Insights on postsecondary institutions, Canada’s current and future workforce, and industry sectors.

POSTSECONDARY INSTITUTIONS

How university equity is undermining venture-based commercialization

By Andrew Maxell

Dr. Andrew Maxwell (photo at right), is the Bergeron Chair in Technology Entrepreneurship in the Lassonde School of Engineering at York University.        

OPINION

Universities oversee research commercialization through two fundamentally different pathways: technology licensing, which dominated the late 20^th century, and venture creation, which is now the central engine of economic and societal impact.

Licensing moves codified knowledge – patents, contracts, disclosures – into established firms.

Venture creation relies on people: on tacit knowledge, user insight, rapid iteration and the lived process of building something real and valuable.

This article is about the second pathway – commercialization through venture creation – because this is where the greatest public return on research investment now occurs.

My work on incubators made this clear a decade ago: licensing rarely delivers regional economic benefit. When a technology is licensed, any value created typically accrues to firms located far from the university and far from the taxpayers who funded the research.

But when commercialization happens through venture creation, the value stays local. New companies form. Supply chains emerge. Talent circulates. Partnerships deepen. Alumni return to hire, mentor and give back.

These effects compound, producing far more value for both regions and universities than licensing revenue ever has – or ever will.
Venture creation is the most powerful engine of public return on research investment.

And yet, universities continue to impose structures – IP ownership, equity claims, administrative control – that reduce the likelihood that ventures will succeed at all.

My argument is not against commercialization.
It is an argument for commercialization – for recognizing that institutional control now inhibits the very outcomes universities claim to support.

Universities have a moral obligation to help research create value. But “help” does not mean “control,” and it certainly does not mean “own.”
If universities genuinely want more successful ventures, they must stop obstructing the people doing the commercializing.

The Old Pipeline

1. Bayh-Dole’s intentions were right – but its mechanisms now undermine its goals.

When the Bayh-Dole Act in the U.S. gave universities ownership of federally funded inventions in 1980, it was solving a real problem. Professors lacked incentives and organizational support to commercialize their discoveries. Universities, the thinking went, could step in as diligent stewards: filing patents, negotiating licenses and transferring discoveries to firms capable of developing them.

This worked tolerably well in an era where most innovation was codified and flowed linearly into the R&D departments of large firms. Licensing made sense. Venture creation barely existed.

But that world is gone.
The mechanisms Bayh-Dole empowered now run directly against the way innovation actually occurs.

Bayh- Dole’s intentions remain sound. Its mechanisms no longer deliver what they were designed to achieve.

2. Licensing delivers almost no value and most technology transfer offices lose money doing it.

Most technology transfer offices lose money, even at universities celebrated for commercialization.

The claim that universities “deserve” financial return because they “fund the research” is simply inaccurate. Public funding agencies finance the overwhelming majority of research. Universities provide facilities and overhead support, but not the capital.

Yet even if this claim were true, licensing – the mechanism universities rely on – barely works.

Research by Thursby and Kemp showed decades ago that most technology transfer offices(TTO)  operate at a net financial loss. Friedman and Silberman later confirmed that TTO structure and incentives actively depress success rates.

My own work with Moren Levesque found that even when licensing succeeds, the economic value typically flows to distant firms – not to the local region and certainly not in a way that builds the local innovation ecosystem.

Venture creation, by contrast, consistently produces new jobs, local supply chains, industry diversification and new opportunities for graduates.
It is the pathway delivering the outcomes universities claim to champion.

3. Patents no longer anchor competitive advantage – but TTOs still behave as if they do.

Structural Mismatch

The institutional logic of university ownership depends on patents: the idea that they encapsulate the commercial value of research. But in almost every emerging technology domain, patents capture only a fragment of what matters.

Research by Grimaldi and colleagues showed that patents are weak predictors of commercial success in fast-moving sectors. Today, value comes from tacit knowledge, integration insights, user feedback, ecosystem fit, and speed of iteration.

In my recent Canadian Science Policy Centre editorial, I argued that patents have increasingly become inputs rather than assets – necessary but insufficient.

The TTO model assumes a pipeline of codified knowledge that can be licensed.
The reality is an ecosystem of tacit knowledge that must be co-created.

4. Institutional ownership fractures incentives instead of aligning them.

The Incentive Collision

Universities insist that taking equity “aligns incentives.”
The evidence shows the opposite.

Researchers value autonomy, speed and adaptability.
Investors value clean cap tables and quick decision-making.
TTOs value compliance, short-term revenue and institutional optics.

These incentives do not align – they collide.

Kenney and Patton showed that centralized university IP ownership reduces disclosure, slows venture formation and discourages academic engagement. Many founders now avoid involving the university at all. Investors routinely decline deals encumbered by university equity.

The very mechanism intended to support commercialization now suppresses it.

5. Europe has already confronted this reality – North America cannot ignore it.

The External Mirror

The U.K.’s Independent Review of University Spin-Outs concluded that institutional equity stakes were depressing investment and harming national competitiveness. Oxford and Cambridge admitted publicly that their models slowed down entrepreneurship and reformed them accordingly.

The European Commission reached the same conclusion: university-imposed equity terms made spinouts “fundamentally unattractive.”

Europe has already corrected course. North America has not.

6. Universities cannot behave like early-stage investors – and expecting them to do so is harmful.

Governance Misfit

Early-stage investing requires speed, judgment, and risk tolerance – attributes universities cannot and should not attempt to emulate.

Universities are bureaucratic.
They are risk-averse.
They are compliance-driven.
They are not structured for ambiguity, uncertainty or pivoting.

TTOs, in particular, are administrative units posing as venture funds. When they take board seats or exert governance rights, they import institutional caution into environments that depend on boldness.

Investors recognize this mismatch instantly and often walk away.

7. Commercialization is human – and university ownership undermines the people who drive it

The Talent Paradox

Founders succeed because they feel personal ownership. Pierce, Kostova and Dirks showed that psychological ownership drives creativity and persistence.

When universities dilute founders early or assert control, they weaken the motivational engine that keeps ventures alive.

This is especially damaging for graduate students and postdocs who carry the tacit knowledge that makes commercialization possible. Yet institutional models marginalize their agency just when it is most needed.

If universities want successful ventures, they must invest in people, not control structures.

This requires integrating commercialization capability into graduate education – teaching researchers to understand user needs, uncover adoption barriers, co-create solutions and design ventures thoughtfully. These skills not only increase commercialization success but prepare graduates for innovation-driven careers.

You cannot license tacit knowledge.
You can only develop it.

8. Entrepreneurial universities and living labs succeed through trust – not control.

Trust Over Contracts

Innovation ecosystems flourish when universities evolve into entrepreneurial campuses and living labs – places where researchers, students, industry partners and communities collaborate openly around emerging technologies.

