Taskforce calls for $2 billion for CCS

2008-02-02

in Canada, Economics, Politics, The environment

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In March 2007, the Canadian federal government and the Government of Alberta formed a task force to investigate carbon capture and storage (CCS) as a climate mitigation technology. Now, the report of that task force has been released: Canada’s Fossil Energy Future: The Way Forward on Carbon Capture and Storage. The report for $2 billion to be spent by federal and provincial governments in order to get five CCS facilities online by 2015. These five facilities would collectively sequester 5 Mt of CO2 per year. This is equivalent to about 0.6% of Canadian emissions.

Supporters of the plan argue that initial governmental support is essential for learning how to scale up the technology, making much larger (and presumably unsubsidized) reductions possible in the future. The report projects that as many as 600 megatonnes (Mt) of CO2 could be sequestered by 2050: a figure equivalent to about 85% of current Canadian emissions. Sequestration at this kind of scale is a key element of the climate plan recently announced by the Government of Alberta.

The announcement raises both practical and ethical questions. The first centre around the overall expense of the plan, the second around who is paying it. The report acknowledges that building CCS into facilities increases the cost substantially:

The financial gap associated with most commercial-scale CCS projects (ones with one megatonne or more of CO2 emission reductions per year) is on the order of hundreds of millions of dollars.

Businesses will only do this when either (a) the cost of emitting carbon justifies mitigation efforts of this expense or (b) they can convince someone else to foot the bill. The idea that federal and provincial governments should spend $2 billion to help the oil sector continue behaving as usual can be seen as objectionable. It certainly contradicts the Polluter Pays Principle. If carbon capture and storage is to rescue certain industries from the climate change externalities they are creating, it will have to be possible for them to pay for it themselves and remain profitable; otherwise, either public finances or the global environment will need to suffer to sustain their profits.

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{ 12 comments… read them below or add one }

. February 1, 2008 at 4:05 pm

John Bennett, executive director of Ottawa-based environmental group ClimateforChange.ca when asked about the recommendation.

“The crux of the matter here is that for some reason the oil industry feels entitled to both pollute and, when we ask [it] not to pollute, to ask for you and me to pay for it. That’s not acceptable,” Bennett said.

. February 1, 2008 at 4:15 pm

Kick-start CO{-2} solution, governments urged
Ottawa, provinces should earmark $2-billion to develop carbon capture and storage technology, task force says

SHAWN MCCARTHY

GLOBAL ENERGY REPORTER

February 1, 2008

Tristan Laing February 2, 2008 at 10:11 am

So, this is essentially a monstrous subsidy of oil companies.

Is there a rule that governments can only spend huge amounts of funds on projects they know will fail?

fast ferries x10

R.K. February 2, 2008 at 1:21 pm

This is Reagan-style trickle down economics:

Cut taxes for the rich and the economy grows by so much that the poorer people who paid for the tax cuts in lost services are better off.

V.

Pay for CCS for oil companies so they will keep making huge profits that eventually benefit the national economy by more than the cost of the subsidy.

R.K. February 2, 2008 at 9:25 pm

Nowhere. That’s the point.

Tristan Laing February 2, 2008 at 8:34 pm

Where’s the evidence that trickle down economics work?

. February 4, 2008 at 12:51 am

Dept. of Energy paints different picture of clean coal than president’s SOTU

Over at Solve Climate, David Sassoon is taking a nice leisurely stroll through the Dept. of Energy’s Carbon Sequestration Technology Roadmap and Program Plan (2007). Some astonishing sights await!

First, he notices that despite some big talk in recent press releases, the DOE road map says frankly that “as a technology and a research discipline, carbon sequestration is in its infancy.” Development and testing of key technologies is scheduled for as much as 12 years out.

Then he notices that the DOE’s own estimates show that renewable energy is cheaper than clean coal.

Then he notices, most hilariously of all, that the DOE doesn’t think there’s going to be enough CO2 to run large-scale sequestration tests in the next decade. Why? It’s too expensive!

. February 4, 2008 at 10:43 am
. February 4, 2008 at 10:44 am

Much of the debate over the economy-versus-environment conundrum here focuses on the oil sands boom and how governments should manage it. Oil companies are planning to quadruple the output from the oil sands over the next 15 years, which would propel the country into the elite ranks of the world’s top petroleum producers and produce jobs and wealth for all Canadians. But at the same time, the federal government has set targets to reduce greenhouse gas emissions by 20 per cent from 2006 levels by 2020. The oil sands are expected to be the single largest source of growth in Canada’s greenhouse gas emissions.

