Canada’s energy minister, Jonathan Wilkinson, is defending carbon capture and storage (CCUS) technology as effective and affordable, despite recent setbacks in Alberta. CCUS systems trap carbon emissions at their source and then store them underground, making them a key component of Canada’s climate plan. The plan estimates that CCUS will contribute up to 16 million tonnes of emissions reductions by 2030, helping to meet the country’s climate targets. The International Energy Agency states that CCUS will need to contribute 15% of global emissions reductions by 2050 to achieve net-zero emissions.
In Canada, the use of CCUS is proving to be complicated. The most recent national emissions report shows that as of 2022, Canada has captured and stored a total of 7.2 million tonnes of carbon dioxide, with the majority coming from Shell Canada’s Quest CCS facility. Shell received subsidies from both provincial and federal governments to cover three-quarters of the $1.1 billion in capital and operating costs for the project. However, a Greenpeace study revealed that Shell was allowed to sell twice as many credits as it actually earned in order to cover costs for the project.
Despite the challenges facing CCUS projects in Canada, Wilkinson maintains that carbon capture technology is essential for meeting climate goals. Capital Power recently scrapped a $2.4 billion carbon capture system planned for its Genesee generating station due to economic feasibility concerns. The Alberta government had promised to cover up to 12% of the costs, and the federal government up to half, through a new tax credit. However, uncertainties surrounding future carbon pricing and market conditions have hindered investments and negotiations for carbon contracts for difference.
Wilkinson emphasized that the cancellation of the Capital Power project should not be seen as a signal against carbon capture technology. He believes that companies will adopt various approaches to meet clean fuel or clean electricity regulations in the future, including the use of carbon capture. The Alberta government attributed the cancellation to delays in implementing the federal carbon capture tax credit, which was first promised three years ago but has yet to be put in place. The bill to implement the tax credit is still under debate in Parliament.
Overall, despite the setbacks faced by CCUS projects in Canada, the energy minister remains optimistic about the potential of carbon capture technology to play a significant role in reducing emissions and meeting climate targets. As the technology continues to advance and costs decrease over time, Wilkinson believes that CCUS will be an essential component of Canada’s transition to a low-carbon economy. However, uncertainties surrounding government support, market conditions, and policy changes continue to pose challenges for companies investing in CCUS projects in Canada.
