An industry’s uncertain future
There’s one major problem with the technology behind carbon capture and storage: it’s just too expensive
Flanked by then-Alberta Premier Ed Stelmach at a coal-fired power plant outside of Edmonton, Prime Minister Stephen Harper made what now seems a doomed proclamation.
Carbon capture and storage (CCS) initiatives, such as Project Pioneer at the Keephills 3 power plant where he stood that day in October 2009, “will define the future of this industry,” he said, announcing a joint provincial-federal cash injection of $779 million to the project.
Less than three years later, the $1.4-billion Project Pioneer has no future. While the technology proved successful, TransAlta, one of three energy companies backing the initiative, announced in April that it no longer made financial sense, even with government subsidies.
“The market for carbon sales and the price of emissions reductions were insufficient to allow the project to proceed,” a TransAlta spokesperson said in an email.
For several years, Canada has billed itself as a world leader in CCS, the process by which carbon dioxide released from the oilsands and other energy production facilities is pumped back underground. The technology has become an important tool in the country’s greenhouse gas emissions strategy, particularly in Alberta, which produces 40 per cent of Canada’s industrial emissions.
But the cancellation of the high-profile Project Pioneer, and the indefinite suspension of another project last fall, has left the province scrambling to meet carbon dioxide emissions targets, and cast doubt on the future of CCS in Canada.
“We’re taking stock of where we are,” said Bob Savage, director of Alberta’s Climate Change Secretariat.
The province remains committed to CCS technology, Savage said, but his “marching orders” are to re-evaluate Alberta’s plan to reduce emissions, including the possibility of investing in other technologies.
Project Pioneer was expected to capture one megatonne of carbon dioxide every year for the next 10 years. Its cancellation, Savage said, will affect the province’s emissions reductions goals, which rely heavily on CCS — 70 per cent of its 2050 targets.
“The Alberta plan already has fairly weak targets, and they’re saying that most of it is going to be accomplished by carbon capture and storage, which is not yet a viable option,” said Douglas Macdonald, senior lecturer with the University of Toronto’s Centre for the Environment. “With TransAlta pulling out, that really questions the viability even more.”
The technology, while still evolving, is not the main issue. Companies are still determining the best ways and tools to pipe and store the CO2, but it’s a new application to an established practice.
The real problem is money: without a carbon tax or a cap-and-trade program, there’s little financial incentive for companies to invest.
(A cap-and-trade program is when the government sets a cap on greenhouse gas emissions and allows polluters to buy credits to meet their targets from firms that fall below the cap.)
“There’s no clear price on carbon,” said Chris Severson-Baker of the Pembina Institute, a sustainable energy think tank. “Without any big incentives for companies — without a carbon price or a regulation that actually requires companies to reduce (greenhouse gas) emissions — CCS projects are not going to go ahead in Canada or anywhere else, because they’re just too expensive.”
Alberta is the sole jurisdiction in North America to have its own carbon tax, charging large emitters $15 for every tonne emitted over the 50,000 allowed per year. But for Project Pioneer backers, that does not translate into savings when the price of CCS is $100-$125 per tonne or higher.
One of the reasons Alberta has relied so heavily on CCS in its emissions targets, Savage said, is because it seemed both Canada and the U.S. would put a price on carbon. But both governments have abandoned the idea, prioritizing instead the rebuilding of the economy.
There “clearly isn’t much of a national commitment,” said Dr. David Keith, a Canada Research Chair in energy and the environment with the University of Calgary.
“CCS was one of the heavy parts of the technology spectrum that can be used for getting deep emissions cuts in large quantities. And there just isn’t a political will to do it.”
Natural Resources Minister Joe Oliver said in an emailed statement that the government is focusing on “job creation, economic growth and long-term prosperity.”
“We are opposed to a carbon tax that would kill jobs and see prices skyrocket on everything Canadians buy, including gasoline and home heating fuel,” he said.
THE GOVERNMENT is still aiming to reduce greenhouse gas emissions 17 per cent from 2005 levels by 2020 — a plan that “remains in place with the ending of the (Pioneer) project,” Oliver said, adding it’s “a sector by sector approach.”
He also insists the government remains committed to CCS. Combined with the governments of Alberta, Saskatchewan and British Columbia, the federal government has provided $2 billion in funding for projects.
Indeed, there are still signs of hope, including five major projects in the works. Alberta has $1.5 billion invested in CCS, including the Shell Quest project, which expects to make a last investment decision that will finalize the project later this year, said David Williams, a Shell spokesperson.
“The fact that the Shell Quest project is moving ahead, at least on principle, and the Boundary Dam project (a power station CCS project in Saskatchewan), and there are other projects in the works, that does actually make Canada a leader on CCS,” said Severson-Baker.
Other initiatives are succeeding at enhanced oil recovery, when CO2 is piped into depleted oil and gas reservoirs and, due to a chemical reaction, increases oil recovery.
That “tells you that there’s actually a revenue source associated with inject-
“We’re taking stock of where we are.” BOB SAVAGE DIRECTOR OF ALBERTA’S CLIMATE CHANGE SECRETARIAT
ing CO2 in some cases,” said Nigel Bankes, a professor of natural resources law at the University of Calgary.
While Savage said the province was disappointed by the setback, he suggests it is part of the experimentation phase, something that has to be done in order to figure out what works and how to bring the costs down.
“The technology has long-term benefits and implications, if we can figure it out,” he said.