While a landmark oilsands carbon capture project begins in Alberta to bury some one million tonnes of greenhouse gases per year, the company responsible is hoping it won’t be buried along with them as storage costs soar.
Led by Royal Dutch Shell PLC, project “Quest” aims to gather carbon dioxide (CO2) emissions from the Scotford upgrader, a huge oilsands operation northeast of Edmonton, and pipe them to a site 80 kilometres north. The gases would then be injected 2.3 kilometres below the surface, where they would eventually cling to deep-rooted rocks.
Quest is backed by the Alberta government to the tune of $745 million, with the federal government adding an additional $120 million.
The province created an enticement for Shell under its Alberta Carbon Offset System. The company can sell its carbon credits, plus bonus ones. The company was offered a two-for-one credit ($30) per tonne of carbon buried. Despite the project’s huge $1.35-billion price tag, Quest’s carbon credits would mean it pays only $155 million over the project’s first decade of operation.
On the European market, a tonne of carbon currently trades for about $10.
While the savings seem significant, carbon capture storage (CCS) is still viewed as purely a move to protect the environment, not a company’s bottom line. Provincial and federal offsets notwithstanding, Quest officials speculate it costs upwards of $72 per tonne to manage a CCS project.
The Alberta government is currently examining the possibility of raising the price of carbon.
According to the Pembina Institute, Alberta is counting on CCS to deliver 70 per cent of the emission reductions it needs to hit its 2050 emission reduction target.
----This story originally appeared on EcoLog.com on September 14, 2012. -----