After the carbon capture industry gold rush, how many facilities will actually be built?

The Alberta government kicked off a flurry of activity three years ago when it began awarding the rights to underground caverns for storing carbon emissions.

The gold rush was underway as companies announced dozens of projects and competed to stake their claim for those rights.

The wave of new projects raised expectations that the oilpatch and other heavy-emitting industries were on the precipice of a building boom to jumpstart the carbon-capture industry and significantly cut greenhouse gas emissions from the production of oil and gas and other industrial products. 

The majority of proposed carbon capture and storage (CCS) projects are based in Alberta, but there are others planned and being piloted in several other provinces and in a variety of sectors including fertilizer, cement and power plants.

Of the 25 projects announced in the province in recent years, however, only one has so far reached an agreement with the provincial government.

On Monday, Shell Canada and ATCO EnPower formally signed the paperwork to advance the Atlas carbon capture hub, located east of Edmonton. The companies will now apply for permits before looking for industrial players who will want to use the facility to inject their carbon emissions underground.

Progress on the project comes at a time when there is plenty of skepticism surrounding the sector and questions about how many of the proposed facilities will actually be built.

In May, Capital Power pulled the plug on a proposed CCS project at a natural gas fired power plant in Alberta. Last month, a report from Deloitte concluded the cost of CCS projects is so high that in many cases, it is “economically unviable.”

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The Pathways Alliance is the largest proposed project and involves several large oilsands companies in northeast Alberta. The companies have yet to make a final investment decision on whether to proceed.

Carbon capture and storage is an important technology to help reduce emissions, says Susannah Pierce, president of Shell Canada. (Mike Symington/CBC)

“You have to look at each one of them individually,” said Susannah Pierce, president of Shell Canada, in an interview with CBC News.

“It really depends on the project itself. I think it also would depend on the comfort level that you have with CCS,” she said, pointing to Shell’s experience building the Quest CCS facility in Alberta nearly a decade ago.

The technology has always faced questions about how realistically it can be built on a large scale, whether it makes financial sense for governments to subsidize and whether the money would be better spent on renewable energy.

The federal emissions reduction plan calls for Canada to cut its emissions by 40 to 45 per cent below 2005 levels by 2030 and to reach net-zero emissions by 2050. That plan includes a tripling of CCS capacity by 2030. 

Up and running

Quest is one of only a handful of CCS facilities currently operating in Canada. 

“That doesn’t seem great,” said Sean McCoy, an assistant professor in chemical and petroleum engineering at the University of Calgary, weighing how many projects have been proposed in recent years.

“But if we step way back and we look at this from a broader perspective, we have the most operating CCS projects in one jurisdiction compared to anywhere in the world,” he said.

A carbon capture facility. The emissions are captured from an upgrader facility that converts oilsands bitumen into synthetic crude oil.
A small handful of carbon capture projects already exist in Alberta, including the Quest facility at Shell’s Scotford complex northeast of Edmonton. Oilsands companies are proposing to build one of the largest carbon capture projects in the world. (Kyle Bakx/CBC)

In total, there are about 40 carbon capture facilities proposed across the country. Of those, federal Natural Resources Minister Jonathan Wilkinson said recently he expects about 20 or 25 to be constructed in the next decade.

More companies will make investment decisions soon, Wilkinson anticipates, following the passing of a new federal investment tax credit for carbon capture and storage facilities. The tax credit includes up to half the cost of equipment used in CCS projects. 

“That would be enormous,” said McCoy. “That would be huge because these projects cost in the billions of dollars. That would be a lot of spending that would happen.”

On Monday, Alberta Energy Minister Brian Jean also signalled more projects will move toward construction soon.

Options for reducing emissions 

Some experts have pointed to how CCS makes more sense for certain facilities than others because of the concentration of the emissions out of the smokestack. Others have pointed to the need to reduce costs, improve the technology and improve government policy to ensure more CCS facilities are actually built.

Still, some in the industry say less is more.

“I think we need to probably build fewer, not as many as are being proposed,” said Bob Myles, chief operating officer of ATCO EnPower, which focuses on renewable energy, hydrogen and energy storage.

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Talks continue, but no new supports needed, says Pathways president Kendall Dilling.

“If you look at every industry that has ever been developed, it starts off with a lot and then the ones that are the most economic are the ones that are actually going to proceed,” he said.

The oil and gas industry and other heavy-emitting sectors have pointed to other strategies to reduce emissions beyond using CCS technology, such relying on lower-emission sources of electricity to power their operations, invest in energy efficiency equipment and reduce other emissions such as methane gases.

Still, for many heavy-emitting sectors, experts say there are few options for a sizeable reduction in emissions without implementing CCS.

Without these projects, it will be difficult for companies and the country to meet their climate goals.

“The economics do make a lot of sense for many projects,” said ATCO’s Myles. “That doesn’t mean it makes sense for everybody.”

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