Will carbon capture save the climate, or just let us keep burning fuel?

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Jordan Heath-Rawlings I will forgive you if you cannot keep your carbon terms straight as you navigate news on the climate crisis and what we’re doing about it, there is the carbon tax, of course, also called a carbon price. Depends who’s talking about it. You’d better watch your own carbon footprint, but if you don’t, you can buy some carbon credits to offset it like Taylor Swift does. Soil and forests and oceans are carbon sinks, probably best of all the carbon related terms, at least for the planet. And most recently as though it was a fugitive on the run, we’ve been investing in carbon capture. Now carbon capture is exactly what it sounds like sort of. Again, it depends on who’s doing the talking. It’s either a way to save the planet without having to give up the fossil fuel lifestyles we all enjoy. Or it’s a way to allow big oil to keep drilling while claiming they’re doing some good and getting paid for it.

CLIP: While new financial support from the federal and provincial governments encourages more carbon capture facilities, a new report from the International Energy Agency urges a more direct emission solution, produce less oil.

Jordan: The thing is, we are about to spend billions of dollars in tax money on it. So we probably want to know which one of those choices we are committing to. I’m Jordan Heath-Rawlings. This is The Big Story. Dr. Emily Eaton is a professor in the Department of Geography and Environmental Studies at the University of Regina. She specializes in fossil fuels, just energy transitions and natural resource economies. Hello, Emily.

Emily Eaton: Hi. Thanks for having me today.

Jordan: You are very welcome. I’m hoping you can help untangle some of this policy for us. It’s complicated stuff.

Emily Eaton: Yeah, well do my best.

Jordan: Well, why don’t you just start with the basics. What is carbon capture as a technology and what are the tax credits associated with it?

Emily Eaton: So carbon capture utilization and storage is a set of emissions mitigation technologies, which have actually been in use for the last 50 years, but that have really seen more interest lately, especially because some of the recent large reports like from the International Energy Agency and the IPCC, the Intergovernmental Panel on Climate Change suggest that because of the sort of urgency and scale of the emissions reductions that are now required to remain in a safe place for humanity on the globe, that there are only a few pathways left to net zero emissions. And so many of those rely on removing carbon dioxide emissions and sequestering them underground. So these technologies are typically on a, well, I live in Saskatchewan. We have one of the largest carbon capture project in the world on Boundary Dam, which is a coal-fired power plant. And the technology captures the emissions from burning the coal to generate electricity and it liquefies the carbon dioxide and it is then shipped through a pipeline to a nearby oil field where it’s used in enhanced oil recovery. So that’s the sort of utilization in the CCUS, but it could be used for other things as well. And there’s also a set of technologies called direct air capture that is part of CCUS. And there’s only, to my knowledge, one project operating in the world currently using direct air capture. But that would be where you’re sort of scrubbing it directly carbon dioxide directly out of the air and then turning it into a stream of CO2 that you can inject underground.

Jordan: From a climate expert’s perspective, how meaningful could this technology be if utilized widely and done right?

Emily Eaton: Right. Well, I should note I said that the IPCCs reports show most of the available pathways that are left to include the heavy use of CCUS, but there are some pathways to keep the world under two degrees without CC US technology as well. But if applied in the right way, I think it could be really a helpful technology. And to me that would mean it were applied in ways that allow at the same time for the phase out of fossil fuels. And so it shouldn’t be applied on fossil fuel operations because that simply sort of extends the life of those fossil fuel operations. So whether that’s on gas plants or on hydrogen plants, which is really turning natural gas into hydrogen on coal-fired electricity, all of these projects that are the vast majority of the projects that we are currently investing in Canada, they’re really investments in prolonging the life of the fossil fuel industries. And we know that we need to phase out fossil fuels if we want to have a hope of keeping global warming under two degrees Celsius. And so if they were applied to projects like maybe cement production, of course we do need to reduce overall our use of cement in the world or steel. Same thing with steel. We should be really focusing on reduction of those materials. But there are some industries where we don’t have other solutions and it would be useful to use these mitigation technologies, especially in those industries.

Jordan: Where does the government stand on this technology tax credits for it, et cetera? I understand there’s been legislation in the works for a few years now, right?

Emily Eaton: Yes. There has been legislation in the works and announced in previous budgets, and the new federal investment tax credits should be available effective in January, 2024. So the legislation is coming before Parliament imminently. And what’s in these tax credits is a 50% investment tax credit for the equipment that’s used to capture the carbon and then a stackable credit. So you could use one or the other or both, which would be 37.5% for a separate set of equipment that’s required to transport and inject carbon dioxide. So for carbon pipelines, these carbon hubs and trunk lines that the provinces are talking about. Now, there also is a tax credit for direct air capture that gets 60%. But for the most part, I don’t know of any projects in Canada that are really driving towards the direct air capture. It’ll be mostly used in the fossil fuel industries.

