An intense debate is underway in Canada on the merits of carbon capture, utilization and storage (CCUS) and whether government should fund it via a tax credit. While both sides make valid points, it does not have to be a choice between tax credits and no CCUS.
The oil and gas industry and the federal government have argued CCUS is an essential tool to address climate change and that tax credits will motivate the technology, making it less costly and more widespread. On the other side is a large contingent of academics who oppose CCUS, arguing such tax credits merely use public dollars to fund the fossil fuel industry and delay making meaningful progress addressing the climate crisis.
But there is an answer that addresses both sides of the argument: Establishing legislation that requires producers to store a rising fraction of the carbon dioxide associated with their activities and — crucially — the products they sell. Known as a carbon takeback obligation (CTBO), such regulation would appropriately place the CCUS cost on the shoulders of industry and fossil fuel consumers, while predictably and quickly reducing emissions.
Here’s how it would work. The government would require anyone producing or importing fossil fuels in Canada to store an amount of carbon determined by the amount they sell. Failure to meet this requirement would result initially in financial penalties and ultimately in loss of the right to produce or import oil and gas. The standard would be phased in starting immediately, reaching the requirement of storing 100 per cent of emissions associated with oil, gas and any remaining coal production by 2050.
This follows the fair and reasonable concept of extended producer responsibility. A carbon takeback obligation will ensure the companies that profit from the sale of oil and gas are held responsible for the impact of these products.
Over time, some fossil fuel producers will innovate and develop large carbon capture facilities, allowing vast amounts of carbon dioxide to be permanently stored deep underground. Others will favour approaches that diversify earnings away from producing fossil fuels. But under no circumstances should Canadian taxpayers pay the bill for carbon capture, utilization and storage. The oil and gas industry can do this on its own with its enormous innovative potential and financial capacity.
From society’s perspective, carbon takeback will increase, albeit only slightly in the initial phase, the cost of petroleum-based fuels as producers pass costs to consumers. As this cost increases, alternative energy sources will become more attractive, thereby accelerating the shift in their direction.
Of course, both sides would have their objections. Environmentalists might object on the basis that this will prolong the life of the oil and gas industry. But we must continue to meet society’s energy needs while we address climate change. If the oil and gas industry can achieve net-zero emissions and provide economic energy, it could continue to exist — and should be allowed to. Oil and gas producers might object to regulation that forces them to deploy capital and participate in the climate change solution. But business as usual will not stop global warming. The climate crisis cannot wait.
A carbon takeback obligation would be a win for society, the environment and the industry as producers reinvent themselves as CCUS experts or alternative energy providers. It is time the dialogue changed from two polar views on CCUS to one where CCUS could serve both the oil and gas industry and the environment. A CTBO would provide a meaningful solution to continue benefiting from the massive amount of energy supplied by Canada’s oil and gas production while predictably reducing the associated greenhouse gas emissions.
Myles Allen, CBE, is professor of geosystem science in the School of Geography and the Environment and the department of physics at the University of Oxford, where he serves as director of the Oxford Net Zero initiative.
Hugh Helferty, PhD, started his career in Canada with Imperial Oil and led major research and engineering organizations for ExxonMobil, the largest U.S.-based oil company. He is a member of the advisory panel for Rice University’s Carbon Hub.
Jane Savage P.Eng, MBA, is a 37-year veteran of the Canadian fuel industry, where she held senior positions with Parkland Corporation, the Canadian Independent Fuel Marketers Association (now CEMA) and Imperial Oil.
Comments
I like it. Great solution. And when CCUS fails it will mean quick shutdown of fossil fuel companies.
I'm still not convinced. Even if the oil and gas industry got to zero emissions in the production phase through CCUS, the downstream emissions from burning oil and gas in vehicles, homes and industry will continue. We don't have much time left to turn things around...
On the other hand, renewables are ready and often cheaper than fossil fuels.
Also, has there been any research into the impacts of putting CO2 back into the earth? Could it affect aquifers?
