Tag: carbon-capture

Carbon-removal project collides with the shifting political winds of climate change


This article was written by Jeffrey Jones and was published in the Globe & Mail on February 6, 2025.

Canadian-developed air-capture facility prepares for Texas launch
Kathleen Cruz Gaw is searching for the perfect recipe. She and eight technicians she oversees spend their days in the lab at Carbon Engineering’s research and development centre in Squamish, B.C., analyzing and tweaking formulas for chemical compounds used in the company’s process for extracting carbon dioxide from the sky.


It’s painstaking work that’s taken on new urgency with a US$1.3-billion direct air-capture plant using CE’s technology nearing completion in West Texas, and with a rightward political shift creating uncertainty for the future of capturing and removing CO2 from the atmosphere as a weapon in the fight against climate change.


Since construction in Texas got under way in 2023, CE’s partner, Houston-based Occidental Petroleum Corp., bought the Canadian cleantech developer in a US$1.1-billion deal. Oxy has provided CE with corporate backing and its own global network of experts to improve the technology, as well as a pledge to maintain CE’s Innovation Centre in Squamish.


“We’ve doubled the way we routinely analyze samples,” Ms. Cruz Gaw, CE’s laboratory supervisor, said.


“We do a lot of different characterizations on the internal structure of our calcium carbonate. So a lot more studies are being done to make sure that we have the right key parameters in the production,” she added, before sprinkling a little of the powdery substance into her hand during a recent tour.
Ms. Cruz Gaw also has a hand in designing a look-alike lab in Ector County, Tex., where Oxy is building the world’s largest direct air capture, or DAC, project to date, known as Stratos. The facilities will share their scientific data – much of which is kept closely guarded – in real time when the commercial plant starts up in a few months.


Stratos is due to start extracting 250,000 tonnes of CO2 per year by the end of June, using the technology CE began developing 15 years ago under the stewardship of its former chairman, David Keith. Dr. Keith is an Ottawaborn scientist who was educated at the Massachusetts Institute of Technology. His work at CE drew early backing from Bill Gates and Canadian oil and gas financier Murray Edwards.


In the next 12 months, Stratos will ramp up to full capacity of 500,000 tonnes a year, powered by renewable energy.


The project is coming to fruition in a different era than the one in which it began. With U.S. President Donald Trump back in the White House, subsidies for ventures aimed at lowering emissions, championed by former president Joe Biden, are in question.


Mr. Trump has famously called the science behind climate change a scam, and as one of his first executive orders, he pulled the United States out of the Paris climate accord for the second time. Stratos, meanwhile, is a recipient of green incentives made available under Mr. Biden’s Inflation Reduction Act.
Under the legislation, DAC projects are eligible for a tax credit of US$180 per tonne of CO2 injected into geological formations – up from a previous credit of US$50 – and Oxy has said that has been beneficial in moving Stratos forward. Mr. Trump has ordered a freeze on funds disbursed under the program, pending a review.


CE declined to comment on possible outcomes of the review and potential impact on the project. “We continue to follow recent developments in the U.S. but remain focused on advancing commercial scale DAC pathways through the ongoing technology development work in Squamish,” said Kel Coulson, CE’s director of policy.


It is part of a political backlash that environmental activists worry could sap the momentum of decarbonization – from the adoption of clean energy to electrifying transportation – in an attempt to fuel a hydrocarbon renaissance.
Critics have decried DAC, arguing it could actually be used for cover for increasing oil and gas production, and that the sheer scale of facilities needed to make a dent in atmospheric CO2 levels render it impractical.


However, Occidental chief executive officer Vicki Hollub, who presided over the acquisition of CE a year-and-a-half ago, has remained bullish on the concept and its technological improvements. When Oxy bought the company, it pledged to maintain the Innovation Centre in Squamish. The centre now has 185 employees and two-thirds work at the site, which features a miniature version of the DAC system being built in Texas to test drive the process.


Now, the operation is expanding. CE has purchased two hectares nearby in the coastal B.C. town to build more facilities. That is evidence of Oxy’s commitment to the site, said Rick Ritter, CE’s general manger.


During Oxy’s third-quarter earnings call in November, Ms. Hollub touted improvements under way as construction proceeds to plan. “Collaboration within our technical teams across Oxy, paired with insight from the CE Innovation Centre, have given rise to incredible technological breakthroughs and engineering design innovation, which we will integrate into the continued build-out of Stratos,” she told analysts.


One of those is a move to fewer front-end air-contact units, a modification she said will lower costs. Those are fans installed in long banks of towers called air contactors that pull air through plastic honeycombs moistened with a potassium hydroxide solution, which bonds to the CO2, creating a carbonate salt.


From there, the fluid flows into a reactor to separate the salt from the solution into calcium carbonate pellets. The pellets are fed into a cylinder called a calciner, where they are heated to 900 C to release the CO2 as a pure gas that can be injected underground or stored for other uses such as synthetic aviation fuel. The calcium is then rehydrated in a slaker, so it can be reused in the process.


Until recently, one of the big benefits of CE’s technology was its ability to make use of off-theshelf equipment from a number of different industries, including water treatment, pulp and paper, and oil and gas.


Oxy’s global scale and the advancement of the construction in Texas have shifted that model, said Toby Stedham, CE’s vicepresident of operations. Now, the company is moving to specially designed parts and air contactor fill – the stuff between the gas and the capture solution – for the process, improving efficiency by about 20 per cent, he said.


