Project update: In Canada, partners pull the plug on CA$1.4billion TransAlta CCS project | GCCSI

A group of energy companies abandoned a project to capture, use and store 1 million tons of CO2 per year from the flues of an Alberta coal-fired power plant.

Pointing to weak project economics, TransAlta, Canada’s largest investor-owned electricity generator announced on 26 April that its partners Capital Power and Enbridge would halt the CA$1.4billion project after completing initial engineering and design studies. Construction was due to start this year.

According to TransAlta’s first quarter results, the partners “determined that although the technology works and capital costs are in line with expectations, the revenue from carbon sales and the price of emissions reductions are insufficient…”. The Pioneer plant aimed to sell CO2 for enhanced oil recovery, but found no firm buyers.

“What’s really needed, of course, is a regulatory framework on CO2 that puts a value on that CO2 – a significant value,” Don Wharton, vice-president of policy and sustainability at TransAlta, told The Globe and Mail. Wharton added that: “If [a price on carbon is] done properly, then CCS projects, as well as other emissions-reducing projects, would be more encouraged to go ahead.”

The province of Alberta currently charges certain industrial emitters CA$15 per ton of CO2 beyond a pre-determined level. That price doesn’t support the cost of the project, and there’s “little certainty on future revenue”, Cheryl Wilson, carbon capture and storage analyst at Bloomberg New Energy Finance told Bloomberg News. “Pioneer had too many factors working against it.”

Located about 70 kilometers west of Edmonton, the project was slated to capture 1 million tons of CO2 from the exhaust of TransAlta’s Keephills 3 facility, a 450-megawatt coal-fired power plant that went on line in September 2011 at a cost of roughly CA$2 billion.

A portion of the captured CO2 was to be sold to oil and gas drillers operating in the nearby Pembina oil fields, to enhance the recovery of oil from mature wells. Another share of CO2 was to be permanently sequestered in deep saline formations nearby, as well.

The Pioneer project was granted public funding in October 2009. The lion’s share, CA$436 million, was committed by the province of Alberta, and another CA$343 million was pledged by the Canadian Government. The Global CCS Institute also put up AU$5 million.

According to TransAlta, the company and its partners had spent just CA$30 million on the project to date, with CA$20million of that coming from government.

Speaking to Thomson Reuters News, Chris Severson-Baker, managing director of the Pembina Institute, an Alberta-based environmental think tank, said: “Within Alberta, this was the one coal-plant application of CCS and it was the most important application. There are significant emissions from coal operations… and there are few other options to mitigate greenhouse gas emissions from those types of operations without CCS.”

Meanwhile, the province has funded three other CCUS projects which will reach critical decision points in the next year or so. These are: