After a study tour to Alberta and Saskatchewan ZERO writes about lessons we can learn from Canada's CCS projects.
From a climate perspective, Canada is perhaps most well-known for backing out of the Kyoto treaty and being a rather destructive force in global climate negotiations. Also, the country’s climate goals are extremely modest. At the same time, there are developments in Canada that are cause for optimism. When it comes to carbon capture and storage, Canada is leading the way.
A group from ZERO, Bellona, the Ministry of Petroleum and Energy and Shell have been on a study trip to Canada, to discover the secrets behind this success. We visited the two CCS projects that have come the farthest, Boundary Dam and Quest, two full-scale capture projects that will be up and running shortly.
Despite political will and approved measures, neither the EU nor Norway has had successful CCS ventures. The Mongstad project is forecast to be very expensive (much more expensive than equivalent projects in Canada), and has been delayed by several years. In the EU, several projects have been stopped or postponed. This makes policy measures in Canada particularly interesting.
I have written a short summary on central CCS measures, both on a provincial and national level.
Canada’s CCS Road Map was issued in 2006 by National Resources Canada. CCS is of strategic importance for Canada for several reasons. Canada has large amounts of fossil fuel resources. Reducing CO2 emissions from the extraction of these resources is essential for the federal government. At the same time, CCS will contribute to more efficient use of these reserves through Enhanced Oil Recovery (EOR).
Emission Performance Standard
Environment Canada introduced emission regulations for coal-fired generation of electricity in September 2012. The new requirements mean that a new coal-fired power station cannot emit more than 420 tons of CO2 per GWh.
This was pivotal for SaskPower and Boundary Dam. The choice was between adapting to the new regulations and using CCS, or simply shutting down the coal-fired power station.
The regulations, which come into force in 2015, are formed in such a way that existing coal power plants will not be subject to these demands until they reach the end of their lifetime, which is approximately 45 years according The Canadian Environmental Protection Act, 1999. This is the case for parts of Boundary Dam. New plants must be ready for CCS immediately, although it is possible to have a temporary extension to 2025.
In 2007 ecoEnergy CCS Task Force was assembled to recommend the best measures for implementing large-scale CCS in Canada. The group consisted of different participants linked to CCS, with representatives from research groups and industry.
Their recommendations, which have been implemented, are:
Include CCS in Canada’s «clean air regulations»
Establish financial support for CCS, which different projects will have to compete for. Financial support has been given to both the SaskPower project at Boundary Dam and to Shell’s Quest project.
Invest in research in order to lower the cost of CCS.
SaskPower, as a government-owned company, is the only operative electricity supplier in Saskatchewan. This means that the electric power market in the province has not been liberalized, like in Alberta and Norway. SaskPower meets political demands to offer low and stable electricity prices. Currently the electricity price is fixed at 70 Norwegian øre/kWh, including grid rental, taxes and duties.
The province of Saskatchewan has donated 42 million CAD to SaskPower’s CCS project at Boundary Dam.
SaskPower operates in a more stable pricing situation than providers in Norway and Europe, where energy markets have far greater price fluctuations. It is also more difficult to integrate renewable energy into existing supply networks without expanding these networks considerably, something that is not on the cards currently.
Alberta is aiming to reduce emissions by 50% under Business As Usual (BAU) and by 14% of 2005 levels by 2050. This cannot be called particularly ambitious. Over half of these cuts are expected to come from CCS (139 mt of a total of 200 mt). The fact that CCS is planned to make up such a large share of the cuts is still so ambitious that the authorities may need to adjust this target.
In 2008 Alberta, like several other countries and regions, saw an upward turn in their economy. They decided to invest two billion dollars in the transport sector, and two billion in CCS.
A kind of competition for CCS projects, The CCS Act, was announced and no less than twenty projects applied for funding. After a lengthy process, four of these were selected for funding. The projects were Swan Hills, Transalta, Alberta Carbon Trunk Line and Quest. Of these projects, two still exist. Alberta has a payment model for CCS that both Europe and Norway can learn from: the funding is delivered in installments. This means that at predefined milestones, after thorough documentation, projects receive further funding.
The same year the CCS Development Council was established to develop a roadmap for CCS that could be implemented in Alberta. During this process, a number of participants were consulted. Both industry representatives, researchers, and environmental organizations were able to contribute. The roadmap, which was published in 2009, includes recommendations on business models for CCS, regulations, and research needs.
The follow-up came fairly quickly.
In 2009 The Carbon Capture and Storage Funding Act was passed , and with this a fund of two billion CAD was established to finance CCS projects. Projects are selected via a competition, and currently two projects are being funded. One of them is Quest.
In 2010 The Carbon Capture and Storage Statutes and Amendment Act was passed. This secured adequate regulations for storage of CO2 in Alberta. It is particularly interesting that the province was given responsibility for a long-term storage area. They established a «post-closure stewardship fund», that will cover the surveillance and maintenance of storage, as well as any unexpected events such as a leakage.
Alberta has also introduced further amendments, which give companies the opportunity to seek and rent areas for storage of CO2 on land. In order to receive a permit of this kind, companies must meet several demands, some of which are linked to surveillance of the reservoir and plans to close down storage areas and wells.
Currently a CCS Regulatory Framework Assessment (RFA) is taking place, in which Alberta evaluates the complete existing framework for CCS. After the deadline for comments, 71 recommended changes had been submitted to the provincial government.
Enhanced oil recovery
On the Weyburn oil field, near the border to North Dakota, technology that uses CO2 to increase oil production and expand the lifetime of the oil field, so-called enhanced oil recovery, has been used for several years. The CO2 is bought and transported via pipelines from a coal-fired power plant across the border in the USA. Soon, CO2 will also be transported from the Boundary Dam CCS project. After the project is finished, the CO2 will be stored permanently, and the process will be strictly monitored and followed up along the way. In addition to political measures, the use of CO2 for enhanced oil recovery can help to fund a number of CCS projects, where this is possible.
Carbon Capture and Use (CCU)
In March of 2013, Alberta’s Climate Change and Emissions Management Corporation (CCEMC) launched their «Grand Challenge» initiative. This involves advertising grants of 35 million CAD for innovative projects such as making use of CO2 in products (CCU). Initially they will be giving up to 10 million CAD divided into twenty grants of 500 000 CAD to the most promising technologies.