Alberta earmarks $30-million for carbon capture projects so technology is ‘ready to go’ ahead of federal tax credit

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As Ottawa works on a carbon-capture tax credit slated for release this year, Alberta is ratcheting up funding for the technical and engineering know-how to make sure as many projects as possible are ready to go when the federal plan is released.

The province – through Emissions Reduction Alberta, an arm’s-length agency – will spend $30-million on research and development that can help clear some of the engineering and design hurdles facing sectors that haven’t yet deployed the technology. ERA will cover up to 50 per cent of the project cost, to a maximum of $7.5-million.

Carbon capture, utilization and storage, or CCUS, traps carbon-dioxide emissions and stores them deep under the ground. The CO2 can remain there forever, or it can be used in various other applications.

The use of CCUS in the oil sands and refining is already well-established in oil-producing Alberta.

But as the federal government prepares a plan detailing how exactly Canada will meet its target of reducing greenhouse-gas emissions, Alberta’s Environment Minister Jason Nixon says the resulting policies “coming forward from the federal government are going to have an impact way beyond just oil and gas.”

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As such, the new funding – being drawn from the province’s carbon tax on large emitters – will allow industries such as concrete and fertilizer production to iron out technical problems so they can apply for the federal tax credit as soon as possible, and start lowering their emissions.

“We’d like to see a pool of solid projects ready to go,” Mr. Nixon told The Globe and Mail in an interview.

“This is very focused on the technical side, trying to overcome some of the hurdles that are still in place, particularly as you move this technology into some of the other areas that have not used it in the past.”

Steve MacDonald, the chief executive officer of ERA, said in a statement that the funding will also encourage collaboration between industries on CCUS technology development, and help build the case for investment. Recipients will be required to report on project outcomes, including greenhouse-gas reductions, job creation, and other environmental, economic and social benefits.

While CCUS is widely viewed by various industries as something of a salve as countries around the world increasingly try to rein-in their greenhouse-gas emissions, critics say it hampers the deep structural changes needed to address climate change.

That’s particularly true when it comes to enhanced oil recovery, in which captured carbon is injected into mature oil wells to bolster production. Environmental groups argue that deployment of CCUS in such a manner prolongs the use of oil at a time when the world needs to quit its fossil-fuel habit.

But oil-producing jurisdictions and the International Energy Agency say CCUS will play a crucial role as the global energy sector lowers it emissions – a process that won’t happen overnight.

Oil production and consumption “will not be zero tomorrow,” IEA executive director Fatih Birol said Thursday, speaking at the launch of a report analyzing Canada’s energy and climate policies.

And while Mr. Birol stressed the need to reduce global demand for fossil fuels, those that are produced need to be as clean as possible – which is where CCUS comes in.

“If you ask me choose a most critical technology out of 800, definitely CCUS would be one of the top three,” he said.

“It is so important. In the absence of CCUS, reaching our climate goals will be much more difficult.”

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