This is the second installment of a two-part series on carbon capture and storage. Read Part 1, Alberta's Carbon Capture and Storage Plan Stagnate as Carbon Price Lags.

As Alberta falls behind on its goal to capture 30 million tonnes of carbon emissions a year by 2020, hundreds of millions of dollars in government subsidies are being pumped into the carbon capture and storage (CCS) sector.

Enhance Energy’s Alberta Carbon Trunk Line project is receiving $495 million from Alberta and $63.3 million from Ottawa. Enhance says on its website the project would have been much smaller without the government investment.

Shell Canada, with partners Chevron Canada Ltd. and Marathon Oil Corp., is developing Alberta’s only other CCS project, called Quest, with $120 million in federal and $745 million in provincial support. Shell aims to sequester more than one million tonnes of carbon dioxide per year from its Scotford upgrader, starting in late 2015.

Shell told Postmedia it paid $400 million in taxes and royalties in 2012 and the project is requiring the company to share its expertise with other companies.

As part of the agreement for funding Alberta’s two CCS projects, the knowledge gained from developing the projects is being shared with the CCS community at large, says Mike Fernandez, executive director of sustainable energy at Alberta Energy.[view:in_this_series=block_1]

In Saskatchewan, SaskPower hoped to start its $1.3-billion CCS project to capture one million tonnes of carbon dioxide by April 2014, said Tyler Hopson, a SaskPower spokesperson. Although recent delays have postponed the project coming on line.

With $240 million from the federal government and the rest of start-up funding coming from SaskPower, the Crown corporation will use the carbon dioxide from its coal-fired plant at Boundary Bay for enhanced oil recovery operations. SaskPower is also building a $60-million facility to provide firms with space to test their capture technologies.

Even with major government support, projects are not guaranteed.

Cancelled CCS projects

TransAlta Corp. announced in 2012 it was abandoning its CCS project connected to its new Keephills 3 coal-fired plant. Despite $342 million from Ottawa and $436 million in funding from Alberta, TransAlta cancelled the project because “the market for CO2 sales and the value of emissions reductions in Alberta and Canada are not sufficient,” according to the project’s final report.

The project would have accounted for about 20 per cent of Alberta’s total carbon dioxide emissions reduction target by 2015. Instead, the company decided to pay the $15-per-tonne penalty for carbon over a certain level.

“What’s really needed, of course, is a regulatory framework on CO2 that puts a value on that CO2. A significant value,” Don Wharton, vice-president of policy and sustainability at TransAlta, told the Globe and Mail.

 “The federal government came out with coal regulations that basically allow all their [TransAlta’s] plants to continue to emit at their current level until the end of their economic life,” Severson-Baker says. “In the meantime, the Alberta government hasn’t followed through with its plan to increase the amount of money it charges on a per-tonne basis for large emitters and it has remained at $15-a-tonne for the last five years.”

With no stronger carbon regulations in sight, fossil fuel companies drop projects to reduce or sequester carbon.

The other cancellation occurred in early 2013. Swan Hills Synfuels deferred building its Synfuels LP gas plant to turn underground coal into synthetic natural gas because of low natural gas prices. As a result, Alberta backed away from providing $285 million in subsidies to help build the carbon capture technology.

“CCS investment is the same as a refinery or power plant, it is a very capital-intensive investment where you need that guaranteed revenue stream over time, so it is not just a question of what the carbon price is today, it’s, ‘Can I lock in that carbon price over the long-term?’ ” said Andrew Leach, energy economist from the University of Alberta.

No GHG Regulations and No New Funding Plans

In a year-end interview, Prime Minister Stephen Harper said federal greenhouse gas regulations for the oil and gas industry are delayed again. Harper said the regulations would have to wait until they can be harmonized with the United States.

With weak coal regulations and no new oil and gas regulations to boost the cost of pumping unabated atmosphere-heating gases, there are also no new funding plans for new CCS projects coming down the pipeline in Alberta.