“That’s driving lower capital expenditures because you’re building fewer units. It’s driving lower operating expenditures because you’re operating fewer pumps, you’re operating fewer fans. So you’ve got less of an electrical demand to drive the process,” he said at the Squamish site.


To be sure, for the technology to make a dent in the carbon already released into the atmosphere, numerous plants of much grander scale would be required worldwide. Though CE’s project is currently in the lead, other players are looking to compete.


Swiss-based Climeworks AG has a two-step process to remove CO2 and inject it underground as a liquid. In 2021, the company began operating a project in Iceland called Orca that removes 4,000 tonnes of CO2 a year, and last year it started up a second project there called Mammoth, which is about 10 times larger.


Climeworks also has its sights on a DAC project in Louisiana that could eventually capture up to one million tonnes of carbon a year.
In Canada, Montreal-based startup Deep Sky Corp. is assembling a demonstration centre in central Alberta, where it is installing eight different DAC technologies to run in side-by-side tests to judge performance measures such as energy efficiency, the absence of waste byproducts and the ability to expand to commercial scale.


Occidental, under its subsidiary 1PointFive, is looking to advance a new project in south Texas that would dwarf its first one. It recently won up to US$500million from the U.S. Department of Energy’s Office of Clean Energy Demonstrations for the initial DAC facility at the site, which could increase by another US$150-million to expand a regional carbon network in the region.
Ms. Hollub said the company can keep pushing DAC forward with more technological improvement and applying lessons from Stratos into future projects. However, she also said continued government support and thirdparty capital are needed to grow the technology to “climate-relevant scale.” BlackRock Inc., the world’s largest asset manager, for instance, is investing US$550-million in Stratos.


Another key is the market for carbon credits. Last summer, Microsoft Corp. agreed to buy credits for 500,000 tonnes of carbon removal from Stratos, making it the biggest buyer. Microsoft is aiming to be carbon-negative by 2030. It joins such other players as Shopify Inc., Thermo Fisher Scientific and the NFL’s Houston Texans.


Ultimately, a move from voluntary markets, which have been slow to build credibility, to government-sanctioned ones, known as compliance markets, would boost the attractiveness of investing in the credits, Ms. Coulson said. “That is a great demand signal,” she said.


Despite North American uncertainty, other governments such as those in the United Kingdom and Japan are now taking inspiration from policies such as the IRA, and measures in Canada, including carbon-capture tax credits and a DAC incentive protocol, that are supporting development. CE hopes all that will lead to more adoption around the world, she said.

Shell exits Alberta oil sands as it boosts 10% stake in carbon-capture facility

This article was written by Emma Graney and was published in the Globe & Mail on January 31, 2025.

Shell is swapping its ownership in Albian, with Canadian Natural Resources Ltd. for an additional 10 per cent of the Scotford upgrader and Quest Carbon Capture and Storage facility.

Deal, announced this week, underscores company’s strategy of moving toward assets with lower greenhouse-gas emissions

Shell Canada Ltd. is exiting the Alberta oil sands, swapping its remaining 10-per-cent interest in the Albian mine in the province’s north for a greater stake in an upgrader and carbon-capture project outside Edmonton.

The deal, announced this week, underscores Shell’s strategy of moving toward assets with lower greenhouse-gas emissions. In June last year, for example, the company announced it would proceed with Polaris, a carbon-capture project in Sherwood Park, Alta. It is also partnering with Calgary-based ATCO EnPower on the Atlas Carbon Storage Hub, which will provide permanent underground storage for the carbon dioxide captured by Polaris.

Shell is swapping its ownership in Albian, which is part of the Athabasca Oil Sands Project, with Canadian Natural Resources Ltd. for an additional 10 per cent of the Scotford upgrader and Quest Carbon Capture and Storage facility.

The Quest project, launched in 2015, has captured and sequestered 7.7 million tonnes of CO2 as of the end of 2022.

Susannah Pierce, who took the reins as Shell Canada president in 2021, has repeatedly pointed to carbon capture –including the Polaris project – as playing a key role in the company’s goal to hit net-zero emissions by 2050.

In a 2021 interview with The Globe and Mail, she said Shell had an “aggressive goal with respect to carbon capture sequestration, which clearly is something that we need for projects or investments or assets that really can’t eliminate emissions on their own.”

Upon completion of the deal announced this week, Shell will have a 20-per-cent interest in the Scotford upgrader and Quest, and will fully exit Athabasca’s mining operations.

Machteld de Haan, Shell’s executive vicepresident of chemicals and products, said in a statement that the deal will allow the company to focus on the Scotford site and to maximize value in its upgrader, carbon-capture projects, and refining and chemicals businesses.

The deal also means CNRL will own the Athabasca mines outright, increasing the company’s production by approximately 31,000 barrels a day. It will also own 80 per cent of the Scotford Upgrader and Quest.

However, that new volume won’t be part of the company’s 2025 production guidance, which it said in January it was aiming to boost by 12 per cent over 2024.

The Calgary-based oil giant is targeting average annual production of between 1.51 million and 1.55 million barrels of oil equivalent per day in 2025, which represents production growth of about 170,000 barrels a day compared with 2024.