These ecosystems work because universities act as trusted facilitators, not equity-seeking gatekeepers. Cross-functional teams form. Opportunities are explored. Ventures emerge. Students gain experiential learning that shapes their future.

As I argued in my PhD work, the most productive commercialization outcomes emerge not from control and contracts, but from trust, aligned values and shared purpose.

When universities shift from extraction to facilitation, they stop being bottlenecks and start becoming catalysts.

What universities should do instead

Instead of owning pieces of the companies researchers create, universities should focus on what actually increases commercialization success.

They should catalyze engagement by bringing founders, researchers, users, investors and partners together early.

They should build local capability and capacity, investing in translational talent and entrepreneurial skills.

They should create multiple commercialization pathways, ensuring diverse ideas and teams can find the models that suit them.

They should prioritize long-term regional impact over short-term revenue, recognizing that true returns come through ecosystem vibrancy.

And they should reduce friction by grounding interactions in trust and shared values, not ownership and control.

When universities embrace these roles, they stop extracting value
and start amplifying it.

Conclusion

If universities want more commercialization, the best thing they can do is get out of the way.

The ideas that shape the future do not emerge from institutional ownership.
They emerge from empowered people.

Licensing delivers little value.
University equity suppresses venture formation.
Institutional incentives misalign with entrepreneurial needs.
Universities cannot behave like investors.
And researchers – especially graduate students – lose motivation under institutional control.

If universities want more successful ventures, more vibrant regions, more impactful research, and more alumni connected through success rather than resentment, they must embrace a profound but simple truth: Universities should stop trying to control innovation
and start enabling it.

Get out of the way.
Support instead of owning.
Facilitate instead of extracting.
Educate instead of encumbering.

Universities have a powerful role to play in venture-based commercialization.
But that role is not to own the process. It is to liberate it.

References

European Commission (2019) Knowledge Transfer Study 2019. Publications Office of the European Union.

Friedman, J., & Silberman, J. (2003). University technology transfer: Do incentives, management, and location matter? Journal of Technology Transfer, 28(1), 17–30.

Grimaldi, R., Kenney, M., Siegel, D. S., & Wright, M. (2011). 30 years after Bayh–Dole: Reassessing academic entrepreneurship. Research Policy, 40(8), 1045–1057.

Kenney, M., & Patton, D. (2009). Reconsidering the Bayh–Dole Act and the current university invention ownership model. Research Policy, 38(9), 1407–1422.

Litan, R. E., Mitchell, L., & Reedy, E. J. (2007). Commercializing university innovations: Alternative approaches. Ewing Marion Kauffman Foundation.

Maxwell, A. (2023). The evolving role of technology transfer offices in entrepreneurial universities. In Encyclopedia of Entrepreneurship Education (Edward Elgar Publishing).

Maxwell, A. (2025). Beyond patents: Why commercialization requires more than codified IP. Canadian Science Policy Centre (CSPC) Editorial.

Maxwell, A., & Levesque, M. (2011). Technology incubators: Constructing regional advantage. Journal of Business Venturing, 26(1), 1–20.

Pierce, J. L., Kostova, T., & Dirks, K. T. (2001). Toward a theory of psychological ownership. Academy of Management Review, 26(2), 298–310.

Siegel, D. S., Waldman, D., & Link, A. N. (2003). Assessing the impact of organizational practices on the productivity of university technology transfer offices: An exploratory study. Research Policy, 32(1), 27–48.

Thursby, J. G., & Kemp, S. (2002). Growth and productive efficiency of university intellectual property licensing. Research Policy, 31(1), 109–124.

UK Department for Science, Innovation and Technology. (2023). Independent review of university spin-outs. HM Government. Andrew Maxwell substack

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Postsecondary education delivers lasting benefits but significant barriers and challenges must be addressed

Postsecondary education delivers lasting benefits for individuals and the economy, and public investment in the system is both valued and necessary, according to a report by the Canadian Alliance of Student Associations (CASA).

At the same time, working-age Canadians identify significant barriers, such as affordability, student debt and gaps in job-relevant training, that must be addressed to strengthen the system’s value even further, the report says.

CASA is a non-partisan, not-for-profit advocacy organization representing students at 27 student associations across the country. Through its partnership with the Quebec Student Union/Union étudiante du Québec, CASA represents 390,000 students across Canada.

The report is based on a May 2025 Abacus Data survey of working age Canadians (18 to 65).

Across regions, ages and political affiliations, working-age Canadians believe that public funding for postsecondary education is essential to the country’s economic future, according to the report.

Eighty-nine percent of working-age Canadians surveyed believe that investing in postsecondary education is important for the country’s long-term economic stability and global competitiveness.

They support targeted assistance for low-income students, stronger incentives for employers to hire apprentices, and continued investment in both curiosity-driven and mission-driven research at universities, colleges and polytechnics.

The survey showed widespread support (83 percent) for greater financial assistance to help employers hire apprentices.

In 2022, the rate of apprentices completing their training on time was just 19.1 percent, a modest increase from the previous year but still below the 2019 pre-pandemic level of 21.8 percent.

One of the biggest barriers to completion is the lack of employer training placements. Addressing this requires greater incentives for businesses to take on apprentices, including the expansion of programs such as the Apprenticeship Service, the report says.

A majority of working-age Canadians (84 percent) also believe that postsecondary institutions should place greater emphasis on career preparation over theoretical learning. This view holds consistently across age groups, educational backgrounds, and federal voting history.

One way the federal government can support this is by extending and expanding work-integrated learning programs, such as the Student Work Placement Program, which offers wage subsidies to employers who hire students and has delivered significant benefits to both students and businesses.

Strengthening these programs is particularly important in the current context, as youth and student unemployment are at their highest levels since the 1990s (excluding the pandemic), making early career experience more crucial than ever, the report notes.

Working-age Canadians also overwhelmingly support public investment in research conducted at postsecondary institutions. This includes support for mission-driven research aimed at solving specific challenges (87 percent), and curiosity-driven research focused on discovery without immediate practical goals (79 percent).

A vast majority of individuals would encourage their children to pursue some form of postsecondary education, whether in skilled trades, college, polytechnic or university.

While 67 percent of those who have completed a degree program or higher believe that the system is working well for both students and the country, just 48 percent of those without a postsecondary credential believe it is working well for the country, and 49 percent believe that it is working well for students.

Those who have completed postsecondary education report stronger skills, broader career opportunities, and greater confidence in navigating the labour market than those who have not.

They are more likely to hold positions of responsibility, adapt to job changes, and report higher life satisfaction, better mental health and stronger community ties.

