With the world in the grip of the biggest energy crisis in decades, millions of people are bracing for a winter that is expected to be marked by power brownouts, heating fuel shortages and widespread economic recession. Skyrocketing energy prices sparked by Russia’s invasion of Ukraine at the same time as global demand entered a post-pandemic rebound are having devastating consequences. In the United Kingdom, as just one example, three-quarters of the country is expected to enter energy poverty by the new year, and countless families are facing the stark choice between spending money to keep warm or having enough to eat.
It is a painful example of the real-life difficulties of trying to balance the world’s growing demand for reliable, affordable and responsibly produced energy while simultaneously working to meet ambitious goals for cutting greenhouse gases (GHGs). There are no easy answers for how these competing objectives can be achieved over the next few decades, but it is increasingly clear that if we have any hope of meeting the aggressive emissions reductions required by the Paris Agreement, an ‘all of the above’ strategy is required.
While the immediate impacts of the current energy crisis may not be as acute for Canadians, the long-term challenge is a daunting one, as our lifestyles are energy intensive and our economy is founded on heavy-emitting industries like oil and gas, agriculture, cement and steel manufacturing that provide products the world continues to desire. At the same time, our federal climate targets aim to neutralize carbon emissions from our electricity sector by 2035, and reach net-zero emissions across the country by 2050.
Thankfully, many of the technologies that will help us get there are already in play in Canada – including a key solution in which we are a world leader – carbon capture and storage (CCS).
CCS is a suite of technologies that can be applied to a variety of industries and applications. Deploying CCS involves complex engineering, but the concept is simple – capturing the carbon dioxide that is the by-product of burning fossil fuels and storing it far underground so it cannot enter the atmosphere and contribute to global warming.
Respected international organizations including the UN’s Intergovernmental Panel on Climate Change and the International Energy Agency agree that it will be virtually impossible to meet the critical emissions reduction targets needed to avoid dangerous climate change without significant expansion of large-scale CCS. It is seen as a pillar of the long-term transformation of the energy system because it enables deep and rapid emissions cuts to many of the largest emitting industries, as well as the potential for removing large amounts of CO2 directly from the atmosphere after it has been emitted from a smokestack or a tailpipe.
Using equipment and processes that are already proven successful over the last 20 years, CCS serves as an important bridge by removing the climate impacts of fossil fuels in a cost-effective manner while the world undertakes a massive expansion of renewables and other energy alternatives such as nuclear and hydrogen.
Canada has been a leader in the first generation of CCS. We are home to five of the world’s 35 commercial CCS facilities, and account for approximately 15 per cent of current global CCS capacity even though our country generates less than two per cent of global CO2 emissions.
Our experience includes several projects that were the first of their kind. SaskPower pioneered the world’s first fully integrated CCS facility on a coal-fired power plant, which began operation in 2014. The facility has safely prevented more than 4.5 million tonnes of CO2 from entering the atmosphere – the equivalent of taking 900,000 cars off the road for a year. Meanwhile in Alberta, Shell’s Quest project has captured more than six million tonnes from an oil sands upgrading facility since 2015, and the world’s largest CO2 pipeline transports emissions from a refinery and a fertilizer plant for industrial use and underground storage.
These projects are models for the next generation of CCS being planned around the globe, providing valuable lessons that will yield new facilities with the potential to safely capture and permanently store more CO2 at a lower cost than what has been possible to date.
Canada’s latest climate plan calls for a doubling of the country’s CCS capacity over the next decade, while more than 100 new projects are in development worldwide. Some estimate that the CCS industry will grow to be a $55 billion/year industry by 2030, and it is expected to be responsible for 15 per cent of the emissions reductions required for the world to reach net zero emissions this century.
With this level of activity underway, it is clear that Canada is uniquely suited to capture enormous value from the massive expansion of CCS on the horizon. But there must be strong collaboration between industry and government to move multiple billion-dollar projects forward quickly.
We are at a critical point, as world emissions continue to grow, and Canada risks falling behind our peers and competitors when it comes to CCS deployment. The investment tax credit included in Canada’s most recent federal budget is an important step towards mobilizing private capital to invest in CCS projects, but it is a substantially lower level of support than the programs now in place in the U.S., the United Kingdom and Norway.
Depending on the regulatory processes and the ability to purchase equipment and hire workers, it takes about six years to bring a large-scale CCS facility to life. This means it is imperative that companies in Canada receive the business certainty they need to move large-scale CCS projects forward. The major players in Canada’s heavy-emitting industries are committed to achieving net zero by 2050 and set to invest billions in CCS in Canada, but stronger incentives are needed to accelerate these projects and ensure they happen on the timeline and scale required to meet 2030/2050 targets.
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 international borders. The landmark incentives for CCS projects now in place in the United States promises to make the world’s second-largest greenhouse gas emitter a world leader when it comes to the next wave of CCS development. The comprehensive incentives contained in the U.S. Inflation Reduction Act passed earlier this year provide valuable guidance to our federal government while it is in the midst of developing a national strategy for CCS.
We know that bringing Canada’s strong commitment to fighting climate change to reality will not be easy, but we have the home-grown expertise necessary to continue playing a leading role in this exciting area. Let’s make sure we don’t miss out on such a critical opportunity.