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Mixed Greens: Another blow for CCS as Canada project shelved

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Just days after the IEA issued a warning that carbon capture and storage technology risked being stillborn without a significant increase in policy support and government funding, the plight of CCS has suffered another setback, with Canada’s largest publicly traded electricity producer abandoning project to trap and store emissions from an Alberta coal-fired power plant. Bloomberg reports that the Calgary-based energy company, TransAlta, said in a statement on Friday that the potential revenue from selling carbon didn’t justify the cost of completing the project – known as Project Pioneer – on which construction was due to start this year. “The technology works and capital costs are in line with our expectations,’’ Dawn Farrell, the company’s CEO, said. “However, the markets for CO2 sales and the price of emission reductions are not sufficient at this time to allow the project to go ahead.”

A joint venture between TransAlta, Enbridge, Capital Power Corp, and the provincial and federal governments, Project Pioneer would have been able to trap as much as 1 million tonnes of CO2 a year from the flues at the Keephills 3 coal-fired power plant west of Edmonton, and then sell the gas to energy companies to use in enhanced oil recovery operations. TransAlta said Thursday that Capital Power Corp and Enbridge decided not to proceed with the $1.4 billion project after running front-end engineering and design studies. But according to BNEF CCS analyst Cheryl Wilson,  “it is no surprise the partners abandoned the project.” In an email on Friday Wilson said the current price for carbon dioxide doesn’t support the cost of the project, and there’s “little certainty on future revenue,” she said. “Pioneer had too many factors working against it.”

And the Edmonton Journal‘s Graham Thomson agrees.” CCS experiments like Project Pioneer came about because of contracts signed back in the summer of 2008, he says, when the then Alberta government “foresaw a world where countries, notably the US, would move to a cap-and-trade system to legislate a reduction on emissions.” And while Alberta currently has a tax of $15 per tonne on large emitters of CO2 that’s based on the intensity of emissions, the experts say what is needed is a tax of around $100 per tonne, to force companies to reduce their emissions drastically. “But that’s not going to happen,” says Thomson. “Alberta won’t move to a carbon tax unless Ottawa does and Ottawa won’t unless Washington does.” The great irony of all this is that the collective failure of US and Canada governments to move on carbon pricing is due in no small part to the lobbying efforts of north America’s fossil fuel giants; the very same companies who stand to benefit greatly from the deployment of CCS technology.

And while TransAlta’s Farrell says “we now know the technology works and we still believe there is a future for CCS,” the stalled Project Pioneer joins the ranks of CCS projects in at least five countries that have been delayed or canceled in the last year, says Bloomberg. The UK canceled plans in October to provide £1 billion ($US1.6 billion) for a CCS project in Scotland, and expects to offer the funds to other projects. An initiative in Italy by Enel is on hold, and Vattenfall scrapped a €1.5 billion ($US2 billion) system in Germany in December. American Electric Power shelved plans in July for the first US commercial-scale carbon-capture initiative. The IEA, meanwhile, estimates that 3,400 CCS plants are needed globally by 2050 to meet a goal of cutting carbon emissions in half.

Carbon price a must: Hansen

Someone else who understands the importance of a robust carbon price is NASA climate chief James Hansen, who told a meeting of the European Geosciences Union in Vienna on Thursday that putting a price on carbon is the world’s best hope at staving off runaway global warming. The US space agency’s top climate scientist told the conference that carbon emissions from cars and factories would need to be reduced by an average of 6 per cent a year to stabilise Earth’s climate by the end of the century, and said that government subsidies to oil, gas and coal companies, worth up to $500 billion worldwide each year, had impeded the transition to alternative technologies. “The most efficient and economically affordable approach is to put an honest price on the different energies,” Hansen said yesterday at a European Geosciences Union meeting. “Presently, we’re subsidising fossil fuels and not making them pay for their costs to society.”

“The air and water pollution from fossil fuels is enormous and borne entirely by the public, just as the cost of climate change will be borne by young people and not the fossil- fuel companies,” Hansen said. “Rather than subsidising fossil fuels or subsidising solar panels, we should simply put a price on carbon.” Bloomberg reports that carbon prices in the EU jumped the most in over a week last Thursday, amid higher electricity prices in Germany and as the UK said its February coal use was the highest in three years. EU carbon allowances for December rose as high as €7.38 ($US9.76) a metric tonne and closed 2.6 per cent higher at €7.34 on the ICE Futures Europe exchange in London.

Japan’s green boost

Japan is set to boost its renewable energy capacity by about 13 per cent this financial year with the July introduction of a price incentive program for generators. Japan’s Ministry of Economy, Trade and Industry said on Friday that the nation would add 2,500MW of clean energy including solar and wind in the fiscal year, up from its current capacity of 18,750MW. Bloomberg reports that utilities must pay above-normal rates to renewable energy producers under the incentive program, and costs will be passed onto power users as a surcharge of as much as ¥0.4 (0.5 cent) a kilowatt-hour, the ministry said. An average household will pay as much as ¥100 a month for the surcharge, it said. Estimates were issued today at a meeting of a panel to set tariffs for solar, geothermal, wind, biomass and hydropower. The five-member panel led by Kazuhiro Ueta, environmental economics professor at Kyoto University, will today submit recommendations to Industry Minister Yukio Edano, with approval expected next month. The solar rate was ¥42kWh for 20 years.

Norway’s EV Leaf affair

Six months after Nissan’s LEAF EV was released in Norway, BusinessGreen reports that over 1,000 of the “bellwether electric car” have been snapped up. The sales have sent the LEAF to ninth on the list of the best-selling passenger cars in Norway in February this year, says the website, and have given it a 2 per cent share of the nation’s car market – as well as making the electric model Nissan’s second highest selling car nationally. And while the forward-thinking Norwegians have obviously taken to the green car, the rapid uptake has also been attributed to the government’s substantial package of EV tax breaks and incentives – the highest level of support in Europe. According to BusinessGreen, no VAT is charged on EV purchases in Norway, the new car tax is waived, and drivers are eligible for free parking, toll exemption and can use bus lanes in Oslo. There are also around 3,500 public charging points in the capital, many of them free to use.

“The Norwegian package of incentives is unsurpassed and the recharging infrastructure is established and accessible,” Olivier Paturet, general manager of Zero Emission Strategy at Nissan Europe, said in a statement. “We can see that Norway is leading the way with its proactive approach to encouraging its citizens to drive electric vehicles. We hope it will continue with the further development and upgrading of the charging infrastructure.”

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  • David Rossiter

    I see the magic $100 per tonne of carbon for CCS is again referred to in the Transalta Pioneer article. This represents about A$0.09 to 0.13 per KWh extra cost on generated electricity for typical coal fired power stations probably more than a doubling of generated cost of electricity from coal. But maybe that is the cost that has to be borne for CCS. These are the sorts of numbers and bigger we heard about 15 years ago for this technology and yes the technology works but still we have yet to see it at the GW scale only at the MW scale so far.