Craig Golinoski is president of a Calgary-based private equity firm that rebranded itself a year and a half ago from a backer exclusively of small and mid-sized oil companies to an outfit seeking to fund carbon capture and storage projects. But the plan to offer his investors a piece of the energy transition has hit snags.
The oil and gas industry sees CCUS – trapping carbon emissions and storing them underground – as the primary way it can contribute to meeting Canada’s target for getting to net zero by 2050. Most of the discussion is centred on large-scale projects in the oil sands and petrochemicals, from which carbon can flow long distances into a hub. This year the Alberta government selected six developers to build sequestration hubs.
Environmental activists deride carbon capture as a Band-Aid solution to the problem of carbon emissions, an excuse to keep producing fossil fuels when the world should be weaning itself off them.
Canadian developers need such certainty – that carbon prices will rise on the schedule the current government sets, or that there is a mechanism to make up the difference if they do not, Mr. Golinowski said. The idea of a carbon contract for differences in prices is being discussed. That would give banks the security they need to extend financing for CCUS projects. Also, if Canada does not offer similar terms as the United States, the risk is that capital bypasses Canadian developers.
One project has moved forward with participation from one of the world’s largest private equity firms, but the partners are currently shouldering the price risk. Entropy Inc. was established as a unit of Calgary-based Advantage Energy Ltd. to employ technology to capture carbon at an Advantage gas plant in Alberta, and contract out its services to other emitters.
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