THE CARBON CAPTURE AND STORAGE TRAP For taxpayers.

Contributed by Robert Lyman © 2022. Robert Lyman’s bio can be read here.

In the latest of a series of the Royal Bank of Canada’s Economics and Thought Leadership climate series, it continued to promote the theme that Canada can attain the “Net-Zero” by 2050 greenhouse gas emission reduction goal embraced by the Trudeau government and at the same time continue to expand the development of the oil and natural gas industry. In doing so, the RBC is supporting the claims of many in the Canadian hydrocarbons industry who advocate the widespread adoption of carbon dioxide capture and storage (“CCUS”) technology and of other technologies, allegedly soon to be available, that will reduce the emissions from hydrocarbons production in Canada.


The purpose of this article is to examine the RBC thesis, the related global and Canadian contexts, and the factors most likely to influence investment in CCUS in Canada to 2030 and beyond. It will be argued that the goal of net zero emissions is neither desirable nor attainable and that present and proposed policies to increase CCUS in Canada will, at best, only shift the immense costs of this uneconomic technology from the oil and gas industry to taxpayers and energy consumers. Embracing CCUS and other uneconomic technologies as means to reduce Canada’s emissions is a policy trap, especially for the average Canadians who would be forced to pay.

2 Comments

  1. Ken Gregory

    Page 9 of the Lyman report says that the Shell Quest CCS project had a capital cost of C$1.35 billion and operating costs of C$41 million per year. The Quest Carbon Capture and Storage Project Annual Summary Report – 2020, revised August 2021 at https://tinyurl.com/4v5zhv8b , page 10-1 says “Total capital costs required to reach commercial operation on October 1, 2015 were approximately $790 million. The large discrepancy of capital costs is because the $1.35 billion is estimated capital plus operating costs.

    The Annual report 2020 shows that the average annual operating costs 2017-2020 calendar years were $29,700/yr. This is less than the $41 million/yr estimated. The total operating costs from October 1, 2015 to December 31, 2020 was $152 million. Total capital plus operating costs to end 2020 was $942 million.

    The project life is estimated at 25 years, which is the total project injection of 27 MtCO2 divided by 1.08 MtCO2/yr injection. Assuming the operating costs do not increase, the total project cost for capital plus 25 years of operation would be $1,531 million. Note that the project also emits CO2, so the net CO2 emissions avoided is 0.84 MtCO2/yr, averaged over 2016-2020.

    This page https://sequestration.mit.edu/tools/projects/quest.html says the project cost is “Total cost of the project is estimated at $1.35 billion.” This is the number used in Lyman’s report as capital costs, but it includes capital and operating costs. The page also says as of 2016 “The current estimate of capital costs is about $811 million”. The $1.35 billion total cost estimate apparently includes $811 million of capital costs and 13 years of operating costs.

    A Shell news release of July 9, 2020 says “Quest received $865 million from the governments of Canada and Alberta to build and operate the facility.” This was $120 million from Canada’s Clean Energy Fund and $745 from Prov. of Alberta.

    The Annual report 2020 shows the cost per tonne of emissions avoided was $125/tCO2. The average over 2017-2020 the cost was $108.4/tCO2. This is an outrageously high cost.

    Using the FUND economic model, the social cost of CO2 is negative, likely C$-14/tCO2 at 3% discount rate. The negative sign means that the benefits of CO2 emissions exceed the social costs. The benefits to agriculture of CO2 fertilization and warming is 95 time the harm from sea level rise and storms combined. See https://friendsofscience.org/pdf-render.html?pdf=assets/documents/Social%20Cost%20of%20CO2-June11.pdf

    • fosadmin

      Robert Lyman responds: The figures that I used were from the press reports at the time; I did not make them up.

      As Ken Gregory notes, the federal and Alberta subsidies totalled $865 million. Yet the figure he quotes for capital costs was $790 million. Why would the governments provide up front subsidies that exceeded the capital costs of the project?

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