Federal government defends carbon capture technology as Alberta project canceled due to cost

Canada’s energy minister defends carbon capture and storage technology as both efficient and affordable, after an Alberta power company pulled out of a planned project and one study found that another project had obtained public subsidies to cover more than three-quarters of its costs.

“Carbon capture and sequestration technologies are getting better, and over time they actually become less expensive, like all other technologies that go through the cycle,” Jonathan Wilkinson said Tuesday.

“For those who say that the technology itself is unproven, I would simply say that that is not true. The technology, the basic technology, has been around for a long time. It’s a question of scale and a question of cost, and those are two things that are actually happening. »

Carbon capture, utilization and storage, also known as CCUS, are systems that trap carbon emissions at their source and then redirect them to the ground. They are expected to play a key role in Canada’s climate plan, which cannot meet its targets and continue to produce the oil and gas that underpin a significant part of the economy Canadian.

The climate plan estimates that carbon capture will account for up to 16 million tonnes of emissions reductions by 2030, or about five percent of the additional emissions reductions needed to meet the next target in 2030.

The International Energy Agency projects that CCUS will need to account for 15% of global emissions reductions by 2050 to reach net zero, where all emissions are eliminated or captured.

“Increased use of CCUS features in the combination of all credible pathways to net zero by 2050, including all 1.5C pathways developed by the United Nations Intergovernmental Panel on Climate Change United Nations and (the International Energy Agency),” reads Canada’s climate plan.

But in Canada, this increased use is proving complicated.

The latest national emissions report released last week shows that by 2022, Canada had captured and stored a total of 7.2 million tonnes of carbon dioxide since 2017, most of it at Shell’s Quest CCS facility Canada, at its Scotford upgrading plant, north of Edmonton.

Shell covered about three-quarters of Quest’s $1.1 billion in capital and operating costs through provincial and federal grants, and the rest came from the sale of carbon credits generated by emissions capture of carbon. A Greenpeace study released this week found that to make ends meet, the company obtained permission from Alberta to sell twice as many credits as it actually earned.

The Greenpeace study says that instead of generating $203 million by selling credits based on the amount of carbon actually captured, Shell generated $406 million.

The study was released just days after Capital Power, an Edmonton power producer, scrapped a $2.4 billion carbon capture system planned for its Genesee plant because the economics didn’t work. not. A statement from the company in its May 1 quarterly earnings report said that while carbon capture is “technically viable,” the company does not believe the project is “economically feasible.”

The decision comes even as the Alberta government promised to cover up to 12 per cent of the costs and the federal government up to half through a new tax credit.

Additional certainty was being tested with carbon contracts for difference under the new Canada Growth Fund. Such contracts help ensure that a carbon market will be robust for credits generated by technologies such as carbon capture and storage.

Uncertainty about whether future governments will maintain a federal carbon price undermines confidence that such markets exist or that sufficiently high prices for credits can be obtained. Investments only make sense if companies can have certainty about the price at which they will be able to sell these credits.

Capital Power has not yet been able to negotiate a contract for the difference.

Wilkinson said the cancellation should not be seen as a signal against carbon capture.

“There are a number of different pathways for Capital Power to actually meet the requirements of the clean fuels or clean electricity regulations that eventually come into effect,” he said.

“They made a business decision that they could meet these requirements in a different way. But as I said, there will be many different approaches in different sectors that I think will use carbon capture technology.

The Alberta government blamed Capital Power’s decision on the fact that Ottawa has not yet implemented the carbon capture tax credit.

The credit was first promised three years ago, but took several years to design and was included in legislation to implement the fall economic statement in November.

This bill has still not been adopted. The subject is being debated again this week.