Alberta to wind up emissions reduction fund to pay deficit and new programs

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Alberta will drain its $ 750 million environmental piggy bank funded by its carbon tax on large emitters to pay for a host of programs it hopes will help the province get out of a tax hole and jobs caused by the COVID-19 pandemic and a dramatic drop in oil prices.

The Technological Innovation and Emissions Reduction Fund (TIER) includes the cash paid by large emitters on their greenhouse gas emissions. Some are meant to reduce Alberta’s deficit, but the rest are meant to fund programs that encourage industry to reduce emissions and promote investment in clean technology.

But on Tuesday, Environment Minister Jason Nixon said it was time to liquidate the fund and put the money to use.

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“I can’t think of a better time to use it,” he said.

“When we face a major economic downturn like this, it’s an opportunity to be able to create jobs while facing some of the environmental innovation challenges that we have in this province.

Mr Nixon said details of these programs would be announced in the coming days.

The decision to liquidate the fund came as the Supreme Court considered the constitutionality of the federal government’s national consumer carbon tax. Saskatchewan, Ontario and Alberta argue that Ottawa exceeded its powers by imposing the tax.

Mr Nixon said the timing of Tuesday’s announcement was purely a coincidence, but added his government believes the province can use innovation to tackle climate change, “where other governments continue to think they can tax their way out of this problem.

The government’s approach to innovation includes $ 80 million for a new subsidy program for energy efficiency and carbon capture.

Emissions Reduction Alberta – an independent agency that has used royalties for large emitters to fund GHG reduction projects – will also keep a large portion of the $ 750 million to invest in clean technology projects, including $ 10 million intended for carbon capture and storage (CCS).

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Carbon capture has recently gained ground around the world as countries pursue net zero emissions targets, China, Japan, the Netherlands, Norway, Saudi Arabia, Britain and with the United States all increasing support for CCS.

The International Energy Agency (IEA), a Paris-based agency that advises industrialized countries on energy issues, has also referred to CCS as a balm for reducing emissions in greenhouse gas-intensive sectors. greenhouse, including the production of oil and electricity.

In a June report, the IEA noted that higher CO2 capture rates will be increasingly important in the transition to a net zero energy system; today, most carbon capture plants capture around 90% of CO2, but in the future, they could easily be designed to capture 99% or more.

There are no technical barriers to increasing catch rates for older plants, the report notes, and increasing these rates is done at relatively low cost using absorption technologies. chemical.

The report also notes several other technology innovations being tested at pilot scale, including NET Power’s 50-megawatt natural gas power plant in Texas and J-Power’s Osaki CoolGen Capture demonstration project in Japan.

A CCS pilot project in Great Britain is also capturing CO2 from a power station entirely powered by biomass. If successful, it could be expanded to become the world’s first negative-emission power plant, according to the IEA.

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But the use of the technology will also need to gain public approval, especially when it comes to cost.

The Boundary Dam Power Station carbon capture plant in Saskatchewan, for example, was the first power plant in the world to successfully use CCS technology when it opened in the fall of 2014, but the plant was so riddled with problems that it required a $ 500 million overhaul. The provincial government halted plans to expand CCS technology to the rest of the power plant, saying there was no business case.

Nonetheless, the IEA points out that a 2018 study of Saskatchewan’s Shand Project – a 300 megawatt facility downstream of the Boundary Dam – found deep reductions in capital costs that lowered the price of CO2 capture. of 67% per tonne.

Nixon acknowledged that emission reduction technology “sometimes needs a little work” at first, but said his government sees “a great future” for CCS.

“The reality is that we are looking for ways to meet our environmental obligations that will always allow us to create jobs, have a good economy and be leaders around the world, and carbon capture is one of those things we need to look at. , ” he said.

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