Varcoe: Green lights needed on Canada’s carbon capture projects

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Shut, and nearer – however not fairly shut sufficient.

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If there is a easy method to describe the impact the brand new federal price range may have on proposed carbon seize, utilization and storage (CCUS) tasks in Canada, the plan represents progress, says Greg Ebel, CEO of Enbridge.

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Nevertheless, the Calgary-based firm will not be prepared to offer the inexperienced mild to its proposed Wabamun carbon hub mission in Alberta, at the least not but.

“It was a step in the correct course, so far as incentives are involved. I nonetheless assume there’s a method to go that can make CCUS in Canada as economical … as what we see in the US,” Ebel mentioned in an interview this week.

“It is simply not fairly there but.”

A sequence of main CCUS tasks are on the drafting board in Alberta that might seize carbon dioxide emissions and bury them deep underground or use them in industrial processes.

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It could enable business and the province — Alberta has the very best emissions within the nation — to take main decarbonization steps because the nation strikes towards a net-zero goal by 2050.

Vitality consultancy Wooden Mackenzie tracks 53 CCUS tasks, hubs and expansions which were proposed or are in numerous levels of improvement throughout Canada; 39 such enterprises are in Alberta, representing billions of {dollars} of funding.

These plans embody Enbridge’s Wabamun coal hub — it is partnering with Capital Energy and cement maker Heidelberg Supplies — and a $16.5-billion CCUS improvement proposed by the Pathways Alliance, linking oil sands operations to a storage hub close to Chilly Lake .

Such initiatives are important to decarbonise massive industries within the province.

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“CCUS can also be going to assist us improve the provision of oil and gasoline, hydrogen, vital minerals and naturally low-carbon cement,” Alberta MP and Affiliate Finance Minister Randy Boissonnault mentioned Wednesday throughout an announcement with Heidelberg about its carbon sequestration. mission in Edmonton.

Executives with Heidelberg and the federal authorities have signed a memorandum of understanding to help the development of the world’s first carbon-neutral cement plant on the firm’s Edmonton facility.

The $1.4 billion mission will seize multiple million tons of CO2 per yr, which is able to then be despatched to the Wabamun hub for storage.

Heidelberg officers haven’t but made a closing funding determination, however the firm is busy with its design work and expects the mission to be operational by late 2026.

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“We’re more than happy to see the (federal) funding tax credit score introduced. And that was actually a catalyst,” mentioned Chris Ward, CEO of Heidelberg Supplies North America.

Whereas tasks in Alberta are steadily progressing, few have obtained official approval.

Some firms have been ready for particulars of Canada’s new funding tax credit score for CCUS tasks, first talked about within the 2021 price range. Corporations additionally needed to see if the federal and provincial governments would shut the hole between incentives provided in Canada and people obtainable in the US.

In final week’s price range, the federal authorities took extra steps to spice up funding in clear power and CCUS initiatives, however is it sufficient?

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“I did not see something on the market on carbon seize that basically gave us extra readability,” mentioned Alberta Vitality Minister Peter Guthrie, whose authorities has additionally been beneath stress to help such developments.

“I am a little bit annoyed.”

The Trudeau authorities has introduced it would transfer ahead with carbon contracts for distinction, via the Canada Progress Fund, which ought to assist lock sooner or later worth for carbon or hydrogen.

The federal tax credit score for CCUS tasks is about at 50 % for investments in tools to seize CO2, and a 37.5 % for tools used for transportation and storage.

In final week’s price range, a number of small adjustments have been made to the funding tax credit score. The price range additionally pledged to take steps to hurry up the regulatory timelines going through main tasks.

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“The one factor that might clearly be useful is just a few certainty on the time-frame for consent/approval,” Ebel mentioned.

Whereas Canada gives an funding tax credit score for capital expenditures, the US gives a tax credit score of $85 for every ton of CO2 saved.

“The US goes ‘full in’ on carrots, whereas Canada is relying a little bit extra on that stick within the type of a carbon tax,” Wooden Mackenzie analyst Scott Norlin mentioned.

The Pathways Alliance group, which represents main oil sands producers, welcomed among the price range adjustments however needs to higher perceive the federal government’s plans round carbon contracts for distinction.

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In the meantime, Capital Energy is investigating its proposed carbon seize mission, which might transfer as much as three million tons of CO2 per yr from the Genesee Producing Station to the Wabamun pivot west of Edmonton.

Capital Energy CFO Sandra Haskins mentioned the corporate helps carbon contracts for distinction as a method to scale back coverage uncertainty.

The Edmonton-based firm expects to make a closing funding determination on its mission, anticipated to value $2.3 billion, within the fourth quarter of this yr.

Whereas these are optimistic indicators, a report launched this week by CIBC described the price range as “Canada’s carbon seize drawback – one other missed alternative.”

“As incremental incentives have been ignored of this price range cycle, we consider there’s a threat that Canada will fall behind in its means to draw inexperienced capital,” mentioned the report by analyst Dennis Fong.

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At Enbridge, his work continues Wabamun pivot, together with drilling a check nicely and evaluating its pores.

The pipeline big additionally has a CCUS mission in Texas, and Ebel expects the corporate to have the ability to do each carbon seize developments.

In Alberta, capital prices for the carbon hub are nonetheless being decided and there’s a good chance that Enbridge and its companions will make a closing funding determination throughout the subsequent yr.

“Look, it is excessive on our agenda,” Ebel mentioned.

“Within the subsequent 12 months, I believe all three of us will have the ability to say go-no go.”

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@postmedia.com