Canada’s carbon capture dreams…”This blows my mind”

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Canada’s carbon capture dreams…”This blows my mind”

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A carbon capture advocacy group owned by coal company BHP admits 2035 carbon emission reduction promises won’t be kept in Canada

A veteran U.S. energy consultant and attorney is accusing the nascent carbon capture and storage (CCUS) industry of hypocrisy after a report from an advocacy group founded by coal giant BHP last week warned the technology won’t be able to meet the 2035 decarbonization goals in Canada’s draft Clean Electricity Regulations. This despite the targets being much the same as Canadian CCUS proponents first promised nearly a decade ago.

“This blows my mind,” David Schlissel, a Massachusetts-based consultant associated with the Institute for Energy Economics and Financial Analysis (IEEFA), told The Energy Mix. “It’s hypocritical. These guys have been hyping 90%, 95% capture, and now it’s, ‘well, we really can’t do it that fast, it’s not tested, it’s not certain’.”

He was reacting to a report earlier this month from the International CCUS Knowledge Centre, which was founded by BHP, one of the world’s largest producers of coal, that warned that the federal government’s 2035 target date for grid decarbonization will be extremely difficult to meet based on the current state of the technology, The Canadian press reports.

It’s been a path of failed promises

As far back as 2014, the Boundary Dam carbon capture facility in Saskatchewan set out to achieve a 90% capture rate, Schlissel wrote in 2021, before consistently poor performance forced it to downgrade its target to 65%. In 2015, the troubled project had to pay a C$12-million penalty to Cenovus Energy after failing to deliver its quota of captured CO2 to the Alberta fossil’s Enhanced Oil Recovery operation.

In 2017, the Saskatchewan government admitted the province’s ratepayers were paying an “implicit” carbon tax of nearly $60 per tonne to support the plant.

And yet the industry maintained for years that the technology was ready to contribute serious emission reductions, mounting a high-powered and controversial campaign for federal subsidies to support further development. In 2021, a multi-stakeholder panel convened by the Ottawa-based Public Policy Forum called for an “achievable pathway to national climate and economic objectives” that “must include a significant contribution from carbon capture technologies and from utilization and storage.”

Now, CP says, the CCUS Knowledge Centre is warning that if federal clean electricity regulations are too stringent, it could scare companies away from investing in emissions-reducing carbon capture altogether. Schlissel suggested CCUS proponents began changing their tune when governments made it clear — to fossil fuel companies in Canada, and to utilities in the United States — that the subsidies they’ve put on the table for CCUS development won’t be large enough to cover all the costs.

“Governments have called their bluff, and now they’re backing off. They’re saying there are all these problems, which is what we and others have been saying for years.”

In response, just as Canadian fossils are refusing to invest their record profits in a C$24.1-billion carbon capture megaproject in Alberta without significantly more lavish taxpayer subsidies, U.S. utilities are stepping away from past promises to capture large proportions of their carbon, Schlissel said.

“A lot of them and their trade groups have come back to say ‘it’s untested, we’ve only tested it on a small scale, don’t hold us to it’,” he told The Mix. “So this is outstanding. Governments have called their bluff, and now they’re backing off. They’re saying there are all these problems, which is what we and others have been saying for years.”

“Depending on how casual you want to be,” Schlissel added, “you could say I’m waiting for an apology.”

Taking them at their word

When Canadian Environment and Climate Change Minister Steven Guilbeault published the government’s draft Clean Electricity Regulations in August, the plan drew criticism for allowing provincial utilities and private power producers to generate electricity from gas if that’s their choice. But only if they can cut their carbon emissions by about 95% compared to the most efficient gas plants now in operation.

At the time, Guilbeault and senior federal officials steadfastly maintained that their “technology-neutral” approach to the regulations would let provinces decide their own electricity mix—as they are entitled to do under the Canadian Constitution—as long as they adhered to a climate pollution target that the federal government has jurisdiction to set. Gas plants can only come close to that standard by bolting on CCUS equipment and getting it to work consistently and affordably.

While Ottawa said it was confident CCUS could deliver, the regulation was meant to leave that decision where it belongs, with the provinces.

“CCS is just one way of complying with these proposed regulations and we don’t prescribe how technologies meet it,” a federal spokesperson said at the time. “What we require is that they reach the performance standard we’ve set without defining which technologies or measures provinces should use to achieve it.”

But the latest CCUS Knowledge Centre report urges Ottawa to rethink the emissions intensity limits for carbon capture-abated power plants laid out in the draft regulations, CP writes. They state that after 2035, fossil fuel-driven power plants will have to meet an emissions performance standard of no more than 30 tonnes of carbon dioxide per gigawatt of electricity produced per year.

Which indeed means that to be compliant, natural gas-fired power plants would need to achieve a nearly 95% CO2 capture rate, says Valiaho, the CCUS spokesperson, which is what the industry has been promising for years. 

