Carbon Capture in Alberta: Offsets, Credits and Projects

Carbon Capture,

Aaron Foyer December 10, 2021

Sponsored Content by McDaniel & Associates

Carbon Capture in Alberta: Offsets, Credits and Projects

Carbon capture is set to grow in Alberta as the Canadian oil and gas industry looks to sequester much of its carbon emissions in the future.

In the International Energy Agency publication, Net Zero by 2050, carbon capture volumes increase from current levels of 40 million tonnes of carbon dioxide (Mt CO₂) per year to 1.6 gigatonnes per year in 2030 and 7.6 Gt per year in 2050.

Over the next 30 years, CCUS will need to grow as fast or faster than wind and solar have grown over the last 20 years.

Of the 7.6 Gt of CO₂ captured globally in 2050, 50% is from fossil fuel combustion, 20% from industrial processes and 30% from bioenergy and direct air capture.

About 95% of what is captured is assumed to be permanently stored in geological formations and 5% used to produce synthetic fuels.

Alberta’s Carbon Credit Market

The Technology Innovation and Emissions Reduction (TIER) program regulates Alberta’s emissions pricing and trading system. This will benefit carbon capture in Alberta.

TIER applies to about 60% of Alberta’s emissions from both EOC’s and EPC’s. Facilities that reduce emissions beyond their benchmark can generate emissions performance credits (EPCs) which can be sold as carbon credits.

More and more, annual purchasers of carbon credits outweigh the amount of carbon credits produced in the province.

Carbon credits have now shifted to a seller’s market in Alberta. For the first time, there is now less than a year’s worth of carbon credit inventory for the demand. These market dynamics could drive additional CCUS projects going forward.

There are a range of sellers from companies in different industries, but TransAlta is far and away the largest purchaser of carbon credits in Alberta, accounting for almost one third of all carbon credits purchased.

Abbreviations:

EOC – emission offset credit; one carbon emission offset credit represents a one-tonne reduction or sequestration of greenhouse gas emissions (GHG) expressed in CO₂ equivalent (CO₂e)

EPC – emission performance credit; EPCs that are generated in Alberta are by a regulated facility that reduces GHGs below their reduction target as specified in the Technology Innovation and Emissions Reduction Regulation; one EPC is equivalent to a one-tonne reduction of CO₂e

GHG – greenhouse gas

TIER – Technology Innovation and Emissions Reduction

MtCO₂e – Million tonnes of carbon dioxide equivalent

Gt – Billion tonnes