Rising Chinese Crude Demand Sends Supertanker Rates Soaring

By Tsvetana Paraskova - Mar 20, 2023

• VLCC daily rates have increased to more than $100,000 per day in March.
• 
  
• Chinese refiners are chartering more supertankers to bring crude later this year as the economy reopens.
• 
  
• The world’s largest international shipping association expects that the tanker shipping market over the next two years could be the strongest one in 15 years.

Shipping rates for supertankers have recently shot up above $100,000 a day as the market for very large crude carriers (VLCC) tightens and Chinese oil demand rises.  

Chinese refiners are chartering more supertankers to bring crude later this year as the economy reopens. At the same time, the sanctions on Russia have tightened demand for all kinds of crude-carrying vessels as the voyage to Russia’s main customers now, China and India, is much longer than a week-long trip from a Russian Baltic port to northwest Europe. 

In the tighter tanker market, day rates are rising and are expected to stay elevated for at least another two years, according to analysts and shipowners.  

Chinese demand is set to drive global oil consumption this year, and Chinese refiners are booking tankers to carry crude on long-haul trips from the United States, further tightening the VLCC market and pushing rates higher. As U.S. oil prices are at a discount to the Middle Eastern benchmark, more U.S. crude is set to arrive in China at the end of the second quarter of this year, banks, brokers, and shipowners say. 

“Tankers are traveling longer distances and ship availability is very tight. I think rates will stay strong for the next two years,” Lars Barstad, chief executive at Frontline, which owns and operates 22 supertankers and nearly 50 smaller vessels Suezmax and Aframax, told The Wall Street Journal.   

Tanker rates are also pushed higher by the lower availability of vessels as more ships are involved in the Russian oil trade and – due to the sanctions – have become unavailable to other shippers. The number of newly built tankers and orders for new builds is at a decades-low, further constraining vessel availability. Related: EU Looks To Extend Natural Gas Consumption Cuts For Another Year

“Despite improving fundamentals and strong tanker markets in the second half of 2022, new ordering of tanker tonnage in dwt terms was the lowest reported in 27 years. There is a marginal number of available berths being discussed for late 2025 delivery, predominantly in China, but to compensate for the growing numbers of vessels reaching 20 years of age over the next years, one needs to look to 2026,” Frontline said last month in its 2022 results report and outlook for the coming years.  

“This continues to be the fundamental reason one may remain positive for tankers for the years to come.” 

Teekay Tankers, which is not participating in the movement of Russian cargoes, said last month that “the transfer of ships into the so-called shadow fleet effectively removes them from mainstream trades and reduces effective vessel supply.” 

Teekay Tankers expects the global tanker fleet to grow by around 1.5% this year, with virtually no growth in 2024, the company’s CEO Kevin Mackay said. 

“In comparison, tanker tonne-mile growth is set to remain at very healthy levels over the same time frame due to projected firm levels of oil demand growth, particularly from China, and the continued stretching of the midsize tanker fleet due to changing trade patterns. As such, we believe that the tanker market has the potential to remain very firm over the medium term,” Mackay added. 

Hugo De Stoop, CEO at Euronav, said in early February that rising crude demand and the longer voyages after the EU embargo on Russian oil have driven freight rates higher. 

“We believe that the solid base of sector fundamentals (order book, fleet age, incoming regulations) will continue to underpin positive conditions within the tanker market for multiple quarters ahead,” De Stoop said. 

BIMCO, the world’s largest international shipping association, said on a webinar at the end of February that the tanker shipping market over the next two years could be the strongest one in 15 years. 

BIMCO expects crude tanker demand to grow faster than supply by 2.5-3.5 percentage points in both 2023 and 2024, while product tanker demand will outpace supply by an even higher margin. 

“Unsurprisingly, we predict that the tightening of the supply/demand balance will lead to an increase in freight rates, time charter rates, and second-hand ship prices,” the association said. 

“We believe in fact that the market will experience a period of sustained market strength that has not been seen since the 2008 financial crisis.”

