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[Arctec]

Ottawa advised to underwrite carbon technology

SHAWN McCARTHY
Saturday, March 10, 2007
OTTAWA — Financing for a CO{-2} pipeline may be politically attractive, but governments would get a better bang for their climate-change-fighting buck by underwriting carbon-capture technology at a planned new coal plant, says one member of a federal-provincial panel set up this week by Prime Minister Stephen Harper.

The panel member, University of Calgary engineer David Keith, added that Alberta's new carbon tax, announced this week, is simply too low to create much incentive for oil companies, utilities and other emitters to adopt expensive new technologies, such as carbon capture and storage.

"These regulations are not remotely commensurate with the magnitude of the problem," said Mr. Keith, a long-time proponent of so-called carbon sequestration as a means to combat climate change. "But you have to start somewhere."

Mr. Harper and Alberta Premier Ed Stelmach made a series of environmental announcements this week. Mr. Stelmach announced that major industrial polluters will be required to cut their carbon dioxide emissions per unit of overall production by 12 per cent by the end of the year, or face a $15-a-tonne tax. The Conservative government is also expected to adopt $15-per-tonne tax for companies that exceed emissions limits, a figure that was first proposed by the former Liberal government.

Environmentalists have complained that Mr. Stelmach's "intensity-based" targets will allow real CO{-2} emissions to soar in the province as a result of economic growth and expansion of the oil sands.

In Alberta alone, coal-fired power plants produced 45 megatonnes of CO{-2} emissions in 2004, while the oil sands projects emitted an estimated 27 megatonnes in 2005, a figure that will grow dramatically in the coming years.

Mr. Keith said penalties would have to be twice as high to have a meaningful impact on emissions.

The federal and provincial leaders also announced the creation of a new task force that will recommend how government should help finance the development of a system that would allow oil producers, utilities and chemical companies to capture carbon dioxide emissions and pipe the gas to aging oil fields to be used for enhanced recovery.

Mr. Stelmach said that at least some of Ottawa's promised $156-million contribution would be used to underwrite the construction of a $1.5-billion pipeline needed to transport the CO{-2} from emitter to end user.

Mr. Keith said the proposed pipeline is designed to allay political concerns about growing CO{-2} emissions from expanding oil sands production, but he said a more cost-effective approach would be to focus on coal-fired utilities.

"While in the long run I am very supportive of a CO{-2} pipeline, it's not clear this is the best way to spend your first $1.5-billion on carbon capture and storage," he said. "It would be more cost effective to focus on the next coal-fired power plant, making it a capture and storage facility."

Calgary-based TransAlta Corp. and Edmonton's Epcor Utilities Inc. announced last month their plan to jointly develop a 450-megawatt, coal-fired power plant at the Keephills 3 power plant about 70 kilometres west of Edmonton.

While environmentalists and political critics have focused on emissions from proposed oil sands expansions, coal-fired power plants in Western Canada represent a far greater source of CO{-2} emissions.

TransAlta's chief executive officer Steve Snyder is chair of the federal-provincial task force, which is expected to recommend funding priorities by November.

Company spokesman Joel Thompson said TransAlta believes in the long-term promise of carbon sequestration. But he said the technology for capturing CO{-2} emissions at coal-fired plants is not sufficiently reliable or cost effective to be used for Keephills 3.