Increasing Demand: Commercialization of Carbon Capture, Utilization and Storage (CCUS)

October 05, 2023

Written By Zakariya Chatur, Celina Glabus, Peewara Sapsuwan and Shawn Munro

Introduction

As demand for Carbon Capture, Utilization and Storage (CCUS) technology increases, energy producers across Canada can capitalize on emerging opportunities. Bennett Jones had the privilege of being named the Official Legal Sponsor of the 24th World Petroleum Congress (WPC): a platform we leveraged to showcase our 101 years of expertise across the spectrum of the energy industry. Bennett Jones was also the Calgary Chamber Feature Member in the lead-up to the event including an insightful interview with Managing Partner Pat Maguire. "We really grew up with the economy in Alberta with the oil and gas sectors," said Pat, "and as the economy evolved and diversified, we've evolved and diversified with it." Kevin Myson and Jessica Kennedy also highlighted the opportunities that CCUS commercialization presents for energy producers across Canada. A summary of these opportunities, the Federal Government's new Carbon Management Strategy and other considerations for CCUS commercialization is provided below. 

Industry Commitment to CCUS

Key players in the oil and gas sector have shown tangible commitment in pivoting towards sustainable and affordable sources of energy, with significant investment in the CCUS-related R&Ds. There are currently twenty-five potential CCUS projects being evaluated by the government of Alberta. One proposed project that featured prominently at the WPC was Pathways Alliance, a collaboration of a number of Canada's key players in the energy sector, which plans to get its $16.5-billion carbon capture project operating in northern Alberta by 2030.¹ With Alberta's dynamic and mature energy sector, the province has the capacity to build a robust and competitive CCUS market.

Discussions at the WPC also demonstrated that energy adjacent industries are integral to CCUS technological research, development and validation, and eventual implementation into viable CCUS projects. Alberta Premier Danielle Smith acknowledged Heidelberg Materials, a cement company planning to construct a CCUS facility in Edmonton.² Even Emissions Reduction Alberta, one of the biggest investors in CCUS technology, recognizes that the cement, fertilizer and power generation sectors can contribute to CCUS feasibility.³ 

Important CCUS Considerations

Despite the excitement around CCUS, industry leaders are reminded of the challenges they face to get projects off the ground. It was highlighted at the WPC that carbon capture projects face political and regulatory uncertainties which it must clear before construction can start.⁴ 

Uncertainty in carbon pricing and federal regulatory trajectories can present additional challenges to CCUS commercialization and project viability. A report by the International Institute for Sustainable Development (IISD) suggests that capital projects could continue to see high carbon pricing because of the technology's new developments.⁵ The Federal Government has developed a Carbon Management Strategy to drive CCUS commercialization and development and create economic opportunities for energy producers in Canada. 

Canada's Carbon Management Strategy

On September 27, 2023, the Federal Government released its Carbon Management Strategy, which outlines five federal priorities to promote a competitive and robust carbon management sector.⁶ The first is to accelerate innovation and RD&D, including to develop and improve the commercial viability of carbon management technologies. The second is to advance policies and regulations, including to ensure regulatory frameworks underpin safe and responsible carbon management development, and to align carbon management standards with global partners. The third is to attract foreign investment and trade opportunities, including to showcase carbon management technologies to new foreign buyers and partners. The fourth is to ensure Canada develops and deploys carbon management projects and infrastructure to meet emissions reductions targets. Finally, the Federal Government plans to grow inclusive workforces, noting that a diverse and inclusive workforce can contribute to Canada's competitive natural resources labour force.⁷ We believe these policies will increase confidence in lenders and financing entities in project viability. These policies may also provide those seeking to develop a new project with more choices.

Alberta's provincial CCUS program will likely be announced before the United Nations Climate Change Conference in November. Bennett Jones will provide an update on Alberta's CCUS program when it is announced.

Conclusion

Bennett Jones has experience in energy and infrastructure project development including in power, renewables, clean technology and hydrogen, and developing strategies for industries to capitalize on current and upcoming initiatives of a low-carbon economy. To discuss the potential opportunities and implications of CCUS commercialization, please contact Shawn Munro, Sean Assie, Ashley White or Luke Morrison. 

¹ Amanda Stephenson, The Canadian Press, "Pathways Alliance watching Trans Mountain's latest hurdles with dismay" (21 September 2023) online: <bnnbloomberg.ca/pathways-alliance-watching-trans-mountain-s-latest-hurdles-with-dismay-1.1974686>. See also generally the Pathways Alliance website.

² Scott Strasser, Edmonton Journal, "Call for wealthy nations to lead on net-zero" (20 September 2023) online: <epaper.calgaryherald.com/article/281556590436504>.

³ Supra note 2.

⁴ Supra note 1.

⁵ Laura Cameron & Angela Carter, International Institute for Sustainable Development, "Why Carbon Capture and Storage Is Not a Net-Zero Solution for Canada's Oil and Gas Sector" (February 2023) online: <https://www.iisd.org/system/files/2023-02/bottom-line-carbon-capture-not-net-zero-solution.pdf>.

⁶ Government of Canada, "Canada's Carbon Management Strategy" (27 September 2023) online: <natural-resources.canada.ca/climate-change/canadas-green-future/capturing-the-opportunity-carbon-management-strategy-for-canada/canadas-carbon-management-strategy/25337>.

⁷ Ibid.

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