Canada: Carbon Capture And Storage - An Alberta Perspective

Edited by Paul H. Harricks

Carbon capture and storage (CCS) is a process that first captures and then sequesters industrial carbon dioxide (CO2) emissions before release into the atmosphere.  The CCS process involves the following stages:

  1. CO2 capture and compression;
  2. CO2 transport from the capture site to an injection/storage site;
  3. injection and permanent storage of CO2 in geological formations; and
  4. upon injection completion, post-closure long-term monitoring of the CO2 storage site.

A CCS system combining these features will reduce industrial CO2 emissions into the atmosphere.

The Alberta Government considers CCS a critical technology to reduce industrial greenhouse gas (GHG) emissions and has proposed CCS as the largest portion of its GHG reduction strategy.  Alberta has taken significant steps in advancing its CCS initiative by establishing a legal and regulatory framework to implement large scale CCS projects.  Although the CCS initiative provides a potential solution for sustainable hydro-carbon production in Alberta, large scale CCS raises numerous issues.


In January 2008, the Government of Alberta released its Climate Change Strategy.  The report reiterated the Province's target to reduce annual GHG emissions from a 2010 baseline by 50 megatonnes (Mt) by 2020 and added a target of reducing annual GHG emissions by 200 Mt by 2050 (inclusive of the 50 Mt target).

The Climate Change Strategy anticipated that CCS implementation would account for up to 70% of Alberta's targeted GHG emissions reductions.  The Strategy also included the establishment of the Alberta Carbon Capture and Storage Development Council to facilitate the implementation of CCS in Alberta by recommending those economic, regulatory, and technical requirements consistent with CCS implementation.

Formalized Regulatory Framework

1. Carbon Capture and Storage Funding Act, S.A. 2009, c. C-25 (the "Funding Act")

The purpose of the Funding Act is to encourage and expedite the design, construction and operation of CCS projects in Alberta.  The Funding Act provides the Minister of Energy (the "Minister") with the legal authority to make grants facilitating the Funding Act's purpose.  To date, the Minister has allocated $2 billion in provincial funding to four CCS projects:

  1. The Alberta Carbon Trunk Line Project by Enhance Energy for construction and operation of a 240 km pipeline that will collect and transport CO2 from industrial emitters (initially a fertilizer manufacturing facility and an oilsands bitumen refinery in Redwater, Alberta) to existing oil reservoirs.  The injection of CO2 below the oil reservoir is intended to both enhance oil recovery and provide significant storage.
  2. The Shell Quest Project to capture more than one million tonnes of CO2 annually from Shell's Scotford oilsands upgrader located near Fort Saskatchewan, Alberta and transport same by pipeline to injection wells located in Central Alberta.
  3. The Swan Hills Synfuels Project for piloting of in-situ coal gasification to convert a deposit of deep unmineable coal into synthetic gas (syngas) underground that will be processed at a conventional gas plant to remove CO2 as a byproduct of the gasification.  The CO2 from this process will be captured and used for enhanced oil recovery and the produced syngas will be used as a fuel in a combined cycle power generation station to produce low emission electricity.
  4. TransAlta Corporation's Project Pioneer for construction of a carbon capture facility at the Keephills 3 coal-fired power plant located west of Edmonton, Alberta anticipated to capture and store one million tonnes of CO2 annually.  It must be noted that on April 26, 2012 Project Pioneer's industry partners, TransAlta. Corp, Enbridge Inc. and Capital Power Corp., announced they will not be proceeding with CCS project due to economical concerns.  See discussion below under "Cost Considerations".

2. Carbon Capture and Storage Funding Regulation, Alta Reg 64/2010 (the "Funding Regulation")

The Funding Regulation authorizes Ministerial spending for CCS education and research, and for development and refinement of the provincial regulatory regime for CCS.  In March 2011, the Alberta Government launched a Regulatory Framework Assessment (RFA), funded pursuant to this regulation.  The objectives of the RFA are to: (i) review the current regulatory requirements in Alberta that apply to CCS; (ii) examine CCS frameworks in other jurisdictions; and (iii) identify opportunities to improve Alberta's regulatory framework.  The review is expected to be completed in late 2012.  As yet, there has been no public announcement arising as an outcome of the RFA.

