CTC #91 - Carbon capture ramps up

NEWS

Carbon capture ramps up

What happened: Strathcona Resources is planning a $2B carbon capture and sequestration (CCUS) project at its oilsands projects in Alberta and Saskatchewan.

The project is a partnership with the Canada Growth Fund (CGF), a public fund focused on accelerating decarbonization technologies. CGF will contribute up to $1B for the capital costs of the projects while Strathcona will leverage federal CCUS investment tax credits and grants for its half. 

Strathcona will own and operate the projects with CGF earning a targeted return over time. The deal structure shares risks related to project costs and performance between the two partners, while Strathcona will take on risk related to the future price of carbon.

What’s the context: The combination of new Investment Tax Credits (ITCs) and CGF’s ability to back projects that financial institutions aren’t yet comfortable with are unlocking CCUS projects that the fossil fuel industry has been talking about for years. Shell and ATCO also recently announced a carbon capture and storage project and Entropy committed to its second CCUS project (the first was also backed by CGF).

Why it matters: The feds are banking (literally and figuratively) on carbon capture as a way to reduce emissions for the oil and gas sector. CCUS needs to sequester 60 megatonnes (Mt) annually by 2050 for Canada to meet its climate targets (or 80 Mt if the world is slow to move away from fossil fuels). 

Scaling up carbon capture is key to reducing emissions in a number of industries like cement production, steelmaking, and more where zero-emissions alternatives are still in the early stages of technology development and cost more per tonne than CCUS.

Not so simple: But not everyone is on board with investing in CCUS, particularly for oil and gas. Skeptics argue that carbon capture is a moral hazard, prolonging fossil fuel extraction while having no impact on the 80% of emissions that come from their eventual combustion. Other arguments include:

• Past projects haven’t lived up to expectations, often under-performing by 30-50%

• It’s expensive and investment would be better spent on more mature technologies like renewable energy generation

• There is a slow learning curve because each project is highly customized and complex

• Capturing and storing carbon itself requires energy, which increases emissions

• And captured carbon is often used for enhanced oil recovery

Despite these drawbacks, others like the IEA argue that CCUS will play a major role in getting us to net-zero. Many industries will still be emitting in 2050 (even though we wish they didn’t, it’s a likely scenario) and CCUS can help reduce those emissions.

Retrofitting CCUS onto existing facilities is more cost effective on a per-tonne basis than building new capacity with alternatives, and CCUS could accelerate wind and solar by decarbonizing gas plants used for meeting peak demand..

The bottom line: The moral hazard is a real challenge, but we’re going to need carbon capture in some capacity. Particularly in the near term while alternatives for difficult to decarbonize sectors get to commercial scale. However, policy guardrails and aligning these investments with our long-term climate ambitions will be critical to threading the needle.

CLIMATE CAPITAL

♻️ CO2Brew raised $800K in pre-seed funding led by Avatar Innovations for its circular CO2 system for brewers. CO2Brew captures high purity CO2 from the fermentation process and enables breweries to reuse it for carbonation. 

🏢 Evercloak received $1.1M from Natural Resources Canada to develop their energy efficient air conditioning and dehumidification for buildings. The company also landed a US$350K loan from New York State for a pilot project. Air conditioning accounts for 10% of the world’s electricity consumption and will triple by 2050.  

💧 Ekona Power also secured a $1M investment from NRCan to expand their low-carbon hydrogen pilot plant. Ekona produces hydrogen from methane (natural gas) with solid carbon as a by-product which can be sold and eliminates the need for carbon capture systems.

🔋 Saltworks Technologies secured $4.9M from the federal government for their technology that converts lithium brine to lithium battery precursors. NORAM Electrolysis Systems also received $4.5M to support industrial-scale demonstration of their membrane electrolysis technology for lithium production.

⚛️ General Fusion received funding through B.C.’s Integrated Marketplace program to improve the diagnostics for its fusion demonstration machine.

💰 Emissions Reduction Alberta invested more than $44M in 21 clean tech projects including:

• ArkeaBio which will test a novel innoculant to target methane-producing bacteria in cattle

• Arolytics is developing software for oil and gas emissions data and optimizing methane leak response

• DERBI will demonstrate the benefits of virtual power plants for consumers and grid operators

• Highwood Emissions Management will validate their software that combines multiple data streams to deliver more accurate methane reporting

MILESTONES & PRODUCT

🏡 Jouleia launched a new product aimed at helping homeowners switch to heat pumps with end-of-life planning for their furnaces. The service provides insight into the risk of a furnace breaking down and surfaces resources on heat pumps, rebates, and installation services.

Dive deeper: Listen to our interview with Jouleia co-founder Paul Sehr on The Climate Cycle podcast

🪫 Electric snowmobile maker Taiga Motors filed for bankruptcy and is looking for buyers. The company cut 100 jobs this year or 30% of its workforce as it struggled to make sales, particularly with recent mild winters.

IN THE NEWS

☀️ Renewable advantage: Despite having the second highest share of hydro in the G20, Canada dropped to 14th in new renewables construction according to Ember. The drop is a result of more wind and solar deployment around the world coupled with Alberta’s pause on renewables and a move away from renewables by Ontario (despite building more wind and solar than any other province for many years).

📈 Climate contradiction: A new report argues that insurers are redistributing the risks and costs of climate change to consumers. Shareholder advocacy organization Investors for Paris Compliance found that the seven largest Canadian insurance firms have increased rates by 36% (adjusted for inflation) due to more climate-related claims, while continuing to invest billions in fossil fuel assets.

📜 Staking a claim: Grassy Narrows First Nation is taking the Ontario government to court over the province’s mining claim system. Under the Mining Act, prospectors do not need to consult with First Nations before staking claims. The action follows a similar case in B.C. where the Supreme Court ruled the mining permit system did not fulfill the province’s duty to consult.

☣️ Forever chemicals: The federal government plans to restrict the use of PFAS. The feds noted that PFAS, or “forever chemicals”, are entering the environment at levels harmful to human health. However, fluoropolymers, a widely used type of PFAS, were excluded and will get a separate assessment due to having “different exposure and hazard profiles”.

BIG PICTURE

The technology to decarbonize road transport is here, as battery prices drop to an average of $53/KWh in China

Could cities become carbon removal leaders?

Suppliers are feeling the heat on emissions as Lego and Amazon announce new policies

Climbing fossil fuel use could lead to a “disorderly” transition

The UK’s new National Wealth Fund sets its sights on decarbonizing heavy industry

Microsoft purchased 500,000 tonnes of direct air capture carbon credits

LISTEN

Dive into the world of sustainable materials in the latest episode of The Climate Cycle podcast featuring Stephanie Lipp, co-founder and CEO of MycoFutures.

MycoFutures is creating an animal-free, plastic-free and non-toxic leather alternative using mycelium, the root system of fungi. We talk about Stephanie’s journey from mushroom farming to materials startup, how they turn mycelium into durable materials, and the road to scaling up.

Listen below 👇

COMMUNITY

💡 CICE July Call for Innovation: The B.C. Centre for Innovation and Clean Energy is seeking breakthrough solutions in hydrogen, batteries and energy storage, and low-carbon fuels. Apply by August 1st.

💡 Call for Innovation: Wildfire Tech: CICE is also seeking innovations focused on wildfire prevention, mitigation and adaptation with $3 million in funding available. Apply by August 7th.

💻️ VP Finance / CFO at Spare Labs: This role leads financial operations and be a core part of the executive team. Help unlock the future of shared transportation.