City welcomes provincial carbon capture grant program
By COLLIN GALLANT on November 30, 2023.
cgallant@medicinehatnews.com@CollinGallant City energy officials are encouraged by a new provincial grant program to cut the costs of developing carbon sequestration hubs to help meet net-zero targets, stating a capital grant to pair with federal tax credits was expected at some point. Premier Danielle Smith, Energy Minister Brian Jean and Environment Minister Rebecca Schulz announced the Alberta Carbon Capture Incentive Program (ACCIP). It would partly use the province’s carbon levy revenue from heavy emitters to pay $5.3 billion over the next 10 years if all projects, estimated to cost $35 billion in total, move ahead. That involves 22 approved projects to capture carbon dioxide from industrial processes and store it in perpetuity in regional hubs, like one proposed by the City of Medicine Hat. “We’re monitoring those policies and learn how those can benefit industrial and economic development in southeast Alberta,” said Jon Sookocheff, special projects analyst with the city’s energy, land and environment division. “In the meantime we’re continuing to advance the technical studies for Clear Horizon.” Project Clear Horizon was announced in a mid-year economic development update in 2021 and is one of dozens of potential CCUS hubs being developed in the province. It would allow open access to heavy-polluting industries in the region to keep carbon dioxide out of the atmosphere, storing it in underground geologic formations. The city’s gas-fired power plant currently pays into the provincial TIER fund, as do major plants of CF Industries and Methanex, as well as major oil and gas infrastructure in the region. The most recent city financial statement outlines the power plant’s carbon compliance cost will reach $8.2 million in 2023. The recent city budget update predicts a $2-million increase in 2024 as the levy increases next April. In late 2022, the city’s energy division outlined plans to spend about $32 million over two years, first for evaluating seismic data then proceeding to exploratory drilling northwest of the city in 2024. The project previously received a $5-million grant from the TIER fund, along with federal funds, and the balance of current work is covered by reallocated capital from the gas production division. The city is also attempting to draw in hydrogen production, a process that at least initially requires methane to be split, creating CO2 that would need to be captured to produce a net lowering of emissions. “The intent is to enable the retention and expansion of existing industry, but it creates options as well … and an ability to attract new companies to our petrochemical cluster,” said Sookocheff. “There’s a lot of factors that go into that – the ability to transport and store carbon being one of them, but an important one.” This week’s announcement highlighted the Pathways Alliance consortium of oil sands operators moving ahead with a $16-billion hub in the Cold Lake region. That budget makes up almost half the proposed cost of projects in the CCUS queue, though officials state final costs are not known. “Alberta is transitioning away from emissions, not from proven, reliable energy sources,” said Smith at the program announcement in Edmonton on Tuesday. “We have invested significantly in CCUS projects and now we’re encouraging the private sector to do the same.” Media reports this month state Ottawa is ready to announce final details that could be worth C$20 billion over five years. Budget 2023 states companies that sequester or divert it to other industrial processes could apply for credits worth 37.5 to 60 per cent of capital cost of upgrades, depending on if they meet prevailing wage criteria. Alberta could pay 12 per cent of construction and equipment cost via a grant from the TIER system that charges a carbon levy on heavy emitters. Total cost estimates have not been released, but city officials have said they are seeking partners in the private sector or to proceed in a consortium fashion. 21-20
