In 2021, Canada passed the Canadian Net Zero Emissions Accountability Act. To achieve net zero emissions by 2050, decisive and pragmatic action is required across Canada’s top carbon intensive industries including manufacturing, mining, and oil and gas sectors.
With net zero strategies set, companies in these sectors urgently need to find ways to decarbonize their assets and, in some cases, make the products they produce cleaner. Their social license and customer base depends on it, particularly as carbon intensity becomes a key differentiator when sourcing finance from lenders, or as tenders and contractual requirements embed carbon competitiveness. 
Why carbon capture?
Carbon capture, storage, and utilization (CCUS) is technology that prevents carbon dioxide (CO2) from being emitted into the atmosphere. It can be retrofitted to existing power and industrial plants, making it an ideal solution for our clients in the hard to abate sectors including thermal power plants, oil and gas facilities, chemicals plants and steelmaking factories.
The captured CO2 can either be sealed in formations deep beneath the ground (such as previously exploited oil and gas reservoirs) or as an input or feedstock for other products or industrial processes. Traditionally it has been used to support enhanced oil recovery, an industrial process whereby pressurized CO2 enables the extraction of previously inaccessible hydrocarbons. Captured CO2 is also used to manufacture other products such as carbon fiber, plastics, and alloys.
Carbon capture in Canada
With the third largest oil reserves and the fourth largest natural gas deposits in the world, Canada’s energy reserves are its largest source of export revenue. For years Canada’s natural resources sector has accounted for over 15% of GDP. This presents a challenge but also an opportunity as the economy transitions to net-zero over the coming decades.
In realizing CCUS as a transition technology, it presents a unique opportunity for Canada to support a carbon-neutral economy by 2050. The Government has invested in the sector and as a result there are currently three commercial scale projects in operation enabling both enhanced oil recovery and permanent geological storage. These are the Quest CCS and the Alberta Carbon Trunk Line (ACTL) projects in Alberta, and the Boundary Dam Project in Saskatchewan. As large engineering and construction projects that take years to plan, design, construct, and commission, CCUS has also enabled the creation of new, high value jobs in Canada.
In 2021, the Canadian government promised several incentives to the development and commercialization of CCUS totaling more than $320 million over a seven-year period. In a further effort to decarbonize heavy industry, and in recognizing both the emissions mitigation and economic benefits of carbon capture, the government also announced it would work with stakeholders to design an investment tax credit to stimulate non-Enhanced Oil Recovery (EOR) CCUS development activity. 
The rise of CCS networks
Early CCS (Carbon Capture and Storage) projects tended to have their own dedicated pipeline and suitable underground location. This favoured large scale projects, where economies of scale made the costs for the carbon capture, processing, transportation, and storage reasonable.
As CCS is increasingly seen as a vital climate change mitigation tool for energy intensive sectors, the need has risen to make smaller capture viable. Recently, there have been incentives and a trend toward projects sharing CO2 transport and storage infrastructure including pipelines, port facilities and storage wells. Centrally aggregating CO2 streams from multiple smaller capture plants will enable heavy emitters to also benefit from economies of scale.
Aspects of three large-scale CCS networks have been announced in Alberta. These include Shell’s Polaris CCS project which aims to provide third-party storage as part of its second phase. The Alberta Carbon Grid partnership of Pembina and TC Energy aims to transport and sequester more than 20 million tonnes per annum (Mtpa) of CO2 (almost ten percent of Alberta’s industrial emissions) from multiple customers, industries, and sectors. The third, known as the Pathways CCUS System, is an alliance of six Canadian oil sands producers. The first phase of this project includes a CCUS transportation line connecting oil sands facilities in the Fort McMurray, Christina Lake and Cold Lake regions of Alberta to a carbon storage hub near Cold Lake. The transportation line would be expanded in phases to gather captured CO2 from more than 20 oil sands facilities, and it would also be available to other industries interested in capturing their own emissions. Together, these three projects have the potential to capture up to 70Mtpa of CO2 around one quarter of Alberta’s 2019 CO2 emissions, and less than 10% of the 2019 Canadian CO2 emission total.
The challenges of carbon capture
While carbon capture is not a new technology, there are few plants operating at the scale required to meet net zero emissions targets. Today there are only 27 CCS facilities in operation worldwide with a total installed capacity of approximately 40 Mtpa.
According to the International Energy Agency, limiting global warming to 2°C requires installed CCS capacity to increase to over 5,600 Mtpa by 2050. Between US$655Bn and US$1,280 Bn in capital investment is needed. Stronger investment incentives following the introduction of climate targets are needed. While the sector is building momentum, challenges remain because the performance of this technology remains largely unproven at such large scale, particularly for long term geological storage. There are also challenges around cost and price point, resources and skills gaps in the supply chain which together create additional risk for asset owners and developers. For some sectors, the installation and retrofit of carbon capture technologies to existing infrastructure is not their core competency and may not yet consider CCUS as a viable option.
For CCUS networks to be successful it is important for companies to treat them as a program or portfolio of assets. The projects require effective collaboration across multiple stakeholders including government, client stakeholders and consultant teams, including engineering, CCUS technology, legal, planning, permitting and economic modelling to be successful.
As asset owners seek to deploy climate tech innovations such as carbon capture, they have compelling and complex issues to confront.
These projects are important to the mitigation and management of future carbon emissions, but they are using ‘first of its kind technology’ with large scale investment from multiple stakeholders. The challenge is to ensure the breadth of the scope including technical challenges are fully understood, and that the commercial model and risk for each part of the CCUS process is known.
What are the factors critical to the success of carbon capture deployment in Canada?
1 | Funding certainty
Currently there is uncertainty surrounding Canadian energy policies especially with the recent net-zero promises. As the Canadian government continues to mature its energy and net-zero policies it needs to ensure that both federal and provincial governments are aligned and support policies that help the most emission intensive industries across the country. The risk profile is reduced when there is more certainty around the legislative landscape, and this can encourage private investment into the CCUS space.
2 | Taking a programmatic approach
CCUS networks bringing together larger scale compression, dehydration, pipeline and storage on a regional basis around industrial centres, lie at the heart of the acceleration and commercialization of CCS. They will be the game changers, channeling public and private sector investment in a collaborative endeavor to develop the solutions to drive industrial scale decarbonization and meet climate targets. Taking a programmatic approach that drives consistency across project formation and delivery will be key to success. Connecting skills and sharing learnings will also help Canada build capability to accomplish the task ahead and build world-leading and exportable expertise.
3 | Embracing technology and data
Taking advantage of technology, data and information modelling to drive performance, support decision making and create collaborative working environments will be key to enabling the pace and scale of CCUS deployment required. Driving the right technology and data strategy from the start, setting up the program to establish effective information management that complies with local regulations, and aligns to information requests from stakeholders will support the integrated reporting and collaborative delivery needed.
CCUS – vital to achieve net zero
The road ahead is challenging but CCUS is increasingly well placed to make a significant and necessary contribution to achieving net zero emissions. While the industrial scale deployment of CCUS will require action and collaboration from multiple stakeholders, it does provide a route for Canada’s emission intensive industries to move towards a net- zero future. And, given Canada’s significant natural resources sector and existing experience with the technology, the country is uniquely positioned to embrace carbon capture, storage, and utilization technologies.