Annex
Canada programme and visit notes
18 November 2013
PROFESSOR JAMES MEADOWCROFT AND GRAHAM CAMPBELL
Professor James Meadowcroft, Canada Research Chair
in Governance for Sustainable Development and Graham Campbell,
Executive Director, Carleton Sustainable Energy Research Centre
provided an overview of the politics and policy landscape of CCS
in Canada.
· Canada
has very large energy resources including oil, gas, hydro, uranium
and biomass. The combination of abundant energy resources and
lots of space has resulted in Canada developing a very carbon
intensive industrial structure. This makes it very difficult for
Canada to tackle climate change because the whole economy is carbon
intensive.
· Climate change
is not really in the public or Federal Government's consciousness
and as a result it has not made much progress on developing policies
to tackle climate change.
· Canada abandoned
its Kyoto targets because they were over ambitious and not achievable.
· There is some
interest in new renewable in Canada although it has a lot of hydro.
However, the presence of oil and gas sector effects the flow of
capital and disadvantages the development of renewables.
· The Federal
Government's current approach is 'accelerated resource development'.
The objective is to utilise its resources as quickly as possible.
As such, it has abandoned sustainable development and built on
responsible (use) development. The current Government's position
is unhelpful and partisan.
· Policy fragmentation
and jurisdictional diversification makes it difficult to develop
a national response to climate change.
· There has been
progress to tackle climate change at a provincial level. British
Columbia has introduced a carbon tax. Ontario has phased out coal
and replaced it with gas.
· Decarbonising
will be cheaper with CCS in the mix. It is better to have more
tools rather than less (even though currently more expensive).
· There are,
however, several barriers. The biggest is the cost of developing
CCS. CCS also presents a split incentive: developers should in
theory benefit by developing CCS, however, currently it is more
beneficial not to develop CCS. CCS is different to other low carbon
technologies. It has a 'structural problem' in that as a bolt
on technology it is undesirable to develop.
· CCS will acquire
strategic importance in the future especially for fossil fuel
exporting countries.
· There is currently
low public acceptance of CCS. The public are concerned about the
safety of storing carbon dioxide underground, end of pipe treatment,
and lock-in to high carbon technologies. There have also been
low levels of public engagement.
· CCS is seen
by Federal Government as a problem to resource extraction. CCS
is, however, not dead. It is still important. It is only because
Canada is not taking climate change as seriously as should be.
It will come back into fashion when it does.
· CCS future
still very uncertain in Canada. CCS in 2050 scenarios 1) high
usage 2) geographically fragmented usage 3) specialised usage
(e.g. Industrial processes and biomass). Industrial CCS is definitely
a potential starter. There would be merit in public policy focusing
on industrial CCS. This is also because there is demand for pure
CO2 sources. However the key problem is what you do
with it (storing or other commercial uses)
· CCS in Canada
is closely related to enhance oil recovery. More so than a response
to climate change. Shell Quest project is one such example. Boundary
Dam is also interlinked with fossil fuel production. Basic problem
in Canada is that there isn't a national price on Carbon. EOR
dilutes the benefit of the CCS. There are trade-offs there. However,
benefits are that it already has existing infrastructure and it
is possible to continue to inject carbon dioxide after EOR has
finished.
· CCS costs are
clouded in uncertainty. People and industry are propagating the
uncertainty.
· It is hard
to say when Canada might realistically see commercial scale CCS.
Need to progress CCS along the learning curve. This requires many
power plants with CCS to be built. This is, however, a long way
off. Depends on whether enough projects get up and running and
on how much investment and when.
· The International
Energy Agency (IEA) CCS roadmap outlines 7 key barriers. Financial
barriers: good. Policies re CCS: none. Laws and regulations requiring
CCS: no. Other uses for CCS: no, not looking at industrial. Public
info and engagement: no. Reducing costs: no. Infrastructure requirements:
doing quite well. Useful check list would be difficult.
DR. ROMAN SZUMSKI
Roman Szumski, Vice-President Life Sciences, National
Research Council (NRC) outlined research being undertaken on algal
carbon conversion a potential second generation CCS technology.