Last week, however, according to news agency reports, Valiaho said no carbon capture facility in the world is currently hitting the target, with Boundary Dam — the only large-scale carbon capture facility currently installed on a power plant in Canada—reporting a capture rate of 65 to 70%.

A “future state” where CCUS delivers

“It doesn’t mean it can’t be done,” Valiaho maintained, adding many carbon capture technology vendors believe a 95% capture rate is technically achievable.

If the federal requirements are too strict, and power generators have doubts about whether the standards are achievable, they may choose not to invest in carbon capture at all.

“I think there is a future state where this works at that kind of high level, but, you know, there’s not one operating continuously in the world right now with that type of performance.”

Valiaho said many of the problems that have been encountered at Boundary Dam can be avoided at future carbon capture facilities by employing some of the lessons learned at that site.

But she said if the federal requirements are too strict, and power generators have doubts about whether the standards are achievable, they may choose not to invest in carbon capture at all.

Regulations seen to be overly stringent could also put operators who installed carbon capture technology in good faith in the position of being non-compliant with the law. Valiaho said under the current draft regulations, Boundary Dam would have to shut down, even though the facility has captured more than four million tonnes of harmful CO2 since operations began in 2014.

According to the original plan, IEEFA’s Schlissel told The Mix, that total should have been nine million tonnes — still a fraction of what the industry would have to achieve to contribute meaningfully to Canada’s decarbonization targets.

And the global industry is just as far behind what it would have to deliver against the science-based goal of reducing global greenhouse gas emissions 45% by 2030. Shortly before Schlissel issued his 2021 report, the UK’s Tyndall Centre for Climate Change Research placed the operational capacity of CCUS projects around the world at just 39 megatonnes of CO2 per year, or roughly 0.1% of annual emissions, with deployment slow and plagued by accidents. In October 2022, an annual survey by the Global CCS Institutes showed how a record 153 new projects under construction, sufficient to capture 244 million tonnes per year if they all delivered as promised — still less than 1% of global emissions in 2021.

Around the same time, an IEEFA analysis found that 10 of the world’s 13 “flagship” CCUS projects, accounting for 55% of global carbon capture capacity, had underperformed, failed outright, or been mothballed.

In its final assessment report last March, the Intergovernmental Panel on Climate Change (IPCC) cited drastic reductions in fossil fuel consumption while scaling up renewable energy and energy efficiency as the quickest but also the most affordable path to the rapid, deep emission reductions that can get the climate emergency under control. It concluded that CCUS would deliver about one-tenth the benefit at far higher cost.

“Permanent, very high subsidies”

And yet, in her interview with CP, the CCUS Knowledge Centre’s Valiaho shifted the onus to federal regulators. “We want to see CCUS go forward,” she said.

“There is still a level of uncertainty about how realistic it will be to achieve the emissions reductions required by 2035.”

Scott MacDougall, an electricity program director at the Calgary-based Pembina Institute, said carbon capture and storage is an extremely important technology when it comes to reducing emissions from the electricity sector, especially in Saskatchewan and Alberta.

He told CP he’s hopeful the federal government will hear the feedback from industry and build more leniency into the regulations.

“The (Clean Electricity Regulations) should incentivize the use of CCUS technology and not penalize it,” MacDougall said. “Hopefully they’ll take some advice onboard about this and make some adjustments down the road.”

But Schlissel said that’s the wrong message to draw from the Knowledge Centre report.

“They’ve been defending these claims of 90%, 95% capture for years with no evidence that it’s going to be achieved,” he said of the wider CCUS industry. Now, “this kind of analysis should definitely not encourage governments to double down on CCUS subsidies. It should lead them to raise greater doubts about whether these targets will be achieved. The only way carbon capture and storage will be financially viable is with permanent and very high subsidies, at a time when renewable energy costs are falling.”

A Knowledge Centre spokesperson maintained that “large-scale carbon capture and storage must play an important role in Canada reaching a net-zero electricity grid by 2035, especially for provinces that will continue to rely on natural gas for power generation.” But while “existing carbon capture technology is considered capable of achieving a 95% capture rate,” he told The Mix in an email, “the fact is that there are still no natural gas-fired power plants using CCS anywhere in the world, and we know there are always unexpected issues that come up with first-of-a-kind projects.”

That means “there is still a level of uncertainty about how realistic it will be to achieve the emissions reductions required by 2035,” he added, citing challenges with “timing and policy,” investment decisions by major emitters, labor shortages, and global competition for equipment and supplies.

Major segments of this report were first published by The Canadian press on October 19, 2023.

Featured photo: Boundary Dam. Credit: International CCS Knowledge Centre

Written by

Mitchell Beer

Mitchell is founding publisher and managing editor of The Energy Mix. He is rumoured to be a frighteningly fast writer, after working seven years as a journalist, 35-plus as a commercial writer, 45-plus as a sustainable energy and climate specialist, and now again as a journalist and editor. In October, 2019, he delivered a TEDx Ottawa talk on building wider public support for faster, deeper carbon cuts. He received the Clean50 Lifetime Achievement Award in October 2022.