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Costing out climate change Initial estimates of carbon dioxide capture, sequestration leap to C$5B from C$1.5B; citizens told they can’t avoid sharing financial burden By Gary Park For Petroleum News
As political leaders around the world are seized with the need to enact climate change legislation, the actual cost of achieving their targets is getting scant attention.
The European Council of Ministers is in headlong pursuit of setting an example prior to international talks scheduled for later this year on a global post-Kyoto agreement.
The leaders of 27 European Union countries endorsed a deal earlier in March to achieve a 20 percent binding target for renewable energy in the EU’s energy mix by 2020, although setting goals for each member country was postponed.
However, a binding minimum of 10 percent was set for individual countries for biofuels’ share of EU gasoline and diesel over the same period, compared with the existing non-binding benchmark of 5.75 percent by 2010.
The EU leaders said tougher action is needed to advance the use of renewable fuels.
Even then, Friends of the Earth described the 20 percent target as “too timid.”
But as the “green” bandwagon gathers pace little effort is being made to talk about costs.
Little talk about costs However, on a micro-scale, the Alberta government is quickly learning what it will take to attain even modest objectives.
The province rattled the oil and gas industry and others when it announced plans to legislate a 12 percent cut in the intensity of greenhouse gas emissions — effective July 1 for industrial operations completed before 2000 and phased in over nine years for the newest operations.
It took less than a week for some of the euphoria to fade as the Alberta government rolled out some cost estimates for just one aspect of the plans for tackling GHGs — a proposal to carry carbon dioxide from the oil sands to enhanced oil recovery sites in central Alberta.
Initial estimates put a price tag of about C$1.5 billion to C$2 billion on what would be a major component of the Alberta strategy.
Environment Minister Rob Renner quickly scuttled that notion.
“I suspect the number, all costs included, will be significantly higher. I’ve seen estimates as high as C$5 billion by the time it’s taken into account the cost to industry to implement the capture facilities.”
That estimate also extended to a more extensive pipeline network linking carbon emissions to sequestration sites.
But even the most casual observer of capital projects related to the Alberta petroleum industry knows how notoriously short of the mark initial budgets have been.
It’s the burden on companies — which Renner made no attempt to hide — that has spread jitters through industry ranks.
Consumers would ultimately pay Neither did he soft-pedal the impact on residents.
“At the end of the day, if … any government around the world, imposes additional costs on industry, those costs will eventually float down to and be borne by the consumer — that’s the nature of business,” he told reporters in Edmonton.
“The issue comes down to how much is the consumer willing to pay to protect the environment? I believe, particularly Albertans, are willing to pay,” Renner said.
That’s good politics at a time when governments are under heat from voters to get on with tackling climate change, as if ordinary citizens can take a detached stance from the whole process.
A better fix on the actual costs might be known in November when a joint Alberta-Canada task force recommends the next phase of action on CO2 capture and storage, Renner said.
“When you are an economy largely based on oil and gas there is always going to be a production of CO2,” he said. “Our approach is to significantly reduce the emissions of CO2. The only way we’re going to do so is by encouraging the technology and research.”
Introducing a note of reality, he said there is “no silver bullet solution to climate change.”
The Alberta government has left little doubt it expects industry to take up a full financial share of whatever projects it pursues.
But opposition parties in the Alberta legislature are uneasy about seeing the government share the costs of CO2 capture and storage, or retrofitting coal-fired power plants (the largest source of electricity in Alberta), refineries, upgraders and petrochemical plants.
New Democratic Party leader Brian Mason said the province could end up sinking billions of dollars into a boondoggle by resorting to an “unproven approach whose main rationale seems to be to allow industry to increase its CO2 emissions.”
He said the better answer is a freeze on oil sands development and the setting of absolute targets for lowering GHGs.
Liberal party environment spokesman David Swann said the emphasis should be on precise targets, not expensive pipelines.
He said the government seems “bent on the technological fix (when) we need to be serious about reducing the issues we’ve created.”
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