CNRL said at the time the growth would come in part from its US$6.5-billion acquisition of Chevron Canada Ltd.’s interests in the Athabasca Oil Sands Project and Duvernay shale, which was completed in 2024.

The company also plans to drill 361 crude oil and natural gas wells in the year ahead, and is working on increasing production at Athabasca and its Horizon oil sands site.

The deal with Shell means that CNRL can focus on its own strategy of holding a diverse range of oil sands production assets.

It will also help the company meet its longterm commitment of 169,000 b/d on the expanded Trans Mountain pipeline system.

Political uncertainty could derail $16.5B carbon capture plan

Industry watchers say federal election could slow efforts to secure government subsidies for project

This article was written by Amanda Stephenson and was published in the Toronto Star on January 10, 2025.

A proposed project by the Pathways Alliance, a consortium of energy companies, would capture carbon dioxide emissions from more than 20 oilsands facilities in northern Alberta and store them in an underground hub.

The fate of Canada’s largest proposed carbon capture and storage project is even more uncertain after Prime Minister Justin Trudeau’s resignation announcement this week amplified existing unknowns around the future of energy and climate policy in Canada, experts say.

The $16.5billion highprofile project in question would capture harmful carbon dioxide emissions from the oilsands, Canada’s heaviestemitting sector.

It would be built by the Pathways Alliance, a consortium whose members include some of Canada’s largest energy companies.

But industry watchers say the project’s future is cloudy due to current political turmoil and the likelihood that a new federal government will be elected this year.

“I can’t imagine a huge project like that could really move forward in a time like right now,” said Michael Bernstein, executive director of the nonprofit group Clean Prosperity.

“When you’re looking at a project that has at least a 15year time horizon, you want as much certainty as possible. And there’s just more uncertainty than I can remember in my whole time doing this work right now.”

The Pathways Alliance is made up of six oilsands companies that have jointly committed to achieving netzero greenhouse gas emissions from oilsands production by 2050.

Their proposed project, the centrepiece of that commitment, would capture carbon dioxide emissions from more than 20 oilsands facilities in northern Alberta and transport them 400 kilometres away by pipeline to a terminal in the Cold Lake area, where they would be stored in an underground hub to prevent them from entering the atmosphere.

The project would be one of the largest carbon capture and storage projects in the world, if it came to fruition. But while the companies first proposed the joint project in 2022, they have not yet made the final investment decision required to proceed.

Pathways has spent much of the time since then lobbying for federal and provincial support.

A spokesperson for the Pathways Alliance declined to comment Monday when asked about the current Canadian political situation.

Scott Crockatt — spokesperson for the Business Council of Alberta, a group whose membership includes major oilsands companies — said while an extended period of political uncertainty poses challenges for businesses overall, the Alberta companies that have proposed decarbonization projects in recent years remain committed to that goal.

“Most businesses who were looking at decarbonization projects and other types of sustainability projects were doing it for sincere business reasons, like generating value and reducing longterm risk,” Crockatt said.

“So I actually don’t think that underlying motivation is going to change with political cycles.”

But the oil industry has also repeatedly said investing in carbon capture, which remains a hugely expensive technology, cannot happen without significant levels of government support.

The federal Liberal government, which has publicly called on the oil industry to move faster on its emissionsreduction promises, created an investment tax credit for carbon capture and storage projects in an effort to get companies to move ahead.

The Liberal government has also promised a mechanism to backstop the price of carbon in order to give certainty to companies considering investing in emissionsreducing technology. But while the federal Canada Growth Fund has been in talks with the Pathways Alliance on this topic, details of a projectspecific agreement have yet to be hammered out.

The Canada Growth Fund did not reply to a request for comment.

Heather ExnerPirot, special adviser on energy to the Business Council of Canada, said the problem for Pathways is that with polls showing the Conservatives are likely to win an upcoming federal election, it’s unclear how far a Pierre Poilievre government would go to financially support the group’s flagship project.

While Poilievre has been clear on his desire to do away with the consumer carbon tax, he has not said what will he do about Canada’s industrial carbon pricing system and will likely have less of a climateoriented agenda than the present Liberal government.

“It doesn’t sound, from everything they (the Conservatives) have been saying, like they would support what you would need to do to get Pathways Alliance over the hump in the time frame we’ve been looking at,” ExnerPirot said.

“They don’t seem to be very keen on it. It’s just very expensive.”

Andrew Botterill — energy, resources and industrials partner at Deloitte Canada — said any future weakening of the industrial carbon pricing system or emissions allowances would damage the business case to invest in decarbonization technology. That’s why a looming election on the horizon could delay or prevent final investment decisions, he said.

“Companies are looking for longterm certainty and an understanding on what the market’s going to look like for the next 10 years, and 20 years and 30 years,” Botterill said.

“When they see things on the horizon that are uncertain I think it slows the big capital spends.”

The current federal emissions reduction plan — which calls for Canada to cut its emissions by 40 to 45 per cent below 2005 levels by 2030 and to reach netzero emissions by 2050 — envisions national carbon capture and storage capacity more than tripling by 2030.

“ Most businesses who were looking at decarbonization projects and other types of sustainability projects were doing it for sincere business reasons … So I actually don’t think that underlying motivation is going to change with political cycles.

SCOTT CROCKATT SPOKESPERSON FOR THE BUSINESS COUNCIL OF ALBERTA

Energy major CNLR expects carbon-capture project to move forward

This article was written by Emma Graney and was published in the Globe & Mail on January 10, 2025.