"If the oil and gas industry can achieve net-zero emissions and provide economic energy, it could continue to exist — and should be allowed to."
Free-market advocates should insist that fossil-fuel producers and consumers bear the full costs of production and consumption.
None of this burden should be shifted to taxpayers — an effective subsidy that enriches largely foreign shareholders.
The authors' carbon takeback obligation (CTBO) proposal accepts this principle. So far, so good.
However, the authors recognize only the climate costs of fossil fuel use — and ignore all the other externalized costs of fossil fuel extraction, production, refining, transport, and consumption.
Climate change aside, the health and environmental costs of fossil fuels are still prohibitive.
Tally the costs of air pollution; water contamination; ocean acidification; oil spills; deadly smog; asthma; cancer; acid rain; sour gas leaks; toxic tailings lakes; pipeline, rail car, and oil rig explosions; coal mine accidents.
No distinction should be allowed between climate and non-climate related costs.
Fossil-fuel producers and consumers have no right to externalize and download any of these costs to the public purse, the environment, and future generations.
There is no "economic" or sustainable combustion of fossil fuels. If producers and consumers had to pay the full costs, the industry would cease to be viable overnight.
Together and separately, the health, environmental, and climate costs of fossil fuels are prohibitive. We have no fossil fuel future.
"... under no circumstances should Canadian taxpayers pay the bill for [oil industry] carbon capture, utilization and storage."
I agree 100% with this statement. I would also add that under no circumstances should Canadian taxpayers pay for the bill on the industry's vast accumulated set of environmental liabilities, such as leaking wells and toxic oil sands tailing ponds. Industry and oil producing provinces have had 60 years to save and build a fund for that purpose.
"... we must continue to meet society’s energy needs while we address climate change."
I also agree with that statement, but disagree that fossil fuel production should to strive to achieve "net zero" emissions, in other words, to continue to produce and even expand production. This just prolongs the inevitable and further cements society's carbon dependence. I believe that science has very recently determined that we are now beyond the consideration "net" zero policies and must pivot quickly to overall reductions, the steeper the better. Producers will throw conniptions over any fossil reduction policy , but they are setting themselves up to speed off the cliff when consumer demand falls when cheaper, cleaner alternatives can easily slip into place. Just recently EVs attained 40% of all car sales in France, a nation that has also built a legacy of low emission electrified rail transport at all levels, from neighbourhood trams to very high speed intercity travel. Today, the entire EU is planning to abandon imported Russian oil and gas by 2027, and renewables are now playing an increasingly important role in that transition, but it will take time to switch over fossil dependent industry and millions of consumer's appliances to electricity, hence a lag time with imported non-Russian LNG.
Carbon capture and storage is necessary, but not with status quo fossil fuel production. If-when Canada ever decarbonizes and electrifies, let us hope that the proven massive CCS capabilities of far cheaper and stratospherically more beneficial regenerative agriculture and forestry is finally recognized and play much larger roles. Experiments over several decades in Saskatchewan with RA actually captured and stored enough atmospheric carbon in the soils via cover crops to displace 3.4 million cars. Moreover, the soils became more productive with improved structure and captured carbon and nitrogen. And the entire process is powered by free sunlight. Think about that.
"Establishing legislation that requires producers to store a rising fraction of the carbon dioxide associated with their activities and — crucially — the products they sell."
How exactly would producers store CO2 from the products they sell?
CCUS works (and not very efficiently or cheaply at that) only on concentrated emissions flows. CCUS does not work at all for millions of tiny point sources like tailpipes.
CCUS cannot even capture all the emissions from upstream operations.
Contractor's garbage bag meet tailpipe. Return the captured carbon in the inflated bag to gas stations where they will rebate you after sucking it out with a vast underground vacuum system. They're still working on how not to let the other pollutants in the bag escape. Research grants available through the Alberta Suncor government. Naming rights with portraiture on the bags also offered. Just think, your face plastered on a big bulging plastic bag sticking out of the back end of millions of cars ... ;-)