· The
NRC is a departmental agency. It has a President which reports
to Cabinet. The detailed research agenda is developed by the NRC
and government provides a high level steer.
· The NRC jointly
develops technologies with industry. It expects to make a return,
along with its industry partners, which is recycled back into
research.
· Algal carbon
conversion involves converting a waste product-gas emissions and
waste water from an industrial process-and using algae to convert
it into valuable products (as well as remediated waste water and
industrial emissions).
· This technology
has the potential to be applied to an oil sands site and in other
industrial sectors such as cement
· The NRC has
ambitions to develop a 100,000 litre test plant. This is small
enough so as to be easily transportable (to remote parts of the
country) and large enough to be scaled up if desired.
· The algae which
is being used is a local and natural strain to reduce the potential
risk of contaminating the Canadian environment.
· Industry believes
the technology could be commercially viable. The NRC is partnering
with several companies. Industry buy-in came when the NRC switched
from saying 'making biofuels' to 'managing carbon dioxide'.
· There are,
however, several barriers to taking up the technology. Questions
remain over how 'transferable' the technology because of the unknown
attributes on algae strains. It is still uncertain the extent
to which the technology can be scaled-up.
DAVID MCLAUGHLIN
David McLaughlin, Strategic Advisor to the Dean
of Environment, University of Waterloo provided an overview of
the politics of energy and climate policy in Canada.
· At
the moment Canada will not meet its 2020 carbon targets.
· It will not
meet them unless the oil and gas industry plays its part.
· Modelling how
to achieve carbon reductions in Canada always includes CCS.
· Incentivising
CCS will require the development of a carbon price. This would
need to be over $100. However, it is unlikely that the economy
will not bear a carbon price this high. As such it is unlikely
that there will be significant CCS in Canada any time soon.
CLARE DEMERSE
Clare Demerse, Director of Federal Policy, Pembina
Institute provided an overview of the politics of energy and climate
policy in Canada.
· Even
though energy is a provincial competency, it is still highly influenced
by the Federal Government.
· The Federal
Environment Minister says that Canada will meet its 2020 carbon
targets. But nobody else thinks there is a plan in place that
will help Canada actually achieve it.
· The projected
growth in oil sands, according to the Federal Government's own
projections show that it will cancel out and eclipse any other
carbon savings made elsewhere in the economy.
· Understanding
what solutions there are to reduce the carbon impact of oil sands
are crucial for climate change action in Canada. CCS will be fundamental
but is very expensive when applied to the oil sands-even more
than coal with CCS.
· CCs would require
a carbon price of $100 a tonne of more. However, there is currently
vehement opposition to economy wide carbon pricing. Instead Canada
is taking a sector by sector, bottom-up approach. But there is
very little attempt to scale it up to meet Canada's 2020 targets.
At present the fossil fuel industry is not going to be a strong
enough policy signal to incentivise the development of CCS. There
are unlikely to be new CCS subsidies in the short term.
· Originally,
Canada was expecting to be requiring CCS level standards on oil
sands and coal in order to help meet Canada's 2020 carbon targets.
No longer think this is remotely on the table.
DAVID SAWYER
David Sawyer, Associate, International Institute
for Sustainable Development provided an overview of the politics
of energy and climate policy in Canada.
· In
2008/09 Canada was looking at how to achieve it targets and at
this time CCS featured strongly. Large allocation of resources
were given over to incentivising CCS. Today CCS doesn't come up
as an issue at all. As such, we are not asking enough of our fossil
fuel companies.
· Internal drivers
(such as market access, carbon prices and competition) in Canada
are not strong enough to drive CCS development in Canada.
· External drivers
are however starting to develop which may incentivise CCS in Canada.
This includes the potential development of a clean fuel standard
in the US (a key export market for Canada). The oil and gas industry
in Canada has an eye on these developments but is still not currently
developing CCS. This is largely because there is little appetite
for CCS in the whole of North America.
· Canada is going
to have to require global drivers to develop CCS. This will develop
if Canada is able to build pipelines which allow it to export
fossil fuels to Asian and European markets.
ALEX WOOD
Alex Wood, Senior Director, Policy Markets provided
an overview of the politics of energy and climate policy in Canada.
