Jason Kenney, Premier of Alberta, has partially funded a canceled pipeline project leaving the province on the hook for more than $1.5 billion with loan guarantees amounting to nearly $7 billion in total.
The Premier has also used $3.5 million in public funds to launch an inquiry to seek who is behind anti-Alberta oil-sands “propaganda.” Kenney wanted to find evidence of foreign influence in the anti-pipeline and anti-oil sands opposition. His inquiry has turned up empty.
In fact, both investments at the taxpayers’ expense have turned into dust and left Albertans holding a bag of nothing.
But now, the Premier has suddenly discovered climate change and its association with greenhouse gases. To solve the challenge he has settled on carbon capture and sequestration (CCS) and the funding of projects that can offset emissions that would allow Alberta to continue to harvest the oil sands. This isn’t something new. It just seems to be new to Kenney. After all, Alberta has committed $1.24 billion through 2025 to two older CCS projects: Shell’s Quest, and the Alberta Carbon Trunk Link (ACTL). Both projects received government investment from a previous provincial administration under the New Democratic Party (a democratic socialist party). Kenney’s United Conservative Party (UCP) had inherited them as legacy projects.
What are they?
- Quest was designed to capture over 1 million tons of carbon dioxide (CO2) annually from an oil sands upgrader which represented about 35% of the site’s carbon emissions. It achieved that milestone in the past few years.
- ACTL was a 240 kilometer (approximately 150 miles) pipeline designed to capture, transport, and store up to 14.6 million tons of CO2 annually from two sites in the province with the opportunity to add more emitters over time. It has yet to achieve its CO2 reduction goals.
Both projects when fully operational will capture and store 15.6 million tons of CO2 annually which, according to an Alberta government website on oil sands operations represents only 20% of the oil sands’ total emissions per year.
Alberta has fomented against a federal government policy to put a nationwide price on carbon in the form of a levy per ton. Alberta, rather than coming up with its own carbon pricing scheme has taken the federal government to court to fight the levy which currently amounts to $30 per ton and will incrementally grow to $170 by 2030.
Alberta has been content with a modest sector-based initiative to reduce emissions while pushing a narrative about decreased carbon intensity per barrel of harvested oil sands. None of these policies is equivalent to the federal carbon levy.
It is understandable that without an alternative economic plan Alberta wants to sustain its oil sands operations which are deemed critical to the province’s financial viability. It knows that its court challenge will likely fail.
Is that why Kenney has taken a new tack?
This week’s $30 billion carbon reduction announcement aimed at building a number of CCS and CCUS (carbon capture utilization and storage) projects in Alberta comes with a big ask. The money isn’t coming from the province. It wants the federal government to fork it over with the promise to produce a 30 million ton reduction in CO2 emissions annually by 2030 (just a little over 40% of the current total annual emissions). And Alberta wants the money in annual chunks of $2 to 3 billion.
What is so disturbing about this ask is how sadly out-of-date Alberta has become. Since the first decade of this century, there have been CCS and CCUS projects being talked about. Some have been proposed by industry and started, and then stopped. Others have been critiqued by the academic community as counterproductive to solving the carbon problem. Quite a few have been abandoned by the industry and left for governments to bail out the project.
Before the Paris Climate Conference in 2015, I wrote about the state of the CCS market. The number of projects that had died had vastly outnumbered those completed. And the latter had only made it because of those government bailouts and investments with an industry partner scaling back its financial participation.
So what appears to be happening here is that Alberta has rediscovered CCS and CCUS as a new religion to save the oil sands, and is asking the Canadian federal government to distribute the alms. Stated Alberta’s Energy Minister during this week’s announcement, “We want the federal government to step up…Carbon capture and CCUS have a long lead time, it can take 4 to 5 years to get to the point where they’re even under construction. So if we want to meet our targets for 2030 and beyond, we have to get moving on them now or yesterday.” So where was the Alberta government and the current UCP’s thinking a decade ago considering the lead times?
Will Kenney’s ask fall on receptive ears? It may very well because the new U.S. federal administration and that in Canada are both committed to reducing atmospheric CO2 to net-zero by 2050. In yesterday’s Financial Post, it states that Canada’s Minister of Environment and Climate Change, Johnathan Wilkinson, had meetings with the U.S. Special Presidential Climate Envoy, John Kerry, to discuss climate change cooperation between the two national governments. The current goal is for a coherent policy to be in place by April 22 at an upcoming Earth Day Summit which has been called for by President Biden.
Meanwhile, the Canadian federal government and Alberta have committed jointly to advance CCS and CCUS technology because of their job-creating potential as well as the benefit of overall emission reductions in CO2 and other greenhouse gases. A technology, once largely ignored, now is being seen as an opportunity to create a global competitive advantage for the country and the province.
President Biden, too, has hitched his climate change ambitions to the potential for massive levels of new job creation. The President has set a goal for the U.S. energy industry to be 100% clean by 2050. He wants to upgrade buildings and homes, create millions of new jobs, curb greenhouse gas emissions, and take a global leadership role in combating climate change. And if the opportunities in the U.S. can lead to Canadians exporting CCS and CCUS technology to the U.S. and other countries, then Canada too will reap similar benefits.
So maybe Kenney’s timing is propitious even though his “come to Jesus” moment is a Johnny-come-lately reaction.
