1Mt Alberta Carbon Capture Project Hits Buffers

by | Apr 30, 2012

The three major companies involved in a carbon capture initiative in Alberta, Canada have dropped out of the project.

TransAlta Corp., Enbridge Inc. and Capital Power Corp. had planned the Pioneer carbon capture and storage project to help combat emissions associated with their oil sands operations, but said last week that they would pay penalties for any emissions, rather than mitigate them, The Globe and Mail reports.

The C$1.4 billion ($1.42 billion) project was to be based at TransAlta’s Keephills 3 coal-fired power plant and would have captured the equivalent of a fifth of Alberta’s total carbon emissions by 2015, the newspaper reports. It had the goal of capturing 1 megatons of carbon annually, according to the developers.

Pioneer would have operated the plant, capturing and storing some CO2, and selling compressed CO2 to other oil sands operations for use in their “enhanced oil recovery” projects.

The decision follows the conclusion of a front end engineering and design study – a initiative that has so far cost C$30 million.

TransAlta blamed weak government regulations for the project’s cancellation. Alberta currently charges companies C$15 per metric ton of carbon emitted over a certain baseline. The company said that the market for carbon sales and the price of emissions reductions were insufficient to allow the project to proceed. It would have struggled to make Pioneer worth the expense, despite the project being the recipient of C$778.8 million in government funding, the company said. The Edmonton Journal’s Graham Thompson believes that the project – contracts for which were signed in 2008 – is a product of a time when Canada “foresaw a world where countries, notably the US, would move to a cap-and-trade system to legislate a reduction on emissions.” The ongoing lack of US cap-and-trade system means no meaningful market for Pioneer’s credits. Thompson reports that a penalty figure of around C$100 a metric ton of carbon would be needed to make the project work.

In other carbon capture news, there has been “limited progress” made by committed governments in reviewing opportunities for carbon capture systems in industry since 2011, according to a report by the International Energy Agency and Global CCS Institute. Tracking Progress in Carbon Capture and Storage says that governments have been weak when exploring the development of industry CO2 “capture clusters.”

Last July, American Electric Power shelved plans to build one of the nation’s first carbon capture and storage facilities, terminating a cooperative agreement with the U.S. Department of Energy. AEP cited the “current uncertain status of U.S. climate policy” and the weak economy as reasons for halting plans for a commercial-scale CCS system at its Mountaineer coal-fired plant in New Haven, W.Va. Plans had called for the system to capture about 1.5 million metric tons of CO2 per year.

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