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What is blocking carbon capture and storage projects?

Natasha Kumar By Natasha Kumar Mar22,2024

What's blocking carbon capture and storage projects?

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Canada has announced tax credits for carbon capture and storage, but they take time to materialize.

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The federal and Alberta governments have announced incentives for carbon capture and storage (CCS) projects. Despite this, investments are not released.

Even in the United States, where the Inflation Reduction Act incentives were considered a flagship, projects are slow to take shape.

Current incentives have failed to unite industries, note analysts at S&P GlobalCommodity Insights. Challenges to commercializing [the technology] persist, primarily due to cost.

According to Claude Letourneau, president and CEO of the company Svante, the American incentive of $85 per tonne of CO2 stored was sufficient two years ago. But there was inflation and the cost of projects increased by around 30%.

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The Canadian company is developing a filter to capture CO2. Its manufacturing plant is being built in British Columbia, but most of its projects are in the United States.

South of the border, his company managed to get around the problem by benefiting from another incentive that funds the commercial demonstration.

In Canada, another problem is added to inflation, according to Claude Letourneau. The government has developed several investment tax credits, including one that reimburses up to 50% of CCS infrastructure spending.

These are very good programs to stimulate the CO2 capture industry. But unfortunately, these programs have not been put into law, he explains.

The bill is still in progress. discussion in committee.

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Claude Letourneau points out that the technology can be applied to other industries other than oil.

Without a proclaimed law, investors are not releasing their purse strings, he says, especially since the arrival of a new government could change the situation.

It is absolutely necessary that the government convert each of these programs into law, in the coming weeks, not in the next eight months.

A quote from Claude Letourneau, CEO of Svante

The New Ways Alliance, a group of six tar sands operators, says it encounters the same problem. Its CCS project, on the table for 18 months, is valued at $16.5 billion.

We have a lot of tools on the table , from a financial and regulatory point of view, which are sufficient, but there are a lot of uncertainties, explains the president of the Alliance, Kendall Dilling.

He cites as an example carbon difference contracts which aim to guarantee a price on carbon, even if the policy changes during the life of the project.

We are close […] I think we will end up making a final investment decision to proceed.

A quote from Kendall Dilling, president of the New Ways Alliance

In the meantime, the Alliance will file a regulatory application in the coming days.

The allocation of public funds to highly profitable companies has attracted widespread criticism . At the CERAWeek conference, however, Alberta Energy Minister Brian Jean explained that once in place, the Alliance's CCS project will add $1 to the cost of a barrel of outgoing oil. tar sands.

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Kendall Dilling presented the New Pathways Alliance decarbonization project at the CERAWeek energy conference by S&P Global.< /p>

Industry and governments are betting that the market will overlook this higher cost in favor of low-carbon oil. However, this is not yet the case, notes Kendall Dilling, which makes private investment unattractive.

According to the president of the Alliance , the group has until the end of the year to make an investment decision and achieve its emissions reduction targets by 2030.

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Natasha Kumar

By Natasha Kumar

Natasha Kumar has been a reporter on the news desk since 2018. Before that she wrote about young adolescence and family dynamics for Styles and was the legal affairs correspondent for the Metro desk. Before joining The Times Hub, Natasha Kumar worked as a staff writer at the Village Voice and a freelancer for Newsday, The Wall Street Journal, GQ and Mirabella. To get in touch, contact me through my 1-800-268-7116

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