Carbon capture projects lag as companies fear risk

Tension between industry, government over exposure borne by taxpayers

- AMANDA STEPHENSON

Capital Power cancelled plans for a proposed carbon capture project at its Genesee power plant near Edmonton this spring, saying while the project is technically viable, the economics don't work.

The question of who should bear the financial risk for pricey carbon capture and storage projects has become a stumbling block slowing the technology’s adoption in Canada.

It has been half a year since privately held Entropy Inc. inked a deal with the federal government that saw Ottawa agree to underwrite much of the risk for the company’s proposed carbon capture and storage project.

Entropy said it would go ahead with its $49-million second phase of the project — at parent company Advantage Energy’s Glacier gas plant in Alberta — after the two parties signed the first-of-its-kind deal. Called a “carbon offtake agreement,” or “contract for difference,” the deal was hailed by many as an example of what needs to be done if Canada is to see a significant rollout of carbon capture and storage.

But six months after the Entropy agreement, not a single other company has successfully negotiated a similar deal. And the bulk of carbon capture projects proposed for Canada still only exist on paper, with final investment decisions yet to be made.

Carbon capture, or CCUS as it is often called, traps harmful greenhouse gas emissions from industrial processes and stores them deep underground. Its deployment is widely seen as being key to successfully decarbonizing the energy sector.