Sustaining Canada’s innovation in carbon capture, storage and utilization

Canada is bolstering its reputation as a global innovator in carbon capture, utilization and storage (CCUS), with new research and technology development facilities in Western Canada attracting international participation.

But achieving and sustaining world-class innovation in CCUS will require substantial and ongoing research funding, a strong country-wide carbon price and new financial incentives like the CO₂-linked tax credit offered by the Trump administration, energy and environment experts tell RE$EARCH MONEY.

The International Energy Agency (IEA) says without deploying carbon capture and storage on a wide scale, Canada and other countries will not meet their commitments in the 2015 Paris Agreement, to reduce greenhouse gas emissions (GHGs) to limit global warming to less than 2 degrees Celsius.

“As long as you accept that we’re going to continue to have an oil and gas industry and a manufacturing industry that emit CO₂, then absolutely you should be incenting people” to reduce emissions, says Sandra Odendhal, president and CEO of Calgary-based CMC Research Institutes, which operates two facilities designed to advance CCUS technologies.

Funding from the federal and Alberta governments in the last couple of years for clean technology development is a positive first step, she says.

The Government of Alberta’s $1.4-billion Energy Innovation Fund includes $225 million for innovation projects across industry sectors to develop emissions-reduction technologies.

However, “if government offered a tax incentive for CCUS, that would incent more corporations as well as more innovation companies to really roll up their sleeves and go hard to solve this problem,” Odendhal says.

In the US, the Trump administration’s 2018 Budget Bill offered industry the “45Q” tax credit of US$50 per ton for CO₂ captured and permanently stored underground, and US$35 per ton of CO₂ used in enhanced oil recovery operations.

According to the IEA, the tax credit could lead to capital investment of about US$1 billion over the next six years, and increase total global carbon capture – now about 40 million tons per year – by around two-thirds.

The tax credit “is a very high level of commitment. That’s the kind of support that’s needed to get some of these (CCS projects) off the ground,” says Eddy Isaacs, a highly regarded promoter of energy and environment innovation who now runs his own consulting company.

“It’s not a panacea, but it could prove to be a good starting point,” says Isaacs, the newly elected president of the Canadian Academy of Engineering and former CEO of Alberta Innovates Energy and Environmental Solutions.

In terms of overall tax regimes, “there have been some changes within the US that have offered [incentives] and made these types of projects more cost competitive,” says Patrick McDonald, director of climate and innovation for the Canadian Association of Petroleum Producers (CAPP). The industry association, in its 2018 economic report, Competitive Climate Policy: Supporting Investment and Innovation, includes several recommendations to make Canada’s tax regime more aligned and internationally competitive, including ‘recycling’ carbon revenue to support and de-risk innovative projects by the industry.

“If we want these types of projects to move forward -- and they are getting better environmental outcomes -- let’s take a look at the existing tax regime and what can be done to make it more effective so that we can get more investment in these types of projects,” McDonald says.

A few years ago, Stephen Harper’s federal Conservative government contributed $120 million to Shell Canada’s $1.34-billion Quest CCS facility at an oilsands upgrading plant near Edmonton. Alberta’s then-Progressive Conservative government contributed $745 million to the project.

The Harper government also contributed $240 million to SaskPower’s $1.5-billion Boundary Dam CCS project at a coal-fired power plant. The Saskatchewan government also invested in that project.

Since then, neither the Trudeau government nor any provincial government has invested in new commercial-scale CCS projects.

The Quest facility, after three years of operation, has safely captured and geologically sequestered more than three million tons of CO₂ – keeping it out of the atmosphere. However, there are only 17 such large-scale CCS plants currently operating in the world. Up to 2,000 such facilities will be required to reduce GHGs significantly enough to keep global warming in check, according to the IEA.

“Without some kind of government-led carbon pricing mechanisms, there is no solution,” Simon O’Brien, subsurface manager for the Quest project, told a recent scientific workshop last month in Calgary.

CCUS innovation community growing in Western Canada

At the workshop, 16 research groups from six countries shared results of R&D underway at a unique facility east of Calgary. The $7-million Field Research Station is part of CMC Research Institute’s Containment and Monitoring Institute. The federal Western Economic Diversification Program contributed $4.9 million to developing the site, supported by the Univ of Calgary with investment from the Canada First Research Excellence Fund.

The field test site is designed to facilitate development of reliable, accurate greenhouse gas measurement and verification technologies, and advance the commercialization of carbon storage.

The facility has attracted Canadian and international academic researchers from the US, UK and Norway, as well as companies committed to CCS, such as Norway’s Equinor (previously Statoil) and France’s Total. But so far, Canadian energy companies have been noticeably absent in the R&D activities.

“We need the policy alignment to help engage Canadian companies to do what Total is doing of their own accord,” said Don Lawton, director of the facility and a professor of geophysics at the Univ of Calgary.

In May, representatives from government and the energy industry opened the $22-million Alberta Carbon Conversion Technology Centre, located adjacent to the Enmax-Capital Power Sheppard Energy Centre, a natural gas-fired power plant in Calgary.

Five of the 10 international finalist teams in the NRG-COSIA Carbon XPRIZE will utilize CO₂ in a flue gas stream from the power plant over the next two years, in scaling up their technologies to convert CO₂ into value-added products, such as enhanced concrete, liquid fuels, plastics and carbon fiber. US energy company NRG and the Alberta-based Canada’s Oil Sands Innovation Alliance (COSIA) each contributed $10 million to support the competition.

Natural Resources Canada and the Alberta government each invested about $10 million to kick start the new centre in Calgary.

“We expect this centre will be a magnet for research scientists from around the world to collaborate and test conversion of carbon dioxide into usable products,” says Laura Kilcrease, CEO of Alberta Innovates.

Another new western Canada facility, to test carbon capture and conversion technologies, opened in Richmond, BC last September. The BC Research (BCRI) Technology Commercialization and Innovation Centre is home to CMC’s Carbon Capture and Conversion Institute and BCRI, which together offer a combination of engineering, design and fabrication experts, pilot plant space and laboratories for developing and scaling up technologies to capture carbon from industrial processes and convert it to valuable-added products.

Natural Resources Canada invested $950,000 in state-of-the-art equipment for the facility, while the BC government contributed $100,000.

But one-time government investment in ‘bricks and mortar’ doesn’t guarantee world-class research and innovation, says John Cherry, a director at the G360 Institute for Groundwater Research, adjunct professor at the Univ of Guelph and distinguished professor emeritus, hydrogeology, at the Univ of Waterloo.

“Government needs to put money in a pot that’s large enough and lasts long enough to attract the best academics in Canada, and enable them to attract the best grad students and the best post-docs in the world to do this carbon capture research, because it’s so damned important,” Cherry says.

“That’s the only way in this day and age that you’re going to be able to do international-calibre research.”

R$