WATCH ABOVE: Asked whether the federal government is “giving up” on Canada’s carbon capture and storage initiative Thursday, after a $2.4 billion project in Alberta was cancelled earlier this week, Environment Minister Steven Guilbeault said while carbon capture and storage “is happening in Canada,” it is not the “be-all end-all.
So what’s the holdup? It comes down in part to tension between government and industry over the perceived financial risk of CCUS investments, and differing opinions about how much of that risk should be borne by taxpayers. “For carbon capture and storage to work, there has to be a relentless focus on picking the best projects,” Belenkie said.Captured carbon doesn’t have any value on its own as a product, but can lower a company’s own carbon tax expenses by reducing its overall emissions. In addition, companies that deploy CCUS can generate carbon credits to sell to big polluters looking to offset their own emissions.
The sticking point, though, appears to be at what “strike price” these contracts will be triggered. Entropy’s successful carbon offtake agreement saw the Canada Growth Fund agree to purchase up to 185,000 tonnes of carbon credits from Entropy for a 15-year term at an initial strike price of $86.50 per tonne.
“What the Canada Growth Fund has been trying to do is bespoke negotiations with various emitters, prioritizing projects that they think are particularly good value for taxpayers,” Bernstein said. In a February report, global consultancy Wood Mackenzie warned there is a real chance of the Pathways project being “delayed and potentially scuppered” if industry and the federal and provincial governments cannot come together to underwrite the risk that exists.