An explosive report on one of the largest carbon capture and storage facilities in Alberta is challenging the wisdom of Canada’s hydrogen strategy

An explosive report on one of the largest carbon capture and storage facilities in Alberta is challenging the wisdom of Canada’s hydrogen strategy.

The Quest carbon capture and storage (CCS) facility operated by Shell near Edmonton is emitting more greenhouse gases than it captures, according to a report published last week by international NGO Global Witness.

The carbon capture system used at Quest is a prime example of the type of innovation Canada is banking on to curb emissions from the hydrogen sector. Because the vast majority of hydrogen produced today is made from methane, the federal government is interested in expanding carbon capture technology to cut emissions. The findings from Global Witness are calling into question this strategy and Canada's future energy plans.

“The problem is (Ottawa is) basing the hydrogen strategy off speculative technology that the Quest project shows us doesn't work,” said Julia Levin, senior program manager for climate and energy at advocacy group Environmental Defence.

“It's not even a risky gamble, it's just the wrong choice.”

Canada is a top 10 global producer of hydrogen, but the vast majority is produced using methane (natural gas), making it a contributor to global warming.

In late 2020, Natural Resources Canada (NRCan) published its hydrogen strategy, showing it intends to grow the country’s hydrogen sector by betting big on carbon capture technology. The plan attempts to strike a balance between the oil and gas industry’s desire to find new revenue streams for its gasfields and Canada’s obligation to slash emissions under the Paris Agreement. As Canada’s National Observer has previously reported, the federal government is looking to include Big Oil in its hydrogen plans.

However, the Global Witness report indicates the technology needed to do this doesn’t always work as promised, throwing the strategy into question. The Quest CCS facility, completed in 2015, produces hydrogen to help refine bitumen at the oil major’s Scotford complex.

Shell reports the Quest plant captured 48 per cent of the facility’s emissions, preventing about five million tonnes of carbon dioxide from reaching the atmosphere. That rate is far below the 90 per cent capture rate industry lobbyists regularly tout.

However, Global Witness crunched the numbers on the project’s overall emissions, taking into account the methane pollution from extracting and transporting natural gas that Shell doesn’t report, and found the plant coughed more than 7.5 million tonnes of greenhouse gases into the atmosphere, rendering it a net-emitter. When the project’s full supply chain is factored in, Global Witness estimates the amount of carbon captured drops from 48 per cent to about 39 per cent.

Shell rejects the report’s findings.

“We disagree with the report’s conclusions and any analysis that suggests Quest is not reducing CO2 emissions is simply wrong,” said Shell spokesperson Stephen Doolan in a statement to Canada’s National Observer.

“​​Quest remains one of the most successful CCS projects in the world and we look forward to scaling and sharing this technology as we transition to becoming a net-zero energy business by 2050, or sooner, in step with society.”

Levin said the future of Canada’s hydrogen production will make use of either carbon capture or renewable energy because there is a well-understood recognition that hydrogen produced with unabated methane is a “carbon bomb.” She said there could be some specific uses for renewable hydrogen in sectors like steel making, but hydrogen made with fossil fuels should be rejected whole cloth.

“Fossil-derived hydrogen is just dressing up a fossil fuel as something new when it's not,” she said. “This is absolutely about oil and gas companies scrambling as the energy transition happens … and (instead) lobbying heavily for a false solution that will allow them to maintain their business as usual.”

NDP environment critic Laurel Collins said using public money to subsidize carbon capture plans, and ultimately ending up with increased emissions, is the opposite of climate leadership.

“The Liberal government has a track record of putting the interests of big corporations, and specifically the oil and gas companies, over the interests of communities and people across Canada who want to see the government take bold climate leadership,” she said.

“Profitable oil and gas companies do not need subsidies from the taxpayer to do what they should be doing already,” she added.

The Quest facility reportedly cost over US$1 billion to build, with at least US$654 million coming from government subsidies. It's part of Shell's Scotford complex, which ranks among Canada's top emitters.

A 2019 study from the International Energy Agency looking at Shell’s carbon capture system in Alberta found that using carbon capture in heavy oil processing plants is “not yet economic without considerable support in the form of government or external funding.”

In other words, carbon capture isn’t economic in the oil and gas industry without being propped up by government.

“As a means to address Canada’s obligations under the Paris Agreement, this is a poor use of taxpayer dollars,” the Global Witness report finds.

Still, both the federal and Alberta governments are betting big on carbon capture and eyeing Edmonton as a hub for hydrogen. One example is a deal with Air Products Canada, which is currently building a $1.3-billion carbon capture and hydrogen production complex it expects to be operational by 2024. In June, the federal and Alberta governments said they’d signed a memorandum of understanding with Air Products Canada to support the buildout. Ottawa is also investing over $60 million in a carbon trunk line to connect Alberta’s oilsands operations to a hub outside Edmonton.

The federal government is currently funding at least 16 separate carbon capture projects across the country.

NRCan declined an interview and did not return a request for comment by deadline.