· Canada
cannot meet its targets without CCS. But Canada also has a lot
of cheaper emissions reduction opportunities which are currently
not being realised. The Canadian Government is currently pursuing
a high cost carbon reduction pathway.
· The economics
of CCS projects are very daunting. Shell's Quest project is considered
to be a money loser (even with the money they are getting from
the Federal and Provincial Government's). Shell is pursuing this
project because of reputational issues and their vulnerability
when looking at the oil sands involvement. They are doing CCS
because of the reputational gain of being able to say that they
are cleaning up the oil sands.
· What policy
would take CCS forwards in Canada? It will require a combination
of carbon pricing, mandating CCS, and external pressures.
MICHAEL KEENAN
Michael Keenan, Associate Deputy Minister at Natural
Resources Canada outlined what his Department was doing to incentivise
the development of CCS in Canada.
· CCS
is a key part of the overall energy strategy of the country. Canada
has some of the best geological stores for CCS as well as a number
of potential streams for using CCS.
· Canada will
have an emissions performance standard for new coal. Existing
coal has to close down at the end of its economic life unless
it retrofits CCS. This is a CCS 'runway'. There is a significant
incentive to continue the use of coal with CCS.
· Federal Government
greenhouse gas emissions regulations have a positive impact on
CCS. He believed that that there is an opportunity for collaboration
on CCS between Canada and UK. Energy is important to the Canadian
economy.
· CCS will enable
continued and sustained use of fossil fuels.
· The Federal
Government has a role to facilitate investment in CCS and looks
to promote national and international work on CCS.
· CCS in Canada
is comprised of 3 things 1) technology evolution 2) market evolution
3) government policy evolution.
· Canada has
4 objectives 1) reducing technological risks 2) providing a stable
regulatory framework 3) gaining public acceptance 4) learning-by-doing
to reduce costs and risks (sharing learning).
· Canada is active
in R&D on all types of capture technologies not just post
combustion but main focus is on 'step change technologies'.
· The Government
has increased its expenditure on CCS (20% of expenditure in 2011-2012).
However, this will peak because a lot of the money is going into
large scale demonstration projects. The rest will be on ongoing
R&D but which is a much smaller proportion of funding.
· Federal Government
has said it's not pursuing a national carbon pricing strategy.
It is pursuing a regulatory strategy instead. The Government thinks
that this strategy will be successful. Doesn't think to price
is essential. The Government supports 4 large scale CCS projects
1) Weyburn-Midale 2) SaskPower Boundary Dam 3) Shell Quest project
4) Albert Carbon Trunk Line. These projects are helping to increase
the efficiency of CCS technology. Boundary Dam project specifically
should, it is hoped, help to move CCS along the cost curve.
· Canada is doing
quite well in relation to other countries evidenced by the global
CCS institute. In fact Canada's investments have put Canada on
the world stage in terms of CCS.
· Public engagement
efforts are ongoing.
· Government
is trying to share learning internationally through both bilateral
and multilateral forums.
· Canada has
advanced 3 large-scale CCS projects (on time and on budget).
MIKE BEALE
Mike Beale, Assistant Deputy Minister at Environment
Canada outlined what his Department was doing to incentivise the
development of CCS in Canada.
· Focus
is environmental outcomes: in this case greenhouse gas emissions
(GHG) emissions.
· To what extent
can CCS be incorporated into our regulations? Example, coal fired
regulations. That is 420 grams of CO2 equivalent. This
is structured unit by unit. So, therefore, either need to have
CCS on a plant or not at all. Sets emissions performance standard
both for new coal and old coal which has reached the end of its
economic life.
· Boundary dam.
Worked closely with SaskPower to develop these regulations so
that it made sense to potentially apply CCS to its units 4 and
5.
· However, under
these regulations it may make more sense to build a new gas fired
power station rather than a new coal fired power station with
CCS.
· Regulations
are time based. There is very little flexibility in the regulations
(no trading etc). There is, however, a 10 year deferral mechanism.
· The regulations
are driving significant reductions in coal fired electricity generation.
Unfortunately however coal is not a big enough part of the pie
to ensure it is able to meet its targets.