Jordan: And what we’re talking about the fossil fuel industry, you mentioned earlier that this is used for something called enhanced oil recovery. What is that? And I guess why is there such a debate around whether that technology should be allowed to apply for this credit?

Emily Eaton: So when the tax credits were first announced in 2022, Chrystia Freeland was very adamant that they would not apply to projects that used enhanced oil recovery. And since then, the government has found a sort of loophole around that, and I’ll come back to that in a second. But what enhanced oil recovery is there are aging oil fields all across Canada. In Saskatchewan where I am again, there’s this Boundary DAM project on the coal-fired plant, which transports the carbon to an old oil field, the Wayburn oil field, and that oil field is using other technologies is depleted, but when they pump the CO2 down into the reservoir, they’re able to sort of flood out the remaining oil that’s left and is not recoverable through other methods. And so what this technology is really doing, and the reason that people are so critical of its use and enhanced oil recovery is it’s allowing new production of oil that would otherwise not be possible without these CO2 floods. And it’s worth noting that of all the carbon captured globally, about 73% of it right now goes to enhanced oil recovery, while less than 1% is going to other industrial uses, and the remaining 27% is stored underground without being put to any use at all. The sequestration in the CCUS really we’re boosting oil production through the use of enhanced oil recovery. And one thing I’m interested in is the extent to which companies in Saskatchewan are claiming they’re sort of double claiming the idea of the carbon savings. So Sask power, the generator of the electricity is saying, look at the equivalent of how many cars we’re pulling off the road every year with our CCUS at the same time as the oil company in the Wayburn oil field is saying, look how green our oil is because every barrel we’re producing is sequestering carbon underground. So there’s a sort of double accounting for this. Well, the total picture is of course, more oil production that wouldn’t have otherwise been possible. And we know that fossil fuels are accountable for more than 80% of global greenhouse gas emissions and that most of the emissions associated with fossil fuels are found in their combustion or in their end use. So even if we can produce oil with fewer emissions, we know that it’s going to be burned somewhere in somebody’s car and that a significant amount of emissions, the vast majority of emissions come from that consumption.

Jordan: Do we know if, considering that the vast majority of CCUS is being done for fossil fuels, do we know if we’re actually making any progress out of it? Are we breaking even? Are we coming out ahead or are we digging ourself further into a hole? I don’t even know if it’s possible to do that math, but I’m trying to get a sense of if this is mitigation or if this is just not doing as much as we could.

Emily Eaton: Well, there’s two ways to answer that question. So one is that because of the way that the emissions reporting works globally, Canada is really only responsible for the emissions that it makes within its own borders. And so Canada exports a lot of its oil to other places in the world. And so the emissions associated with using those fossil fuels are often on another country’s books. And so in this calculation of whether CCUS is actually reducing emissions, we’re only getting part of the picture and that part of the picture is the least polluting part of the picture. But we could also say that we can look at the sort of success rate of CCUS projects around the world, and none of them are targeting a hundred percent capture rates. Most of them are targeting between 80 and 90% capture rates. So again, in Saskatchewan’s Boundary Dam when it was built, the target capture rate was 90%. Well, that sounds really high, but it turns out that the facility almost never met its capture rate, and that actually reduced its targeted capture rate because the oil field wasn’t interested in taking all of its CO2. And so a lot of these projects are because they’re very expensive, they’re also reliant on having somebody to sell the CO2 to. And so how much CO2 they’re capturing is going to be dependent on what their market is for selling that CO2 as well. So we can look sort globally at the capture rates. There was one report that I was looking at from 2022 on 13 flagship CCS projects comprising about 55% of the world’s capture capacity. That report showed that these CCS projects are failing and underperforming more than they are succeeding. And of course, they’re also prolonging the use of fossil fuels and the release of greenhouse gases into the atmosphere. So these carbon capture projects also require electricity or power, doesn’t have to be electricity in that form, but they require power to run them. And so the best estimates are that the facilities themselves might increase the power needs of a operation by up to 25%. So they need a lot of electricity and a lot of power. And so if they’re increasing a project’s consumption of fossil fuels by 20%, and then they’re only capturing at 80, 70, 60%, doing the math to figure that out I think is a really good question.

