Canada: Carbon Capture And Storage: A Key Carbon Abatement Option In Canada?

As countries worldwide search for ways to make deep cuts in carbon dioxide (CO2) and other greenhouse gas (GHG) emissions, carbon capture and storage (CCS) technology is being recognized by governments, research institutions and industry as a potentially key tool for such emissions reduction.

The world's leading body of experts on climate change, the Intergovernmental Panel on Climate Change,¹ believes that CCS is among the most promising tools to control GHG emissions. In Canada, with the recent re-election of Prime Minister Stephen Harper, the development of CCS is expected to proceed as planned as a cornerstone of the government's green plan.

What is Carbon Capture and Storage?

CCS technology involves capturing high-volume CO2 from large industrial sources before it is emitted into the atmosphere and then compressing, transporting and injecting it into deep underground geological formations where it is intended to remain permanently trapped. In some cases, CO2 can be utilized in a process termed enhanced oil recovery (EOR) which entails pumping the gas into declining oil fields where it dissolves into the remaining oil, thereby reducing its viscosity and pushing it into production wells, resulting in increased oil production.

Why adopt CCS?

In Canada, proponents believe the potential of CCS to reduce the environmental footprint of both the oil sands industry and electrical generation plants powered by fossil fuels is vast. New facilities could be built "capture-ready", and the technology could also be retrofitted into existing industrial plants. However, while the individual components of CCS are all being deployed at an industrial level, the safety of the entire process has not been definitively proven and its commercial feasibility is reportedly still many years away.

Although CCS has yet to be implemented on a large scale in Canada, research at numerous demonstration plants has indicated that when applied to an industrial facility, CCS is capable of reducing CO2 emissions by approximately 80-95%. Moreover, Canada has an abundance of fossil fuel reserves located in close proximity to suitable underground storage sites with potential for EOR, providing ideal circumstances for CCS development.² The world's first CO2 measuring, monitoring and verification initiative, Weyburn-Midale, was launched in Saskatchewan in 2000. The demonstration project, in its second and final phase, is a government-industry partnership sanctioned by the International Energy Agency (IEA). Test results indicate that long term (i.e., 5,000 year) underground CO2 storage is safe, and the second phase is planned to result in a best practices manual to guide both technical and policy components of future CCS projects.

CCS regulation in Canada

CCS implementation, which would cover CO2 capture, pipeline transportation and injection, is expected to fall under the authority of provincial agencies that regulate oil and gas and power generation. Similarly, while responsibility for water management and regulation is shared by the federal, provincial and municipal governments, provincial agencies would presumably address the potential for leakage and conduct environmental impact assessments in respect of groundwaters that lie solely within a province's boundaries.

Existing federal and provincial oil and gas legislation covers certain aspects of CCS, including capture and transportation-related issues such as construction and health and safety. However, in most Canadian jurisdictions, CO2 storage activities such as access rights and legal characterization, and injection and post-injection activities such as monitoring and liability, have yet to be adequately addressed.³

Encouraging CCS deployment

In April 2007, the federal government released its "Turning the Corner" plan for reducing GHG emissions. The proposed regulatory framework includes mandatory and enforceable targets for emissions reduction from all major industrial sectors. Details of the plan were released in March 2008 and will effectively require the use of CCS or equivalent technology by 2018 in order to meet these targets. The federal government has committed $250 million in funding for the development of CCS and recently announced a call for proposals under a new $125 million fund to advance CCS technologies. In addition, various provincial measures to encourage or mandate GHG mitigation are being developed, including an existing $2 billion fund to advance CCS projects in Alberta.

Challenges and the road ahead

Notwithstanding these developments, a number of technical, regulatory and policy impediments cast a shadow of uncertainty on the future development and implementation of CCS in Canada. According to some experts, CCS will not be commercially viable for at least a decade - and even then large scale implementation will still be many years away. The IEA recently warned that the G8 countries must immediately make $20 billion available for CCS funding if the technology is to become established by 2020. In addition, regulatory uncertainty may discourage private investment in the technology, while environmental groups concerned with the safety and experimental nature of CCS argue that government investment should be directed instead toward proven renewable energy sources such as hydro, solar and wind power.

Clearly, several measures will be necessary to facilitate the successful adoption of CCS technology. Monitoring, reporting and verification guidelines must be developed and safety concerns, such as leakage, must be addressed. Further, Canadian governments will need to continue to provide research and development incentives to advance demonstration projects, akin to the U.S. industrial tax credit for CCS implementation included in the recently enacted Emergency Economic Stabilization Act of 2008.

According to proponents, the development of an effective, harmonized regulatory system in Canada is a key first step toward developing both industry and community confidence in the technology. Moreover, CO2 storage needs to be demonstrated rapidly and at a wider variety of locations in order to assess the potential for CO2 retention in varying geological formations and develop criteria for site selection. Proponents believe that expanded demonstration will also provide critical data to enable the development of CO2 monitoring and verification processes and risk management practices. This, in turn, is expected to accelerate the deployment of CCS and facilitate the progress required for large-scale commercial emissions reductions in the future.

Footnotes

¹ The IPCC is a scientific intergovernmental body set up by the World Meteorological Organization and by the United Nations Environment Programme, established to provide the decision-makers and others interested in climate change with an objective source of information about climate change.

² This storage potential is particularly immense in the rock formations of the Western Canadian Sedimentary Basin.

³ International Energy Agency website. In January 2008, the Canada-Alberta EcoENERGY CCS Task Force made a range of recommendations regarding how to address these outstanding issues.

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