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Carbon capture and storage – or bust

THE NAMES of two men invariably come up when you talk to an oil-patch executive in Calgary: Waxman and Markey. Whatever Canada would like to do about fighting climate change, a bill in the US Congress sponsored by the Democrat representatives Henry Waxman and Edward Markey to introduce a cap-and-trade scheme south of the border could be decisive.

"Canada's in a holding position while it waits to see what the US does," says Marlo Raynolds, executive director of Alberta's Pembina Institute, an environmental group. It could all trigger a long constitutional battle in Canada, say lawyers, because while the provinces own the coal, oil and gas that release the carbon into the atmosphere, the federal government has dominion over Canada's air. Figuring that one out could take months of negotiations, say lawyers.

The federal government must do something, because Canada's record on climate change is poor. Since 1990, the government says, the country's emissions have risen by 26%. The energy sector accounts for over 80% of the total. So it is no surprise people in Alberta – Canada's energy powerhouse and responsible for about half of the growth in the country's emissions since 1990 – are worried about Waxman-Markey and their American Clean Energy and Security Act of 2009.

For once, the oil sands are not really at the heart of this problem. For now, anyway. Their contribution to Alberta's emissions is very low, at about 4%. But by 2020, they will produce 12% of the nation's total. The real culprit is coal, which makes up about a quarter of Alberta's carbon dioxide (CO2) emissions. Like other countries – including the US and in Europe – the province is building new coal-fired power stations.

This does not suggest much urgency to reduce emissions. Nor do the targets themselves: Alberta wants to halve its emissions by 2050, proclaims the programme the government published in January 2008. But by halving Alberta means against business-as-usual forecasts for what emissions would be in 2050. The programme, if it works, would only seek a 14% reduction on the emissions level of 2005, 40 years hence.

Meanwhile, the mechanism in place to bring about this reduction does not require polluters to cut their CO2 in absolute terms – but merely to reduce the intensity of their carbon pollution by 12%. If they fail to do so, they pay a penalty of C$15 a tonne of carbon over their allotment. The polluters can also cut their emissions by buying offset credits. One prominent climate-change specialist suggests the weak targets befit a provincial government whose cabinet "includes several climate-change sceptics".

The other plank of the strategy – and on which the 2050 targets are based – is carbon capture and storage (CCS). The government has pledged to invest C$2bn ($1.8bn) to help bring three demonstration plants on line by 2015. All three will be built close to Edmonton, the industrial heartland of the province.

The CCS programme has brought the critics out in force. Environmentalists say the programme would commit taxpayer money to an untested technology – at the same time as the province refuses to commit similar sums to building a renewable electricity base.

There are also big infrastructure issues to deal with, acknowledges Sandra Locke, from the energy ministry's CCS team. To make CCS attractive to the energy sector, Alberta wants carbon to be stored through enhanced oil recovery (EOR) in fields across the province. But that will need dedicated pipeline infrastructure.

CCS: expensive and uneconomic

Indeed, a study commissioned by the province this year found that CCS is "expensive and uneconomic" and will need an investment of C$1bn-3bn a year from the federal and provincial governments after the first demonstration projects are on line in 2015. The extraction cost for taking carbon out of an in situ oil sands project could be as high as $250 a tonne.

There is an upside. The report says that if CCS for EOR takes off, it could increase Alberta's conventional oil reserves by 50%, generating up to $25bn in additional oil royalties. That could make it an investment yielding yet more cash for Alberta. But relying on a technology that is not yet proved on the scale the province needs is a gamble.

"They are putting all their eggs in one basket," says one environmentalist. Andy Ridge, of the Alberta energy ministry's climate change policy unit, responds: "There are not a lot of eggs to put in the basket."

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