“There are no plans; no new funding plans for a big CCS funding program,” Fernandez at Alberta Energy said.

A carbon tax would allow companies to make their own decisions, Severson-Baker says, whereas direct funding for CCS puts government in the role of choosing technologies.

Alberta Would Need 25 Quest Projects

According to Alberta’s 2009 climate plan, the province aims to capture 30 million tonnes of carbon emissions annually by 2020. If all goes well, Shell Canada’s Quest and Enhance Energy’s Alberta Carbon Trunk Line will only be sequestering roughly three to four million tonnes by 2020.

In 2012, Simon Dyer, policy director at the Pembina Institute, did the math for the U.S. House Committee on Energy and Commerce:

Alberta’s climate plan states that 30 MT of annual reductions will be derived by CCS by 2020 — the equivalent of building 25 Quest-type projects in the next 8 years. Clearly, this is a fiction.

When Alberta projects to 2050, the province aims to capture and store 139 million tonnes of emissions.

“When I look out to 2050, yes we acknowledge it is an aggressive target and we are going to need to see commercial CCS at dozens of sites, possibly at a hundred sites,” Fernandez said. “I am pretty confident as the price of carbon starts to rise in North America, the cost of this technology will come down and it is very realistic to hit our 2050 CCS targets.”

In mid-December, a Vancouver-area start-up Inventys Thermal Technologies announced former U.S. energy secretary Steven Chu was joining its board. In the announcement, Inventys’ president said its new technology could cut capital and operating expenses to less than a fifth of current processes, reported the Globe and Mail.

As the CCS technology matures, the cost to sequester will drop, but the speed and decrease needed to make CCS a commercial solution can only be achieved via a price on carbon, Severson-Baker says. 

Will the carbon stay put underground?

If the technology became practical and Alberta was somehow sequestering 139 million tonnes of emissions per year by 2050, research has shed light on concerns this could cause earthquakes and ultimately release the trapped carbon dioxide.

A 2012 study published in the Proceedings of the National Academy of Sciences by Mark Zoback and Steven Gorelick of Stanford University reveal there is a “high probability” injecting large amounts of carbon dioxide into brittle rocks will trigger earthquakes and even small quakes could break the seal of the carbon repository.

The authors concluded, “large-scale CCS is a risky, and likely unsuccessful, strategy for significantly reducing greenhouse gas emissions.”

With the carbon needing to be stored underground forever, will the oil companies of today be around in a hundred years to monitor their oceans of carbon dioxide sitting under the surface?

Read part 1, here.

Image Credit: Pembina Institute via Flickr

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

This is the first installment of a two-part series on carbon capture and storage. Read Part 2, Government Subsidies Keep Alberta's CCS Dream Afloat.

Alberta is falling behind on its goal to capture 30 million tonnes of carbon emissions a year by 2020 — and growth in the carbon capture and storage (CCS) industry will only come if the price of carbon rises significantly or government mandates CCS through regulation, experts and officials say.  

Currently, only two CCS projects are in the works in Alberta. If both projects come on line in time they will sequester at best three or four million tonnes of carbon a year by 2020 — just a tenth of the province’s target.

Enhance Energy Inc. is moving ahead this spring with building its Alberta Carbon Trunk Line, which the company calls the world’s largest carbon capture and storage project.

The carbon trunk line will include a 240-kilometre pipeline to capture waste carbon from Alberta’s industrial heartland and pipe it south to the Lacombe area, where it will be injected into depleted oil reservoirs to help extract light oil, before being stored underground.

Enhance Energy aims to have its project up and running by the end of 2015, president and CEO Susan Cole told DeSmog Canada. Initially, the plan was to sequester carbon emissions from North West Upgrading Inc.’s bitumen refinery, but with that project delayed until after 2017, the company had to find two new sources of carbon dioxide. Cole is optimistic Enhance will meet its goal of sequestering 1.8 million tonnes of carbon dioxide by 2017.[view:in_this_series=block_1]

Despite Enhance Energy’s progress, ambitious plans of using carbon capture and storage to sequester carbon emissions on a grand scale are not thriving in Canada. In the last two years, the number of CCS projects in Canada dropped from five to three (two in Alberta and one in Saskatchewan).

