Advertisement

2 new carbon capture hubs could be built in Canada by 2030: government document

Click to play video: 'Could decarbonization be Canada’s path to reach climate goals?'
Could decarbonization be Canada’s path to reach climate goals?
WATCH: Could decarbonization be Canada's path to reach climate goals? – May 28, 2021

Canada is pushing to provide incentives for at least two new massive carbon capture projects by 2030, a federal government document showed, with nearly a dozen oil and gas companies already pursuing rights to store carbon dioxide in Alberta’s vast underground caverns.

The hubs to collect carbon from clusters of emitters would advance Prime Minister Justin Trudeau’s goal of cutting emissions by 40-45 per cent from 2005 levels by 2030. The global oil industry is betting heavily that carbon capture utilization and storage (CCUS) can become a multi-billion-dollar global business with government and private investment.

To encourage private investment in CCUS projects, Canada is counting on its carbon price, which is set to rise to C$170 per tonne of carbon by 2030 from C$40, a planned tax credit, and its Clean Fuel Regulation (CFR), which requires lower emissions intensity in fuel.

Story continues below advertisement

The cost of building the projects, and their locations, are not yet known.

The two carbon storage hubs would be planned or under construction by 2030, with Canada sequestering at least 15 million tonnes of carbon annually by that year in total, according to the Natural Resources Department’s draft CCUS strategy, obtained by Reuters after it was shared privately in July with industry stakeholders.

“The big takeaway is the federal government is pretty serious about CCUS,” a Calgary oil industry source said.

Canada’s four existing projects, representing 15 per cent of global facilities, currently capture 4 million tonnes per year, according to the Canadian government.

Click to play video: 'Alberta Premier Jason Kenney to push oil and gas industry to boost spending'
Alberta Premier Jason Kenney to push oil and gas industry to boost spending

Canadians vote for a new federal government on Sept. 20. On Sunday, Trudeau said he would cut oil and gas sector emissions based on five-year targets starting in 2025. His Liberal party is in a tight race with the Conservatives, a party that also supports carbon capture and has promised to introduce a tax credit to encourage investment.

Story continues below advertisement

The Natural Resources Department is doubtful whether its incentives will be enough to stimulate widespread adoption.

Get the day's top news, political, economic, and current affairs headlines, delivered to your inbox once a day.

Get daily National news

Get the day's top news, political, economic, and current affairs headlines, delivered to your inbox once a day.
By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy.

“It is not yet clear whether this elevated pricing signal, combined with other federal policies yet to be implemented, such as the CFR and the investment tax credit announced, will be sufficient to drive widespread CCUS adoption,” the federal strategy said.

The government’s doubts highlight challenges such as high costs and complex technology required to capture carbon.

Natural Resources Minister Seamus O’Regan could not be immediately reached.

In September, Alberta is expected to call for expressions of interest to store carbon underground, with formal project selection next year, according to two sources familiar with the process.

Alberta already has received informal interest from at least 10 groups, including publicly announced projects involving Royal Dutch Shell, TC Energy and a consortium of the five biggest Canadian oil producers, said David Knight Legg, board advisor to economic development agency Invest Alberta.

Many global oil and gas producers see CCUS as a way to prolong their capacity to produce fossil fuels, by locking away their emissions.

Click to play video: 'Carbon capture hasn’t won over critics despite 2M tonnes milestone'
Carbon capture hasn’t won over critics despite 2M tonnes milestone

A massive expansion of carbon sequestration facilities is vital if the world is to reach net-zero emissions by 2050, according to the International Energy Agency (IEA), from around 40 million tonnes a year currently to 7.6 billion tonnes.

Story continues below advertisement

Julia Levin, program manager at Environmental Defence, called CCUS a “dangerous distraction” from transitioning to cleaner sources of energy.

“It’s been five decades of huge amounts of resources, research, public and private investment and we have a global capacity to capture 0.1 per cent of emissions from the fossil fuel sector,” she said.

IEA research suggests storing carbon deep underground is safe and stable. However, the pipelines required to transport carbon to injection sites need to be monitored to mitigate the risk of ruptures.

One industry source said dozens of oil and gas companies are considering projects, awaiting details of Alberta’s competitive process.

Jennifer Henshaw, spokeswoman for Alberta’s energy minister, said the government is still developing the competitive process.

Analysts say hubs are the most economic way to store carbon. Alberta is a rare place where suitable geology, a cluster of high emitters and government regulation are all in place, said Neeraj Nandurdikar, global head of power and renewables consulting at Wood Mackenzie.

Hubs make sense because the more carbon they sequester, the lower costs will be, said Tim McKay, President of Canadian Natural Resources, Canada’s biggest oil producer.

Story continues below advertisement
Click to play video: 'New Coaldale recycling facility going green'
New Coaldale recycling facility going green

Some smaller oil producers warn that hubs could stymie their plans to inject carbon close to their operations, many in remote regions.

Whitecap Resources, an oil producer that already stores carbon, will propose to Alberta that it manage underground space for small producers that want to inject their carbon locally, CEO Grant Fagerheim told Reuters.

Whitecap could sequester 6 million tonnes of carbon per year under the proposal, triple what it currently buries, he said.

Michael Belenkie, head of Advantage Energy’s Entropy unit, a company making modular carbon capture technology, said Alberta needs to prevent speculators from securing underground space, which would kill off CCUS projects.

Story continues below advertisement

For now, uncertainty is keeping interest in check.

After the election, more companies are likely to propose projects, said Chris Severson-Baker, Alberta regional director of the Pembina Institute.

“You might get a stampede of interest,” he said.

Sponsored content

AdChoices