Mr. Stephen Kaufman (Chairman, Integrated CO2 Network) at the Natural Resources Committee

Thank you, Mr. Chairman and honourable members, for the opportunity to speak to your committee on behalf of the ICO₂N group.

I would like to specify that my comments and answers to your questions will be in English. The subject is complex, and I am not bilingual.

I'm sorry about that.

I'd like to start with a short introduction on the Integrated CO₂ Network, also known as ICO₂N. I'm the chairman of ICO₂N, and I also happen to work for Suncor Energy during my “day job”.

ICO₂N is an initiative of 17 of Canada's largest industrial companies, including the coal-fired power sector, oil sands, and others. Companies in ICO₂N represent over 100 million tonnes of annual CO₂ emissions, about 15% of Canada's total. They also represent about 95% of the current oil sands production and over 60% of Alberta's electricity production.

The group's mandate is to advance carbon capture and storage in Canada. We've been working on this goal since 2005. Over the last five years, ICO₂N has completed significant technical, economic, and policy work on all aspects of CCS, including detailed economic analysis of large-scale CCS in Canada.

Our work was instrumental in the conclusions of the Canada-Alberta task force on CCS in 2007 and the Alberta CCS Development Council work in 2008. We've openly shared all of our analysis and work with Natural Resources Canada, Environment Canada, and other federal and provincial departments. I believe it's fair to say that ICO₂N has been and continues to be the leader in CCS analysis and advice to industry, government, and the public in Canada.

I had the pleasure of speaking to this committee in 2006. Many of our early conclusions about CCS have since been verified. Today I'd like to look forward a little on how and why Canada can promote the deployment of this technology.

As to the importance of CCS, as was mentioned by earlier speakers, we have large industrial plants in Canada with the potential to capture CO₂, which are located in close proximity to world-class geological storage locations. Canada has a unique opportunity to be a world leader in implementing CCS. The potential to use CO₂ for enhanced oil recovery is a key feature in Canada, which also improves the viability and economics of CCS.

Carbon capture and storage is a critical part of an integrated energy and environmental strategy for Canada. The large volume of CO₂ reductions that are achievable through CCS makes it one of Canada's most significant ways to reduce emissions and meet greenhouse gas reduction objectives. CCS is a solution that can complement other CO₂ reduction approaches, including important ones such as energy conservation, renewable fuels, and lower carbon energy sources.

The environmental importance of CCS has clearly been identified by our colleagues at the Pembina Institute who spoke earlier. It's also been demonstrated in recent reports by the National Round Table on the Environment and the Economy and by the Delphi Group.

We've actually provided you with a couple of packages of material, along with my presentation comments. One is a report by the Delphi Group. I've included a two-page summary of that inside what we've distributed. We've also provided a copy of our ICO₂N report, which details the economic analysis and technical analysis that we've done on CCS. This is for you to review when you have time.

It is important to recognize that the Delphi report shows that CCS is both a significant volume contributor, as well as very cost-effective when compared to other CO₂ reduction alternatives.

Carbon capture and storage has been identified as an international priority as well. The G8 countries, as you know, are going to be in Canada in June. They have set an objective of having 20 CCS projects under way by 2010. The IEA has identified CCS as one of the most important technological solutions to curb greenhouse gases. The IEA stated last week that CCS presents Canada with an opportunity to develop a technology that can reduce GHG emissions on a large scale.

CCS can be the next large-scale Canadian infrastructure development that will enable sustainable growth of our energy industry. It can help to maintain Canada's economic well-being, as it allows for the reduction of GHG emissions from some of our largest and fastest-growing sectors, such as coal-fired power generation and oil sands production and upgrading. Both of these key sectors have a very real role to play in a clean energy future for North America. In addition to the energy sector, CCS could help other sectors, such as chemicals, fertilizers, steel, and cement, address their GHG intensity in the same way.

CCS is also an important part of the clean energy dialogue that is under way between Canada and the United States. An effective advancement and implementation of CCS in Canada will strengthen our position in international climate change discussions and will position Canada for larger-scale CCS deployment ahead of policy developments that may happen in the U.S. and internationally.

