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Carbon capture shows potential - New Hope

Financial Post: Lorraine Mallinder - November 26, 2008

http://www.financialpost.com/working/story.html?id=995197

Courtesy of Petroleum Technology Research CentreWestern provinces in Canada are hopeful that once developed, the carbon capture and storage technology will meet the 1997 Kyoto Protocol targets.

Carbon capture and storage is an alluring prospect for a world that is not quite ready to wean itself off its addiction to hydrocarbons. Not only does the technology bury emissions, it can also be used to drive up oil production.

Lawyers reckon Canada is leading the race to develop the technology, which ultimately aspires to strip carbon dioxide from coal before injecting it in deep underground caverns for storage in perpetuity.

"If you had to point to a silver bullet, carbon capture and storage is it," says John Goetz, a Calgary-based partner at law firm Burnet, Duckworth & Palmer.

Western Canada, with its abundance of emissions from fossil fuels and its deep geological formations, is the perfect testing lab for the technology, Mr. Goetz says. "We have the ability to set up large-scale schemes and export to the rest of the world," he says, estimating that the technology could be up and running in the next five to 10 years.

Canada's Western provinces are literally banking on the technology as a means of helping to meet targets established by the 1997 Kyoto Protocol, which requires an average reduction in carbon emissions of 6% below 1990 levels between 2008-2012.

Major energy companies active in the region are also queuing up to get involved, many hopeful of clawing back projected expenditure on carbon credits in the form of grants to fund expensive research.

Saskatchewan is home to one of the world's four major-league carbon capture and storage (CCS) projects. (The other three are in Norway and Algeria). The Weyburn-Midale project serves a dual purpose, piping in carbon dioxide from a gas plant in North Dakota for large-scale injection experiments that can also push up oil from nearby fields.

Alberta this year created a $2-billion fund dedicated to CCS projects. In the long-term, the investment is expected to reduce the province's emissions by 139 megatonnes by 2050, a figure representing two-thirds of the province's projected reductions. Canadian energy firm TransAlta has applied to the fund to test technology developed by France's Alstom at one of its coal-fired generating stations west of Edmonton. Tests are scheduled to begin in 2012.

British Columbia this year granted funds to U. S. firm Spectra Energy to test whether deep underground saline reservoirs near its existing Fort Nelson natural gas plant could seal off emissions for eternity.

The company claims that the project has the potential to store around one million tonnes of carbon emissions annually, the equivalent of taking 250,000 cars off the road each year.

The figures are impressive, the promise clear, but the technology is still unproven. Lisa DeMarco, a Toronto-based partner at Macleod Dixon, says that CCS is still a "far longer-term proposition" than other clean energy technologies, pointing out that there have been "challenges associated with the capture aspects of the technology".

The real prize for CCS researchers is to find commercially and technologically viable ways of plugging the technology into coal-fired power plants, a major source of future emissions, particularly in emerging economies with voracious appetites for energy. While full-cycle CCS experiments have been carried out in Germany, full-scale demonstrations remain far off. The various capturing processes needed to isolate emissions for storage have not yet been united on a scale to deal with the volume of emissions from a typical power plant.

Still, Ms. DeMarco describes carbon capture and storage as the "name of the game." There are significant opportunities for NAFTA-based co-operation and export of Canadian expertise and technology, she says.

With the climate clock ticking ever faster, CCS would buy the world time to make the painful transition to a renewables-based energy economy.

The IEA forecasts that CCS could contribute nearly one-fifth of the reductions needed to halve greenhouse gas emissions by 2050, a cut deemed necessary to limit expected temperature increases to less than three degrees.

While CCS is the great white hope of clean energy technologies, Canada is also making good headway on other fronts. The country's expertise in hydro is already well documented, but a growing number of companies are now experimenting with solar and wind.

"Canada has seen a huge upsurge in interest in increasing investment in renewable energy. The new challenge is trying to export our knowledge," says Linda Bertoldi, a partner at the Toronto office of Borden Ladner Gervais.

Ms. Bertoldi rates solar power as one of the most rapidly growing sectors. Canadian companies such as Day4 Energy and Canadian Solar Inc, are developing promising technologies with international renown.

The enormous potential of solar will, however, remain locked until cost-effective methods of storage can be found. "Solar will really go gangbusters if a system can be developed for storage," says Elizabeth Harrison at Farris, Vaughan, Wills and Murphy.

Wind technology, too, is looking promising, with ambitious projects to build wind farms in such locations as Lake Ontario coming on stream. The Canadian Wind Energy Association wants the technology to supply 20% of the country's energy demands by 2025.

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