Canadian Natural Resources Ltd. has no plans to tear up its carbon-capture budget, even as the future of the country’s emissions reduction policies are in limbo after the resignation of Prime Minister Justin Trudeau.

The Calgary-based oil giant earmarked $90-million for carbon capture in its 2025 budget, released Thursday.

Canada’s largest oil sands producers, through a consortium called the Pathways Alliance, have pledged to bring production to net-zero by 2050. Part of that plan includes a large joint carbon-capture project. Although the federal government introduced investment tax credits to bolster the project, there is no final deal on funding from a federal financing agency called the Canada Growth Fund.

Ottawa introduced a ream of emissions-reduction policies under Mr. Trudeau, but many of them – particularly the consumer carbon tax and federal oil and gas emissions cap – have been loudly decried by Conservative Leader Pierre Poilievre.

Mr. Poilievre has said little, however, on what his party would do to fight climate change should it be elected.

No matter what happens in Ottawa, the company wants the Pathways carbon-capture project to move forward, CNRL president Scott Stauth told an investor call Thursday morning.

“We continue to focus on the fiscal side of things, in terms of all the parties coming together on this. So I think we’re a little bit more positive than you’re suggesting,” Mr. Stauth said.

Mr. Stauth said money allocated to carbon capture in this year’s budget is primarily for engineering work for the Pathways project, as well as at the Scotford Upgrader outside Edmonton, and the company’s Horizon Oil Sands site and thermal oil sands properties.

“We’re progressing these carbon-capture projects on from an engineering perspective for 2025,” he said.

The Canada Growth Fund is a $15-billion independent public fund created in 2023 by Ottawa to support carbon capture and other forms of clean technology, but its previous discussions with Pathways fizzled out before anything substantive was put on paper. Negotiations directly between Pathways and the federal government about carbon-capture financing, before Ottawa decided that it would leave such talks to the CGF, also proved fruitless.

Late last year, however, the CGF for the first time put forward a specific proposal to back a multibillion-dollar investment in the Pathways CCS project.

Also in its budget Thursday, CNRL said it plans to boost overall oil and gas production by 12 per cent in 2025, to between 1.51 million and 1.55 million barrels of oil equivalent a day in 2025. That’s about 170,000 more barrels a day compared with 2024.

The company says the growth is in part owing to its previously announced US$6.5-billion acquisition of Chevron Canada Ltd.’s interests in the Athabasca Oil Sands Project and Duvernay Shale, which was completed in 2024.

CNRL says its operating capital budget for 2025 is set at approximately $6-billion, up from its 2024 forecast of $5.42-billion.

Mr. Stauth said the company is also pursuing opportunities to increase production at Horizon and the Athabasca Oil Sands Project.

The company completed a project to enhance reliability at Horizon in 2024, which shifted plant turnarounds to once every two years, instead of annually. Mr. Stauth said capital savings are targeted to be approximately $75million in 2025 compared with 2024.

The company says it plans to drill 361 crude oil and natural gas wells in the year ahead.

Stripping carbon from the sky

This article was written by David Gelles and Christopher Flavelle, and was published in the Globe & Mail on December 23, 2024.

A welder works at the Deep Sky carbon-capture facility in Innisfail, Alta., on Dec. 11. The company has raised more than US$50-million to develop carbon-dioxide removal projects.

The financial world is racing to fund the field of carbon-dioxide removal in search of an environmental miracle

This summer, Bill Gates huddled in London with representatives of some of the world’s wealthiest people, including Amazon.com Inc. founder Jeff Bezos, SoftBank Group Corp. founder Masayoshi Son and Prince al-Waleed bin Talal of Saudi Arabia.

They were evaluating their joint investments in companies that could help the world combat climate change. Among the businesses in their portfolio, four stood out as having a particularly audacious goal: They were working to strip carbon dioxide from the atmosphere, for a profit.

As countries around the world continue to pump planet-warming pollution into the skies, driving global temperatures to record levels, the financial world is racing to fund the emerging field of carbon-dioxide removal, seeking both an environmental miracle and a financial windfall.

The technology, which did not exist until a few years ago, is still unproven at scale. Yet it has a uniquely alluring appeal. Stripping away some of the carbon dioxide that is heating up the world makes intuitive sense. And with a small but growing number of companies willing to pay for it, investors are jockeying to be first movers in what they believe will inevitably be a big industry that is necessary to help fight global warming.

Companies working on ways to pull carbon dioxide from the air have raised more than US$5billion since 2018, according to investment bank Jefferies. Before that, there were almost no such investments.

“It’s the single greatest opportunity I’ve seen in 20 years of doing venture capital,” said Damien Steel, chief executive of Canadabased Deep Sky, which has raised more than US$50-million to develop carbon-dioxide removal projects. “The tail winds behind the industry are greater than most industries I’ve ever looked at.”

The group assembled by Mr. Gates, known as Breakthrough Energy Ventures, is among the biggest backer of the more than 800 carbon removal companies that have been started in recent years. Other investors include SVB Financial Group venture capitalists, private equity firms from Wall Street and major corporations like United Airlines Holdings Inc.

Investors believe the market is poised for explosive growth.

