Alberta Picks Six Proposals to Develop Canada's First Carbon Storage Hubs

CALGARY, Alberta (Reuters) — Canada's main oil-producing province Alberta on Thursday selected six proposals to move forward with developing Canada's first carbon storage hubs, intended to help cut climate-warming emissions by permanently sequestering them underground.

The proposals are projects put forward by Enbridge Inc., Shell, Wolf Carbons Solutions, Bison Low Carbon Ventures, Enhance Energy and a joint-venture project from TC Energy and Pembina Pipeline Corp.

Thursday's announcement is the latest step in Alberta's efforts to grow a carbon capture and storage (CCS) industry that the International Energy Agency (IEA) says is critical if the world is to hit net-zero emissions by 2050. The IEA estimates carbon storage capacity needs to reach 7.6 billion tonnes, up from around 40 million tonnes currently.

It comes the same week Prime Minister Justin Trudeau's Liberal government released a road map showing how Canada plans to meet its commitment to cut emissions 40-45% below 2005 levels by 2030. 

CCS involves capturing emissions from industrial processes, like oil and gas production, and transporting them via pipelines to underground sequestration sites.

The process is prohibitively expensive for most emitters, while environmentalists say it prolongs the life of a fossil fuel industry that should be replaced by renewable sources of energy.

A number of other jurisdictions, including the U.S. Gulf Coast and Britain, are also pushing to develop CCS hubs that are accessible to multiple emitters and are seen as a way of streamlining the costs and infrastructure required.

Federal Natural Resources Minister Jonathan Wilkinson told Reuters that CCS is one of the top two tools the oil and gas sector can use to cut emissions, and individual projects would cost around C$1 billion ($801.3 million) each.

The six proposed hubs are all located near Alberta's capital Edmonton and will store emissions captured from facilities in the Alberta Industrial Heartland (AIH) zone, home to a cluster of refineries, petrochemical and fertilizer plants.

Tax Credit

The next step is for the companies selected to work with government to assess whether their proposed locations are suitable for storing carbon permanently. If successful they will be awarded so-called "pore space" rights to inject carbon underground.

They will also have to provide open access to all carbon emitters in the AIH region, and affordable use of their hub.

Alberta did not say how much it expects the projects to cost or what their capacity would be.

Provincial Energy Minister Sonya Savage said the government was trying to ensure CCS is deployed "responsibly and strategically" over the long term.

"This will help meet the increasing demand from industry and help significantly reduce emissions," she said in a statement. Savage told Reuters in January the hubs would probably take a couple of years to develop.

The government is also opening a request for proposals for other carbon storage hubs across the province after it received nearly 50 expressions of interest from companies last year.

Canada is the world's fourth-largest crude producer, and oil and gas is the country's highest-polluting sector, accounting for 26% of total emissions. Alberta sits atop the Western Canadian Sedimentary Basin, a huge geological formation riddled with porous spaces, ideal for pumping carbon underground.

Given the cost involved in developing these hubs, Ottawa has promised a tax credit to incentivize CCS deployment, details of which will be released in next week's federal budget.

"(CCS) is an important piece, it obviously requires some partnership between the federal government and industry to ensure that those projects are economically viable," Wilkinson said in an interview on Wednesday.

($1 = 1.2480 Canadian dollars)


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