· Actions taken
today brings Canada 50% of the way to meeting its targets
· Departments
approach to incentivising reducing emissions. No financial incentives.
Function is regulatory. Taking a sector by sector regulatory approach.
Started with transportation sector. Now developing a suit of regulations
for oil and gas sector including for oil sands. Have another suit
of regulations for energy intensive industries. These regulations
are designed to help reach the target (the extra 50%)
· It is hard
to see that CCS will make a major contribution to the 2020 targets.
Dinner hosted by Howard Drake, British High
Commissioner with Leon Benoit MP, Chair of the Standing
Committee on Natural Resources; the Hon. Geoff Regan, PC, MP,
Vice-Chair of the Standing Committee on Natural Resources and
Liberal Natural Resources Critic; the Hon. John McKay PC, MP,
Liberal Critic for the Environment; Christine Moore MP,
Member of the Standing Committee on Natural Resources and NDP
Deputy Critic for Energy and Natural Resources; Linda Duncan
MP, Member of the Standing Committee on Natural Resources
and NDP Critic for Public Works and Government Services; Mike
Allen MP, Member of the Standing Committee on Natural Resources;
and Brad Trost MP, Member of the Standing Committee on
Natural Resources.
19 November 2013
KYLE WORTH
Kyle Worth, Project Manager, Aquistore, Petroleum
Technology Research Centre outlined work being done to store carbon
dioxide underground.
· Petroleum
Technology Research Centre is a not-for-profit research and development
organisation. Aquistore is a research and development project
looking to store carbon dioxide in a saline aquifer pulling together
lessons learnt from nearby carbon capture and storage projects.
· This site has
a number of advanced technologies which, it is hoped, will facilitate
and improve the injection, storage and monitoring of future carbon
storage projects. They are also hoped to bring down the cost of
future projects.
· Aquistore is
only six miles from the nearest city. There are 20 families nearby.
They have undergone a significant amount of proactive public engagement
with the local community. This includes actively visiting the
local community to inform them of the project, holding an open
house, allowing visits during operations (which is not normally
allowed) and having a clear and comprehensive document explaining
how Aquistore were going to move through the process. They have
also developed materials which explain how the local geology will
stop any leaks from occurring.
· They are hoping
to start commercial injection into the aquifer in early 2014.
· They are also
hoping to work with UK academics to collaborate and share data.
ROBERT WATSON
Robert Watson, Chief Executive Officer at SaskPower
provided a background briefing on SaskPower.
· SaskPower
is a fully integrated power company with generation, transmission
and supply businesses. It produces almost all its own power. Five
years ago it entered into its first power purchase agreements
with privately owned gas power plants and a wind farm.
· SaskPower has
4,104 MW generating capacity. 50 per cent is coal, 25 per cent
is gas, 20 per cent is hydro, three per cent is wind and 2 per
cent comes from other sources. The strategic aim of the company
is to diversify is generation sources. It wants to expand gas
but not become over reliant on it. It also wants to protect its
coal assets. It is also looking at geothermal and solar will probably
come into the fleet as the costs come down.
· SaskPower has
seen an eight per cent increase in energy consumption. This increase
is mostly coming from industrial developments such as pot ash
mines, uranium, oil sands and agriculture.
· Saskatchewan
is the first jurisdiction in Canada to be completely smart metered
both business and domestic customers. Hope to be able to test
out the smart grid as well as smart generation.
IAN YEATES
Ian Yeates, Vice-president at SaskPower outlined
SaskPower's approach to CCS.
· SaskPower
has a lot of experience in CCS in Saskatchewan including in the
Weyburn-Midale, Aquistore and Boundary Dam projects.
· At Boundary
Dam, units one and two (65MW) are old, worn out and will be shut
down. Unit 3 (150MW) being fitted with CCS. The futures of units
four and five (300MW) have not yet been decided.
· There is a
potential future difference between supply and demand in Saskatchewan.
For example, the province has seen significant growth in demand
while faced with the prospect of closing its coal facilities.
The development of CCS would, however, mean that this is less
of a problem.