More than 1,000 big companies have pledged to eliminate their carbon emissions over the next few decades. As part of those efforts, more corporations are starting to pay for carbondioxide removal. This year, Microsoft Corp., Google and British Airways were among the companies that committed a total of US$1.6-billion to purchase removal credits.

That figure was up from less than US$1-million in 2019, according to CDR.fyi, a website that tracks the carbon-dioxide removal industry. Next year, industry executives believe companies could spend up to US$10-billion on such purchases. In a recent report, McKinsey estimated the market could be worth as much as US$1.2-trillion by 2050.

While huge sums of money are being dedicated to the nascent field, these projects will not have a substantial effect on global temperatures any time soon.

There are a few dozen facilities operational today, including ones in Iceland and California. But the biggest of these capture only a sliver of the greenhouse gases humans produce in one day. Even if hundreds more such plants were built, they would not come close to counteracting even 1 per cent of annual carbondioxide emissions.

“Let’s not pretend that it’s going to become available within the time frame we need to reduce emissions,” said former vice-president Al Gore, a cofounder of Climate Trace, which maps global greenhouse gas emissions.

Last year a United Nations panel cast significant doubt on the industry’s ability to make a difference. “Engineering-based removal activities are technologically and economically unproven, especially at scale, and pose unknown environmental and social risks,” it said.

Instead, many scientists and activists say the most effective way to combat global warming is to rapidly phase out oil, gas and coal, the burning of which is heating the planet.

“We need to obey the first law of holes,” Mr. Gore said. “When you’re in one, stop digging.”

Carbon-dioxide removal is the most developed form of what is known as geoengineering, a broad set of speculative technologies designed to manipulate natural systems in order to cool the planet. In the past several years, as climate change has worsened, such ideas have moved from the stuff of science fiction into the mainstream.

Other proposed plans include changing the chemistry of the world’s rivers and oceans to absorb more carbon dioxide, genetically altering bacteria to reduce greenhouse gas emissions from agriculture and reflecting sunlight away from Earth by brightening clouds or spraying sulphur dioxide into the stratosphere.

But it is carbon-dioxide removal that is attracting the big money.

Investors believe that, while the impact on temperatures may be negligible in the short term, the industry will start to make a difference as global emissions fall and the technology becomes more powerful.

And decades from now, even if the world is able to completely eliminate all new greenhouse gas emissions, many experts, including the Intergovernmental Panel on Climate Change, a scientific body convened by the United Nations, believe it will still be necessary to remove some carbon dioxide from the atmosphere to reduce global temperatures.

Critics argue that carbon-dioxide removal is a dangerous distraction that will perpetuate the behaviour that is causing the climate crisis.

“Carbon capture will increase fossil fuel production; there’s no doubt about it,” said Mark Z. Jacobson, a professor of civil and environmental engineering at Stanford University. “It does not help climate one bit.”

But for now, neither investors nor customers are shying away.

A group of companies including Stripe, H&M, J.P. Morgan and Meta Platforms Inc. have banded together to make more than US$1-billion in purchase commitments for carbon-dioxide removal. Other companies including Airbus SE, Equinor ASA and Boeing Co. have pledged to pay for the service, too.

Some companies are trying to offset their emissions. Some see value in helping to develop a new industry they might one day profit from. And some say they are simply trying to do the right thing.

“This isn’t intrinsically tied to our day-to-day business,” said Nan Ransohoff, the head of climate at Stripe, an online payments company that is co-ordinating the group purchasing. “But we care a lot about progress and trying to help the world move in the right direction.”

The U.S. government is supporting the industry. The Inflation Reduction Act more than tripled the tax credit for capturing and storing carbon removed directly from the atmosphere, to US$180 a tonne. The bipartisan infrastructure law signed by U.S. President Joe Biden in 2021 included US$3.5-billion for the creation of four demonstration projects.

Executives don’t believe that the carbon-dioxide removal industry will be knocked off course by president-elect Donald Trump, who has called climate policies a “scam” and has said he wants to roll back many of Mr. Biden’s climate initiatives.

Support for the new technology “has been very bipartisan,” said Noah Deich, who until recently was the deputy assistant secretary of carbon management at the Energy Department.

Last month, Senator Lisa Murkowski (R, Alaska) and Senator Michael Bennet (D, Colo.) introduced legislation that would create additional tax incentives for the carbon-dioxide removal industry.

And the demonstration projects being funded by the infrastructure law have been championed by some Republicans. “This will help ensure our economy is built for the future,” Senator Bill Cassidy of Louisiana posted on social platform X when his state was selected as one of the sites. “It is great for our state!”

Yet even as enthusiasm for the technology grows, there is not nearly enough supply to meet the demand. Only 4 per cent of all purchases have been fulfilled, according to CDR.fyi.

Pulling greenhouse gases out of the air is also expensive. Today, it can cost as much as US$1,000 a tonne to capture and sequester carbon dioxide. Many analysts say the price would need to drop to around US$100 a tonne for the industry to take off.

“This isn’t a market,” Mr. Steel said. “A market means liquidity, repeatability, standards. We have none of that here.”

But at least for now, investors are still eagerly funding new companies in the field, hoping that some of their bets pay off.

Svante, one of many Canadian companies in the industry, has received more than US$570-million from small venture firms as well as big energy companies like Chevron Corp.

