The release of the Government of Canada’s Carbon Management Strategy is an important step forward in the country’s journey towards net-zero greenhouse gas emissions by 2050 – defining key priorities for advancing the development of carbon capture and storage (CCS) and other emissions reduction technologies as part of the federal climate plan.

The Knowledge Centre was pleased to be part of the advisory committee that provided input to Natural Resources Canada on the strategy, and we are glad the Carbon Management Strategy recognizes the critical role CCS must play in decarbonizing heavy industries across the country while protecting the jobs and economic benefits these industries provide.

“It is very heartening that Canada’s Carbon Management Strategy is completely aligned with broader international authorities such as the UN’s Intergovernmental Panel on Climate Change and the International Energy Agency, which have clearly stated that CCS, alongside other carbon management tools, must be rapidly scaled up in order to meet the world’s climate commitments under the Paris Agreement,” said James Millar, president and CEO of the International CCS Knowledge Centre.

The federal strategy outlines Canada’s commitment to remaining a world leader in CCS development. It provides a roadmap for how the government will advance the large-scale carbon management projects that virtually all the country’s resource-based firms — from cement, steel and fertilizer manufacturers to mining, electricity, and oil and gas — are planning to begin building in the next few years.

“Each one of these projects represents the potential for thousands of high-quality jobs over several years of construction, economic partnerships with Indigenous groups and ongoing employment for running and maintaining these facilities, many of which are the lifeblood of local communities,” Millar said.

Perhaps the most pressing of the five key priorities identified in the strategy is ‘advancing predictable policies and regulations, including Canada’s economy-wide carbon pricing system.’ As highlighted in the Knowledge Centre’s recent analyses of Canada’s proposed investment tax credit (ITC) for CCS projects and other CCS-related policies, project developers continue to lack the long-term certainty they require to invest in major emissions-reduction projects.

“Companies cannot make final investment decisions on multi-billion-dollar projects until the ITC is in place with legislation, and until carbon contracts for difference are negotiated to ensure price of carbon emissions will not change with the stroke of a pen if there is a change in political leadership in the years ahead,” Millar said.

The Knowledge Centre’s briefing on the draft CCUS-ITC legislation that was released August 4 highlights how the ITC alone may not be sufficient for private-sector developers to proceed with their projects, adding that it is critical for the government to finalize other CCS-related policy measures, including ‘carbon contracts for difference’ that protect investors from potential changes to federal carbon prices. The government announced its intention to introduce these contracts in its 2022 Fall Economic Statement and stated that it plans to launch consultations on these measures in the coming months.

CCS Background

Canada has been a leader in the first generation of global CCS development, with five of the 30 commercial CCS projects in the world today, including the Quest CCS project operated by Shell at the Scotford oil sands upgrader near Edmonton, the largest CO2 pipeline on the planet - the Alberta Carbon Trunk Line, and SaskPower’s Boundary Dam Unit 3 CCS Facility — the world’s first fully integrated CCS facility on a coal-fired power plant.

Canada accounts for approximately 15 per cent of current global CCS/CCUS capacity – approximately seven million tonnes of CO2 per year – even though the country generates less than two per cent of global CO2 emissions. Since 2000, CCS projects in Canada have safely stored more than 47 million tonnes of CO2, or the equivalent of taking more than 10 million cars off the road.

Canada has pledged to cut its emissions by 40 – 45 per cent below 2005 levels by 2030 and to reach net zero emissions by 2050. Canada’s current federal emissions reduction plan expects national CCS capacity to more than triple, adding facilities to capture and store at least 15 million tonnes per year by 2030.

The major players in Canada’s heavy-emitting industries – which provide major contributions to national GDP and government revenues, employ millions of people, and include firms that are at the core of most Canadians’ pension plans and investment portfolios – are committed to achieving net zero by 2050, and they are set to invest billions on CCS in Canada.

In Alberta, Capital Power announced last December a limited notice to proceed for its Genesee CCS project. Heidelberg Materials is advancing the world’s first CCS project on a cement plant in Edmonton. And the oil sands industry is already spending tens of millions of dollars on the environmental assessments, early-stage engineering work and stakeholder engagement that is necessary to receive permits for construction for one of the world’s largest CCS projects known as the Pathways Alliance.

About the International CCS Knowledge Centre

The International CCS Knowledge Centre is a non-profit organization founded in 2016 by BHP and SaskPower to advance large-scale carbon capture and storage (CCS) projects as a critical means of managing greenhouse gas emissions and achieving the world’s ambitious climate goals.

The Knowledge Centre provides independent, expert advisory services for CCS projects across heavy-emitting industries based on our team’s unique experience developing the world’s first fully integrated post-combustion CCS facility on a coal-fired power plant. We have a proven track record of helping our clients lower costs, reduce risk and improve the performance of CCS projects across industries and technology platforms using the latest knowledge and lessons learned from major projects across the globe.

We also provide input to policy development and promote broad collaboration between stakeholders to enhance understanding of the critical role CCS plays in global decarbonization efforts and accelerate the deployment of new CCS projects around the world.