And if CCS does take off, questions remain about the cost of the greenhouse gas reduction strategy and the long-term liability of vast amounts of carbon stored underground indefinitely. In this two-part DeSmog Canada series, we explore these questions in detail.

How CCS works

Carbon capture and storage builds upon technologies used for pumping liquefied carbon dioxide into depleted oil wells to extract hard-to-get reserves. Besides being used for extracting oil, waste carbon dioxide can also be stored underground in saline rock formations or turned into new products.

There are currently no commercial-level projects in Canada to turn waste carbon into products, but some test projects are underway. The National Research Council invested $8 million in building a demonstration facility at Canadian Natural’s Primrose South oilsands facility to turn waste carbon into algae and then process it into biofuels.

The standard CCS model collects waste carbon dioxide from industrial facilities and compresses it into a dense fuel to transport via pipeline to a storage location. The storage site is usually one to two kilometres underground in a porous, saline-rock formation, below a “caprock” such as a shale or rock salt layer required to keep the carbon dioxide in place. Monitoring stations are installed at the groundwater level, the storage location and at the injection site.

Alberta and Saskatchewan sit upon a geological formation that could sequester around 3.7 trillion tonnes of carbon dioxide emissions. Parts of British Columbia, Manitoba and Newfoundland could also be used to sequester carbon dioxide, while Ontario and Quebec have limited potential for storing carbon emissions underground.

CCS cartoon from the University of Bristol's CO2 Group.

The cost of burying carbon underground

Building facilities to capture, pipe and store carbon dioxide is expensive. The cost to sequester carbon dioxide from an upgrader in Canada is between $70 and $90 per tonne. With fewer upgraders being built in Canada, the needed growth of CCS technology is likely to be at in-situ oilsands operations, where the cost jumps significantly to $160 to $250 per tonne.

If the waste carbon is used for enhanced oil recovery operations, it offsets costs by $20 to $50 a tonne. The expensive and complicated process of securing waste carbon makes extracting carbon dioxide for enhanced oil recovery operations more economical, says Chris Severson-Baker, managing director of the Pembina Institute, a sustainable energy think tank.

“It is very complicated to broker an agreement between a company generating CO2 and one that will use it,” Severson-Baker says. “An oil and gas company that wants to use CO2 for [enhanced oil recovery] can drill their own CO2 well and have complete control over it and they don’t pay an environmental charge for the CO2 that ends up in the atmosphere.”

As a method to cut greenhouse gas emissions CCS is expensive, but many view it as a key transition technology to move us from our business-as-usual economy to a de-carbonized system. But as the economics stand now, it won’t happen on its own.

“You need something that underpins it [CCS] — either it is regulation the firm needs to meet so they are prepared to spend the money on carbon capture and storage, or you need the carbon price high enough to make it viable,” Andrew Leach, energy economist at the University of Alberta, says.

The Pembina Institute says on its website CCS should be viewed as “one of a number of potentially effective technologies for reducing GHG emissions on the scale required to combat catastrophic climate change.” However, the institute adds CCS needs to be seen as part of a portfolio of solutions and adequate attention must be paid to “more sustainable, low-impact solutions such as ramping up on renewable energy and energy efficiency.”

On the other hand, Greenpeace says CCS technology is too expensive and too late to solve the climate crisis and the money is better spent on renewable energy and efficiency.

Indeed, the three remaining CCS projects in Canada are only moving forward because of massive government support.

Read Part 2: Government Subsidies Keep Alberta's CCS Dream Afloat

Image Credit: Pembina Insititute via Flickr

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.