Climate challenges and the carbon tech solution

Margareta Dovgal on how carbon management is essential on the road to net zero emissions.

Margareta Dovgal, managing director of Resource Works. 

The United Nations’ latest climate report set a target of limiting global warming to no more than 1.5 degrees Celsius — a goal that might be out of reach without unprecedented investment in carbon capture technologies.

The Natural Resources Defense Council reports that between 1880 — the year that accurate recordkeeping began — and 1980, world temperature rose on average by 0.07° Celsius every 10 years, or 0.7° in all. But since 1981, the rate of increase has more than doubled.

And now, in the new UN climate report, the Intergovernmental Panel on Climate Change (IPCC) says that existing fuel switching and carbon capture commitments are inadequate for achieving a limit of 1.5 degrees of warming.

In other words, we have the conditions for a warming planet that could seriously shake the environmental systems upon which our societies are built.

Today, even as we transition to alternative sources of energy that put less carbon into the atmosphere, we need to look at escalating the utilization of technologies aimed at removing atmospheric carbon if we want to reverse some of the damage that's being done.

This requires a major and potentially incredibly costly pivot to technologies like carbon capture, utilization, and storage, commonly abbreviated to CCUS, or carbon capture and storage (CCS), especially if more affordable biological systems-based solutions are not leveraged at the scale required.

CCUS is picking up steam internationally, and the IPCC and the International Energy Agency have even declared that they see no viable path to net-zero emissions without carbon management technologies. They go on to say the deployment of carbon tech must be rapid and immense, scaling up by nearly an astonishing 200 times by 2050.

Closer to home, carbon tech is beginning to make a mark in Canada, where the federal government calls it “critical to achieving global climate and energy goals,” and oilsands companies are investing in a major CCUS project.

Six oilsands companies who together produce about 95 percent of oilsand output are together setting a goal of net-zero greenhouse gas emissions by 2050. The group, called the Pathways Alliance, is making headway.

“Reaching net zero requires multiple pathways,” it says. “Our approach includes an estimated $24-billion investment in carbon capture and storage (CCS) and other technologies to reduce emissions and improve energy efficiency in our processes by 2030.

“Our scientists and experts are also studying and testing many emerging emission-reduction technologies for use in later phases of our plan.”

Clearly, enormous investments of this kind can only occur if government policy helps create the conditions for success – if industry sees a future in Canada. New federal commitments within budget 2023 promise a tax credit and coming legislative proposals that will help amplify the private capital being leveraged by members of the alliance, but more work is needed to lock in Canada’s competitiveness as an energy producer in a net-zero regulatory environment.

Over the last year or so, too much of the capital required for the clean tech transformation was going to the US where the business landscape is more favourable, partly thanks to the Inflation Reduction Act. With budget 2023's incredible clean tech investments, this might soon change.

Nonetheless, despite positive signals on the fiscal incentives front, Canada’s overall approach is still founded in policies that inadvertently discourage investment by leaning heavily on proverbial “sticks” rather than carrots to create an incentive to decarbonize.

The BC government’s new Energy Action Framework risks becoming one such example if the need to enable, rather than constrain, the construction of LNG export infrastructure to meet global demand is not baked in. The framework will set a regulatory emissions cap for the oil and gas sector and (depending on how it is designed) may discourage energy investors of any stripe from coming to BC – especially if it fails to demonstrate an effective approach for generating the capital formation required to bring the additional hydro capacity online for new LNG export facilities to use.

As the world rushes to decarbonize in a sustainable manner, using readily available, comparatively low-emissions energy is the first step to displacing the most polluting forms of energy, like traditional biomass and coal.

The International Energy Agency estimates 770 million people in our world still live without access to electricity, mostly in Africa and Asia. And so many burn wood or cattle dung to cook their food and heat their homes, releasing an incredible amount of emissions into the global atmosphere.

The world will continue to need more than just renewables for a long time, as only the most developed countries are now beginning to see notable increases in meaningful contributions from non-emitting energy solutions. Canada has the means to help the developing world take the next step in a transition away from high-emissions energy to low-emissions energy, particularly with cleaner-burning natural gas to replace dirtier coal in electricity generation around the world.

All the while, Canada can use the revenues from LNG exports, for example, to invest in emerging clean technologies like CCUS. It’s a win-win for global decarbonization and perhaps the best path forward for governments serious about climate action.

Fortunately, the new federal budget suggests Ottawa might be coming around to these realities, with $83 billion in supports and incentives for investment in clean technologies, including CCUS and CCS projects. That’s a promising sign to investors that Canada is a forward-looking country eager not to shut down industry, but to help it transform for a low-carbon future.

A two-pronged strategy is Canada’s best shot at contributing to global decarbonization. By creating the conditions for a thriving LNG export industry in BC, we can displace coal and traditional biomass in Asia. Meanwhile, a resulting environment of investment confidence would empower governments and the private sector to deliver the required scale of CCUS projects in conjunction with scaling hydrogen and electrification.

One day, zero-emissions energy will replace oil and gas. But for now, they are essential to Canadian climate action – and a core part of our economic security in uncertain times.

Margareta Dovgal is the managing director at Resource Works. Follow her on Twitter and LinkedIn for more hot takes on natural resources and making the world a better, more secure and prosperous place.

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