Canadian CCS leadership: An opportunity too important to lose

By James Millar, President and Chief Executive Officer of the International CCS Knowledge Centre

With the world in the grip of the first truly global energy crisis, millions of people are bracing for a winter that is expected to be marked by power brownouts, heating fuel shortages, and widespread economic recession. Skyrocketing energy prices sparked by Russia’s invasion of Ukraine at the same time as global demand entered a post-pandemic rebound are having devastating consequences. In the United Kingdom, for instance, three-quarters of the country is expected to enter energy poverty by the new year, and countless families are facing the stark choice between spending money to keep warm or having enough to eat.

It’s a painful example of the real-life dif- ficulties of trying to balance the world’s growing demand for reliable, affordable, and responsibly produced energy while simultaneously working to meet ambitious goals for cutting GHGs. There are no easy answers for how these competing objectives can be achieved over the next few decades, but it is increasingly clear that if we have any hope of meeting the aggressive emissions reductions required by the Paris Agreement to avoid catastrophic levels of climate change, an “all of the above” strategy is required.

While the immediate impacts of the current energy crisis may not be as acute for Canadians, the long-term challenge is a daunting one, as our lifestyles are energy intensive and our economy is founded on heavy-emitting industries that provide the products and resources the rest of the world desires. At the same time, our national climate targets aim to neutralize carbon emissions from our electricity sector by 2035 and reach net-zero emissions across the country by 2050.

Thankfully, many of the technologies that will help us get there are already in play in Canada – including a key solution in which we are a world leader – carbon capture and storage (CCS).

CCS is a suite of technologies that can be applied to a variety of industries and applications. Deploying CCS involves complex engineering, but the concept is simple: capturing the carbon dioxide that is the by-product of burning fossil fuels and storing it far underground so it cannot enter the atmosphere and contribute to global warming.

Respected international organizations including the UN’s Intergovernmental Panel on Climate Change and the International Energy Agency agree that it will be virtually impossible to meet the critical emissions reduction targets needed to avoid dangerous climate change without significant expansion of large-scale CCS. It is seen as a pillar of the long-term transformation of the energy system because it enables deep and rapid emissions cuts to many of the largest emitting industries, as well as the potential for removing large amounts of CO2 directly from the atmosphere after it has been emitted from a smokestack or a tailpipe.

Using equipment and processes that are already proven successful over the last 20 years, CCS serves as an important bridge by removing the climate impacts of fossil fuels in a cost-effective manner while the world undertakes a massive expansion of renewables and other energy alternatives such as nuclear and hydrogen.

Canada has been a leader in the first generation of CCS. We are home to five of the world’s 30 commercial CCS facilities, and we account for approximately 15 per cent of current global CCS capacity even though our country generates less than two per cent of global CO2 emissions.

Our experience includes several projects that were the first of their kind. SaskPower pioneered the world’s first com- mercial CCS facility on the Boundary Dam coal-fired power plant, which began operation in 2014. The facility has safely captured more than 5 million tonnes of CO2 – the equivalent of taking 1 million cars off the road for a year. Meanwhile in Alberta, Shell’s Quest project has captured more than six million tonnes from an oil sands refinery since 2015, and the Alberta Carbon Trunk Line, the world’s largest CO2 pipeline, transports emissions from a refinery and a fertilizer plant for industrial use and underground storage.

These projects are models for the next generation of CCS being planned around the globe. They provide valuable lessons that the Regina-based International CCS Knowledge Centre is leveraging to help companies develop new facilities with the potential to safely capture and permanently store more CO2 at a lower cost than what has been possible to date.

Canada’s latest climate plan calls for more than tripling the country’s CCS capacity over the next decade. It is expected to play a central role in eliminating emissions not only from the oil & gas sector, which accounted for 180 million tonnes of GHGs in 2020, but also the 115 million tonnes that come from power generation and other heavy industries. With more than 100 new projects in development worldwide, some estimate the CCS industry will grow to be a $55 billion/year industry by 2030, and it’s expected to be responsible for 25 per cent of the emissions reductions required for the world to reach net zero emissions by mid-century.