Work-integrated learning experiences further enhance these benefits, equipping graduates with both improved practical skills and professional networks.

Despite these clear advantages, affordability remains the most significant barrier to access and success, the report says.

Cost is identified (by 49 percent) as the biggest barrier to enrollment, and high tuition and student debt are cited as the biggest downsides of attending postsecondary education, with lasting effects on graduates’ ability to buy homes, start families or launch businesses.

“The fact that high education costs serve both as the largest barrier to participation and the greatest challenge for those enrolled highlights the need to reform and expand the Canada Student Financial Assistance Program,” the report says.

Indigenous learners face uniquely heightened costs associated with attending postsecondary, including travel and accommodation expenses, mental health supports and childcare.

As a result, in 2021, fewer than half (49.2 percent) of Indigenous people aged 25 to 64 had completed a postsecondary credential, compared to 68 percent of non-Indigenous people.

Nearly two-thirds of total survey respondents (61 percent) said they struggled to afford tuition and other educational expenses, and just over half (52 percent) said they had difficulty finding a job relevant to their program after graduation (or securing career-relevant work experience while still studying (51 percent).

In addition, 43 percent of graduates, especially in younger cohorts, reported facing mental health challenges during their program.

Respondents also pointed to inadequate government funding, weak policymaking, and a lack of job-relevant training as major system shortcomings.

“Despite their essential role, Canada’s postsecondary institutions have not yet received the sustained federal support needed to fully realize their potential,” the report says. “Prolonged stagnation in federal funding and varying levels of provincial investment have contributed to a growing reliance on international student tuition as a key source of revenue.”

When the federal government suddenly capped student study permits in 2024, without introducing compensating supports, many postsecondary institutions were left in a precarious position. In Ontario alone, this is expected to result in the loss of 10,000 jobs, the report notes.

The report’s findings underscore the urgent need for Canada’s governments to better support post-secondary education and research, CASA says.

This includes stable, sufficient funding for the system as a whole, and expanded access to opportunities such as work-integrated learning and apprenticeships.

It also means addressing key barriers like high tuition and insufficient job-relevant training, so more learners can access and complete their programs.

Additionally, the burden of student debt, which increasingly affects many graduates long after they finish, must be acknowledged and alleviated to ensure long-term success.

Canada’s youth and adult learners are ready to shape the country’s future, CASA says. “With the right policies and investments, postsecondary education can unlock their potential and ensure Canada thrives in the decades to come.” CASA

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Loss of international students disproportionately affects small college towns relying on this student workforce

The loss of many international students in Ontario due to federal policy changes in immigration disproportionately affects smaller college towns that previously relied on this group for workers and to drive economic activity, according to a report by the Higher Education Quality Council of Ontario and Fleming College.

The report is based on a 22-question survey that Fleming College administered to all international students at campuses in Peterborough, Lindsay and Haliburton between fall 2023 and fall 2024, resulting in 1,821 responses.

The survey results confirm what many employers already know: prior to the federal policy shift, international students were dedicated workers, working across diverse industries at high rates while studying.

Fifty-three percent of students surveyed said they were working during their studies – 41 percent of which said they were working 15 or more hours per week – and 94 percent of the non-working students said they were looking for work.

Like many domestic students, most international students weren’t working in their field of study – they were in entry-level, part-time positions that often pay low wages and require little to no education. Most survey respondents (92 percent) agreed that their primary reason for working was for a source of income to support themselves. 

Some international students, namely those in programs with direct links to the labour market, secured employment more directly related to their field of study before graduating.

Of working respondents, 54 percent of students studying to be personal support workers and 22 percent of those in early childhood education were already working in their field – two fields where Ontario is desperate for skilled workers.

At Fleming College, international students helped to power the local workforce, with most working in the communities they called home, the report says.

Seventy-four percent of international student respondents were working within 40 minutes of where they lived and 79 percent of respondents were taking public transit, walking or biking to get to work.

These numbers “highlight the fact that international students were serving, supporting and strengthening the Fleming community,” the report says.

Some employers are raising concerns about the decline in the number of international student, describing them as a vital part of the workforce. However, their absence may not be felt equally across the province.

In major cities with large labour pools, the effect may be muted, but in smaller communities, the consequences could be far more pronounced.

Fleming College is spread across three campuses outside of the Greater Toronto Area. Smaller college towns, like the ones supported by Fleming College, have come to rely on a constant – and increasing – stream of part-time workers to fill hourly, shift-based positions.

“A decline in international student enrollment doesn’t just impact campus life; it means fewer highly educated people available to work in and uplift these local areas,” the report says.

International students also spend money on rent, public transit and at restaurants, grocery stores and other small businesses. By bringing more spending to the area, Fleming College’s international students have become vital contributors to their local economies.

Considering the 14 percent of survey respondents preferring to work in their campus community after they graduate and the 60 percent wanting to work in Ontario after they graduate, international graduates who have developed their skills at postsecondary institutions are a large source of skilled labour for the province, the report says.

Concludes the report: “Immigration policy changes have impacts on the labour supply and cultural diversity in Ontario’s communities, but they may also lead to longer-term consequences that could weaken the talent pipeline and hinder economic growth for years to come.” Higher Education Quality Council of Ontario

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The Government of British Columbia is launching an independent review to strengthen the public postsecondary education system and ensure it is sustainable and well-positioned to support people in B.C. and the province’s economic growth. Public postsecondary institutions in B.C. are facing significant financial pressures, largely due to factors such as unilateral federal reductions to study permits for international students, global inflation and declining domestic enrolment. As a result, many postsecondary institutions are in a critical position, with widening gaps between revenues and expenses, the government said. To address this, the Ministry of Post-Education and Future Skills is launching a review with a holistic approach to sector-wide sustainability to establish a clear path forward to stabilize institutions in the short term and to build a foundation for long-term financial sustainability and operational resilience. The independent review is being led by Don Avison, KC, former B.C. deputy minister and former board chair of Emily Carr University of Art + Design. Avison will deliver a report with recommendations by March 15, 2026, that will guide government’s work to keep the system accessible, affordable, sustainable and aligned with provincial economic priorities.

This review takes a broad, holistic approach to sector-wide sustainability and will cover the following areas:

• Governance and operations: Examine the structure of B.C.’s public postsecondary system to reduce duplication, streamline service delivery and improve overall efficiency.
• Program delivery: Identify ways to deliver programs more effectively within existing budgets, ensuring that institutions are effectively preparing graduates with relevant skills and training.
• Financial sustainability: Explore broad opportunities to address both short-term and long-term financial challenges. Govt. of B.C.