· SaskPower has
estimated that their new CCS plant will cost them $1.4bn. When
comparing the cost of Coal plant with CCS to the best alternative,
gas fired plant you see that the majority of costs for gas are
in the fuel while for coal the majority of costs are in the capital
investment. Furthermore, they estimate that when you factor in
the revenue from selling carbon dioxide for enhanced oil recovery
the costs of coal with CCS fall within the gas cost range.
Dinner with Robert Watson, Chief Executive Officer
at SaskPower and Provincial Government representatives.
20 November 2013
Tour of SaskPower's Boundary Dam CCS project with
Michael Monea, President of SaskPower.
21 November 2013
CHRIS HOLY
Chris Holy, Branch Head, Research & Technology,
Resource Development Policy Division, Alberta Department of Energy
provided an overview of the energy landscape in Alberta and its
approach to resource development with specific emphasis on CCS.
· Alberta
has been an energy producing province for over 100 years. There
is a high level of social trust in Alberta. The provinces resources
are owned by the Crown. Private companies are used to extract
the resources. As such, it only takes royalties and collects information
using a third party regulator which provides a quality control
function. There is a high degree of labour mobility which helps
to transfer knowledge and creates a culture of innovation.
· Alberta has
a huge resource base. Primary energy production is dominated by
fossil fuels.
· Demand is lower
than supply. Alberta therefore exports most of its energy. Alberta
is looking for new markets to export to.
· Alberta is
also looking at opportunities to diversify their energy production.
This includes looking at what other opportunities there are outside
of fossil fuel production. There has been a trend away from coal
fired generation towards gas generation with some renewables.
This shift to gas is also being used for heat (both industrial
and domestic).
· Tax in Alberta
is very low. Corporation tax in Alberta is 10 per cent compared
to 15 per cent at the Federal level. Similarly, there is no sales
tax in Alberta but five per cent at the Federal level.
· There is lots
of innovation in the oil and gas extraction industry. In general
the oil and gas industry has moved on significantly over the last
century. It is much more high tech today. This helps to improve
efficiency through managing complexity. One specific example is
the use of 'big data' which to improve resource extraction.
· There is also
a focus on moving fossil fuel resources into reserves. In the
shale context, this involves technology changes to allow both
light and heavy crude oils to be fracked. In the oil sands context,
mining technologies are maturing. There is now a move towards
in situ production (steam assisted gravity drainage). This is
going to overtake mining. This development is an economic reality
rather than an aesthetic reality. It has developed to reflect
a financial regime rather than a geological basis. The in situ
method of extracting oil sands has taken off because the technology
has developed enough over the last decade to make it economically
viable.
SANDRA LOCKE
Sandra Locke, Assistant Deputy Minister, Electricity
and Sustainable Energy Division, Alberta Department of Energy
outlined Alberta's climate change policies and its work on CCS.
· Alberta
is an energy exporter. They recognise that their export markets
are looking for and demanding cleaner sources of energy (especially
when it comes to oil sands). CCS is, therefore, very important
to them and acts as an important incentive.
· Alberta is
the first jurisdiction to put a limit on greenhouse gas emissions
(Climate Change and Emissions Management Act).
· Alberta also
has a carbon tax set at $15 a tonne. There is no internal mechanism
for revising the price. The price is only changed when the regulation
is up for review. The money raised from the tax is hypothecated
and put into a technology fund. The Climate Change and Emissions
Management Corporation takes this money and invests it in cutting
edge technology development to achieve carbon reductions. The
funds have to be used in, or have a benefit to, Alberta. These
funds don't apply to energy efficiency in buildings. Energy efficiency
in buildings is driven by regulations.
· In Alberta
the biggest source of emissions comes from the industrial sector.
The Provincial Government's target is to reduce emissions from
this sector by 70 per cent through the deployment of CCS. There
have, however, been a lot has changes since it was first formulated
in 2008. There will have to be another review (to be completed
by September 2014). It is likely that the target will be downgraded
slightly to between 50 per cent and 70 per cent.
· The main focus
of the Government's efforts is on reducing the carbon intensity
of oil sands. Other industrial applications (cement and steel
etc) are still some time away from CCS. They are looking at what
the Federal Government wants to do about CCS on the industrial
sector. In theory it is likely that these sites (roughly 100 including
non-industrial) will have to apply CCS.