By Tsvetana Paraskova for Oilprice.com

Small reactors could empower First Nations with energy security

Indigenous communities in Ontario, Saskatchewan get on the ground floor of this emerging technology

Ian Ross2 days ago

Conceptual rendering of BWRX-300 small modular reactor (GE-Hitachi conceptual)

Emily Whetung MacInnes was hesitant when Ontario Power Generation (OPG) approached her community of Curve Lake First Nation for their input about building Canada's first on-grid small nuclear reactor (SMR).

OPG is planning a 300-megawatt SMR at its Darlington site, east of Toronto, on the traditional land of Curve Lake. The provincial utility wanted to ensure that Indigenous voices were heard.

As one of the signatory communities in the Williams Treaty (1923), Curve Lake was invited to be part of the conversation about any environmental concerns and impacts.

The chief emeritus of the Kawarthas-area First Nation had concerns about the waste consequences associated with nuclear energy.

Today, count Whetung MacInnes in as "enthusiastically supportive" of nuclear energy. She views SMRs as a solution to a low-carbon future.

Sitting on an independent review committee, Whetung MacInnes has a front row seat to watch the project take shape.

Construction has not started. The Darlington SMR project has a site preparation licence. An application has been submitted to the Canadian Nuclear Safety Commission for a licence to construct. According to an OPG website, the reactor will come online in 2029.

So impressed and confident is she with the nuclear industry's “over the top” safety protocols, Whetung MacInnes took her six- and nine-year-old kids on a tour of McMaster University's on-campus small modular reactor in Hamilton. 

She mentioned her experiences in an online panel discussion hosted by the Macdonald-Laurier Institute last week headlined, Finding a good fit: Indigenous peoples and small nuclear reactors.

“When you see the extreme measures that the industry takes, I think you feel a lot better about things,” she said.

SMRs are being touted as a solution to supply power to electrical grids or remote off-grid areas, such as a mining operation.

Smaller than conventional reactors, the factory-designed modules allow the technology to be transported to a site for assembly. The technology, still in the design stage, is expected to be cheaper to construct and more scalable to meet the needs of industry and remote communities to provide a more reliable and cleaner source of energy than from diesel generation.

SMRs can provide reliable energy and heat but Whetung MacInnes also sees spinoffs such as locally produced, greenhouse-grown food production, better internet for on-reserve learning and employment, and also supply chain opportunities that can benefit First Nations.

"I think the applications are endless," she said. 

"Energy security is extremely important in the North," said Richard Boudreault, chief scientist with the Canadian Space Mining Corp. and chair of the Regina-based First Nations University of Canada.

When diesel generators break down in winter, he said, it's a crisis that sometimes requires immediate evacuation. Diesel creates pollution that harms people's health and contributes to climate change.

With diesel fuel prices sure to steeply rise once the federal carbon tax kicks in, energy will not be secure in Far North communities, Boudreault said.

A trained engineer, he has 40 years of experience in the nuclear sector and possesses a keen interest in energy solutions for Canada's most northerly regions.

A variety of small reactor technologies exist, he explained. Most still need to reach the prototype stage followed by a decade-long testing process before there’s regulatory approval to operate.

"These projects will take a long period of time,” said Boudreault.

However, there are tried-and-true small reactor technologies in use on university campuses that produce power and are run by students, he said. 

And through more than 50 years of operation, not one has gone "China Syndrome," said Boudreault, referencing the 1979 movie thriller about a nuclear meltdown. Nor has there been one recorded death in the nuclear industry in either Canada or the U.S., he claims.

Nuclear energy has its supporters in northern Saskatchewan where uranium is mined and where this resource sector is the largest regional employer of Indigenous people.

“If we’re going to solve the climate change crisis we need baseload energy that’s carbon free, and so nuclear offers that,” said Sean Willy, president-CEO of Des Nedhe Group, the economic development arm of English River First Nation, a Dene community in the northern half of the province.