CANADA’S CURRENT & FUTURE WORKFORCE

 The Government of Canada announced close to $20 million in funding for two local organizations, the United Brotherhood of Carpenters and Joiners of America (UBC) and the Carpenters' Regional Council. The UBC will deliver virtual reality training on rigging and hoisting to over 4,000 journeypersons and apprentice Industrial Mechanic (millwrights) across Canada. The Carpenter’s Regional Council will provide access to 10 training hubs within UBC’s training facilities across the country to prepare 4,000 journeyperson and apprentice carpenters with the skills and hands-on experience required to work with new and emerging green technologies including installing, repairing and maintaining the exteriors layers that protect and seal buildings. These projects are funded by the Union Training and Innovation Program - Sustainable Jobs stream under the government’s Canadian Apprenticeship Strategy, which also complements investments in the Sustainable Jobs Training Fund that helps thousands of workers to upgrade or gain the new skills required for a green economy. Federal Budget 2025 proposed a $75 million expansion of the Union Training and Innovation Program over three years, which will further boost union-based apprenticeship training in the Red Seal trades. Govt. of Canada

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Creating research agenda on international assessments of adult competencies could improve Canada’s skills policies and programs

Canada needs a research agenda using data from the Organisation for Economic Development and Co-operation’s Programme for the International Assessments of Adult Competencies (PIAAC), according to a report by the Future Skills Centre.

This knowledge can be used to improve understanding of relationships among skills, productivity, prosperity and well-being, says the report, Skills for Productivity, Prosperity and Well-Being in Canada: A Canadian PIAAC Research Agenda.

“By using PIAAC data to better understand who has skills, how they are used, and how they change over time, researchers can help us identify strengths, gaps and areas for improvements in skills policies and programs,” the report said.

Co-authors of the report are Creig Lamb, co-director of Shift Insights, and Dr. Daniel Munro, PhD, co-director of Shift Insights and senior fellow and director of policy projects in the Innovation Policy Lab at the Munk School of Global Affairs & Public Policy at the University of Toronto.

PIAAC is the largest international survey on the levels and use of skills of hundreds of thousands of adults aged 16 to 65, including nearly 40,000 in Canada, over two cycles of data collection.

PIACC, through a skills assessment and background questionnaire, provides insights on a wide range of adult skills issues, including:

• performance on skills and competencies that underlie personal and societal success.
• the distribution of skills across a variety of subpopulations.
• how skills are used in workplaces and how demand for skills is evolving.
• why and how skills matter to a range of social, health and economic outcomes.
• factors related to skills acquisition and decline.
• how education and training systems contribute to skills development.
• policy levers that can be used to enhance competencies.

Lamb and Munro argue that with the release of the second cycle of PIAAC, Canada has an opportunity to build on past work and explore some critical, albeit neglected, research themes that speak to the country’s larger productivity and growth challenges.

These themes include: Why and how do adult skills matter? What difference do they make to labour market outcomes and sectors?

With limited resources, Canada needs to make strategic decisions about what kinds of PIAAC-related research to prioritize, said their report. “Additionally, we need to ensure that the data are widely available, usable, and properly understood by users.”

Cycle 1 of PIACC “says much about who has skills, but not why policymakers, practitioners and others should care,” they noted.

Cycle 1 data from PIACC showed that Canada ranked above the OECD average in PS-TRE (Problem-Solving in Technology-Rich Environments), lagging only Sweden in the proportion of the population scoring at the highest level of proficiency.

Canada ranked at the OECD average in literacy, with larger portions of the population in the lower and higher ends of the literacy spectrum.

However, Canada ranked below average in numeracy, with the proportion of the population in the lower end above the OECD average.

Other research using Cycle 1 PIAAC data examined how skills proficiency is distributed across populations in order to identify where interventions are needed to achieve more equitable proficiency.

While Canada performed well in the aggregate, there are inequities that track Indigenous identity and immigration status, and variations by gender and age:

For example, Cycle 1 data show that skills among Indigenous adults are, on average, lower than the Canadian average, although there is variation by region, language and specific Indigenous identity.

Other studies found that recent immigrants score significantly lower in all three skills domains than the Canadian average.

Building on research that identified differences in proficiency among populations, a suite of related studies investigated possible explanations for those differences as well as behaviours that influence skills acquisition and retention:

• A handful of studies revealed a strong correlation between educational attainment and skills proficiency, albeit with variation by age, gender and field of study.
• Adult learning opportunities – including participation in formal and informal skills training programs, such as classroom and on-the-job training – play a role in maintaining skills over time. Consistently using skills at work also helps sustaining skills as people age.
• Common barriers to training participation (among all workers) include being too busy, affordability, family responsibilities, inconvenient scheduling, weak employer support, and lack of prerequisites.

Cycle 1 research using PIAAC paid limited attention to skill use and skills mismatches, but a few studies uncovered insights relevant to Canada:

• Some studies show Canada ranks above the OECD average in adults’ use of skills at work, with especially high use of writing and reading skills – and, along with the U.S., the highest use of numeracy skills in the OECD.
• Researchers used PIAAC data on skills used at work to reveal that, across 20 OECD countries, Canada had the lowest proportion of routine-intensive occupations – meaning a large proportion of Canadian jobs involve highly cognitive tasks and require higher skills proficiency.
• International studies that included Canada showed that skills mismatches are prevalent and have a significant, negative impact on wages and employment outcomes. Canada is among the countries with the highest levels of over-qualification for jobs and skills mismatches. One study found that 31 percent of Canadian workers with a university degree reported being overqualified for their job, but also that many of those workers had relatively low literacy and numeracy skills.

While more research is needed, especially focused on Canada, some studies using Cycle 1 PIAAC data showed that skills contribute to prosperity – both individual (e.g. wage level) and economy-wide:

At the level of the economy, some research using Cycle 1 PIAAC data found that skills generate positive economic returns. One 2017 study found that human capital plays a major role in worker productivity with foundational skills – i.e. literacy, numeracy and PS-TRE – playing the largest role.

PIAAC collected insights on four dimensions of well-being (i.e. trust in others, civic engagement, volunteering, and self-assessed health status) that allowed researchers to investigate the relationships among skills, health and overall well-being.

OECD Skills Outlooks (2013, 2016) show that literacy skills are correlated with positive individual assessments of health across countries. Other research substantiated this relationship.

Research using Cycle 1 PIAAC data has uncovered important insights, but it remains a critically underused resource, Lamb and Munro noted. “Moreover, it is not clear how much influence the research that was conducted had on Canadian skills policy.”

Had more research examined and generated powerful insights about exactly how skills might improve productivity, growth, and social and individual well-being – big challenges for which policymakers are seeking strategies and solutions – more of them might have taken notice, they said.

