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Canada advances carbon capture projects Governments ink deal with Shell Canada to store carbon dioxide; Ottawa plans to issue ‘performance rules’ for large CO2 emitters By Gary Park For Petroleum News
The Canadian government is close to imposing “performance rules” on large greenhouse gas emitters, starting with refineries and oil sands upgraders.
The “unbelievably complex” regulations will involve government officials in “deciding what is the best available technology,” said one source.
Without waiting for that announcement, the governments of Canada and Alberta are betting heavily that the unproven carbon capture and storage (CCS) technology is a large part of the answer, despite intense opposition from some lawmakers, academics and environmentalists.
Federal Environment Minister Peter Kent said the upcoming rules will cover large, energy-intensive industries as part of Canada’s commitment to reduce emissions by 17 percent from 2005 levels by 2020 and fend off criticism from Europe and the United States that Canada’s climate change regulations are lax, especially in the oil sands sector.
Although Canada told a recent United Nations climate conference in Germany that it remains committed to its 2020 goal, policies implemented so far cover only one-quarter of that reduction.
But Canada and Alberta signed a final agreement June 24 with Shell Canada to contribute C$865 million towards the Quest Project, or 60 percent of the cost of what would be Alberta’s largest CCS facility. Alberta will account for C$750 million over 15 years.
Quest is designed to capture 1.2 million metric tons per year of CO2 from Shell’s 255,000 barrels per day Scotford bitumen upgrader near Fort Saskatchewan — or about 35 percent of the plant’s total emissions — and ship the gas to injection wells. Construction is scheduled to start in mid-2012 and finish in 2015.
Preferable to cap and trade Alberta Premier Ed Stelmach and federal Natural Resources Minister Joe Oliver touted the government contribution as an investment in “ground-breaking” technology and a chance for Alberta to lead the way in reducing carbon emissions.
Stelmach said the Quest project is part of C$2 billion his government will spend on four CCS projects to store 5 million metric tons a year of CO2 by 2015, which he described as a better method of tackling climate change than options for a “convoluted cap and trade” program to engage in the international buying and selling of carbon credits.
He also defended the widely-criticized CCS technology, assuring Albertans it is a “safe and very secure way of capturing carbon.”
Stelmach said that because CCS projects are at a standstill globally, Alberta would have put itself at a competitive disadvantage by raising its own price of carbon above C$15 per metric ton.
Oliver said his government still expects the oil sands sector to develop “new and clean sources of technology, while more technology must be used for conventional sources.”
Opposition sceptical of deal Alberta’s opposition political parties challenged what they said is a “sweetheart” deal to fund 60 percent of Quest.
Wildrose Alliance leader Danielle Smith refused to endorse giving “hundreds of millions of taxpayer dollars to an individual company,” while Liberal leader David Swann said “there are cheaper ways to reduce carbon … we’re spending too much public money.”
But Alberta Energy Minister Ron Liepert said the two-for-one credit deal is critical to launching Quest because the Canadian government had declined to put a price on carbon emissions, “negatively affecting the economics of the project.”
John Abbott, Shell’s executive vice-president of heavy oil, said the credit was necessary because the project was not financially viable at the C$15 per metric ton value Alberta has assigned to carbon.
He said sustainability of Shell’s heavy oil business depends on improving environmental performance as well as reducing operating costs.
Other projects moving ahead Separately, Saskatchewan Energy Minister Bill Boyd said his province is counting on an agreement later this year for its third commercial enhanced oil recovery project using CO2.
He said discussions are under way with a number of oil companies to take CO2 from a government-owned coal-fired power plant, aiming to bring a project on stream by early 2014.
Currently, Saskatchewan has two commercial enhanced recovery projects, which import their CO2 from a coal gasification plant in North Dakota.
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