Jordan: It sounds like these companies, and probably many others are treating this a lot like accountants at tax time, right? Looking for every little loophole, looking for ways you can pass things on to other people’s books. And I mean, I’m not even sure if I’m asking you a question now, but that doesn’t sound like the way to properly tackle the climate crisis and approaching net zero.

Emily Eaton: That’s right. And I think that sort of the climate movements and the climate policy experts are getting pretty tired with these sort of accounting practices that in the end might not amount to any or the kind of significant reductions that we need to avert a global catastrophe. I guess I should say that one of the things that we’ve just seen in the new legislation is despite that earlier insistence from Friedland that these projects, they wouldn’t be covering investment into projects where the carbon was going to be used for enhanced oil recovery. She has since gone back on that. And now there’s a new formula where 10% of the carbon captured actually needs to be stored properly. So through sequestration and the can be used for EOR and the project will still get subsidized by the government. Now only the part that is properly captured will get subsidized by the government, but they’re nevertheless opening the door to these EOR projects. And you can imagine that these are self-reported numbers, and once you’re a company that is involved in both EOR and sequestering, I don’t think the government has the ability to sort of verify and follow up in the way that it needs to.

Jordan: I want to ask you about this government in particular, which has long held itself as an incredibly climate friendly government to see that change that you just mentioned from Minister Freeland, but then also the walking back of that piece of the carbon tax, which of course opens the door to what else might be carved out of that. How are you feeling about this government that has championed climate for so long?

Emily Eaton: So I feel like they’re really showing right now that they’re sort of bowing to the influence of the oil and gas industry in Canada. And so this is sort of the new climate denialism that is sort of investing in things that appear to be solutions to the problems while still engaging in the main sources of the carbon emissions in the first place. And so to the extent that, for example, the government is investing in renewable energy, will that renewable energy, for example, displace our reliance on fossil fuels? I think that’s something to be investigated. In other words, are these going to be additions to an economy that we’re going to continue supporting and that is the oil and gas industry. And if we look at the cost of these investment tax credits, for example, in CCUS, they form part of the largest part of the government’s budget investments on climate mitigation. And so we’re really seeing when we look at where the money is going, the money is going to the very industries that are responsible for the climate crisis in the first place. And so I’m not very optimistic in the sense that I think that, again, we’re really just seeing the power and influence of the fossil fuel industries. They’re looking for ways to at least have plans on paper that I don’t believe that they believe that they can actually achieve those net zero emissions plans, but they know they need to have a plan in order to continue receiving support from the government and from the population.

Jordan: Last question, just because of the big climate conference, was just this weekend, is what you just described a Canadian thing, or is this the tone you’re seeing in the way we’re addressing this crisis worldwide?

Emily Eaton: Yeah, I think it’s definitely the tone more widely, and I think that there’s a big contest on right now about what the future will look like. There’s no more question anymore about the need for an energy transition. I think every government, every business, every institution is drawing up plans about how they’ll transition. But what that actually entails, I think is up for grabs right now. And so we’re seeing a lot of the world’s most powerful industries, again, the industries that are responsible for the climate crisis in the first place, trying to vie for a place in this future, trying to ensure that fossil fuels continue to be part of the future, even if renewables are built out, that fossil fuels aren’t phased out, which is the hope of the climate movement and a lot of climate policy experts, the need for real emissions caps rather than just mechanisms to trade emissions and sort of move things around one’s books and onto another countries, for example. So yeah, I think that all of the regular politics associated with the power politics are at play at these sorts of global meetings such as The Cop.

Jordan: Emily, thank you so much for this. This is a complicated topic. I understand it a lot better now.

Emily Eaton: Thanks for having me,

Jordan: Dr. Emily Eaton of the University of Regina. That was The Big Story. For more big stories, you can head to The Big Story podcast.ca or you can stay in your podcast player and scroll down. They go on for a long way. You can send us suggestions for new big stories by finding us on Twitter at The Big Story fpn by writing to us. The email address is hello at The Big Story podcast.ca. Or by calling us up and leaving a voicemail, that phone number (416) 935-5935. We’ve got The Big Story every morning or every weekday morning anyway at 4:00 AM and your favourite podcast player. We’ve got in this economy and its own feed, which you should go and subscribe or follow or do whatever you’d like to. But if you don’t, it will also be here 4:00 AM on Saturdays. Either way, we’ve got lots of stuff for you. It’s all free. You can find it wherever you get your podcasts. Thanks for listening. I’m Jordan Heath-Rawlings. We’ll talk tomorrow.