The authors also pointed out that Cycle 1 PIAAC research did not offer much clarity on how skills policies and programs might be used to address inequities in skills proficiency, nor on how exactly skills can be harnessed to spur productivity and prosperity gains.

“Research offered much in the way of descriptive statistics, but little in the way of relevance and mechanisms,” they said.

With the release of the second cycle of PIAAC data, they added, there is an opportunity to begin filling some of these gaps and taking stock of changes in skills proficiency, use and importance in the economy and society since the first cycle of PIAAC a decade ago.

“Unfortunately, spurring that research and getting it into the hands of decision-makers will be an uphill climb as the release of Cycle 2 data was offered little fanfare in Canada.”

Unlike the first cycle, Statistics Canada does not appear to have plans to prepare a substantial report, which means that filling research gaps will include doing some of the more descriptive work that provides a base for further studies, Lamb and Munro said.

They recommended creating a comprehensive PIAAC research agenda, with data from Cycle 2, to collectively address pressing skills-related policy questions to help shape the future skills policy landscape in Canada.

The Canadian PIAAC Research Agenda would be organized under three pillars:

1. Pillar 1: Skills as Drivers.

To better understand, and ensure that policymakers and skills practitioners recognize the importance of skills for economic, social and individual outcomes, the top priority of a PIAAC research agenda should be skills as drivers. Themes and questions to pursue include:

• Skills, productivity and economic growth:
• What is the contribution of skills to firm-, sector- and overall productivity growth?
• Which skills contribute the most and least to productivity and growth?
• What is the contribution of skills to other economic measures, including firm and sector profitability and export behaviour?
• Are the relevant skills and relationships consistent across sectors?
• How do these relationships vary by occupation, industry, gender, age, race, Indigenous identity, immigration status, region, education, and training?

Skill use and labour market outcomes.

• How and which skills are used at work? How does it vary by sector, occupation and firm size?
• How are skills related to labour market outcomes, including employment, wages, job stability, job satisfaction, job responsibilities and other measures?
• How do variations in skills proficiencies affect labour market outcomes?
• How have the relationships – and the minimum skills proficiency needed to succeed – changed over time? What are the employment and income prospects of people with basic or lower levels of skills proficiency now versus 10 years ago?
• What is the relationship between skills proficiency and income and wealth inequality?
• How do the relationships among skills, labour market outcomes and inequality vary by occupation, industry, gender, age, race, Indigenous identity, immigration status, region, education and participation in training?

Skills and well-being.

• How are skills proficiencies related to health, trust, political engagement and influence, and volunteerism?
• How do these relationships vary by gender, age, race, Indigenous identity, immigration status, region, and education?
• How are skills proficiencies, individual and social well-being, and labour market outcomes (e.g. employment, wages, inequality) related?
• How have the relationships among skills and measures of individual and social well-being changed over time?

Best practices.

While pursuing research under the “skills as drivers” theme, researchers should document how results and relationships compare across jurisdictions – both provincially and internationally. In doing so, the research can identify outliers where skills have particularly strong or weak impacts on specific outcomes and thereby focus attention on understanding what can be learned from high- and low-performing jurisdictions on key concerns:

• Do some jurisdictions see stronger relationships between skills and economic outcomes? What might explain the differences?
• Do some jurisdictions see stronger relationships between skills and labour market outcomes? What might explain the differences?
• Do some jurisdictions see stronger relationships between skills and measures of individual and social well-being? What might explain the differences?

2. Pillar 2: Infrastructure and Enabling Conditions.

In order for a Canadian PIAAC Research Agenda to succeed in generating useful insights, we need to ensure that the data are well-organized, accessible and understandable, Lamb and Munro said.

Employment and Social Development Canada, Statistics Canada and the Council of Ministers of Education, Canada in partnership with the OECD should work to understand the kinds of data different stakeholders need and continue to fund projects that organize and make the data available in formats that researchers and other interested parties can use with minimal friction, they said.

Additionally, efforts should be made to link PIAAC data to other data sources – such as census, tax and other administrative data.

Recognizing that even accessible, well-formatted and linked data can be difficult for some researchers to navigate – and in light of real, but often overlooked limitations of the data – efforts should be made to provide training to potential researchers who need it.

A Community of Practice, composed of PIAAC researchers and relevant stakeholders, could be established to address issues such as which questions to pursue first, using what methods, and with what aims and audiences.

 Additionally, a Community of Practice could help deliver researcher training. Based on interviews for their report, there is strong appetite in Canada and internationally (e.g. at the OECD) to launch such a community, Lamb and Munro said.

3. Pillar 3: Skills as Outcomes

In addition to carefully examining and communicating the role of skills in economic and social outcomes, a Canadian PIAAC Research Agenda should include some examination of skills as outcome.

Three core questions should guide research in this theme: How do Canadian adults perform on skills? What explains Canadian adults’ skills proficiency? How can we improve?

Lamb and Munro offered lists of specific questions that should be addressed under each of the three core questions.

The authors suggested that rolling out the Canadian PIAAC Research Agenda should be sequenced, staring “very soon” with Pillar 1 (skills as drivers) along with Pillar 2 (infrastructure and enabling conditions) followed by Pillar 3 (skills as outcomes).

They conclude: “PIAAC is an essential resource that could help Canada generate better strategies to improve productivity, prosperity and well-being.” Shift Insights

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Seven key lessons for designing and delivering effective skills training programs

Many traditional skills training programs aren’t rooted in – or responsive to – the evolving skills and demands of local employers, according a report by Shift Insights done in partnership with the Toronto-based Future Skills Centre.

These programs often fail to consider and address the complex needs and challenges individuals face when completing training programs, which are particularly acute for laid off mid-career workers or people from vulnerable communities, says the report, Skills Strategies for Innovation and Good Jobs: A Playbook.

Many jurisdictions have created workforce “intermediaries” as an alternative to skills training programs to address the dual challenge: finding the workers with the right skills and knowledge, and overcoming barriers to training that would help workers – especially in some demographic groups – participate in the economy.

There have been numerous studies highlighting the effectiveness of workforce intermediaries at helping vulnerable populations secure gainful employment, while also fostering a pool of skilled workers needed to drive local economic growth and innovation, the report notes.

Intermediaries are locally embedded organizations with dedicated staff who work with firms, educational institutions, labour organizations, social service organizations and people to understand concrete skills needs of local employers and ensure trainees have substantial support to complete training.

“They facilitate innovative skills training programs to support regional innovation and growth, and ensure local workers can participate in and benefit from regional prosperity,” the report says.

