Our continuing coverage of Canada’s federal election September 20 carries the #Elxn44 tag. You can use the search engine on our site to find other stories in the series.
A draft strategy developed by Natural Resources Canada (NRCan) calls for federal incentives to get two massive carbon capture and storage projects on the drawing boards or under construction by 2030, Reuters revealed this week in an exclusive report.
“Nearly a dozen oil and gas companies [are] already pursuing rights to store carbon dioxide in Alberta’s vast underground caverns,” the news agency reports, citing a draft document shared privately with industry stakeholders in July.
Reuters says NRCan hopes to see Canada sequestering at least 15 million tonnes of carbon dioxide per year by 2030, the year the country’s target under the Paris climate agreement calls for a 40 to 45% reduction in CO2 emissions. That target, from a 2005 baseline of 739 megatonnes, would call for total cuts of 295 to 332 Mt., so that the over-the-top CCS subsidies the fossil industry has been demanding would make only a tiny contribution to the total target.
“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,” Reuters writes. “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 $40, a planned tax credit, and its Clean Fuel Regulation (CFR), which requires lower emissions intensity in fuel.”
Globe and Mail climate columnist Adam Radwanski writes that a “big new subsidy” for CCUS, apparently in the form of an investment tax credit, is a “pivotal” part of the climate conversation during the current federal election. Consultations on the plan end next week, he says. But with both the Liberals and Conservatives supporting the subsidy, “it’s likely that federal financial support for CCUS, increasingly identified by entities such as the International Energy Agency as an inescapable aspect of global decarbonization, will follow the election regardless of the vote’s result.”
Radwanski has details on the mix of optimism and skepticism the topic has generated.
“Perhaps the most obvious question is what share of total emissions reductions can be met by pulling carbon out of the air,” he writes, with Ottawa’s 15-megatonne estimate amounting to 5% of Canada’s latest Paris promise, but at least one CCUS advocate in Regina placing the potential at 60 to 70 Mt.
“From there flows the question of how big the tax credit should be, which the Liberals did not indicate in their budget and the Conservatives have not specified despite their pledge of $5 billion for CCUS in general,” Radwanski adds. “Proponents expect the credit to cover more than 50% of CCUS projects’ capital costs, but acknowledge some federal Finance officials would prefer a much lower proportion.”
The NRCan paper expresses doubts that the mix of incentives on offer would be enough to get the technology off the ground, Reuters writes.
“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 strategy states.
Julia Levin, climate program manager at Environmental Defence Canada, called CCUS a “dangerous distraction” from the clean energy transition. “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% of emissions from the fossil fuel sector,” she told Reuters.
“To date, almost all of the captured carbon is actually being used to pump more oil out of the ground that would have otherwise been unreachable,” she writes. “The bottom line is the most effective way to deal with emissions of carbon dioxide is to prevent them from ever being created rather than trying to pluck them haphazardly from the air or smokestacks.”
Radwanski says the question of whether captured carbon should be used for enhanced oil recovery (EOR), as 81% of it already is, “is where there could be the most daylight between the federal parties backing CCUS”. The Liberals have explicitly ruled out EOR, he notes, while the Conservatives are more receptive.