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The federal government has made a leap of faith that Canada's oil industry and coal-fired utilities can quickly incorporate carbon capture and storage technology that remains largely untested and is fraught with legal uncertainties.

Environment Minister John Baird yesterday announced new regulations that will require all future coal-fired power plants and oil sands projects to capture carbon dioxide emissions and inject them underground for permanent storage.

Mr. Baird said Canada simply cannot meet its targets to reduce greenhouse gas emissions by 20 per cent from 2006 levels by 2020 without the widespread adoption of such technology.

The challenge, however, is that a carbon capture and storage (CCS) system would be hugely expensive, while the technology has been integrated and tested in only a handful of limited applications.

At the same time, the government has to create the regulations that would underpin such a system - from approving underground storage sites to regulating liability for accidents to clarifying ownership of the subsurface.

Industry experts say Ottawa has been slow to move in creating that necessary framework. Without it, companies will be unable to proceed with capture and storage projects, regardless of the mandatory emissions targets.

There are currently four examples of carbon capture and storage globally, including one in southeastern Saskatchewan in which oil companies pipe carbon dioxide from a highly subsidized plant in North Dakota underground to improve production from a mature oil field.

In three others - two in Norway and one in Algeria - oil companies capture emissions and inject them underground.

In Canada, much attention has focused on the need for CO2 pipelines to gather the gas and deliver it to storage sites in Western Canada, and both the federal and provincial government have provided support for proposals to construct such systems.

But the real hurdle - and major expense - is capturing the CO2.

One industry study suggests that 80 per cent of the cost of a CCS network in Western Canada would involve capturing the carbon dioxide from the plants.

Unlike sulphur dioxide and other pollutants, carbon dioxide is extremely difficult to separate from normal flue gases after a fossil fuel such as coal or natural gas has been combusted.

Typically, utilities that are considering CCS for coal-fired power plants look to a gasification process that burns the coal in pure oxygen to produce a synthetic gas and carbon dioxide. The synthetic gas is then burned to make electricity and the CO2 is pressurized and piped to a storage site.

No clean-coal plants with carbon capture are operating anywhere in the world, and plans for projects in Germany and the United States have been frequently delayed. However, the federal government and Saskatchewan recently announced a $1-billion project to rebuild an old coal-fired power plant in that province to extend its life and capture carbon dioxide from its emissions for storage.

Oil sands operators are most likely to incorporate carbon capture and storage at their upgraders, which use hydrogen to transform bitumen into synthetic crude oil. For companies with upgraders at Fort McMurray sites, a pipeline will be required to deliver the CO2 to central Alberta for storage.

Some of the CO2 can be used in mature oil fields to enhance recovery; such processes are already in use in southeastern Saskatchewan and in Texas.