Canada to lead next wave of CCS projects: interview [Gas in Transition]

Canada is primed to lead the next wave of carbon capture and storage (CCS) projects, potentially reaping significant benefits from the forthcoming surge in this technology, Beth Valiaho, vice president of public affairs and international engagement at the Saskatchewan-based International CCS Knowledge Centre, tells NGW.

The country already hosts five of the world’s 41 operating commercial CCS facilities, accounting for around 15% of current global capacity, that have collectively stored 47mn tonnes of CO₂ to date. A further 40 projects are at various stages of planning. CCS and other emissions reduction projects have emerged as some of the biggest investments planned in Canada’s emissions-intensive industries, according to Valiaho.

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“We have favourable geological conditions for safe underground CO2 storage, a skilled workforce, robust cleantech innovation programmes, world-class regulatory procedures and government incentives to encourage investments,” she says. “Leveraging these assets is pivotal to unlocking the opportunities that accompany the significant expansion of CCS within Canada and on a global scale.”

CCS will be critical for Canada to tackle the “formidable challenge” of decarbonising emissions-intensive industries. Though the country accounts for less than 2% of global greenhouse gas (GHG) emissions, it aims to reduce them by 40-45% by 2030 compared with the level in 2005, and reach net zero by 2050. This will be no small task, with emissions as of 2022 down only 7.1% versus the baseline.

By positioning itself as an early leader in CCS, Canada can also cultivate innovation and expertise that can be exported, Valiaho says. But it must act fast.

“Recognising the swiftly narrowing window of opportunity, business leaders understand the urgency of gaining a competitive edge by delivering low-carbon products that the world continues to demand,” Valiaho says.

CCS credentials

Canada’s Saskatchewan province is home to the world’s first CCS facility on a commercial power plant, SaskPower’s Boundary Dam Unit 3 (BD3). Opened in 2014, the CCS facility has captured more than 6mn tonnes of CO₂ to date. In Alberta, the Quest CCS facility operated by Shell has sequestered more than 8mn t of CO₂ from the Scotford refinery near Edmonton since 2015.

Canada’s extensive expertise in process engineering, reservoir geology and pipeline development also played a pivotal role in the construction of the world’s largest-capacity CO₂ pipeline, according to Valiaho. Operated by Wolf Carbon Solutions, the 200-km Alberta Carbon Trunk Line in 2020 began transporting CO₂ captured from a refinery and a fertiliser factory near Edmonton to be injected underground in ageing oilfields.

Canada also hosts the world’s most extensive storage project in Saskatchewan, where more than 40mn t of CO₂ has been permanently stored in the Weyburn-Midale oilfield since its launch in 2020.

“All of these projects have established Canada as a world leader in large-scale CCS deployment, and the knowledge and lessons learned from this first generation of CCS projects is instrumental in mitigating risk, reducing costs and enhancing the performance of the multitude of new projects planned worldwide,” Valiaho says.

Plans ahead

Canada’s federal emissions reduction plan targets an increase in CCS capacity by 2030 to at least 15mn t/year, from 7mn t/yr today. But the national energy regulator’s latest long-term outlook indicates that capacity should scale up to 60-80mn t/yr by 2050 in order for Canada to reach net zero.

The country has the second-highest number of CCS projects in development after the US. Out of the planned 40, some will be the first of their kind in the world, and virtually all the nation’s resource-based companies, including those involved in sectors like cement, steel, fertilisers, mining, power generation and oil and gas, are looking at ways of integrating CCS.

“Each of these initiatives holds the potential to generate thousands of high-quality jobs, forge economic partnerships with indigenous groups and provide ongoing employment opportunities for facility operation and maintenance, thereby supporting local communities,” Valiaho says.

In what is set to be the first full-scale application of CCS in the cement sector, a 1mn t/yr CCS facility at Heidelberg Materials’ Edmonton cement plant is due to reach a final investment decision (FID) this year. Dow Chemicals is also making an $8.9bn investment in a carbon neutral polyethylene complex near Edmonton, while Air Products is advancing a clean hydrogen production plant in the area, with both projects integrating CCS. Meanwhile, one of the world’s largest CCS projects is planned by Pathways Alliance, a partnership of Canada’s six largest oil sands producers, as part of efforts to decarbonise their crude production.

Exporting expertise

“Canada is to be commended for its commitment to supporting the development of CCS technology, and for recognising the value of sharing the knowledge and lessons learned from projects for the benefit of society,” Valiaho says.

Her organisation, the International CCS Knowledge Centre, was founded by SaskPower and BHP in 2016 to take the knowledge and expertise gained at the BD3 CCS facility and share it for the benefit of other projects. It has done so through technical papers and presentations at CCS conferences around the world, by offering tours of BD3, holding CCS workshops and biannually hosting the IEAGHG’s CCS summer school.

Through the International CCS Knowledge Centre technical and strategic advisory consulting services, knowledge and lessons from BD3 have been applied to next-generation CCS projects in various heavy-emitting industries, Valiaho says. These learnings were used in the preparation of a feasibility study for Heidelberg Materials’ Edmonton CCS project. The centre is also providing technical advice and support for 11 Alberta CCS projects through Emissions Reduction Alberta’s Carbon Capture Kickstart competition.

“The value of knowledge sharing to reduce risk and improve the outcomes for CCS projects has also been recognised by the government of Alberta, which has provided foundational support for the Knowledge Centre to create a new national CCS knowledge sharing initiative, which will curate and share knowledge and best practices from CCS projects across Canada with interested parties around the world,” Valiaho says.

Policy landscape

Canadian CCS policy is based on a ‘carrot and stick’ approach. Taken together, the suite of policies already in place or being prepared on a federal and provincial level provide significant incentives to spur on CCS development, Valiaho says.

The centrepiece of the country’s CCS policy is a proposed investment tax credit (ITC), covering 50% of the capital cost of CO₂ capture projects between 2022 and 2030. The planned ITC is set at 60% for direct air capture projects, and it also covers 37.5% of the cost of facilities required for transportation, utilisation and permanent storage of CO₂. On the other hand, the ‘stick’ is Canada’s national price on carbon emissions, which is currently $80/t and is scheduled to reach $170/t by 2030.

The federal government has also announced plans to introduce carbon contracts for difference, shielding investors from potential changes to federal carbon prices.

“It is important for these carbon contracts for difference to be negotiated to ensure the price of carbon emissions will not change with the stroke of a pen if there is a change in political leadership in the years ahead,” Valiaho says.

Above all else, developers need policy certainty.

“The significant obstacle to CCS projects proceeding in Canada at this point is the lack of certainty on CCS policy. Project developers continue to wait for the investment tax credit to be implemented as legislation, as well as for carbon contracts for difference to be established with developers,” she says. “With the typical lead time to plan, build and bring a major CCS facility into service being at least six years, time is quickly running out to get all of the projects that are required to meet Canada’s emissions reduction targets underway.”