The report examined four cases/programs to understand how workforce intermediaries operate, what works and what doesn’t, and what are some best practices that could be applied in Canada. The four cases/programs were:

• Project QUEST – San Antonio, Texas.
• Manufacturing Renaissance (MR) – Chicago, Illinois.
• MATES (Maritime Alliance for Fostering the European Blue Economy through a Maritime Technology Skilling Strategy) – European Union.
• BioWorks – North Carolina.

The four cases/programs offer seven key lessons to help improve the design of any workforce training initiative:

1. Focus on local populations and sectors.

Overly broad initiatives that use cookie-cutter, one-size fits all approaches to skills training tend to fail. Successful initiatives must be firmly rooted in local characteristics and conditions. This includes:

• Identifying and understanding the target population for training.

Each of the four cases/programs studied had a different target population for training, each with their own strengths, needs and challenges that programming needed to be tailored to.

• Identifying and understanding the local sectors relevant for training.

Programs must also be designed in accordance with the specific needs of local sectors, which often vary depending on whether they are growth or declining sectors.

For example, in growth sectors, Project QUEST helps advanced manufacturing, health care, and IT industries find the skills they needed to innovate and grow; BioWorks focused exclusively on the growing biotech sector in North Carolina.

In declining or vulnerable sectors, Manufacturing Renaissance was designed to help Chicago’s struggling manufacturing sector find the skills they needed to support continued operations.

2. Economic analysis serves program design.

Successful workforce intermediaries are constantly collecting, analyzing and responding to local economic data. Workforce intermediaries are most effective when they ask the right questions:

• Where exactly are local sectors are heading?
• What specific skills do they need to get there?
• Who is available and who needs help securing skills and employment locally?

Workforce intermediaries also are most effective when they rely on local data and qualitative insights:

• robust regional economic analysis using up-to-date, granular labour market data to understand and identify broader trends.
• on-the-ground insights from local employers and workers on evolving needs to acquire actionable insights that can shape the specifics of program design.

3. Narrow regional and sector focus for manageable scale.

Having a sufficiently narrow, manageable focus is essential for any successful intermediary. Focusing on one to two sectors in a relatively small regional or local economic geography allows for deep expertise and relationship building – both of which are critical in:

• identifying and responding to skills demands.
• offering meaningful and effective training tied to employer input and participation.
• collaborating with social service providers.
• developing concrete pathways to employment with local firms for trainees.

4. Strong relationships among regional actors.

A foundational role of workforce intermediaries is to serve as connectors, bringing together and building partnerships among employers, training providers, social service agencies and other critical local infrastructure.

Ongoing engagement with employers generates a clear picture of local skills needs. Employer partners also often assist with the design and implementation of the skills training itself – ensuring that participants acquire skills and knowledge that employers need, including the kinds of technology and equipment that should be used in the classroom.

Intermediaries also work with employers to overcome barriers in the hiring and onboarding process, including:

• reducing restrictive, ineffective credential requirements.
• enhancing human resources practices.
• addressing discrimination and improving workplace culture.

Intermediaries often partner with local educational and training institutions to provide the skills training itself.

Some intermediaries simply refer to and support students in completing existing programs, while advising on the content of those programs. Other intermediaries run programs in conjunction with local educational institutions.

To help people overcome barriers to completing training, intermediaries often develop relationships with local social service agencies to provide financial support, mental health support, academic assistance and other supports.

Most intermediaries don’t have the resources to provide all the supports an individual needs and require external partnerships. Some embed social workers, or individuals with social work skills, in the program team.

5. Training should be flexible, but success has core elements.

Successful programs are responsive and nimble – continually assessing the effectiveness of their programming for both employers and trainees and adapt their approach accordingly.

However, in general intermediaries typically include the following core elements:

• Robust intake to identify good candidates and what they need to succeed. The intake process often involves a series of applications, questionnaires and interviews and is used to target suitable candidates and assess a candidate’s readiness for training, identifying barriers to completing the program and tailoring supports to individual needs.
• Skills training. Often involves a combination of industry-specific technical skills as well as a transferrable human skills, such as leadership, communication and teamwork, that are increasingly important in the labour market.

Programs often balance working with employers to ensure that candidates are trained in the specific technologies and skills that they need, while also ensuring candidates end up with more broadly applicable skills and credentials to ensure they have a breadth of opportunities in their future career.

• Work-integrated learning. Work placements are essential components in many successful skills training programs. They help students understand and apply the key concepts, explore potential career pathways, build professional networks, and get a foot in the door with local employers.
• Job-placement assistance. Unless training programs lead to successful job placement for participants, it will lack value for workers and employers alike. Intermediaries often provide job search and placement assistance, such as resume building, interview preparation and training.

They also often provide referrals to employers looking for workers, directly placing students in local companies with whom they have relationships with. Learners often have access to placement specialists who work with participants months before graduation to discuss placement requirements and develop individual placement plans.

6. Robust wrap-around, whole-of-life support for trainees.

Training programs are effective only if participants finish – and many face substantial barriers to doing so. Successful programs provide:

• Financial assistance, directly or by connecting participants to other agencies that help with tuition and training expenses, transportation, utilities, medical and child-care expenses, housing costs, and food.
• Psychological and counselling services to ensure participants are supported throughout their journey.
• Academic assistance, including help with foundational math, literacy and digital skills, high school completion, college and university preparation, and skills certification.

7. A well-resourced intermediary organization.

Successful models entail much higher costs than stakeholders are used to seeing.

Unfortunately, intermediaries often face significant challenges securing long-term, sustainable funding. Many are funded through myriad public and private sector grants and funding streams, which are often temporary and require resources to secure and meet reporting requirements.

For example, the average per participant cost of Project QUEST programs is about US$10,500  over 22-month period.

With a return of more than US$30,000 over 10 years, US$10,500 is a reasonable investment, but the initial outlay is hard to secure.

Project QUEST receives US$2 million to US$2.5 million annually in foundational funding from the City of San Antonio, and secures the additional US$5 million it needs through piecemeal public and private sector grants and donations. When a federal labor department grant expired in 2019, Project QUEST was forced to serve 20 percent fewer participants than it did in 2017. Shift Insights

SECTOR SIGNALS

Increased Canadian LNG exports can help reduce global greenhouse gas emissions: report

Increased Canadian exports of liquified natural gas (LNG) have the potential to reduce global emissions by displacing higher-carbon intensity sources of supply, according to a new report by the Public Policy Forum (PPC) and the Canadian Chamber of Commerce’s Future of Business Centre.

Canadian LNG could displace thermal coal at electricity-generation plants in Asia and play a role in reducing global emissions of greenhouse gases, says the report by Mark Cameron and Rash Golshan. Cameron is a fellow at the PPC and senior associate at Bluesky Strategy. Golshan is energy policy lead at the PPC.

