Canada has set emission reduction targets of 40-45% below 2005 levels by 2030, followed by net zero by 2050. Deployment of carbon capture, utilization and storage (“CCUS”) is considered a necessity to meet these targets, helping to enable six key pathways towards a net-zero economy in Canada: (1) decarbonizing heavy industries, (2) low-carbon dispatchable power, (3) negative emissions technologies (NETs), (4) low-carbon hydrogen production, (5) CO2 based industries, and (6) cleaner oil and gas.
The Government of Canada has taken action to develop and incentivize CCUS in Canada, allocating $319 M in Budget 2021 towards CCUS RD&D. Budget 2022 also announced the details of an Investment Tax Credit for CCUS, which offers up to a 50% refundable tax credit for CO2 capture projects and up to a 60% refundable tax credit for direct air capture projects. Despite this support – and the important role that CCUS plays in decarbonization - CCUS technologies are still nascent, with significant uncertainty surrounding the cost of deployment and the variation in costs across technologies, regions and sectors, ultimately leading to a slow market uptake. In particular, CO2 capture operations are by far the most cost intensive portion of the CCUS value chain. Often, these cost estimates are based on energy-intensive amine-based technologies or general top-down approaches that do not represent the unique situation of each region or facility. As such, accurate cost estimates of CO2 capture operations can drastically improve adopter confidence and help identify operations that would benefit most from public support to better enable strategic and cost-efficient deployment.
To this end, the CIB and Natural Resources Canada (“NRCan”), the federal department responsible for developing policies and programs to enhance the contribution of the natural resources sector to the economy and quality of life, are interested in collaboratively advancing the contemplated studies which will aim to improve the accuracy of CO2 capture cost estimates in Canada by using a bottom-up and factored approach to derive cost per tonne of CO2 captured (CA$/tCO2) for representative CO2 capture facilities up to the facility gate and point of transportation. This includes total capital (CAPEX) and annual operating (OPEX) expenditures provided as Class 4 estimates (-30%/+50%), as defined by the Association for the Advancement of Cost Engineering (AACE). These deliverables will serve as a basis for estimating costs of potential CO2 capture operations that are either under development or are seen as strategic opportunities in Canada.
