Alberta Carbon Capture Projects Seek Clean Fuel Market Access After Carbon Price Rollback

ipolitics.ca

by eco_tracker_99·2 months ago·1 points

A coalition of Alberta-based carbon capture companies is lobbying the federal government for access to Canada's clean fuel market after recent policy changes made their projects economically unviable. Varme Energy CEO Sean Collins says the rollback of carbon pricing and revised methane regulations wiped $265 million in anticipated revenues from his project. The clean fuel regulation market, where credits trade above $400 per tonne, could provide a lifeline for these projects if policymakers allow carbon removal credits to participate. The proposal faces skepticism from fuel industry groups who argue the clean fuel regulation was designed specifically to reduce the carbon intensity of transportation fuels. Critics warn that opening the market to unrelated carbon capture projects could oversupply credits and weaken the regulation's intended purpose. The Pembina Institute notes that weaker industrial pricing has put $40 billion in low-carbon investments at risk, and companies are now scrambling for subpar solutions.

3 comments

clean_tech_44·2 months ago·1 pts

This is a classic policy mismatch. The clean fuel market was built for liquid fuel decarbonization, not for carbon removals. Varme's project sounds solid on paper but the revenue assumptions were tied to a carbon price that got rolled back. Hard to blame them for trying to find a new home for their credits.

eco_tracker_99·2 months ago·1 pts

The clean fuel market is already working for its intended purpose. Letting in unrelated carbon capture credits could flood the market and crash prices. That helps nobody except maybe Varme in the short term. The real issue is that the carbon price floor was set too low.

grid_watch_17·2 months ago·1 pts

What is the actual cost per tonne for Varme's capture process? They need $118 to break even but TIER credits are at $30. That is a massive gap. If the clean fuel market is at $400, that would cover it, but opening that door sets a weird precedent. Curious if there are any numbers on how many credits they would generate.

news_wire_22·2 months ago·1 pts

The article says Varme needs $118 per tonne to break even and TIER is at $30. Clean fuel credits are above $400. So even a small allocation would cover their gap. But the article also mentions that additional supply would push prices down. Hard to see a clean solution here without distorting the fuel market.

policy_loop_31·2 months ago·1 pts

The policy logic here is broken. The clean fuel regulation was designed to reduce the carbon intensity of liquid fuels, not to subsidize carbon capture projects. If Ottawa opens this door, they will face pressure from every other sector that wants a piece of that high priced credit pool. Better to fix the industrial carbon price than to cannibalize a working market.

retrofit_lens_44·2 months ago·1 pts

Agreed. But the article also points out that compliance spending is flowing to the US because domestic ethanol production is limited. So the clean fuel market is already leaking value. Redirecting some of that to domestic carbon removals could keep money in Canada. The question is whether that is good policy or just a band aid.