3. Carbon Capture and Storage Statutes Amendment Act, 2010 c. 14 (the "CCS Amendment Act")

The CCS Amendment Act attempts to provide legal certainty regarding several aspects of the CCS process including:

  1. Ownership of Pore Space and Grant of Sequestration Rights:
    To accommodate CCS, ownership of all pore space for the purpose of storing CO2 has been vested in the Crown in Right of Alberta (the Crown) under the Mines and Minerals Act1 (the MMA).  Further, authority has been vested in the Minister of Energy to contract with counterparties for:  (1) an evaluation permit2 granting the right to drill evaluation wells to determine the suitability of geological formations for CCS3, and (2) a carbon sequestration lease4 granting rights to inject captured carbon dioxide for sequestration5.  The CCS Amending Act is retroactive and supersedes existing mineral or storage rights.
  2. Long-term Stewardship and Liability:
    The lessee under a carbon sequestration lease must obtain a well licence and an approval from the Energy Resources Conservation Board under the Oil and Gas Conservation Act prior to drilling or using a CCS well.6  During injection operations, a lessee is required to monitor all wells and facilities and, upon ceasing injection operations, comply with all closure requirements of the approved closure plan.7  The lessee may then apply to the Minister for a closure certificate, which the Minister may issue if satisfied that: (i) the lessee has met all monitoring, closure, abandonment, decommissioning and reclamation obligations; (ii) the lessee has complied with all relevant environmental requirements, and (iii) the captured CO2 is behaving in a stable and predictable manner, with no significant risk of future leakage.8  Upon issue of a closure certificate by the Minister, the Crown permanently assumes all obligations of the lessee for the sequestered CO2 and conditionally indemnifies the lessee against liability in tort.9
  3. Post-Closure Stewardship Fund:
    Lessees are required to pay a fee per tonne of "captured CO2 injected"10 into a post-closure stewardship fund (the "Fund") for the duration of the CO2 injection period.11  Monies paid into the Fund will be available to the Crown to be used for monitoring the injected CO2 plume, fulfilling the obligations the Crown has assumed from the lessee, and paying for the costs of reclamation and remediation activities.12

4. Carbon Sequestration Tenure Regulation, A.R. 68/2011 (the "CST Regulation")

The CST Regulation establishes requisite procedures for Ministerial agreement to make pore space available, to evaluate suitability for sequestration and to subsequently undertake sequestration of CO2.

The CST Regulation: (i) defines "pore space" and "deep subsurface reservoirs"13; (ii) establishes the application process and terms for permits and leases14; (iii) limits the size of parcels of land for permits and leases15; (iv) sets the annual rental fee for subsurface reservoirs16; (v) provides detailed provisions for monitoring, measurement and verification plans requiring Ministerial approval and periodic update17; and (vi) creates the obligation to provide a closure plan and details the specifications required for inclusion in a closure plan that requires Ministerial approval and periodic update18.

The CST Regulation expires on April 30, 2016 and will be reviewed under the RFA.

Sustainable Development

If fossil fuels continue to play a critical role as an energy source, CCS is increasingly recognized as a solution allowing for the continued production of coal and oil and gas coincident with improved energy efficiency and the development of a renewable energy portfolio.

Industry has recognized that CCS may be particularly efficient in respect of large emissions at industrial facilities, especially when integrated into designs for oil sands and other hydro-carbon production facilities.  In Alberta, large CO2 emitters are typically located in clusters, there is often infrastructure available to transport the captured CO2, and there is a foundation of industry knowledge critical to developing the monitoring technology necessary to make CCS viable.  Industry recognition and support is exemplified by the Integrated CO2 Network (ICO2N) which is group of Canadian corporations from the coal-fired power, conventional oil and gas development, oil sands and other industry sectors working to accelerate the development and deployment of CCS technologies.  As explained by Stephen Kaufman, director of climate change management and solutions with Suncor Energy Inc. and the industry chair of ICO2N, "CCS offers great potential for making significant reductions in our GHG emissions, and we recognize that one day it could play a key role in reducing the environmental footprint of the industry".


The willingness of the province to assume all obligation (and therefore liability) for stored CO2 is a considerable departure from current practice in respect of conventional oil and gas operations, which in most jurisdictions provides for operator liability.  Under Alberta's regulatory framework, liability is assumed by the Province at the point when the captured carbon dioxide is behaving in a stable and predictable manner, with no significant risk of future leakage19 and the lessee has complied with the closure requirements set out in regulations and related legislation.20  Interestingly, provincial indemnification is only made available to the lessee and it is unclear who will assume liability in respect of possible claims brought against the other participants in a CCS project, such as equipment suppliers or the original producer of the CO2.  This suggests that Crown liability may be narrower than it first appears.

The MMA also provides that, subject to regulation, the Crown will assume ownership of the sequestered CO2 if the lessee ceases to exist prior to the issuance of a closure certificate.21  This provision provides some additional assurance that the Crown will assume the lessee's obligations in the event of the insolvency of a lessee.  However, until further regulations are promulgated, the extent of assumed liability is uncertain.


