Part One of a three-part series
Canadian ingenuity taught Albertans to wring oil out of sand -- generating hundreds of billions in wealth for the country – created the CANDU nuclear reactor, which has operated safely for decades in seven countries, and pioneered hydrogen fuel cell and direct-air carbon capture technology.
That ingenuity and innovation continues, with Canadian oil companies developing solvent-based methods for in situ oil extraction (instead of energy-intensive steam) and even helping to finance direct air carbon capture. (Alberta oil baron Murray Edwards, founder of Canadian Natural Resources, is one of the investors in Carbon Engineering.)
Canadian companies are also working on developing a next-generation molten salt nuclear reactor (Terrestrial Energy) and even attempting fusion power (General Fusion).
So Seamus O’Regan, Canada’s Natural Resources minister, doesn’t buy the argument that Canada can only achieve its net-zero climate change objectives by shutting down Canada’s oil and gas industries.
In fact, he said he doesn’t think Canada can achieve its net-zero objectives without the oil and gas industry and all the innovative capabilities it can bring to bear to the challenge.
At a virtual energy forum hosted Thursday by the Greater Vancouver Board of Trade, O’Regan repeated what he had said at a Globe conference in February: “Canada cannot reach its climate goals without the oil and gas industry, without our oil and gas producing provinces of Alberta, Saskatchewan, and Newfoundland and Labrador. It can't. There's no getting around it -- too big a part of our economy.
“This is serious, and we’ve got to do it well, because hundreds of thousands of jobs and our biggest national export is on the line.”
Energy forum moderator Radha Curpen, a managing partner specializing in environmental and aboriginal law at Bennett Jones, pointed out that in 2019, oil exports generated $62 billion in export revenue – Canada’s largest.
“We shouldn't forget that we need, for Canada to recover -- to strongly recover -- we need a robust oil sector,” she said. “I don’t want to lose sight of that fact.”
It is with industry’s participation that the federal government plans pursue low-carbon initiatives, including strategies to make Canada a leader in both hydrogen production and next-generation nuclear power.
O’Regan noted that energy markets are changing, and investors demanding companies address climate change, and other ESG (environmental, social and governance) issues. So it’s not just national governments that are requiring industry to innovate and lower their greenhouse gas intensities.
“Big money is taking action and many investors now require climate plans from portfolio companies,” he said.
Canada is blessed with an embarrassment of natural resource and energy riches. It is the second largest producer of uranium in the world, the third largest producer of electricity, the fourth largest producer of natural gas, and fifth largest producer of oil, according to Natural Resources Canada. It also produces many of the minerals and metals that are critical to an energy transition.
It is also an innovator, having produced the CANDU reactor -- producing zero-emission power in Canada and six other countries – and the first commercial hydrogen fuel cell maker – Ballard Power (TSX,NYSE:BLDP).
“This is the strong foundation on which we will build our clean-energy future,” O’Regan said.
O’Regan said the Trudeau government will soon release two key strategies that will be an important part of Canada’s energy transition.
“We will soon be releasing our hydrogen strategy for Canada, which is going to be an ambitious call to action to make us one of the world's top three producers of clean hydrogen,” O’Regan said.
“We are also working on Canada's action plan for small modular reactors, because nuclear energy will be an important part of getting to net zero emissions by 2050. The International Energy Agency confirmed as much and released a landmark report last year that found that achieving our climate goals without nuclear energy would take much longer, with a greater risk of failure, and at a price tag that could be as much as $1.6 trillion U.S. higher.
“So we’re investing in nuclear, we are investing in geothermal, we are investing in tidal energy, in biofuels, and of course expanding our capacities for wind and for solar.
“Canadian ingenuity and imagination is driving all of this, and we want more,” he added.
The Trudeau government has promised to launch a new fund to attract investment in clean technology and a 50% cut to the corporate tax rate for qualifying clean-tech companies.
The Canadian Energy Regular recently published an outlook that forecasts Alberta will increase oil production by nearly one million barrels per day by 2040, and will still produce about 5.3 million barrels per day by 2050.
Clearly, continuing to be an oil producing nation while trying to achieve net-zero emissions targets is going to require a range of technologies, including increased carbon capture and storage.
Earlier this year, the Alberta Carbon Trunk pipeline was commissioned. It uses CO2 captured from industrial processes and pipes it to conventional Alberta oil fields, where the CO2 is used in enhanced oil recovery. Most of the CO2 used in that process stays underground. The pipeline has the capacity to transport and sequester 14.6 megatonnes of CO2 annually.
While much of the carbon captured from industrial processes like petroleum refining and petrochemicals would be sequestered underground, some of the captured CO2 can be used to make a range of low-carbon products, including jet fuel, said Anna Stukas, vice president of business development for Carbon Engineering.
Carbon Engineering uses direct-air carbon capture, which means it can take it straight out of the air – it does not need to capture the CO2 from industrial flue stacks.
“Eventually we’ll be doing permanent carbon removal, or creating negative emissions, to counteract the positive emissions that we have from industry,” Stukas said. “Or we can combine it with useful products.
“For example, if you combine it with low-carbon hydrogen, we can actually create drop-in, compatible, ultra-low carbon fuels, like diesel and jet fuel, that help to decarbonize hard-to-decarbonize sectors like long haul transport and aviation.”
As for conventional oil and gas companies, many have committed to lower their emissions intensity. FortisBC, for example, has recently adopted a 30 by 30 plan, which would reduce the emissions produced from using natural gas by 30% over the next decade.
That strategy has four key pillars:
- increased production and use of renewable natural gas and hydrogen
- developing LNG marine bunkering for ships switching to natural gas
- energy efficiency and conservation
- investing in electric vehicle charging stations
FortisBC plans to have 15% of the natural gas it supplies made up of renewable natural gas by 2030. Renewable natural gas can be made from organic process (capturing the methane from landfills and dairy farms), or from synthetic gas made from wood waste.
FortisBC has also just published a long-term strategy that demonstrates how the existing natural gas system can be harnessed and paired with increased electrification and hydrogen and renewable gas production to help B.C. meet its own ambitious GHG reduction targets.
It uses two models, one of which is strictly along the lines of “electrify everything.” The other model, called, the Diversified Pathway, uses the existing gas infrastructure to pivot towards cleaner gas through hydrogen and renewable natural gas.
Compared to a strict electrification scheme, the report says the diversified pathway achieves the same emissions reductions objectives by 2050, but at a cost that is $100 billion less.