LNG Canada’s Phase 1 terminal in Kitimat, B.C., and new LNG projects in British Columbia are all designed to have lower intensity of carbon emissions than most export facilities in other parts of the world, including those along the U.S. Gulf Coast, according to the report, which drew on analysis by Navius Research Inc.

“Canadian LNG has a two-fold climate advantage: At the point of use, it’s much cleaner than coal, and at the point of production, it’s cleaner than many other sources of LNG,” the report says.

At the same time, Canada can maintain the persistent downward trend in the country’s fuels sector’s carbon intensity via strong methane controls and other measures and with targeted market strategy, the report says.

Prime Minister Mark Carney, as part of his quest to make Canada an energy superpower and reduce economic dependence on the U.S. announced in September that LNG Canada’s Phase 2 expansion plan made the list of major projects of national interest to be considered for fast-tracking.

In November, Ottawa added Ksi Lisims LNG in northwest B.C. to the growing roster of plans submitted to the Major Projects Office.

LNG Canada’s liquefaction facility is designed around  approximately 0.15 tonnes of CO₂e (carbon dioxide equivalent) per tonne of LNG versus a global average of  about 0.35 tonnes of CO₂e, the new report notes.

Newer LNG projects in B.C. are expected to emit even less. At the point of use, natural gas in efficient combined-cycle turbines emits roughly 50 percent to 60 percent less per megawatt hour (MWh) than coal, so the largest climate gains occur where LNG displaces coal generation.

A significant portion of global LNG exports is used for electricity generation in importing countries. Focusing the scope of the report’s analysis to this portion, the authors said: “Canadian LNG offers a remarkable emission reduction potential over competing LNG as well.”

Delivered to China, for example, B.C. LNG is estimated at approximately 74 kilotonnes (kt) of CO₂e per terawatt hour (TWh) of generated electricity versus about 124 kt/TWh for U.S. LNG – about 40 percent less – “implying benefits even when Canadian volumes replace other LNG rather than coal.”

Emissions reduction is also expected to be achievable in other LNG use cases, such as space heating and industrial processes, given the lower emissions intensity of Canadian LNG, which falls outside the scope of the analysis that informs this report.

If Canadian LNG capacity reaches 47.6 million tonnes per year by 2035 – that is, if all LNG projects currently in the pipeline become operational and export to the largest Asian markets – the net climate impact, according to Navius’s “most likely scenario,” would be 40 Mt CO₂e/yr to 70 Mt CO₂e/yr in net reductions to global emissions.

To put that into perspective, this equates to six to 10 percent of Canada’s national emissions, and the higher end of the range is 10 Mt CO₂e/yr larger than B.C.’s annual emissions (60 Mt CO₂e/yr). This figure takes into consideration the announced climate policies and credible projections for the future composition of the electricity grids in destination markets of interest.

Even heavy oil exported from Canada’s oilsands also could help reduce greenhouse gas emissions intensity globally, according to the report.

Historically, the emissions intensity of Canadian heavy oil (heavy oilsands and conventional heavy oil) has improved by about 30 percent since 2005 to about 78 kilograms of CO₂e per barrel (kg CO₂e/bbl), comparable to (or cleaner than) several global heavy grades.

The estimates for emissions intensity of the Venezuelan heavy (one of the key competitors with Canadian heavy oil) vary between around 96 kg CO₂e/bbl to 129 kg CO₂e/bbl, making it a prime displacement target.

If Canadian heavy displaces Venezuelan barrels, the Navius analysis estimates an emissions advantage of approximately 18 to 51 kg CO₂e/bbl today, which could rise to about 35 to 68 kg CO₂e/bbl with the proposed $16.5-billion Pathways Alliance carbon capture and storage project.

The report pointed out that  the growth in oilsands production comes from segments and sources with below-average intensity, which helps reduce the overall average intensity over time. Continued deployment of carbon capture and storage solvent-assisted SAGD (steam-assisted gravity drainage) and electrification could push oilsands and other Canadian heavy oil production’s upstream intensity into the 40s to 50s kg CO₂e/bbl by 2040–2050, further strengthening displacement benefits.

Canadian non-oil sands light oil production (including frontier oil, pentanes plus and condensates production, onshore and Atlantic offshore) generally falls close to the global upstream average in emissions intensity. The emissions intensity for this grade of products dropped from 57 kg CO₂e/bbl in 2005 to 49 kg CO₂e/bbl, before electrification.

The global estimates for the average emissions intensity of comparable products range between 45 to 63 kg CO₂e/bbl.

“Given modest growth potential and strong methane and flaring controls, expanded exports [of these products] here are highly unlikely to raise global emissions,” the report says.

“Canada’s natural gas, heavy and light oil exports offer a significant opportunity to displace dirtier alternatives and deliver global emissions gains. Clearly, this opportunity is strongest in the case of Canadian LNG,” the report says.

Smart climate policy can help Canada to realize this advantage. For example, Canada should champion product-level carbon accounting and production-based intensity standards, which would reward low-carbon-intensity sources like Canada, the report recommends.

Similarly, the federal government should pursue bilateral agreements, such as those recognized under Article 6.2 of the Paris Agreement climate change treaty to convert the global climate benefits into recognized credits.

“However, a pragmatic approach is essential; Canada must not delay leveraging its oil and gas export potential by making such agreements a precondition or waiting for a fully-formed global framework, as this would voluntarily forfeit crucial economic, strategic and environmental advantages that those products offer to Canada, its allies and the global fight against climate change.”

To ensure that Canadian oil and gas continue to reduce production emissions and therefore have a more positive global climate impact, Canada needs to build on its successes in significantly cutting the emissions intensity of various segments of its oil and gas sector, maintain its emissions reduction policies and technologies and prioritize:

1. Assuming a leadership role in both in harmonization of product-level carbon accounting that can lead to production-based intensity standards, as well as operationalizing Article 6 of the Paris Agreement to share verified reductions.
2. Targeting markets where LNG displaces coal or more emission-intensive gas, and heavy oil displaces other high-carbon sources.
3. Continuing to reduce upstream and midstream methane emissions and electrification of natural gas and oil production.
4. Accelerating conventional and oil sands decarbonization (CCS, solvent-SAGD, electrification), without weakening the competitiveness of Canadian products over their competitors.

“With these [measures] in place, Canada can expand energy exports while supporting global decarbonization, the report says. “By continuing to control domestic emissions and engaging in international climate co-operation, Canada can expand its role as an energy exporter while aligning with global climate objectives.”