Carbon capture and storage (CCS) would have to account for nearly half of Canada’s emissions reductions if the country is going to meet its 2020 targets, according to Ottawa’s advisory panel, the National Round Table on the Environment and the Economy. But while the technology holds immense promise, large-scale applications remain untested and fraught with challenges. Not the least is the massive cost involved, Robert Page, the round table’s deputy chairman, said in an interview.

“The economics are serious and the economics are going to be a problem,” Mr. Page said. But if government imposes a significant price on CO{-2} – either through a cap on emissions or a carbon tax – “then it begins to close the gap.”

By some estimates, it would cost $16-billion over 20 years to build and operate a system that would capture 20 megatonnes of CO{-2} per year by 2020 – a level well short of the round table’s target but considered ambitious by other experts. That figure could vary widely depending on construction costs in Alberta, and the source of fuel used to fire oil sands upgraders.

. February 4, 2008 at 1:52 pm

Climate Neros fiddle while Rome burns

Jan 28, 2008 04:30 AM
Tyler Hamilton
Energy Reporter

Governments and industry love to talk about the things they plan to do, perhaps to detract attention away from what they haven’t done or aren’t doing.

How many radio or television debates have shown an environmentalist pointing out the devastating effects of oil sands and power production in Alberta, only to have industry officials tout concepts like “clean coal” or “carbon capture and sequestration” – as if the solution is here and the problem is being overcome as they speak?

As Keith pointed out, there’s been no shortage of press releases. According to Emerging Energy Research of Cambridge, Mass., more than 20 major carbon-capture power generation projects were announced around the world last year – most of them proposed in Canada, the United States and Australia.

Not one, said Keith, is certain to move forward.

Last September, for example, one of the biggest “planned” projects in Canada was abruptly cancelled. The project, which would have involved construction of a 300-megawatt pulverized coal plant in Saskatchewan, was originally estimated to cost $1.5 billion. That figure expanded to $3.8 billion within no time, and that’s excluding the carbon sequestration part of the equation.

What was the industry’s excuse for cancelling it? The government, they said, wasn’t throwing enough money at it. That’s right, the same federal government that keeps talking about this technology as the solution to our woes did not want to commit financial resources.

. March 17, 2008 at 10:57 am

Ottawa Promises a Silver Bullet for Emissions — Someday

“The Harper-Baird cabal (like the carbon tax advocates in B.C.) present CCS as a silver bullet, a new technology that will magically solve a problem that they’d really rather ignore.

But getting magic to work in the real world can be difficult. Just two months ago, a major report to the Minister from the pro-business and pro-CCS National Roundtable on the Environment and the Economy said:

“Technologies such as CCS are largely untested on a massive scale … While small-scale CCS has been proven, the scalability of these small initiatives is untested.”

Let’s be more explicit: only a handful of working Carbon Capture facilities exist, in the entire world. All are very small. Not one could handle the CO2 from the smallest coal-fired power plant in Canada or anywhere else.

No one knows when or if the technology will work on a large scale, or how much CO2 a large-scale operation would actually capture.

And no one knows what it will cost. The Integrated CO2 Network (ICO2N), a very pro-CCS coalition of big Canadian energy companies, says “capture costs are significant and present an economic challenge.” That’s a critical issue, because under capitalism CCS will not be deployed — it won’t even be developed — unless there are substantial profits to be made.”

. November 9, 2009 at 9:55 pm

Big Oil makes case for carbon-capture subsidies

Shawn McCarthy

OTTAWA — From Monday’s Globe and Mail Published on Monday, Nov. 09, 2009 6:00AM EST Last updated on Monday, Nov. 09, 2009 7:54AM EST

Canada’s oil sands companies say they must adopt expensive carbon-capture-and-storage technology to meet environmental challenges, but will require major government subsidies to do so for at least the next decade.

While carbon-capture-and-storage (CCS) will be expensive, the industry defends it as being competitive with wind power and biofuels in terms of the cost per tonne for reducing greenhouse gas emissions.

“CCS is vital to the sustainability of Canada’s oil sands development and the continued production and use of Canada’s fossil fuel resources,” says the report from the Integrated CO{-2} Network (ICO{-2}N), an industry group that represents Canada’s major oil companies and coal-based utilities.

“It makes environmental and economic sense to develop initial CCS projects within a vision of a long-term, large-scale integrated system.”

While the major oil companies all endorse the need for CCS, they do not agree on the best way to impose the price on carbon emissions that will be required to commercialize the technology.

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