November 24, 2009

Canada seen funding new carbon capture plans
Tue Nov 10, 2009 4:29pm EST

By Joshua Schneyer

NEW YORK (Reuters) - Canada may soon fund carbon capture and storage (CCS) in British Columbia and Saskatchewan, expanding its plans to cut greenhouse gas emissions, Natural Resources Minister Lisa Raitt told Reuters on Tuesday.

Canada's central government in Ottawa, which has committed about half of the C$1 billion it set aside earlier for CCS projects, is in talks with natural gas producing companies in the two western provinces regarding new projects, Raitt said in an interview.

Last month, Canada's national and provincial governments announced CCS project funding worth more than C$1.6 billion ($1.5 billion) for a TransAlta-operated coal-fired power plant and a Royal Dutch Shell-operated crude upgrading plant, both in Alberta province. The companies plan to match government funding with their own investments.

"The third area that we're looking at is natural gas, the application of carbon capture and storage for gas," Raitt said.

"We're talking to a number of proponents and hopefully will be having some kind of announcement in the coming months."

Raitt declined to name specific companies involved in the talks.

CCS projects -- which mostly use technology to capture carbon emissions and sequester them underground -- are "the best tool we have right now" to cut emissions from Canadian hydrocarbons projects, Raitt said.

Canada is betting billions of dollars in CCS investment will help it to cut greenhouse gas emissions by up to 20 percent before 2020, even as it ramps up production of crude from its bitumen-rich oil sands in Alberta.

"In terms of North American energy security, the oil sands are going to play a very important role. We have the means to transport more crude safely to the United States, and the infrastructure is there," Raitt said.

"What we need to do is deal with the reality of environmental sustainability," she added.

Canada has become the top supplier of crude to the United States. Exports of more than 2.5 million barrels a day in August were more than double supply levels from any other exporting country, according to U.S. government data.

Canadian supplies have risen to record levels as Saudi Arabia, Mexico and Venezuela have reduced U.S.-bound crude shipments. Two new U.S.-bound pipelines are due to start pumping more Canadian oil into the U.S. Midwest next year.

But Canadian oil sands projects have been criticized for spewing high greenhouse gas emissions. Raitt said she met with business people and politicians in New York to reassure them Canada is working to make its energy projects cleaner.

"We're engaging on harmonization of cap and trade (programs), but also energy security," she said.

(Reporting by Joshua Schneyer; Editing by Marguerita Choy)

http://www.reuters.com/article/GCA-GreenBusiness/idUSTRE5A956Z20091110