· Alberta's CCS
program objectives include: demonstrating CCS at a large scale,
building on public confidence, helping to reduce Alberta's emissions,
develop a world class regulatory program and make links us with
the UK to help them achieve this as well.
· With regard
to funding CCS projects, funding was able to advance very quickly.
Mostly because of their funding principles which were clearly
defined and include:
· Government
contributions cannot exceed 75% of the incremental cost of CCS.
· Funding
paid out in three stages: project development and construction
40% (refundable to government if project isn't completed - there
is no spend it or lose it mechanism - built into initial deal
so the project developers where they stand), 20% as a bonus for
doing what you said you would, and 40% when the company starts
operating, capturing and storing carbon.
· Funding
paid out over ten years. After that the project developer no longer
has any commitments to the government. But there is an expectation
there will still be a commitment to ongoing regulatory requirements.
· No funding
paid until contracts are in place.
· Government
will bear the risk of providing funding, the policy risk and the
expectation that the carbon price will be high enough to make
the business case for CCS, and long term liability of storing
the carbon dioxide underground.
· The Government
didn't get involved in technology choices. It was indifferent
on the type of storage technology the project developers used.
· There were
some notable differences between the UK and Canada on their respective
CCS funding approaches. Canada decided that is wasn't preparedness
to take on cost risk. Unlike the UK it could, therefore, skim
over these issues. If taking on cost risk then have to get into
these issues. Slows things down. Also for the time being not getting
into electricity based CCS. In a market based system it is very
difficult to get CCS off the ground. Recognise that it is more
difficult.
MIKE FERNANDEZ
Mike Fernandez, Executive director, Sustainable
Energy Branch, Government of Alberta outlined information about
what the Albertan Government was doing on CCS.
· The
Albertan Government has taken a leadership role in CCS. However
it doesn't want to make its industry uncompetitive. So waiting
to see what the rest of the work will do. Its 50 per cent future
target for CCS suggests a pipeline of projects. Expectation is
that it will be a commercial technology which will be adopted
for commercial decisions.
· Regarding regulatory
environment for management of storing carbon dioxide, in 2008
Alberta established regulations for taking long term liability.
Companies have to apply for-by satisfying technical requirements-a
closure certificate which absolves them of responsibility for
storing the carbon. There is also a post-closure stewardship fund.
This money goes in the bank and is available to the Alberta Government
to use for monitoring and managing risks etc.
· They believe
that the UK Government will have to take the decision to take
long term liability for storage. It is a deal beaker for most
companies. This is, however, specifically for saline aquifers
not enhanced oil recovery (EOR). Companies take liability for
commercial ventures such as EOR.
· Alberta has
a very close relationship with UK on CCS going back at least five
years.
· In terms of
the lessons learnt for the UK. UK has come a long way but it has
also lost a lot of time by agreeing to fund its CCS alongside
EU funding streams. They believe that the UK needs to realise
that UK has to go it alone. They believe that HM Treasury has
a lot of influence. But this is also the case in Alberta and they
were still able to enshrine money in legislation giving minister
ability to sign $2bn worth of checks. The 2009 legislation removes
the money from general revenue. The money is protected. Only a
specific Minister is able to spend the money.
· Alberta still
has $700 million left to spend. This won't expire because it is
enshrined in legislation. But Alberta's Premier wants to learn
from current projects and see what international community does.
However, currently no political appetite (or motivation) to spend
more money. Likely future funding for CCS in future is the expected
to come from increases in the cost of carbon and how much that
price applies to a plants emissions. In addition there is an expectation
that the cost of CCS will come down - i.e. Get more bang for buck.
· Norway has
done the right thing. It originally took too much contract liability
but has now reduced that liability. He still thinks they will
see CCS in Norway.
HONOURABLE CAL DALLAS
Honourable Cal Dallas, Minister for International
and Intergovernmental Affairs, Government of Alberta gave a high
level overview of CCS and the wider energy landscape in Alberta.
· Alberta
has the third largest oil reserves in the world. There is a mismatch
between the amount of oil sands and carbon savings needed. Recognise
the need to reduce emissions and therefore CCS technologies are
important. Enhanced oil recovery could be useful in order to ensure
they can maximise resource recovery. They would like to sell technologies
made in Alberta abroad.