Evolving technology often develops in 'fits and starts'.  This has resulted in certain 'technological gaps' that science must address as CCS develops:

  1. CO2 Site Assessment: A reliable means of predicting the suitability of a site and its potential storage capacity is essential.  Seismic methodology will be required to accurately and reliably map deep sub-surface locations.
  2. Assessing Likelihood of CO2 Storage Leaks:  A reliable means of assessing and predicting faults and fractures impacting containment at a storage site is essential.  A better understanding of the effects of by-products captured coincidentally with CO2 on cap rock or other material that surrounds the storage site or provides the site seal is also necessary.
  3. Tracking CO2 Leaks:  Tracking methods to accurately and reliably verify and observe CO2 plume movements and any leakage to the biosphere require improvement.
  4. Long Term Outcomes:  Environmental studies are required to determine the effects of CO2 sequestration on groundwater, and on both terrestrial and aquatic plants and animals.

Cost Considerations

Because CCS is in nascent development in Alberta, it is difficult and premature to quantify the capital cost of and actual operational expenses associated with a CCS project.  In these initial stages, expenditures will necessarily focus on infrastructure, retrofits to source plants requiring CCS technology, and the assessment of appropriate secure storage sites.  As Alberta's CCS initiative matures, cost assessment will be required to determine the 'stand alone' viability of CCS projects.  The cost of CCS implementation and operation must be competitive with the "cost of carbon" and not significantly increase the cost to industrial emitters of processing hydro-carbons.  An example of this concern is the recent cancellation of the Project Pioneer CCS project by its industry partners who opted to pay emissions penalties in preference to incurring project development costs.  A currently low price (tax) on carbon with no expectation or certainty regarding future prices was cited as the main reason that the project would not proceed.  Commercial-scale viability of CCS technology will be dependent on a robust market for carbon sales and the price of emissions reductions being sufficient to encourage investment in the technology.  Consideration of funding arrangements for CCS projects, including government funding and incentive schemes or other arrangements to first establish and then ensure the long term viability of CCS in Alberta will be required.

Importance of Government Support

Alberta's development of a regulatory framework supporting CCS initiatives is due in no small measure to the policies of previous Alberta administrations, who made CCS a priority in their strategy to reduce GHGs.  Although the government of Premier Alison Redford remains fully committed to CCS implementation, there have been indications of a possible shift in priority to diversify the funding committed to CCS into other clean energy technologies and emission reduction solutions that support GHG reduction strategies.  This may, at least in the shorter term, suggest a shift in Alberta's GHG reduction strategies to a more multi-faceted approach until the initially approved CCS projects have demonstrated that the piloted technologies are viable and effective tools into which further research and investment is desirable.


The Alberta Government considers CCS a critical technology for reducing industrial GHG emissions.  Development of an appropriate legal and regulatory regime for a new technology is an organic process which will quite understandably require experiment, assessment, and revision.  Patience is required as the CCS industry develops the tools necessary to ensure the safe, secure, and effective storage of CO2 in large quantity.


1. R.S.A. 2000, c. M-17, s. 15.1; The Surface Rights Act, R.S.A. 2000, c. S-24 continues to apply to protect surface owners' rights.
2. Carbon Sequestration Tenure Regulation, Alta Reg 68/2011, s. 3.
3. Supra note 1, ss. 15.1(3) and 115(1).
4. Supra note 2, s. 9.
5. Supra note 1, ss. 15.1(3) and 116(1).
6. Ibid., s. 116(2).
7. Ibid., s. 116(3).
8. Ibid., s. 120.
9. Ibid., s. 121.
10. Supra note 2, s. 20.  Fee to be set by Minister and still undetermined.
11. Supra note 1, ss. 116(3)(g) and 122(3).
12. Ibid., s. 122(2).
13. Supra, note 2, ss. 1(c) and 1(i).
14. Ibid. ss. 3, 4, 9, and 10.
15. Ibid. ss. 5 and 12.
16. Ibid. ss. 6 and 13; annual rental rate prescribed in Mines and Minerals Administration Regulation, Alta Reg 262/1997, s. 20(3.1).
17. Ibid., ss. 15, 16, and 17.
18. Ibid., ss. 18 and 19.
19. Supra note 1, s. 120(3)(f).
20. Ibid, s. 120(3)(a).
21. Ibid, ss. 121(3) and 124(j).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
16 Jan 2018, Seminar, Birmingham, UK

Join Gowling WLG's pensions team as they explain some of the biggest challenges facing trustees and employers in the coming year and provide practical ways of dealing with them.

23 Jan 2018, Seminar, London, UK

Join Gowling WLG's pensions team as they explain some of the biggest challenges facing trustees and employers in the coming year and provide practical ways of dealing with them.

25 Jan 2018, Seminar, Birmingham, UK

2018 is set to be another big year in employment, with employers set to face new challenges and responsibilities. At our event, looking ahead to next year, we will be discussing four key issues you might face in 2018, providing useful tips and answering your questions.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions