Betting on carbon capture

Betting on carbon capture CO2 storage could solve most of Alta.'s emissions problems -- if it works

Archie McLean
The Edmonton Journal
Monday, July 28, 2008

CREDIT: CNS This is the pipe that brings in the co2 gas from 320 miles away in North Dakota, ending at the EnCana Weyburn facility.

Alberta's climate change policy is under increasing global scrutiny.

With oilsands companies ramping up production and the province still heavily reliant on burning coal for power, greenhouse gas emissions will almost double from 2005 levels by 2050 without aggressive action.

To solve this problem, the Stelmach government is betting heavily on carbon capture and storage (CCS), a promising but largely undeveloped technology.

They are counting on CCS delivering a staggering 70 per cent of the province's greenhouse gas reductions by 2050. That amounts to 139 megatonnes a year, roughly as much as the entire country of Argentina put into the atmosphere in 2004.

To kick-start investment, the provincial government recently pledged $2 billion to develop the technology. But questions still linger and critics charge the plan may be too pricey, too slow and too uncertain to deal with the problem.

It's easy to see why politicians and business leaders love carbon capture and storage. For a price, it allows industrial expansion to continue, but emissions to fall.

If it succeeds, the technology could be exported around the world.

It is also pretty simple for the public to understand -- capture industrial carbon dioxide emissions at their source, liquefy and compress them, and pipe them underground, where they can sit in depleted oil reserves or saline aquifers.

"These are things we already know how to do in Alberta," says Jim Carter, the former CEO of Syncrude, who heads a provincial government task force on the technology.

According to a 2005 report by the International Panel on Climate Change, CCS has the potential to reduce emissions by 80 to 90 per cent at a plant compared to a similar facility without the technology.

It's happening on a small scale all over the world, including projects in Norway, Algeria and Weyburn, Sask.

The same report claims the risks of carbon dioxide seeping to the surface are minimal, with retention in underground reservoirs likely to exceed 99 per cent over 1,000 years.

Large point releases are possible, but could be dealt with using current well blowout techniques.

David Keith, the Canada research chair in energy and the environment at the University of Calgary and one of the world's top experts in carbon capture and storage, is confident the risks can be managed.

"If you want a technology with no risk, you better choose no technology," he says. "Any of the large-scale things we're going to do for climate change, including wind power, hydro power or nuclear power, have significant environmental consequences."

Given the right market incentives, Keith believes carbon-capture technology could be built right away.

The obstacles have more to do with cost than technology.

"If you ask me why isn't there technology to make blue elephants, the answer is there's no financial incentive for making blue elephants.

"So essentially world governments have not seriously regulated the emissions of carbon dioxide, so of course technologies for avoiding such emissions are not big winners right now."

Who will pay?

Premier Ed Stelmach and Saskatchewan Premier Brad Wall often make their case for CCS in opposition to other climate change policies such as a carbon tax or cap-and-trade system.

In meetings this month with western U.S. governors and Canadian premiers, they carried a clear and co-ordinated message -- no carbon tax, no North American cap-and-trade system.

Stelmach says both ideas are little more than a money transfer from the West to the rest of the country.

"There is one inter-regional transfer of wealth in this country, it's called equalization, and there won't be another one from the province of Alberta," Stelmach said at the premiers conference in Quebec.

But experts say they are confusing the end with the means. Carbon-capture technology has plenty of potential, but industry has no reason to invest in it without a strong price on carbon.

"We're not regulating the CO2 emissions in a serious way, so why would anybody do it?" Keith says.

Mary Griffiths, a senior policy analyst at the Pembina Institute, says Stelmach and Wall are being disingenuous with their arguments. "If you have a higher price on carbon, then it will be economical to do the carbon capture. Those two are separate issues and it's a red herring to connect the two."

Norway's Statoil, for example, developed its CCS technology after the government there introduced a $60 carbon tax in 1991.

Former deputy prime minister Anne McLellan, who praised carbon capture in a speech last week, also said a carbon tax or cap-and-trade system are not "mutually exclusive" with CCS.

Right now, Alberta charges businesses $15 per tonne of carbon dioxide they put into the atmosphere above their limit (the money goes into a technology fund).

The federal government will likely put a slightly higher price on carbon in the coming months.

According to Carter, the current cost of CCS is between $85 to $100 a tonne.

"There's a big gap there," Carter says.

Enhanced oil recovery may cut costs somewhat, but that still leaves a $25 to $40 gap between simply paying the fine and investing in technologies to save money.

That's where the government's $2-billion development plan comes in.

The July 8 announcement won lots of praise, but was also criticized from both the right (potential boondoggle, government getting in the business of business) and the left (why is government paying private business to clean up their mess?).

The government will issue a request for proposals in the coming months and is hoping for projects that are innovative and fast.

Carter believes the money will help bridge the gap for companies that want to get in the game, but need some help with the initial investment.

"Once we get going here, two things will hopefully happen. One will be to reduce the costs of capture and storage as we learn more about it. And secondly, we'll have a better understanding in Canada and society in general what the price of carbon will be."

Already a number of companies -- including Epcor and a Calgary-based company partly owned by former premier Don Getty -- have expressed interest in applying for money from the fund.

Can we afford to wait for all this?

Carter estimates the five demonstration projects will be up and running by 2015. It sounds like a long time from now, but industry will be pressed to get things done by then.

"These are big capital investments and it takes that long to get them in place," Carter says.

Even if those projects get built, they will only capture and store roughly five million tonnes of carbon dioxide annually, a small fraction of Alberta's overall emissions. It will take decades more before enough CCS is in place to make real greenhouse gas reductions.

The plan simply doesn't reflect the urgency of the problem, says local Greenpeace campaigner Mike Hudema.

"The next 10 years are the critical years," he says.

"Carbon capture is being used more as a greenwashing technique than a way to make real reductions."

Hudema wants more investment in renewable energy and a stronger focus in reducing, not storing, emissions.

But not all environmental groups see things the same way. The Pembina Institute believes CCS is one of many areas the government needs to move on.

"It's not as if we have the luxury of the status quo," Griffiths says.

"We feel that we need to move very, very rapidly on a number of fronts."

Keith believes those who oppose CCS are either using faulty reasoning or haven't decided what they're fighting.

"We have to cut emissions to zero or below zero within 50 years, and if you say you're going to do that only with small renewable and efficiencies, you're effectively saying you're not going to do it," he says.

amclean@thejournal.canwest.com

© The Edmonton Journal 2008