· As a landlocked
jurisdiction, Alberta has a huge challenge getting its fossil
fuel products to the coast and therefore diversify its market.
The Albertan Premier is looking at how they can maximise selling
its resources. There are currently two important projects in this
regard; the Northern Gateway and the West to East Pipeline. To
make these projects a reality requires an important dialogue between
First Nations, municipalities and other provinces. The highest
profile project is the Keystone XL project. They are currently
looking for Presidential agreement in the United States. If successful,
this pipeline would pipe Canadian product to Texas which has demand
for it. There is, however, a difficulty in justifying selling
oil sands because of the high carbon content. Reducing the carbon
intensity of oil sands will be key to winning the argument of
justifying selling the product to America.
· There is a
strange relationship between the Federal and Provincial Governments.
There are issues around where responsibility lies. There are constitutional
boundaries, competencies and sometimes just differing opinions.
Ultimately, the Provincial Government owns the resources and is
responsible for regulation of oil and gas extraction with an independent
regulator.
· Alberta has
made some sweeping changes to these regulations. Countries around
the world are coming to Alberta to see how they can develop similar
regulations. This fits in with Alberta's desire to have a global
impact.
· The Federal
Government has developed regulations which will effect greenhouse
gas emissions from coal fired power stations. This will have significant
future implications for coal fired generation. The dialogue on
production of these regulations were productive. There were some
issues but they were able to overcome them. Alberta believes that
the Federal Government needs, however, to be mindful of competitiveness
issues. Thinks that Alberta's financial and regulatory regime
which is stable and predictable needs to be protected because
it was that which has attracted investment and provided certainty.
When interacting with the Federal Government they try to start
from the perspective that there is a mutual desire to reduce emissions
and then look to see whether they can go from there.
· The Albertan
Government expects oil sand development to develop rapidly and
faster than anywhere else. The emissions reduction trajectory
and reliance on CCS is important and makes the need for a long
term role out of CCS very important. The upfront funding provided
by the Provincial Government to the Shell Quest project was designed
to develop first of a kind projects which can help the technology
progress along the technology curve and reduce costs. The Government
would then prefer to leave it to the market. The future of CCS
is, however, uncertain but they are optimistic that CCS will succeed
if there is a sharing of learning.
Lunch discussion with Michael Moore, Area
Director, Energy & Environmental Policy, Bev Dahlby,
Distinguished Fellow, and Dan McFadyen, Executive Fellow
from the School of Public Policy at the University of Calgary;
and Gianna Manes, President and CEO of Enmax.
STEPHEN LARTER, DON LAWTON, RICHARD ADAMSON AND STEFAN
BACHU, PAUL CLARK AND BRENT LAKEMAN
Stephen Larter, Scientific Director, Richard
Adamson, Managing Director, and Don Lawton, Research Theme Leader
of Carbon Management Canada outlined the work of their organisation.
Stefan Bachu, Distinguished Scientist, Paul Clark, President and
Chief Visioneer and Brent Lakeman, General Manager of Alberta
Innovates outlined the work of their organization.
· Challenge
for the UK is developing off-shore storage.
· Onshore v.
Offshore: Offshore has the advantage of being away from populated
areas but is more expensive because it is harder to get to storage
sites and platforms in the sea are required.
· There is a
window of opportunity for the UK as operational oil-fields reach
the end of life and could be converted instead of decommissioned.
· UK should direct
research efforts towards monitoring/developing off-shore opportunities.
· Research is
needed into more complex CO2 storage sites. Existing
projects have tended to cherry-pick the best sites (for example
those with no old wells nearby that would risk compromising the
storage site).
· A robust regulatory
framework is important to provide certainty which will encourage
investment/involvement by industry.
HONOURABLE THOMAS LUKASZUK
Honourable Thomas Lukaszuk, Deputy Premier of
Alberta, Government of Alberta gave a high level overview of energy
policy in Alberta.
· CCS
is a very important component of Alberta's energy sector. It is
an important feedstock and spin-off from electricity production.
