Alberta is asking Ottawa to commit to $30-billion in spending or tax incentives over the next decade to spur the building of large-scale industrial carbon capture projects.
The provincial government says for Canada to meet climate goals, the country will have to help fund a series of carbon capture, utilization and storage, or CCUS, facilities that force CO2 emissions deep into the ground, and keep them out of the atmosphere. This is especially true in emissions-heavy Alberta.
“There isn’t a pathway to net-zero without carbon capture – globally or in Canada, or anywhere,” Alberta Energy Minister Sonya Savage said in an interview.
“And if we’re going to hope to get to net-zero by 2050 we’re going to have to start working on it now,” she said.
The $30-billion request is outlined in a “discussion document” obtained by The Globe and Mail in advance of the federal budget expected to be unveiled in April. Alberta is hoping that a recent, renewed global focus on this type of carbon capture technology will bolster its case. The few CCUS projects that exist in Canada today have only been built with major outlays from the provincial and federal governments.
The document says the province’s industrial emissions – including oil and gas production, and power generation – accounts for more than one-quarter of Canada’s total emissions. It also sheds new light on Alberta’s plans in how it will reduce that pollution: It states Alberta industries could deliver a 60-megatonne greenhouse gas emission reduction over the next decade. Half of that would be spurred from current government incentives, regulations and supports, and half of which would come from CCUS.
The document argues the Albertan industrial sector’s contribution to the national economy warrants the long-term investment from the federal government, and the country could become a global leader in the technology. CCUS, the report said, would protect high-value, difficult-to-replace industrial jobs while also “greening” them and “preserving valuable exports.”
Oil, mostly from Alberta, is Canada’s biggest export. In recent months, Premier Jason Kenney’s government has gradually evolved its pro-pipeline and oil messaging to include greater concern for environmental, social and governance measures. The change has happened as some global funds have spurned oil sands investments, in part owing to concern about the sector’s high GHG emissions.
The Biden administration’s strong push on climate change and the President’s decision to cancel the Keystone XL pipeline also weigh on the outlook for the Canadian energy sector, headquartered in Alberta.
According to the Alberta document, the financial options to spur carbon capture projects could include direct grants, loans, tax incentives that reward investment and even direct government ownership – in the same vein as the Trans Mountain pipeline.
Alberta’s United Conservative Party government has often clashed with the federal Liberals over climate and energy policy – Alberta has taken its opposition to Ottawa’s consumer carbon tax policy to the Supreme Court, for example. But the province contends industrial emission reduction is an area where there’s room for common ground, and CCUS has to be a part of a suite of measures for the country to reduce its GHGs.
An announcement on a federal-provincial working group focused on CCUS technology is also expected this week.
The document also said Alberta is committed to significant emission reductions “in line” with the country’s climate obligations, including Canada’s Paris Agreement pledge to cut its emissions by 30 per cent from 2005 levels by 2030, or the plan to reach net-zero emissions by 2050. “With a higher proportion of industrial, export-linked emissions than other provinces, Alberta will need to leverage and improve clean-tech innovations at large-scale and accelerated pace.”
Natural Resources Minister Seamus O’Regan told an oil and gas conference this month that CCUS technology will play a key role in lowering emissions in the oil sector, and in the development of blue hydrogen – a low-emission fuel derived from natural gas, which the government has recognized as crucial to Canada’s net-zero 2050 goal.
“We’ve got decades of experience in CCUS and some real leadership in technology and innovation that we’re going to need. We also have an abundance of the suitable geology that we need for CCUS for permanent storage, especially in the Western Canadian Sedimentary Basin,” he told the audience at the annual CERAWeek conference.
As workers move from the oil and gas sector into other opportunities, he said, “we think that lowering emissions by having them work on CCUS projects is going to be really important.”
CCUS is a process that captures carbon dioxide emissions from industrial sources and stores them, often in geological formations, so the emissions can’t enter the atmosphere.
There have long been questions about whether the high cost of building CCUS infrastructure is worth the scale of potential emission reductions. Environmental groups have expressed concern a reliance on carbon capture is a means for extending the use of fossil fuel production, and say the money would be better spent on other renewable forms of energy.
However, Alberta officials argue the process will be an important tool for reducing GHGs from the oil and gas industry – likely to be in business for decades more – and other major industrial sectors such as power generation, and chemical, fertilizer and cement manufacturing.
Alberta is making its call for federal cash on the heels of a provincial budget that earmarked $73-million in 2021-22 for programs to attract investment in carbon capture projects that keep emissions from entering the atmosphere. That cumulative figure increases to $227-million by 2023-24.
Carbon capture technology has been used on a smaller scale in Alberta’s oil sector for decades. But former Alberta premier Ed Stelmach’s government kick-started what are now two large-scale projects in the province with a massive infusion of funding in 2008 – from what was then a gusher of oil and gas royalties.
Canada isn’t alone in looking at CCUS to meet climate goals. The International Energy Agency, a Paris-based organization that advises industrialized countries on energy issues, says CCUS technology has been the subject of renewed global interest and attention in recent years.
The IEA says “more than 20 per cent of global oil and gas production is covered by 2050 net-zero commitments, with CCUS expected to play a role in every case.”
Plans for more than 30 new CCUS facilities have been announced since 2017, the IEA said in a November report. And while the vast majority of those projects are in the United States and Europe, others are also planned for Australia, China, South Korea, the Middle East and New Zealand.
EMMA GRANEY, ENERGY REPORTER
The Globe and Mail, March 7, 2021