And Climeworks, a Swiss company that has already built the largest operational direct air capture facility in the world, in Iceland, has raised more than US$800-million from investors including Singapore’s sovereign wealth fund and individuals like venture capitalist John Doerr.

Mr. Doerr is also a partner in Breakthrough Energy Ventures and was with Mr. Gates in London this summer.

“We’re going to need carbon removal,” Mr. Doerr said, adding that the need to quickly scale the companies was a “code red” situation.

As with any industry, many startups are likely to fail for every one that hits it big. But to investors, that is a risk worth taking.

“There will be some big winners in this space,” said Clay Dumas, co-founder of Lowercarbon Capital, a venture firm that has backed several of the companies. “You could be wrong 95 per cent of the time and still look like a genius when you send a bunch of money back to your investors.”

Carbon removal company gets $40M grant

Project is first direct air capture test hub

This article was written by the Canadian Press and was published in the Toronto Star on December 19, 2024.

A Montreal based company that aims to build a Canadian test site for carbon removal technologies has received a $40million (U.S.) grant from Bill Gates’ climate solutions venture firm.

Canadian startup Deep Sky says it was awarded the grant to help build what it calls its Deep Sky Alpha project in Alberta.

The project, to be built north of Calgary in the town of Innisfail, is meant to be the world’s first direct air capture carbon removal test hub and commercialization centre.

Deep Sky says it will be piloting up to 14 direct air capture projects from companies around the world at the site, in an effort to see which ones work best and could be successfully commercialized.

Direct air capture is a term that refers to physically removing excess carbon dioxide from the atmosphere to slow global warming. It is different from carbon capture and storage, which refers to capturing carbon directly from smokestacks or other industrial emissions points.

Pulling carbon dioxide directly from the air is a way to clean up historic emissions that have already escaped into the atmosphere, meaning it can potentially help slow and even reverse climate change.

But the technology is hugely expensive and faces steep barriers to widescale deployment.

GATES BACKS CARBON-REMOVAL FIRM

This article was written by Jeffrey Jones and was published in the Globe & Mail on December 18, 2024.

CEO Damien Steel at the Deep Sky test site In Innisfail, Alta. The money from Breakthrough Energy Catalyst will allow the company to begin carbon-removal operations at the site by April 1.

Fund supported by Microsoft founder gives $40-million to Deep Sky’s direct-air-capture demonstration centre in Alberta

Startup now able to begin carbon-removal operations at its Alberta plant by April 1

Breakthrough Energy Catalyst, a carbon-tech fund founded by Bill Gates, has given Deep Sky Corp. a US$40-million grant to help the startup develop its direct-air-capture demonstration centre in Alberta, where it will test several technologies.

The money from the big-name climate technology fund, to be announced Wednesday, gives Montreal-based Deep Sky more than the funding it needs to begin carbon-removal operations at the site by April 1, said Damien Steel, the company’s chief executive officer.

Breakthrough Energy Catalyst invests in projects that employ emerging decarbonization technologies with potential to reach commercial scale. As a grant, the investment does not dilute ownership of the company.

Deep Sky, founded by Hopper Inc. chief executive officer Fred Lalonde, will study eight different direct-air-capture units at a time from various vendors at its complex under construction in Innisfail, Alta., an hour’s drive north of Calgary. Such plants pull carbon dioxide from the atmosphere, rather than from smokestacks at industrial sites. The carbon dioxide will be piped to a site north of Edmonton, where it will be injected underground.

The investment represents Breakthrough Energy Catalyst’s first in Canada and in direct air capture, the organizations said.

“They looked at Deep Sky because we are IP- [intellectual property] agnostic. And today we’re the only IP-agnostic project developer on the planet focused on direct air capture,” Mr. Steel said in an interview. “They viewed us as a very good way to support the ecosystem, because the whole ecosystem right now is working hard to find creative ways to scale, and scale in an energy-efficient manner.”

At the demonstration site, called Deep Sky Alpha, the company will examine carbon-removal technologies developed by a host of companies for performance measures such as energy efficiency, the absence of waste biproducts and the ability to expand to commercial scale.

The company plans to install the units through the end of next year, with the first ones starting up by April 1. They include equipment from Airhive, Avnos Inc., Phlair, Greenlyte Carbon Technologies GmbH, Mission Zero Technologies, NEG8 Carbon, Skyrenu Technologies Inc. and Skytree.

“The world will ultimately need many approaches to carbon removal at prices far lower than is achievable today, but Deep Sky’s platform will enable and accelerate the kind of real-world innovation that could make affordable DAC achievable,” Mario Fernandez, head of Breakthrough Energy Catalyst, said in a statement.

Mr. Gates, the Microsoft Corp. founder, established Breakthrough Energy in 2015 to help meet the global goal of net-zero carbon emissions by 2050. The organization has three streams focusing on technology, markets and policy.

The Catalyst portion has raised more than US$1-billion for funding projects in areas such as clean hydrogen production, longduration energy storage and sustainable aviation fuel manufacturing. The fund also helps developers out with energy-infrastructure and project-development know-how to advance projects from development stages to construction, it says. Some of its funding partners include Bank of America, American Airlines, Bank of Montreal, General Motors and BlackRock Inc.

Deep Sky’s Alberta site is designed to be able to capture up to 30,000 tonnes of carbon dioxide over 10 years. Mr. Steel said the company will soon announce a virtual power purchase agreement with a renewable energy developer set to begin operations at a new project.