CCS is also being driven by acceptability of carbon content of
its products in international markets as well as recognition of
the need to address climate change.
· Good geology
and a sparse population makes Alberta suited to storing carbon
dioxide. The population at large finds it acceptable although
some NGOs are against it. The Main concern is that there will
always be a risk of carbon leakage and contamination. On the whole,
though, Alberta believes that it has a social licence to operate
CCS.
· It is important
that third parties are involved in establishing baselines and
verify stored carbon. Any organisation which is funded by Government
is perceived to be bias and therefore disqualifies them.
· The issue of
the social licence also holds true for oil and gas companies in
general. Over the last ten years there has been a seismic shift
in their recognition that they need a social licence to operate.
This includes being collaborating with government and again use
third parties to verify what they are doing. Industry has realised
that they have to be much more sophisticated about what they are
doing.
· Alberta is
one of the only provinces to have put a price on carbon. The oil
and gas industry is in favour of sitting around the table and
discussing a significant increase in the carbon levy. It agrees
with paying as long as the money stays within the jurisdiction
and is fed into innovation which could spark new forms of revenue
in the future. There is also a recognition that Albertans fuel
bills will rise as a result of the tax.
· The oil and
gas industry have also already proven that captured carbon can
act as a new feed stock for other industries (e.g. production
of fertiliser in agriculture). These other industries are looking
to relocate as a result. A big challenge remains in actually moving
the carbon around. Building new pipelines is a very expensive
investment but activity is starting to occur.
· Current business
analysis shows there will be a significant uptake of CCS. Factors
which will influence this, however, are what will be the price
of the feedstock (carbon). There is a great deal of interest.
They will need to watch to see what the price of carbon will be
because this will affect the viability of the technology. This
is important. This will, however, need to be offset against the
cost of construction is higher because of a shortage of labour.
JOHN RIND
John Rind, Vice President of operations for heavy
operations (oil sands), Shell gave an overview of Shell's oil
sands business and how it was applying CCS to it.
· Shell
Canada's up-stream business owns the Athabasca oil sands (in situ)
project as well as Peace River assets and Orion Project near Cold
Lake. It also has leases in Grosmont, located on the far west
side of the Athabasca area. These projects have high carbon content
compared to conventional oil projects. Shell has to upgrade the
heavy oil at a refinery at the Scotford Upgrader. Shell's Quest
project will capture the carbon dioxide emissions associated with
these activities.
· Shell's Quest
project is a joint venture between Shell (60%), Chevron (20%)
and Marathon (20%). It is a fully integrated first of a kind project
in Canada and in the oil sands business. It will capture a million
tonnes of carbon dioxide per year with 25 years capacity.
· Shell's oil
sands business didn't start until 1965. It was a precursor to
Sun Core which started the first facility. Wanted to prove the
technology in place. Sun Core started in 1973. It wanted to prove
that you could reliably make a barrel of oil. There was no substantial
investment up to early 1980s. The main focus was to demonstrate
the technology. The amount of energy needed was cut at least in
half which reduced environmental impact as well as improved the
economic case. Investments were made through 1990s into early
2000s including from shell. There was a focus on heat integration
and improving the performance of the assets. Protecting the environment
was not the driving force behind the improvements made. As the
technology developed and became a larger and larger part of the
Canadian economy, the industry realised that environmental performance
was not where it needed to be. Being frank there is still a long
way to go. Continually trying to reduce environment al impact.
· There is a
Canadian Innovation Oil Sands Alliance. This group shares intellectual
property on technology which helps to improve environmental performance.
· The initial
drivers to improve environmental performance were external to
the province and external to Canada, primarily out of European
Union and the United States. In last 7-8 years, there has also
been pressure from within Canada. Canada's citizens have been
concerned about environmental footprint of oil sands. Oil sands
production has increased significantly so there's has been significant
push back from the general public on what they are doing. Public
acceptance has improved because they have been very transparent,
improved their environmental performance, and done what they said
they were going to do.
· The Canadian
Government understands that oil sands are an important economic
driver.
Reception hosted by British Consul General Calgary
with government, academic and industry leaders.
22 November 2013
Tour of Shell's Quest CCS project.
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