Alberta Pledges $2 Billion For CCS
By Paul Wells
Nickle's Daily Oil Bulletin
10 July 2008
The Alberta government will ante up $2 billion for three to five large-scale carbon capture and storage (CCS) projects that it says will store up to five million tonnes of cabon dioxide (CO2) by 2015 -- a move lauded by industry.
"With this announcement we will continue to demonstrate leadership and encourage the federal government and Alberta industries to make real investments in carbon capture and storage (CCS)," Premier Ed Stelmach said in a statement.
With the potential to reduce emissions at facilities such as coal-fired electricity plants and oilsands extraction sites and upgraders, the $2-billion fund will support CCS projects that are expected to reduce emissions by up to five million tonnes annually."
Dave Pryce, vice-president of Western Canada operations for the Canadian Association of Petroleum Producers (CAPP), says the funding will spur on industry investment for CCS.
"Absolutely, I'm sure it will. It's a significant amount and I don't think we've seen any government come across with a strategy that's this large in dollars," he said.
"I think it's a significant signal of (the province's) commitment. They've now gone down the path, they've put a process in place to engage industry to go forward on this and it's intended to bring investment into putting steel in the ground. It's for project development."
Stephen Kaufman, a Suncor Energy Inc. official and chair of the industry-led Integrated CO2 Network (ICO2N), said the province's financial pledge is a "very positive signal."
"We think it shows the leadership in helping to deploy the early stage CCS projects," he said.
"The ICO2N group has indicated all along that CCS is not going to be able to proceed strictly on a market-based approach and that an approach that includes a partnership with government and industry is going to be needed to get initial projects up and running."
Steve Snyder, TransAlta Corporation's president and chief executive officer, also applauded the province's funding announcement, saying CCS is vital if Canada is to achieve its goal of reducing carbon emissions by 20% from current levels by 2020.
"CCS has the potential to contribute to Canada's economic prosperity and dramatically reduce our environmental footprint at the same time," he said.
"Given its thermal assets, storage potential and access to world leading energy expertise, Alberta is an ideal location to demonstrate the benefits of this technology, which can then be applied elsewhere in Canada, the U.S. and around the world."
Longer term, Alberta's new climate change plan targets a 200 megatonne reduction (from business as usual forecasts) in greenhouse gas emissions by 2050, or 14% below actual 2005 levels. The province said CCS will account for 70% of the total.
The provincial announcement virtually mirrors the recommendations made by the joint federal-provincial ecoEnergy Carbon Capture and Storage Task Force in a report released in January of this year.
"The report (laid) out a pathway to move CCS from talk to action. It shows how industry and government could work together to get several large CCS facilities operational by 2015, cutting emissions by five million tonnes per year at a cost of about $2 billion," said David Keith, the University of Calgary's Canada Research Chair on Energy and the Environment and the only academic on the task force.
"Investment in CCS now is vital to ensure Canada has the option of using CCS to make the very large absolute emissions reductions required over the coming decades," he added.
Stelmach said the $2 billion will be allocated to encourage construction of Alberta's first large-scale CCS projects. The province has issued a request for expressions of interest to begin identifying CCS proposals with the greatest potential of being built quickly and those which provide the best opportunities to significantly reduce GHG emissions.
Pryce noted that the province was light on the details on how projects will be chosen, a situation he expects to be remedied soon.
"One thing we're a little unclear on is the criteria they will use to judge the projects, but that's expected shortly," he said. "The main thing is it sets up a competition to ensure the best projects come forward."
Executives from oilsands giants EnCana Corporation, Shell Canada Ltd. and Petro-Canada sit on a provincial implementation team for carbon capture. Stelmach said that group will recommend to cabinet which projects get to split the $2 billion.
The province said its investment in CCS is essential in helping to meet the goals of Alberta's climate change strategy, while also allowing the economy to continue to grow and provide jobs for Albertans.
"This economic growth, as well as the potential for value-added industries and enhanced oil recovery through CCS, also provide significant taxes and energy royalties, which are invested into priority programs for Albertans, such as health care and infrastructure," the province said in its release.
"This provincial investment is intended to accelerate the development of projects and encourage the necessary investment from industry to make CCS viable in Alberta."
In addition to the $2 billion committed for CCS, the provincial government announced a second $2-billion fund that it says will propel energy-saving public transit in Alberta.
"We're tackling both sides of the emissions challenge on behalf of Albertans and all Canadians," said Stelmach. "We're reducing the impact of industrial emissions with carbon capture and storage and investing in public transit to reduce the impact from our tailpipes."
The province says the second fund announced will take the equivalent of thousands more Alberta vehicles off streets and highways through $2 billion in public transit investments.
Called the Green Transit Incentives Program (Green TRIP), it will promote the use of local, regional and inter-city public transit. The program will support new public transit alternatives throughout the province that will significantly reduce the number of vehicles on Alberta roads and reduce GHG emissions.
Kaufman said the GreenTrip funding is a positive sign that the province has acknowledged that cutting industry emissions is only part of the climate change solution.
"They're recognizing it's the end consumption of petroleum products that really is the big contributor and that they need to be addressed at the same time as industry emissions," he said.
Funds for the two initiatives will come from this year's surplus, which the province expects will be significantly larger than predicted due to higher-than-forecast oil and natural gas prices.
Posted by Arthur Caldicott on 10 Jul 2008