On his first day in office in January 2021, President Joe Biden made it clear that America was back in the fight against climate change, as he recommitted the U.S. to the Paris Agreement. Now, the world’s second-largest greenhouse gas emitter has put its money where its mouth is, passing the largest government spending package on climate and green energy initiatives in American history.
U.S. lawmakers should be congratulated for the hard work and collaboration that led to the swift passage of the Inflation Reduction Act (IRA) that Biden signed into law on August 16. Naturally, most Canadians’ attention on the IRA was centred on provisions to protect cross-border manufacturing of electric vehicles. What should not be overlooked in this tremendous step forward for climate action is the Act’s unprecedented support for large-scale carbon capture and storage (CCS) projects - promising to make the United States a world leader when it comes to the next wave of CCS development.
The importance of the landmark incentives for reducing greenhouse gas emissions from heavy industry cannot be overstated, as deep cuts to CO2 emissions are required to meet the world’s ambitious climate commitments. New CCS projects need to get started immediately if they are to participate in achieving aggressive decarbonization targets for 2030 and beyond, as envisioned in the climate plans of most industrialized nations.
Respected international organizations including the UN’s Intergovernmental Panel on Climate Change and the International Energy Agency have stated that it will be virtually impossible to meet the emissions reduction targets needed to avoid dangerous climate change without significant expansion of large-scale CCS. Importantly, it can be integrated with existing infrastructure using commercially available equipment and processes, avoiding the need to prematurely abandon these assets and enabling an economically feasible and socially tenable transition to a world powered by clean energy.
Canada has been a leader in the first generation of CCS. We are home to five of the world’s 27 existing commercial-scale CCS facilities. SaskPower’s pioneering work led to the world’s first fully integrated CCS facility on a coal-fired power plant, which began operation at their Boundary Dam power station near Estevan in 2014. The facility has safely prevented more than 4.5 million tonnes of CO2 from entering the atmosphere – the equivalent of taking more than 900,000 cars off the road. In Alberta, Shell’s Quest project has captured more than six million tonnes from an oil sands upgrading facility since 2015, and the Alberta Carbon Trunk Line – the world’s largest CO2 pipeline – transports emissions from a refinery and a fertilizer plant that are used to enhance the efficiency of conventional oilfields in central Alberta before being permanently stored underground.
Canada’s latest climate plan calls for a tripling of the country’s CCS capacity over the next decade, but there are still important details missing when it comes to how this will be realized, and there are currently no new CCS projects slated to begin construction. Depending on the regulatory process and the ability to purchase equipment and hire workers, it takes about six years to bring a large-scale CCS facility to life. So, it is imperative companies in Canada receive the business certainty they need to move large-scale CCS projects forward. The enhanced American CCS incentives provide valuable guidance to our federal government, which is in the midst of developing a national strategy for CCS, including the implementation of an investment tax credit for new projects. As with other critical industries, we must seek to ensure our approach to CCS development is aligned with our neighbours to the south, in order to encourage private-sector investment in these mega-projects across both countries.
More than 100 CCS projects are in development around the world, and some estimate the CCS industry will grow to be a $55 billion/year industry by 2030. With this type of activity underway, it is clear that there must be strong collaboration between industry and government to move multiple billion-dollar projects forward quickly. Canada is uniquely suited to continue playing a leading role in this exciting area. Let’s make sure we don’t miss out on such a tremendous opportunity.
This column was originally published in the Calgary Herald on Sept. 20, 2022