Canada’s ambitions to reduce its CO2 emissions are nothing new in the carbon capture and storage space. The country’s climate change policy includes cutting greenhouse gases by 40-45% from 2005 levels by 2030. That is why it is deemed a top country in the world on carbon capture technology development and investments according to a report by Wood Mackenzie.
The country is now pushing to add two new carbon capture hubs by 2030, according to a federal document. Nearly a dozen oil and gas companies are also pursuing rights to store carbon dioxide in Alberta’s vast underground caverns. The cost of the hubs and their location is still not known.
“The big takeaway is the federal government is pretty serious about CCUS,” according to a source from the Calgary oil industry.
According to the Natural Resources Department’s draft carbon capture utilization and storage strategy, shared privately in July with industry stakeholders, the country plans two massive carbon capture hubs to be under construction by 2030.
Currently, Canada has four carbon capture projects that represent 15% of global facilities and capture 4 million tons of CO2 per year. The country is expected to sequester at least 15 million tons of carbon annually by 2030 in total.
It is also counting on carbon capture utilization and storage (CCUS) to reduce emissions and the government counts it to become a multibillion-dollar business, attracting private and public investments.
In order to encourage private investment in CCUS projects, the government is establishing a carbon price, which is set to rise to $134.8 (C$170) per ton of CO2 by 2030 from $31.7 (C$40). It is also introducing its Clean Fuel Regulation (CFR) by 2022 as expected, which requires lower emissions intensity in fuel.
Incentives Not Enough To Stimulate Carbon Capture Adoption
However, according to the Natural Resources Department, those incentives set by the government might still not be enough to stimulate widespread adoption. The main arguments supporting that notion are the high costs and complexity of the technology required to capture CO2.
“It is not yet clear whether this elevated pricing signal, combined with other federal policies yet to be implemented, such as the CFR and the investment tax credit announced, will be sufficient to drive widespread CCUS adoption,” as per the federal strategy.
The carbon capture investment of Canada for two new projects is a major stimulus that could drive other CCUS projects and highlights the importance of driving forward the technology with early adoption. Doubts and challenges are still ahead for the country until the sector matures and risks diminish.