Last month, the company announced it had sold the first carbon credits from the facility to Royal Bank of Canada and Microsoft in a deal that covers the extraction of 10,000 tonnes of carbon dioxide from the atmosphere over the next decade.

Deep Sky announces sale of carbon credits to RBC, Microsoft

This article was written by Jeffrey Jones and was published in the Globe & Mail on November 13, 2024.

Carbon-removal startup Deep Sky Corp. said on Wednesday it has sold the first carbon credits from its Alberta demonstration centre to Royal Bank of Canada and Microsoft Corp. in a deal aimed at supporting its strategy to test several direct-air-capture technologies.

Deep Sky said the transaction covers the capture of 10,000 tonnes of carbon dioxide from the atmosphere over 10 years. Under the deal, RBC and Microsoft have the option to buy an additional one million tonnes from Deep Sky’s future commercial projects, the company said in a statement.

It did not provide a dollar figure for the sale of credits.

Deep Sky, founded by Hopper Inc. chief executive officer Fred Lalonde, will initially test eight different direct-air-capture units at a time from vendors at its complex under construction in Innisfail, Alta., an hour’s drive north of Calgary. Such plants pull carbon dioxide from the atmosphere, rather than from smokestacks at industrial sites.

The company plans to install the units through the end of next year, with the first ones starting up by March. They include technology from Airhive, Avnos Inc., Phlair, Greenlyte Carbon Technologies GmbH, Mission Zero Technologies, NEG8 Carbon, Skyrenu Technologies Inc. and Skytree. The company said it will make its selection based on a host of criteria, including low energy intensity, simplicity and scalability.

The site is designed to be able to capture up to 30,000 tonnes of carbon dioxide over 10 years, with the gas stored in a well north of Edmonton, Deep Sky has said.

The project is not without risk. The carbon-removal sector is still in its infancy and just a few small-scale plants currently operate worldwide. To be effective, direct air capture will have to expand on a massive scale, and that will depend on an active market for carbon credits.

Deep Sky CEO Damien Steel said the sales of credits to RBC and Microsoft are expected to attract other investors, as well as suppliers and customers, to the project.

For the bank, the deal represents the first purchase of direct-air-capture credits by its RBC Capital Markets Environmental Markets Solutions Group, said Sarah Thompson, RBC Capital Markets’ global head of sustainable finance.

In August, Deep Sky announced it was also conducting prefeasibility studies at two industrial centres in Quebec, at Bécancour and Thetford Mines, to determine if the geology is suitable for largescale underground carbon storage.

Pathways: Proposal likely a starting point for more advanced negotiations, but a deal could be months away

This article was written by Adam Radwanski and Emma Graney, and was published in the Globe & Mail on October 28, 2024.

A federal financing agency has for the first time put forward a specific proposal to back a multibilliondollar investment in carbon-capture technology by the Pathways Alliance, a group of the country’s largest oil sands companies.
Three sources familiar with the matter told The Globe and Mail that the offer to back capital costs for the industry group’s six members – who collectively represent approximately 95 per cent of oil sands production – was recently made by the Canada Growth Fund.


The Globe is not identifying the sources, because they were not authorized to speak publicly about the negotiations.


The Canada Growth Fund (CGF) is a $15-billion entity created last year by Ottawa to support carbon capture, storage and utilization, along with other forms of clean technology, but its previous discussions with Pathways fizzled out before anything substantive was put on paper.


The resumption of talks and tabling of the new proposal took place after the CGF separately reached a deal in July to partner with Strathcona Resources Ltd., which is the fifth-largest oil sands producer but not part of Pathways, the sources said.


The CGF is citing that partnership – which involves the agency putting up to $1-billion toward the capital costs of Strathcona’s $2-billion carbon-capture and storage investment – as proof of its ability to get deals done with the industry and as a model for the Pathways proposal.


The renewed engagement between the CGF and Pathways could mark long-awaited progress toward the $16.5-billion shared investment in carbon capture which Pathways – whose members include Cenovus Energy Inc., Suncor Energy Inc., Imperial Oil Ltd., Canadian Natural Resources Ltd., MEG Energy Corp. and ConocoPhillips Canada – has long touted as the centrepiece of its plans to reduce greenhouse gas emissions from oil-sands production.


Ottawa is already providing other support for those ambitions, most notably a new tax credit covering up to 50 per cent of carbon capture, storage and utilization investment costs, and Alberta’s provincial government has layered on an additional 12 per cent in similar backing. But Pathways has said that’s still not enough to make its projects financially viable.


With oil-and-gas production the single biggest source of Canada’s total greenhouse-gas emissions, and the largest obstacle toward hitting national climate targets, Pathways and the CGF are now under political pressure to get something done.


Heading into a meeting with Pathways earlier this month, which Finance Minister Chrystia Freeland also attended but at which the CGF was not present, Energy and Natural Resources Minister Jonathan Wilkinson told The Calgary Herald that he was “very hopeful that we’re going to be able to move this ahead in the not-too-distant future.”


The CGF’s proposal is likely to serve as a starting point for more advanced negotiations, however, and any deal is likely still at least months away. Far from being at the stage of hammering out fine print, the two sides are still some distance apart on the fundamentals, all three sources indicated.


While the CGF is pitching something akin to the Strathcona deal, which would involve financing a portion of projects’ capital costs, Pathways’ circumstances and demands are considerably different from that company’s.