Willy spent a decade with uranium miner Cameco, as the point person of its exploration efforts. First Nation and Métis community engagement was prioritized.

While more than $3 billion has been spent on the supply chain, “a great ESG story,” said Willy, English River and two other communities want to diversify and go a step beyond to invest as future owner-operators of small reactor technology.

“We felt it’s time to move down the supply chain.”

It’ll be likely 10 years, or more, before the technology is commercialized “but we wanted Canada to know that Indigenous people do support these projects, but we want to be investors in these projects wherever they occur," said Willy.

The dialogue is already happening between the nuclear tech companies and First Nations, but they are high-level discussions. It's at the grassroots level where engagement must take place for SMRs to gain acceptance, he said. 

Jesse McCormick, senior vice-president of research, innovation and legal affairs for the First Nations Major Projects Coalition, agreed those conversations are indeed taking place on where SMRs might be deployed.

How this technology will be financed will likely involve a mix of private and public funding, he said, hopefully, with some form of national loan guarantee program, similar to the Alberta Indigenous Opportunities Corp.

How the money moves depends on government regulations, he said.

The inherent risk lies in the federal impact assessment processes and a desire to take the existing system and “blow it up.” That can lead to a period of uncertainty that can cause a flight of capital out of Canada if no one knows what the rules are, McCormick said. 

But the dialogue begins and ends, McCormick said, with First Nations’ ability to understand the technology and be assured that small reactors and the waste material they produce are operated and handled safely.

“You need to have communications tailored to the capacity knowledge and experience of the people who they’re communicating with.”

That means First Nations must have someone trustworthy in place who can deliver the best possible advice and let them make their own independent evaluation.

“If we can get those things correct, we can get to a spot where timeframes are going to be accelerated, regulatory processes are going to be quicker, we can ensure that First Nations are active participants in the development of these projects through commercial and equity arrangements,” he said, then objectives and opportunities will move faster.

When it comes to deploying reactors, two or three First Nations might be directly impacted, but, politically, there will be outlying “second level” communities that will have concerns, he said.

Having informed First Nations voices brought in to facilitate those processes is a good thing. Knowing ahead of time on how First Nations will react to development is critical when it comes to laying a path to bring Indigenous communities on board instead of placing them in a position of opposition, McCormick said.

The U.S. Is Racing To Revitalize Its Nuclear Industry

By Felicity Bradstock - Mar 17, 2023

• The U.S. is ramping up its investments in nuclear power to bring it back from the brink and use it to support a green transition.
• 
  
• By 2021, the U.S. had 93 nuclear reactors in operation, with a combined generation capacity of 95,492 MW and 19 sites at various stages of decommissioning.
• 
  
• Public opinion has swayed in favor of nuclear power due to its promotion as a clean energy source and last year's energy crisis, resulting in greater government funding for the energy source.

Unlike many other countries around the world, the U.S. has kept its nuclear power up and running, making it the biggest producer of nuclear power today. Nevertheless, after falling out of public favor, nuclear power was little talked about in previous decades, with many power plants going into debt and barely keeping afloat. At present, nuclear power provides around 20 percent of the electricity generated in the United States, and this is largely thanks to government grants helping power plants maintain operations. But now, as countries worldwide consider nuclear power once again, the U.S. is ramping up its investments in the low-carbon energy source in a bid to bring nuclear back from the brink and use it to support a green transition. 

The first nuclear power plant in the United States was opened in 1958, and by the end of 2021, the U.S. had 93 nuclear reactors in operation, across 55 nuclear power plants in 28 states. The combined generation capacity of these reactors totaled 95,492 MW. Many of the reactors are 40 years old or more, due to the reluctance to invest in new nuclear projects following several prolific disasters in previous decades. The last two nuclear reactors to come online were Watts Bar Unit 1 in 1996 and Watts Bar Unit 2 in 2016. In addition, several sites were closed over the last decade, with 19 sites at various stages of decommissioning by 2021. 

