Canada must meet its 2030 GHG emission and 2050 net zero targets – failure to do so is not an option. However, it is not possible to do this without fossil fuels, while at the same time meeting energy demands in 8 or 28 years. It is also not possible to utilize fossil fuels without carbon capture utilization and storage (CCUS). Therefore, there is no successful resolution to the climate challenge without CCUS.
Prominent in the debate about climate action is the idea that simply replacing fossil fuels with alternative energy will solve the emissions problem. This would work only if fossil fuels could be replaced quickly enough with reliable and affordable alternatives. In Europe, recent shortages of reliable energy have caused demand for fossil fuel-driven power to spike, increasing the use of coal, depleting natural gas storage to dangerous levels, and driving up energy prices to unaffordable levels. This has been exacerbated by Germany’s decision to shutter nuclear energy. In the UK, wind power production in the North Sea was significantly below average during August and September and natural gas was the only scalable system capable of responding to energy demand. The Texas experience last winter, when their electricity grid collapsed, is a cautionary tale of insufficiently reliable energy production. Canadians too are experiencing significant energy cost increases.
The magnitude of the emissions cuts required to meet Canada’s 2030 and 2050 targets is immense. We need to get from an economy generating 730 million tons of GHG emissions annually to net zero. There is significant risk in assuming that it is even possible to generate the amount of investment in reliable and affordable alternative energy required to meet Canadian demand by these deadlines. There is also significant risk in assuming that we could find and build a blend of alternative energy production capable of delivering sufficient reliable energy quickly enough. While nuclear does provide non-emitting, reliable energy, it is seen to be too dangerous and is slow to scale up. Hydro is non-emitting too, but it damages vast amounts of habitat, and is equally slow to scale up. Solar and wind are good when it comes to emissions and affordability, but they cannot provide the reliability we take for granted. In the long term, some combination of these sources of energy may well fulfill most of Canada’s net zero energy needs, but 9 and 29 years are not the long term.
Canada is a leader in climate policy, reflected in our carbon tax, and the recently announced Investment Tax Credit (ITC) for capital investment on CCUS (excluding enhanced oil recovery). However, the carbon tax has not stimulated CCUS projects likely because of the political risk that a new government might reduce or discontinue it. That makes the ITC especially important. The US Section 45 Q tax credit has resulted in 30 major CCUS projects in the past 3 years. To be at least as effective, our tax credit must adopt critical design provisions, notably: refundability; payment in the year the expenditure is incurred; and a value sufficient to compete with the 45 Q. It must be bolder in scope than the tacit 15 mega tonnes called for in the March budget announcement. It must be available to pension and other large investment funds interested in offsetting emissions associated with their portfolios.
There are some who believe that support for CCUS is tantamount to subsidizing the fossil fuel industry. This position distracts from the sense of urgency and unified sense of purpose required to achieve our 2030 and 2050 goals. The objective cannot, in the foreseeable future, simply be to do away with fossil fuels; it must be to do away with GHG emissions. Fossil fuels, particularly natural gas-fired electricity, provides affordable and reliable energy that is easily scalable and dispatchable, but it is burdened with GHG emissions. CCUS solves that problem.
CCUS opens opportunity for the future of Canada’s economy. Alberta and Saskatchewan in particular have the expertise and motivation to build CCUS facilities which can be exported around the world by Canadian firms. CCUS supports the production of blue hydrogen, a fuel critical to a clean energy future. Any number of industrial processes across the country, including cement, steel, fertilizer and chemical production can be sustained by CCUS.
Simply put, CCUS is critical to Canada’s ability to meet the climate action challenge.