That includes more complex needs around what do with carbon after it’s captured at oil-extraction sites. Unlike Strathcona, whose facilities are situated above potential carbon storage reservoirs, Pathways members would largely need to transport the carbon to other sites, creating greater infrastructure costs.


A bigger sticking point may be that, more than just asking for help with capital investments, Pathways has been citing carbon capture’s operational costs to seek greater revenue certainty.


That would require something along the lines of carbon contracts for difference (CCfDs), which essentially guarantee the value of carbon credits under Canada’s industrial pricing system, even if political change causes that system to be scrapped or the credit market otherwise does not prove robust.


CCfDs are within the CGF’s mandate, and it has already struck smaller deals involving variations of that approach, such as a commitment to purchase hundreds of millions of dollars in credits from carbon-capture developer Entropy Inc. But the agency has previously balked at the level of price guarantee that Pathways is seeking, and the amount of its total budget that would be consumed by meeting that demand.


Complicating efforts to find common ground on such matters is the diverse nature of Pathways’ membership. The alliance is in negotiations with the CGF around both infrastructure that the companies would share to transport and store carbon, and capture facilities that each would have to build separately. The latter could involve different financial considerations for each project, and the companies also vary in their enthusiasm for taking on risk related to emissions reduction.


Leadership on both sides struck cautious but optimistic tones in statements provided to The Globe.


“CGF’s experience to date shows it can provide industrial emitters with investment structures that hedge their compliance costs and align partners to unlock substantial, costefficient emissions reductions over time,” said Growth Fund president and chief executive officer Patrick Charbonneau. “We are creative, engaged and active in the Canadian market, and look forward to unlocking more deals in the months to come.”


Pathways president Kendall Dilling said that it’s “encouraging to see Ottawa taking steps to de-risk industry investments in large-scale carbon capture projects,” and that his organization looks forward to further engagement with the CGF. He also called the recent meeting with Ms. Freeland and Mr. Wilkinson “a very constructive conversation.”


For the government’s part, a spokesperson for Ms. Freeland, Katherine Cuplinskas, stressed that the CGF is responsible for negotiations around financing for potential partners such as Pathways, and that the agency operates at arm’s length.


Meanwhile, against the backdrop of both an approaching federal election that could shift climate policy, and looming emissions-reductions targets that Canada is not currently on pace to meet, oil-and-gas decarbonization advocates are pointing to the new talks as a window that needs to urgently be capitalized on.


“I’m ultimately confident, because we have a moment in which everybody’s at the table,” said Adam Sweet, the climate-policy organization Clean Prosperity’s director for Western Canada.


“If everybody can realize just how good an opportunity this is right now, then we can move.”

Report calls on Washington to regulate CO2-removal industry

A report by the Carbon Removal Alliance, a non-profit representing the industry, outlined ways to improve monitoring, reporting and verification in the U.S.

This article was written by Isabella O’Malley and was published in the Toronto Star on October 24, 2024.

The unregulated carbon dioxide removal industry is calling on the U.S. government to implement standards and regulations to boost transparency and confidence in the sector that’s been flooded with billions of dollars in federal funding and private investment.

A report Wednesday by the Carbon Removal Alliance, a non-profit representing the industry, outlined recommendations to improve monitoring, reporting and verification. Currently the only regulations in the U.S. are related to safety of these projects. Some of the biggest industry players, including Heirloom and Climeworks, are alliance members.

“I think it’s rare for an industry to call for regulation of itself and I think that is a signal of why this is so important,” said Giana Amador, executive director of the alliance. Amador said monitoring, reporting and verification are like “climate receipts” that confirm the amount of carbon removed as well as how long it can actually be stored underground.

Without federal regulation, she said “it really hurts competition and it forces these companies into sort of a marketing arms race instead of being able to focus their efforts on making sure that there really is a demonstrable climate impact.”

The non-profit defines carbon removal as any solution that captures carbon dioxide from the atmosphere and stores it permanently. One of the most popular technologies is direct air capture, which filters air, extracts carbon dioxide and puts it underground.

The Inflation Reduction Act and the Bipartisan Infrastructure Law have provided around $12 billion (U.S.) for carbon management projects in the U.S. Some of this funding supports the development of four Regional Direct Air Capture Hubs at commercial scale that will capture at least one million tons of carbon dioxide annually.

Some climate scientists say direct air capture is too expensive, far from being scaled and can be used as an excuse by the oil and gas industry to keep polluting.

Gernot Wagner, a climate economist at Columbia Business School at Columbia University, said this is the “moral hazard” of direct air capture — removing carbon from the atmosphere could be utilized by the oil and gas industry to continue polluting.

“It does not mean that the underlying technology is not a good thing,” Wagner said.

Direct air capture “decreases emissions, but in the long run also extends the life of any one particular coal plant or gas plant.”

Jonathan Foley, executive director of Project Drawdown, doesn’t consider removal technologies to be a true climate solution.

“I do welcome at least some interventions from the federal government to monitor and verify and evaluate the performance of these proposed carbon removal schemes, because it’s kind of the Wild West out there,” Foley said. “But considering it can cost 10 to 100 times more to try to remove a ton of carbon rather than prevent it, how is that even remotely conscionable to spend public dollars on this kind of stuff ?” he said.