.
“We have gone out to potential pipe suppliers and asked them to give us proposals on costs and timing because we do see this as a critical path going forward,” Imperial Oil CEO Brad Corson told analysts on November 1.
He said the next big milestone is for the Pathways companies to reach an agreement with the federal and provincial governments on an economic framework to proceed.
“Once we have the right economic framework in place, then we will be in a position to go order the line pipe that we need for this 400-kilometre pipeline.”
Pathways – which also includes Suncor Energy, Canadian Natural Resources, Cenovus Energy, MEG Energy and ConocoPhillips Canada – is proposing to build the $16.5 billion project to capture emissions from oil sands facilities and transport them to an underground storage hub.
The project was first announced in 2022 but Pathways had not provided recent public updates. The organization had stopped advertising and even briefly shut down its website during the summer in wake of the federal government’s amendments to the Competition Act in June.
Those changes include explicit provisions on the need to produce “adequate and proper testing” to substantiate environmental benefit claims. Critics say the provisions could lead to frivolous lawsuits and could or even scuttle the very projects that Canada is relying on to slash greenhouse gas emissions.
In early December, the Alberta Enterprise Group (AEG) and the Independent Contractors and Businesses Association jointly filed a constitutional challenge against the federal government over the new “greenwashing” rules, which they say unreasonably restrict free speech.
“These regulations pre-emptively ban even truthful, reasonable and defensible discussion unless businesses can meet a government-imposed standard of what is the truth,” said AEG president Catherine Brownlee.
Pathways has since restored its website, and president Kendall Dilling said the organization and its member companies continue working directly with governments and communities along the corridors of the proposed CCS project.
Canadian Natural Resources began filing the regulatory applications to the Alberta Energy Regulator on behalf of Pathways earlier in the year. The company has so far submitted 47 pipeline agreement applications along with conservation and reclamation plans in seeking approvals for the CO2 transportation network.
Pathways has also continued consultation and engagement activities with local communities and Indigenous groups near its pipeline corridors and storage hubs.
“Engagement is ongoing with local communities, Indigenous groups and landowners, as well as a consultation process with Indigenous groups in accordance with Aboriginal Consultation Office requirements,” Dilling says.
An environmental field program that began in 2021 continues to survey the network’s project areas.
“Environmental field studies are ongoing and we are supporting Indigenous groups in completing traditional land use studies,” Dilling says.
“Studies are supported by hundreds of heritage resource assessments, wetland classifications, soil assessments, aquatic habitat evaluations and other environmental activities.”
In addition to working with governments and communities, Pathways expects front-end engineering and design on the proposed 400-kilometre-plus main transportation line and more than 250 kilometres of connecting pipelines to be complete by the end of this year.
Pathways has also drilled two test wells in the proposed storage hub and plans to drill another two or three evaluation wells in the final quarter of 2024.
From the Fraser Institute
On Monday, the Smith government announced that beginning next year it will change the way it funds surgeries in Alberta. This is a big step towards unlocking the ability of Alberta’s health-care system to provide more, better and faster services for the same or possibly fewer dollars.
To understand the significance of this change, you must understand the consequences of the current (and outdated) approach.
Currently, the Alberta government pays a lump sum of money to hospitals each year. Consequently, hospitals perceive patients as a drain on their budgets. From the hospital’s perspective, there’s little financial incentive to serve more patients, operate more efficiently and provide superior quality services.
Consider what would happen if your local grocery store received a giant bag of money each year to feed people. The number of items would quickly decline to whatever was most convenient for the store to provide. (Have a favourite cereal? Too bad.) Store hours would become less convenient for customers, alongside a general decline in overall service. This type of grocery store, like an Alberta hospital, is actually financially better off (that is, it saves money) if you go elsewhere.
The Smith government plans to flip this entire system on its head, to the benefit of patients and taxpayers. Instead of handing out bags of money each year to providers, the new system—known as “activity-based funding”—will pay health-care providers for each patient they treat, based on the patient’s particular condition and important factors that may add complexity or cost to their care.
This turns patients from a drain on budgets into a source of additional revenue. The result, as has been demonstrated in other universal health-care systems worldwide, is more services delivered using existing health-care infrastructure, lower wait times, improved quality of care, improved access to medical technologies, and less waste.
In other words, Albertans will receive far better value from their health-care system, which is currently among the most expensive in the world. And relief can’t come soon enough—for example, last year in Alberta the median wait time for orthopedic surgeries including hip and knee replacements was 66.8 weeks.
The naysayers argue this approach will undermine the province’s universal system and hurt patients. But by allowing a spectrum of providers to compete for the delivery of quality care, Alberta will follow the lead of other more successful universal health-care systems in countries such as Australia, Germany, the Netherlands and Switzerland and create greater accountability for hospitals and other health-care providers. Taxpayers will get a much better picture of what they’re paying for and how much they pay.
Again, Alberta is not exploring an untested policy. Almost every other developed country with universal health care uses some form of “activity-based funding” for hospital and surgical care. And remember, we already spend more on health care than our counterparts in nearly all of these countries yet endure longer wait times and poorer access to services generally, in part because of how we pay for surgical care.
While the devil is always in the details, and while it’s still possible for the Alberta government to get this wrong, Monday’s announcement is a big step in the right direction. A funding model that puts patients first will get Albertans more of the high-quality health care they already pay for in a timelier fashion. And provide to other provinces an example of bold health-care reform.
Nadeem Esmail
Senior Fellow, Fraser Institute
From the Montreal Economic Institute
Alberta’s move to fund acute care services through activity-based funding follows best practices internationally, points out an MEI researcher following an announcement made by Premier Danielle Smith earlier today.
“For too long, the way hospitals were funded in Alberta incentivized treating fewer patients, contributing to our long wait times,” explains Krystle Wittevrongel, director of research at the MEI. “International experience has shown that, with the proper funding models in place, health systems become more efficient to the benefit of patients.”
Currently, Alberta’s hospitals are financed under a system called “global budgeting.” This involves allocating a pre-set amount of funding to pay for a specific number of services based on previous years’ budgets.
Under the government’s newly proposed funding system, hospitals receive a fixed payment for each treatment delivered.
An Economic Note published by the MEI last year showed that Quebec’s gradual adoption of activity-based funding led to higher productivity and lower costs in the province’s health system.
Notably, the province observed that the per-procedure cost of MRIs fell by four per cent as the number of procedures performed increased by 22 per cent.
In the radiology and oncology sector, it observed productivity increases of 26 per cent while procedure costs decreased by seven per cent.
“Being able to perform more surgeries, at lower costs, and within shorter timelines is exactly what Alberta’s patients need, and Premier Smith understands that,” continued Mrs. Wittevrongel. “Today’s announcement is a good first step, and we look forward to seeing a successful roll-out once appropriate funding levels per procedure are set.”
The governments expects to roll-out this new funding model for select procedures starting in 2026.
* * *
The MEI is an independent public policy think tank with offices in Montreal, Ottawa, and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.
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