Pembina Institute

Pembina reacts to Government of Alberta decision to provide bonus credits for carbon capture and storage offsets

Released: June 24, 2011

Media contact: Chris Severson-Baker

CALGARY — The Pembina Institute's Chris Severson-Baker made the following statement in response to today's announcement of bonus credits in the province's offset system for select carbon capture and storage (CCS) projects:

Role of CCS in fighting climate change

"As one piece in a portfolio approach to tackling climate change, carbon capture and storage has the potential to contribute a substantial reduction in greenhouse gas pollution from some sectors.

"The Quest project is slated to become Alberta's first CCS initiative that stores emissions in deep saline formations, which could deliver far more permanent storage — and thus a greater net environmental benefit — than enhanced oil recovery projects. If implemented effectively, the Quest project could move CCS a step forward in Canada."

Bonus credits cancel some emissions reductions

"However, instead of making CCS development more economically viable by charging a higher price for greenhouse gas pollution, Alberta's government significantly weakened its regulations with today's announcement of bonus offset credits for some CCS projects.

"Alberta's emission regulation gives companies the option of buying offset credits to allow them to keep polluting, instead of making equivalent emission reductions in-house. For that approach to work, the offsets have to represent real reductions. Today's announcement seriously undermines Alberta's offset system by creating a class of credits that is not based on real emission reductions.

"Fortunately, the Government of Alberta has placed some critical restrictions on how these multiple credits will be awarded, notably excluding enhanced oil recovery projects, and putting a time limit on their use.

A strong carbon price is key

"Alberta energy companies currently face a large cost gap in developing CCS, given that the carbon price is low but the cost of developing the technology is high. Raising the carbon price and requiring energy companies to use CCS when they build new facilities would help to close that gap.

"The Alberta government has said these bonus credits are a necessary step in the short term because the province lacks a sufficient carbon price to make CCS economic. Yet Alberta's government has opposed policies that would create a national carbon price, either through a cap-and-trade system or a national carbon tax.

"In a report released earlier this year, the National Round Table on the Environment and the Economy showed that Canada would see strong economic growth across the country — including Alberta — even if we lead the United States in adopting a broad-based price on greenhouse gas pollution. This finding contradicts the Premier's assertion that a higher price on carbon would hurt Alberta's economy.

"We understand the need to find innovative ways to support the implementation of new technologies, but the reason to invest in carbon capture and storage is to cut greenhouse gas pollution. The bonus credits announced today cancel out that benefit for some CCS projects."

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Learn more: Our latest blog post explains the problems with the bonus-credit offset plan in further detail, and suggests better ways to support CCS development in Alberta.

Contact:

Chris Severson-Baker
Spokesperson
403-899-7423

Background:

Additional resources on carbon capture and storage (CCS) and Alberta's offset system are available online, as outlined below.

  • Pembina Institute critique of loopholes in design of Canadian and Albertan offset systems
  • The Pembina Institute's perspective on CCS
  • Pembina Institute critique of Alberta's offset system (see Appendix 2)
  • National Roundtable on the Environment and the Economy report on economic growth for Canadian sectors under various carbon pricing scenarios
  • Analysis of the cost of developing CCS
  • Background information on Alberta's $2 billion subsidy for CCS
  • Alberta's climate change strategy

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