With this level of activity underway, it’s clear that Canada is uniquely suited to capture enormous value from the CCS boom on the horizon. But there must be strong collaboration between industry and government to move multiple billion-dollar projects forward quickly. There is much discussion about what the appropriate level of taxpayer support for CCS projects should be, and whether oil & gas companies should receive additional incentives while they are profiting from fossil fuels. These are important questions, and they must be considered with an understanding of the significant short- and long-term benefits that are at stake.

Most of the largest investments Canadian energy companies and their peers in other heavy industries are planning to make in the coming years are not in traditional growth projects. Instead, virtually all the country’s resource-based firms — from oil & gas, mining, and electricity to cement, steel, and fertilizer manufacturers — are looking to add large-scale CCS to their operations. More than a dozen projects are at various stages of development in B.C., Alberta, Saskatchewan, Manitoba, and Quebec, each one representing the potential for thousands of high-quality jobs for engineers, tradespeople, and suppliers over several years of construction; economic partnerships with local Indigenous communities, as well as ongoing employment for running and maintaining these industrial facilities.

In Alberta, for example, the Pathways Alliance – a partnership of the six largest oil sands companies – plans to invest more than $22 billion in one of the world’s largest CCS projects and other emissions reduction technologies by the end of the decade. This is expected to generate 35,000 construction-related jobs, 1,000 permanent positions, and unlock more than $50 billion in GDP. Meanwhile, international cement producer Lehigh Hanson aims to build the world’s first full-scale CCS project on its Edmonton cement plant by 2026 — creating 800 full-time jobs and approximately 7,000 person-years of employment in the process.

These are tangible opportunities for families and communities that were borne out on the Boundary Dam Unit 3 CCS project in Saskatchewan, where 1,700 people were employed during peak construction and 5 million person-hours of employment was generated over almost four years. SaskPower is now studying the retrofitting of additional coal and gas-fired power plants with CCS, and global mining company BHP is examining the feasibility of deploying CCS at its proposed Jansen potash mine in Saskatchewan, which is expected to be the largest potash producing mine in the world.

Beyond the immediate economic benefits, there are broader long-term opportunities to leveraging Canadian leadership in the CCS sector. As we have seen with the first generation of CCS, the innovation and expertise created by clean technology projects is easily exported, and it’s in high demand as global climate action gains momentum. In tandem with this is the competitive advantage that can be realized by our industries being the first to supply the low-carbon commodities that can fetch premium prices in a decarbonizing world.

We are at a critical point, as world emissions continue to grow, and Canada risks falling behind our competitors when it comes to getting CCS projects off the ground. The investment tax credit included in Canada’s most recent federal budget is an important step toward mobilizing private capital to invest in CCS, but it is a substantially lower level of support than the programs now in place in the U.S., the United Kingdom, and Norway.

Depending on the regulatory process and the ability to purchase equipment and hire workers, it takes about six years to bring a large-scale CCS facility to life. This means it is imperative that companies in Canada receive the business certainty they need to move forward on the timeline required to meet our climate obligations.

As with other critical industries, we must seek to ensure our approach to CCS development is aligned with our peers in order to encourage private-sector investment in these mega-projects across international borders. The landmark incentives for CCS projects now in place in the United States promise to make the world’s second-largest greenhouse gas emitter a world leader when it comes to the next wave of CCS development. The comprehensive incentives contained in the U.S. Inflation Reduction Act passed this past summer provide valuable guidance to our federal government while it is in the midst of developing a national strategy for CCS.

We know that bringing Canada’s strong commitment to fighting climate change to reality will not be easy, but we have the home-grown expertise necessary to con- tinue playing a leading role in this exciting area. Capitalizing on this opportunity is critical to ensuring our energy transition doesn’t destroy the vital industries that are the lifeblood of communities across the country. Instead, CCS enables a just and sustainable transition by making our heavy-emitting industries part of the solution. Let’s make sure we don’t miss out on such a monumental opportunity.

Learn more at ccsknowledge.com. v

What does that mean for employers?

• Retain valuable team members and help them recover with modified or alternate duties

• Work with your team, healthcare providers and the WCB to create a timely and safe return to work plan