But critics such as the International Institute for Sustainable Development reject the portrayal of LNG as a transition fuel, warning that there are potent methane emissions, which contribute to climate change, during the production of natural gas through fracking.

“Canadian LNG exports are likely to increase global emissions by adding to fossil fuel consumption and slowing the transition toward renewable energy,” the institute said in its analysis released on December 4. “New Canadian LNG is incompatible with climate targets.”

An independent review last month of CleanBC, the B.C. government’s climate plan, commissioned by the B.C. government, said expanded hydraulic fracturing for natural gas in northeast B.C. to supply new LNG facilities is at odds with the province’s climate goals.

“The government’s current pursuit of increased gas production and new LNG export opportunities threatens to set back progress,” said the review led by climate policy experts Merran Smith and Dan Woynillowicz. Public Policy Forum

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Oilsands industry’s  $16.5-billion carbon capture and storage project plus current policies would significantly increase oilsands production and significantly reduce emissions

The oilsands industry’s proposed Pathways Alliance $16.5-billion carbon capture and storage project plus current emissions-reduction policies would result in both significant increased oilsands production and significant emissions reductions, according to a report by the Pembina Institute.

However, the so-called “grand bargain,” in which a theoretical oil pipeline to B.C.’s coast is offered in return for large-scale carbon capture deployment, “is a poor way to achieve a decarbonized oilsands, or even substantial emissions reductions from the sector,” the report said.

“Rather, regulation could be used to further de-risk the Pathways project and ensure private investment moves ahead.”

The Pembina Institute’s report looked at three scenarios:

• Current Measures scenario: Using the Canada Energy Regulator’s Current Measures scenario, which foresees growing oilsands production out to 2035, the report forecast emissions to 2035 if current emissions trends were to continue.  
• Current Measures plus Pathways scenario: The report re-examined how oilsands emissions would evolve if the Pathways Alliance carbon capture and storage project were also completed and operational, starting in 2030.
• Grand Bargain scenario: The report modelled a “grand bargain,” where a one-million-barrel-per-day bitumen pipeline is built, major new oilsands developments are built to fill said pipeline, and the Pathways Alliance carbon capture and storage project is realized in full.

Of these three scenarios, the “Grand Bargain” scenario, far from resulting in “decarbonized barrels,” actually results in the highest absolute oilsands emissions – reaching 89 megatonnes (Mt) CO₂e annually by 2035, the report said.

Globally, the International Energy Agency projects oil demand will plateau this decade if countries continue to implement their announced climate policies, rising just 2.5 million barrels per day (b/d) over the next five years, while production capacity is expected to increase by 5.1 million b/d, the report said.

These combined effects will depress prices and further limit upstream investment, according to the report. Demand in key markets like China and the European Union is already decelerating, driven largely by stagnating gasoline consumption.

This should give decision-makers pause when considering the “climate competitiveness” of any new oil pipeline, the report noted.

Absolute emissions from Alberta’s oilsands have consistently increased every year since records began (except in 2020, due to significantly lower production during the height of the COVID pandemic), according to the report.

While there have been some improvements to emissions intensity (emissions per barrel), these gains have been effectively wiped out by increased levels of production, the report said.

“In fact, intensity improvements have essentially flat-lined since 2019. If production continues to increase, emissions intensity will need to decline much more dramatically than the recent trend in order to achieve absolute emissions reductions.”

However,  the “Current Measures plus Pathways” scenario does result in both increased oilsands production and significant emissions reductions, and therefore appears most congruent with the objectives of both Alberta and the federal government, according to the report.

Compared with the “Current Measures” scenario, under the “Current Measures plus Pathways” scenario, annual emissions fall by 10.8 Mt CO₂e per year once the Pathways project is fully operational. By 2035, total emissions from the oilsands would still be 75 Mt CO₂e per year, which would still be the second-largest emitting subsector (based on 2023 data).

This scenario demonstrates the possibility of achieving increased bitumen production without needing to construct a new pipeline, while also seeing oilsands emissions decline, the report said.

Nonetheless, it also highlights the fact that the Pathways project alone will not achieve a fully decarbonized barrel, where production emissions are at net-zero. To reach this, a significant extra investment would be required, amounting to eight times the capacity of the Pathways project.

The Pembina Institute suggests industrial carbon pricing should be strengthened to send an investment signal to the oilsands companies to move forward with the Pathways project.

If done in conjunction with finalized methane regulations (which mainly work to spur investment in decarbonization of the conventional oil and gas sector), this would also render the proposed federal oil and gas emissions cap – to which Alberta has voiced considerable opposition –redundant, the report said.

“If this can be achieved, Alberta and Canada will have facilitated a major influx of private investment in the oilsands, in a way that can be fairly characterized as “climate competitive,” the report says.

The federal-Alberta energy agreement signed in November does in fact open the door to a new oil pipeline to B.C.’s coast, in return for the Pathways Alliance CCS project going ahead. The agreement also suspended the proposed federal oil and gas emissions cap.

However, the agreement also – as the Pembina Institute suggested in its report, which was released just prior to the federal-Alberta agreement – commits both governments to strengthening industrial carbon pricing and the Alberta government to achieving a 75-percent reduction in methane emissions in the oil and gas sector, relative to 2014 levels, by 2035.

According to the Pembina Institute’s report, as of 2024, oilsands production was 4.7 million barrels per day of mined, in situ, and upgraded bitumen, with emissions at 92 megatonnes of carbon dioxide equivalent (Mt CO₂e) annually.

In all three scenarios, Pembina assumed that emissions intensity trends from 2019 to 2023 continue, meaning emissions intensity declines on average one percent per year over the forecast period. This is why, in the “Current Measures” scenario below, emissions fall to 2035 despite production increasing.

Any further emissions intensity improvements as a result of carbon capture (i.e. in the second two scenarios) are layered on top of this one-percent decrease

The Pembina Institute said it believes this to be an optimistic assumption with regards to emissions intensity, given that firms have likely exhausted cheaper abatement technologies, and recent moves by the Alberta government have further weakened Alberta’s Technology Innovation and Emissions Reduction (TIER) carbon market.  

Several changes are needed to the TIER market to ensure sufficient incentives are in place for companies to act on emissions reductions, the Pembina Institute said.

Significantly,  the federal-Alberta agreement includes finalizing new rules that will ensure a minimum effective carbon credit price of $130 per tonne. High carbon credit prices are necessary to incentivize low-carbon investment. 

If this can be achieved, Alberta and Canada will have facilitated a major influx of private investment in the oilsands, in a way that can be fairly characterized as “climate competitive,” the Pembina Institute said. Pembina Institute

[Editor’s note: See today’s story, “Federal-Alberta energy agreement could unlock more than $90 billion in low-carbon capital investment”].

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