The potential for CCS has advanced favourably in the past five years. However, the significant cost of constructing CCS facilities has resulted in only a few full-scale projects proceeding globally. These are in Algeria, the Norwegian offshore, and southeast Saskatchewan, notably with the CO₂ source coming in from the U.S.A.

More extensive adoption of CCS is challenged by issues of cost, design optimization, and a lack of clear international agreement on the pace of action on climate change. Ongoing research and development is necessary to enable new and more efficient capture technologies to emerge, and to refine storage and monitoring techniques. At the same time, piloting and field demonstrations are essential to solve the cost challenge.

Accelerating deployment of CCS can set the stage for more efficient, cost-effective rapid roll-out of this technology. It can help avoid carbon lock-in at new facilities by ensuring they can be built now to have the capability to reduce their emissions in the future. It will also allow industry to learn and develop the technology, ultimately resulting in greater CO₂ emission reductions at a lower overall cost per tonne.

CCS is in a transition period. The cost of technology is wide ranging, depending on sites, and is too high to be commercial today. You'll see on page 4 of our bound report a graph indicating the cost ranges for CCS. Actually, at the back page of my presentation comments there's a graph that illustrates where we're at in CCS and the fact that we're at this transition stage.

It's important to note that this situation is comparable to that of other emerging technologies, such as renewable energy, biofuels, and new nuclear power. As was determined in the Delphi study, none of these technologies is cost competitive with their historic fossil fuel alternatives, so governments have chosen to help deploy all of these technologies by providing public support.

Governments worldwide have a role to help accelerate CCS development. Industry will contribute its part, but a joint effort from industry and government is required during the transition period. Over the last several years, the federal government has promoted the initial deployment of CCS through investments in the ecoENERGY program, a very positive and necessary first step.

The current CCS development programs in Canada are working to address the challenges. These programs have resulted in the development of more than 10 world-leading projects that span the breadth of CCS technical requirements. That's not only demonstrations, but also some of the research studies and things to do with geology in Nova Scotia and other areas of investigation of CCS. It includes, of course, lab studies, industrial scale, what we call pilots, which are of a relatively small nature, and then the large-scale demonstrations.

There are six of these large-scale demonstration projects in western Canada that are expected to be operating by 2015, and that will solidify Canada's position as a world leader in CCS. In fact, the two largest capture projects are being executed by companies that are members of ICO₂N. They are the TransAlta project that you heard about earlier, which has as its partner Capital Power, and the Shell Canada project. It's interesting to note that the Shell project is going to use an amine solvent and TransAlta's project is going to use chilled ammonia, which are two competing technologies for how this will work. These are excellent examples of using demonstration projects to prove which technology will be best. In all of these cases, of course, it's important to note that provincial governments are participating. This is a necessary element that assures alignment of interest across the nation.

In conclusion, carbon capture and storage has tremendous potential to reduce Canada's CO₂ emissions and contribute to a more sustainable energy future. Canada is on the right path with its investment in CCS and is aligned with what other countries are doing, perhaps even ahead. However, industry and government cannot rest on the current programs and projects and need to continue to invest in this work. Collectively, we require full-scale demonstration of the existing technologies to confirm costs, reliability, technology choice, and ensure public confidence.

The full range of policy options to advance major CCS capital investments must continue to be explored, both in Canada and abroad. This includes aligning the expected GHG regulations with complementary tax, policy, and specific regulations related to CCS.

There is a central role for government in reducing investment and regulatory uncertainty to help close the economic gap and encourage CCS. It's also incumbent on government and industry to liaise with other countries and encourage knowledge sharing to accelerate collaborative work and avoid duplication. By working together, industry and government can continue to set a positive climate for CCS and accelerate its deployment towards full-scale adoption. Given the right environment, industry will do its part by mobilizing capital and technological expertise. CCS will be a major part of Canada's energy and environmental strategy in the years ahead. Now is the time to get the policy, regulatory, and investment frameworks right and to fund ongoing work to ensure CCS reaches its full potential.

Thank you for your attention. I look forward to your questions.