Carbon Shell Game

The CCS gravy train is picking up speed

by Mitchell Beer

CCS

The Trudeau government may soon find itself doubling down on unproven carbon capture and storage (CCS) technology that won’t significantly alter the country’s climate footprint, just to compete more effectively with subsidies under the US$369-billion Inflation Reduction Act adopted by the Biden administration in the United States.

The buzz in Ottawa these days is that Canada will have to sweeten the $7.1-billion CCS subsidy in Finance Minister Chrystia Freeland’s budget earlier this year to prevent a surge of southbound dollars to US projects.

“It’s urgent,” said Michael Gullo, vice president for policy at the Business Council of Canada, in an interview with Bloomberg News earlier this month. “There’s a race going on to attract billions of dollars of investment.”

That same week, Freeland was telling an audience in Washington, DC, that Canada is leading, not lagging the global shift to green energy, but will still have to be the “best and fastest” at that transition given its largest trading partner’s newfound interest in clean energy finance.

But there are a few unexamined assumptions as this new subsidy storyline takes shape: that CCS technology works and can scale up in time to support major emission reductions by 2030, and that Canada isn’t already offering to subsidize the technology lavishly.

With an emergency as big as climate change, and a deadline as short as 2030 or 2050, there’s no time for preventable errors and false starts. That means any promises or projections for reducing carbon pollution – especially in this decade of action, with a UN climate agency calling for a 45% emissions cut over the next seven years – have to be based on ideas, decisions, and yes, technologies that are practical, affordable, and ready for prime time.

That line of thought really landed with me a dozen or so years ago when I was part of an early project to model a low-carbon pathway for Canada through 2050. When we put together an inventory of the low-carbon energy the country could really count on by mid-century, with the information available in the 2010s, we included onshore but not offshore wind, and left out battery storage and hydrogen.

We weren’t betting against those options. But we knew that if a plan to confront climate change depended on them, then turned out to be wrong 15 years later, it would be very tough to replace them in time to hit a decarbonization target that was not negotiable.

Fast forward to today, and both offshore wind and batteries are surging. (The jury is still out on hydrogen.) So you could conclude that if they could cut costs and begin scaling up fast, carbon capture can, too.

But carbon capture has been under development for 50 years, and a mid-October report that set out to extol the industry’s rapid growth over the last year ended up shining a light on its paltry role in driving down carbon.

In mid-October, the Global CCS Institute reported record interest in new project development, driven by rising carbon prices and government subsidies. The group’s latest annual survey showed 153 new projects under construction, with the United States and Canada leading the way, “61 more than this time last year and more than at any time in history,” Bloomberg News reported.

But even if all the plants go into service – and even if they deliver on their targets – they will capture just 244 million tonnes of carbon dioxide per year, less than 1% of the 36 billion tonnes humanity emitted last year. And if they’re bolted onto fossil fuel plants, they’ll only deal with about 20% of the carbon in a barrel of oil. The other 80% is shipped to the end user and enters the atmosphere when the oil or gas is burned.

Bloomberg also confirmed that the lion’s share of the carbon captured by today’s CCS projects is promptly reinjected into depleted wells to help their owners extract more oil. The practice, known as Enhanced Oil Recovery (EOR), isn’t eligible for subsidies under Canada’s CCS investment tax credit, much to the chagrin of the country’s major fossil producers. But as recently as January 2021, the UK’s Tyndall Centre for Climate Research was reporting that 81% of the world’s captured carbon was being used for EOR.

Even with no connection to Enhanced Oil Recovery, it isn’t just a cheap shot to ask whether CCS technology will work to specification after it’s installed.

Last month, the Institute for Energy Economics and Financial Analysis (IEEFA) warned that this particular technofix is far more likely to fail than to succeed. The 13 “flagship, large-scale” projects in the analysis accounted for about 55% of the world’s current carbon capture capacity, and 10 of them underperformed, failed outright, or had to be mothballed.

Yet Freeland has been simultaneously talking green transition and signalling openness to supporting new fossil fuel projects if they are “economically feasible.” News reports suggest the new infusion of federal cash will show up in her next fiscal update, expected in December, then finalized in her 2023 budget.

If CCS wins the subsidy sweepstakes again, with the US tax credit as justification, it will fly in the face of some sobering numbers that Luisa Da Silva, executive director of Iron & Earth, presented to a House of Commons committee October 18. Only 2.3% of the United States’ US$158-billion in clean energy initiatives is earmarked for CCS, compared to 48% for home energy efficiency and community resilience, she said. In Freeland’s last budget, CCS netted nearly four times as much funding as clean electricity initiatives.


Mitchell Beer is publisher and managing editor of The Energy Mix, a non-profit community news site and e-digest on climate change, energy, and the shift off carbon.

See also “Carbon Capture and Spin,” Watershed Sentinel, October/November 2022

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