Thank you very much, Mr. Chairman and honourable members, for the opportunity to speak to your committee on behalf of our ICON group.
Given that this issue is complex and that I am not bilingual, my comments and my replies to your questions will be in English.
I apologize for that.
The ICON group consists of twelve companies in the oil sands, electricity generation, industrial, and chemical sectors. Their logos are on the front of your package, but just as a reminder, they include Suncor Energy, TransAlta, Sherritt, Agrium, Air Products, Nexen, Shell Canada, Husky Energy, Canadian Natural Resources, ConocoPhillips, Syncrude, and Imperial Oil.
This group has a strong interest in carbon capture and storage, and we've been working toward creating a long-term, integrated carbon dioxide network that can handle large volumes of carbon dioxide. We've been working with both levels of government, provincial and federal, on this concept for about eighteen months, and we now believe we need to jointly, with governments, accelerate that effort.
It's important to understand that ICON is not a single project. It's a set of policies, regulations, and ultimately private- and public-sector investments to make large-scale carbon capture and storage a reality. CCS has tremendous opportunity for Canada, and Mr. Robson of Nexen and I are here today to highlight some of the considerations with respect to CCS as the government develops its national environmental strategy and Clean Air Act.
Before I go any further, I'll just briefly provide an overview of carbon capture and storage, or CCS, for those of you who may not be familiar with it. carbon dioxide is available at very large volumes from industrial sources—typically combustion sources or process emissions. That carbon dioxide can be captured, separated from other contaminants, purified, and compressed, and then it can be transported by high-pressure pipelines for hundreds of kilometres and ultimately be injected into rock formations that are typically two to three kilometres below the surface of the earth, well below groundwater level. In addition, that carbon dioxide can be used, if you choose, as an injection agent into oil fields to help promote oil recovery. That's a technique we call enhanced oil recovery.
There is extensive international recognition of this technology as part of the solution to climate change challenges that we're facing. The U.K., Australia, and even the U.S. are moving forward on CCS. The international panel on climate change has said that it's a safe long-term way to reduce carbon dioxide emissions.
If you look at page 2 in your package, the National Round Table on the Environment and the Economy has made some extensive comment on CCS in their most recent report. They are indicating—and we believe this—that CCS is potentially one of the most substantive and cost-effective ways for Canada to reduce its greenhouse gas emissions over the next five to ten years.
In addition, the endorsement of CCS was provided by the NRCan technology roadmap, which was prepared in the spring of this year.
On page 3, we talk about why CCS is so important to Canada. In short, it's a made in Canada solution. The investments will occur here in our country, the carbon dioxide reductions will occur here, and the technology development can occur here. Canada is in a somewhat unique position in terms of being able to embrace CCS, because it has large carbon dioxide sources that are located near suitable geologic sequestration sites where the carbon dioxide can be stored permanently underground. We also believe CCS is a technology that is to a large degree proven, but one that will advance over time. Canada could become a world leader in advancing this technology and employing it in our country.
Page 4 details some of the findings of the work we've done over the last year. We estimate that up to 20 megatons per year of carbon dioxide could be captured and stored by the year 2015. Just as a context, that would be the equivalent of removing 4 million cars off the road, or some 25% of the Canadian light vehicle fleet.
There are also real, substantial, Canada-wide benefits. We believe CCS may have application in Ontario, the Maritimes, and western Canada. Alberta is probably the location where our ICON concept could be started. The ICON that we refer to stands for “Integrated Carbon Dioxide Network”.
The Alberta map on page 4 gives you an indication of what a network for carbon dioxide capture would look like, collecting that carbon dioxide from the large emission sources that are in Fort McMurray, the Edmonton area, and down in the Red Deer area at the chemical facilities, and moving that product to the western side of the province for permanent storage in deep reservoirs.
The ICON Group believes that an infrastructure network like this will be key to the success of a CCS system. Such a network approach allows us to have economies of scale from a large system. It optimizes the efficiency over time, and it will minimize the environmental impact by only building the system once and to large scale.
Our study work also concluded that it's very beneficial to develop this large-scale system from the start rather than starting small and working our way up to a larger scale. In order to do that, as we describe on page 5, we really need a common vision and an approach that involves multiple industry sectors, plus coordinated input from both the federal and provincial governments involved.
We don't really believe that we need to pursue demonstrations or R and D. We want to focus our efforts on deployment of this technology now, but encouragement of carbon capture and storage has to be balanced as well with the Canadian competitiveness of our industries to ensure that investments can be ongoing. This is particularly true with respect to the oil sands upgrader activity, which needs to be competitive with U.S. refineries and other locations where this upgrading activity could take place.
Slide 6 talks about our conclusions with respect to the market influences on this type of activity. Really, we believe that if this is left to market forces, very little carbon capture and storage will proceed even if there's a tightening of carbon dioxide emission constraints. The risk profile of these investments and the economics of large-scale CCS are simply unfavourable. There is, as a result, a transitional role for governments in helping to enable large scale CCS. A true three-way public–private partnership, with two levels of government participating with industry, is essential.
Any integrated system will have to encompass three elements. It will involve the large scale capture that would be installed at multiple facilities where the emission points are, with investments in the hundreds of millions of dollars. It would involve an open access pipeline system that anyone could use to transport the carbon dioxide. And it would involve the storage infrastructure, including, in the near term, the use of enhanced oil recovery as a revenue source. EOR is quite important, in our view, to help to get the system started, and the revenues from that sale of carbon dioxide can help to offset the cost of the system. Ultimately, though, what we call direct storage or injection into underground reservoirs without a revenue source coming back to you is going to be where most of the carbon dioxide ends up.
Slide 7 shows the policy principles that we think are going to be important to help to develop carbon capture and storage. One of the first is that companies should be able to retain the option to undertake CCS, along with other compliance strategies that they might like to choose. We don't believe CCS is the only strategy that Canada needs to reduce its GHG emissions over time. As a result, for companies, it needs to be one of a portfolio of choices that they can make. We also believe that companies that choose to embrace CCS and install those facilities should have no greater compliance burden for carbon dioxide reductions than other companies who choose not to do CCS.
We also want to make the point that our companies do believe that we are going to be exposed to costs in doing this. We're not going to undertake carbon capture and storage with a view to making money from it. It's not a profitable investment, but it is something we are willing to pay a share of.
The point about how these companies will move forward on projects relates to scale to a large degree. It may be quite likely that companies that elect to use carbon capture and storage may be able to have emission reductions that are actually greater than their reasonable share of national targets. We therefore need to ensure that there's a mechanism in place so that this behaviour can be incented by funds or the sale of credits or some similar mechanism. This will lessen the burden on these companies for this environmental investment.
In closing, I would like to emphasize that we believe that the ICON Group, with our broad multi-industry representation, is the important group to engage with in developing the policy around a carbon capture and storage network for Canada. Our group has done a substantial amount of analysis on how such a system could function. We would be happy later on in the afternoon to answer any questions you might have about that.
We encourage the federal government to confirm that carbon capture and storage is a key part of Canada's environmental strategy, and that the ICON concept is a priority.
Developing an integrated carbon dioxide network will be a transformative environmental step, one that can be most effectively taken as a private-public partnership. Collectively we have the opportunity to begin on the largest CCS deployment in the world. We need the federal government to work with us to develop the scope, the size, and the policy options that will enable ICON. Collaboration is essential, and the ICON companies are ready to engage this government in substantive discussions.
Thank you for your attention. I look forward to your questions.