Until a few years ago, not too many people were excited about carbon capture and storage (CCS) because the costs to implement were high and a ton of carbon wasn’t worth much on global carbon markets. That’s changed thanks to a number of factors that are driving investment and innovation in the sector.
James Millar, president and CEO of the International CCS Knowledge Centre (Knowledge Centre) says that companies across all sectors now recognize that they have a responsibility to help keep carbon in the ground and CCS is the way to do it.
An example is the Pathways Alliance, a partnership of six companies representing 95 per cent of Canadian oilsands production that plans to spend $16.5 billion by 2030 on CCS projects.
“If we are going to leave a good future for our children, we have to tackle climate change,” Millar says. “We are putting 36 billion ton of CO₂ into the atmosphere every year, so we need a large-scale solution and that is CCS.”
Governments giving a push
But there is also a push coming from governments around the world who are committed to emissions targets, introducing policies, legislation, carbon taxes and carbon credit systems that mean, especially if the capture process can be made more cost effective, there is room to make money in CCS.
“We have to move into new energy, but we can’t stop flying or trucking across Canada tomorrow, so we have to transition,” says Paitoon Tontiwachwuthikul, co-founder of the University of Regina’s Clean Energy Technologies Research Institute (CETRI), a recognised global leader in CCS research. “We can’t have any transition in a meaningful way if we don’t have carbon capture. If we can capture CO₂ at a cost of around $50 [a ton] or lower we are in business with the carbon taxes you see in Canada, USA, EU and other countries.”
Another game changer, Millar adds, was the Inflation Reduction Act (IRA) that President Biden passed in the U.S. last year. “That made it simple and attractive for companies to incorporate CCS because the Biden Administration is going to pay them $85 a ton to keep carbon in the ground for 12 years,” he says.
In Canada, the federal government is looking to finalize a new Investment Tax Credit this fall towards the cost of future CCS projects.
Western Canada leads in CCS
All of these things are driving innovation and investment into the CCS industry in Canada and, with 25 projects at various stages of development in Alberta alone, Western Canada is well positioned to be a global leader in CCS.
“The ability to process gas, compress it and store it into reservoirs are things that Western Canadians are uniquely qualified to do, in particular low-cost natural gas producers,” says Michael Belenkie, president and CEO of Alberta-based Entropy Inc. “Canada has the prosperity to be able to chase this type of decarbonization, we have clean emission sources that are suitable for carbon capture, and we can store CO₂ subsurface over much of western Canada.”
Six of the 35 global large-scale CCS projects are in Canada. Two of them use captured CO₂ to boost the production of older oil fields via enhanced oil recovery (EOR). The Boundary Dam Saskatchewan CCS project at Estevan captures carbon emissions from a coal-fired power plant and delivers it to the Weyburn oil field (operated by Whitecap Resources) for EOR and some is permanently stored.
Shell Oil’s Quest project, located at the Scotford oil refinery near Edmonton, is an important component of the company’s plan to achieve net-zero emissions by 2050. The facility captures CO₂ at the site and uses it for EOR, then transports it to an underground reservoir 65 kilometres away.
Three quarters of CO₂ emissions are from post-combustion sources such as the burning of fossil fuels, with most of the rest coming from pre-combustion industrial processes such as ethanol or fertilizer production.
Post-combustion carbon capture with first-generation technology is capital intensive, complex and expensive because the CO₂ must be purified, compressed, liquified and transported to sites for use or storage.
One of the key challenges is that post-combustion CCS is a low value, high volume game. “The volumes required to create value require a specific approach that is all about low cost, efficiency and the best technology to get there,” Belenkie says.
Entropy worked with researchers at the CETRI to commercialize a proprietary new CCS technology now operating at Glacier, Alberta since July 2022.
The Glacier project is an example of how new CCS technologies are helping to redefine the business case for CCS. Under Canada’s Greenhouse Gas Offset Credit System, carbon credits are currently worth $65 a ton and will rise by $15 a year to $170 per ton by 2030.
“You can resell carbon credits at about a five to 10 per cent discount to the carbon tax price,” says Belenkie. “Our cost on a per unit basis is low and the capital and operating cost is also low. We’re capturing and storing CO₂ at Glacier and collecting carbon credits in Alberta which we intend to resell as our revenue.”
Other players coming on board
Other Canadian companies are proposing to bring new CCS technologies online such as Svante in B.C. that uses a proprietary solid sorbent technology to capture carbon from industrial flue gas from the manufacture of products like cement, steel and fertilizer. It has two pilot plants at the Lafarge Canada cement facility in Richmond, B.C. and the Cenovus Energy plant near Lloydminster, Saskatchewan.
Carbon Engineering has developed Direct Air Capture technology to capture CO₂ from the atmosphere and plans to build a large-scale commercial plant in Texas in partnership with 1PointFive.
Alberta’s Air Products will deploy its proprietary Auto-Thermal Reforming (ATR) technology in a new $1.6 billion Net Zero Hydrogen Energy Complex being built in Edmonton to capture and store 90 per cent of the carbon produced by its hydrogen-fuelled power plant and liquid hydrogen facility.
Room for everyone
With Canada’s target to reduce emissions by 40 to 45 per cent compared to 2005 levels by 2030 now less than seven years away, and the six- or seven-year timeframe required to deploy large-scale CCS projects, many small and medium sized projects will get underway in the years ahead and be vital to help Canada achieve its climate goals.
“We need the large-scale projects but the engineering minds that are driving the new and next stage technology are vital as well because everybody needs to be part of the solution, and that includes all levels of technology and all levels of scale,” Millar says.
But as important as it is to get steel in the ground, knowledge sharing and cooperation between companies and countries will also be vital to help solve the world’s climate issues. The Knowledge Centre is playing a key role in developing a CCS knowledge sharing hub thanks to $3 million in seed funding from the Alberta Government.
“By having engineers and people share knowledge you reduce risk, reduce cost and improve performance so they can put better project plans together,” Millar says. “That is something positive not just for Canada but for the world.”