Despite the poor public opinion of nuclear power in past decades, it continues to contribute a significant proportion of U.S. electricity. And last year, the Department of Energy (DoE) announced a $6 billion investment to preserve America’s clean energy nuclear infrastructure. The funding comes from the Bipartisan Infrastructure Law’s Civil Nuclear Credit Programme, which identified nuclear power as America’s largest source of clean energy. The DoE highlighted that helping the country’s nuclear plants survive would support thousands of clean energy jobs, as well as prevent the release of unnecessary carbon emissions. Nuclear power is now being seen by the DoE as key to achieving President Biden’s climate pledges and supporting the country’s green transition. 

And it’s not only the government that has changed its stance on nuclear power, with recent polls showing greater public support for the energy source. A 2022 Gallup poll showed that public opinion has swayed in favor of nuclear power, with 51 percent for nuclear and 47 percent opposed. This marks a significant shift from 54 percent opposed in 2016. This change is likely largely in response to the energy crisis seen last year, which sent consumer energy bills soaring. In addition, the combination of nuclear power being promoted as a clean energy source and the length of time since the last major nuclear event has improved public perception. 

Several strides were seen in the nuclear industry in 2022, after years of stagnation. The country’s biggest nuclear plant, Diablo Canyon in California, received a $1.1 billion conditional award of credits from the DoE to extend operations. There were originally plans for the plant to be decommissioned in 2024 and 2025, but this changed after introducing the Bipartisan Infrastructure Law. Several advanced reactor firms saw progress toward deploying small modular reactors (SMRs) nationwide. And the DoE invested heavily in research and development, carrying out a study that determined that approximately 80 percent of U.S. coal power plant sites evaluated could be converted into nuclear power plants. 

And there are big plans for 2023 and beyond. In a movement away from U.S. reliance on foreign uranium, the DoE is investing in developing domestic high-assay low-enriched uranium (HALEU), with production expected to start this year. Meanwhile, at New York’s Nine Mile Point Nuclear Generating Station, we are seeing advances in combining clean energy projects with plans for the first production of clean hydrogen using low-temperature electrolysis this year. The hydrogen will be used to help cool the facility. This is one of four nuclear-powered hydrogen demonstration projects being supported by the DoE. 

As well as publicly-funded projects, several private projects are gaining traction. Bill Gates’ TerraPower and X-energy are advancing on each of their construction permit applications, expected to submit them to the Nuclear Regulatory Commission (NRC) within the next year. This could support the launch of new types of nuclear technologies such as TerraPower’s Natrium reactor – a sodium-cooled fast reactor, and X-energy’s Xe-100 high-temperature gas reactor SMR plant.

But now, all eyes are on Georgia Power’s Vogtle nuclear reactor, which was launched this month. The Vogtle nuclear reactor Unit 3 started a nuclear reaction inside the reactor last week, a process called “initial criticality.” This is the process in which nuclear fission begins to split atoms and generate heat. The heat makes the water boil, and the steam created spins a turbine that’s connected to a generator, creating electricity. Unit 3 will become fully operational in May or June, according to the company. The CEO of Georgia Power, Chris Womack, stated: “This is a truly exciting time as we prepare to bring online a new nuclear unit that will serve our state with clean and emission-free energy for the next 60 to 80 years.” 

As both the U.S. government stance and public opinion shift in favour of nuclear power, we can expect to see investment in the sector increase substantially, and new operations come online. An increase in public funding for nuclear projects is helping to create momentum around research and development, supporting innovations in nuclear technology and the potential for creating non-traditional reactors. Meanwhile, private companies are responding to DoE investments by putting their money into nuclear power to support decarbonization aims and, ultimately a green transition.  

By Felicity Bradstock for Oilprice.com

Adding Up The Benefits Of Geothermal


Image credit: ORNL, U.S. Dept. of Energy

By U.S. Department of Energy

ORNL researchers have developed a free online tool for homeowners, equipment manufacturers, and installers to calculate the savings and energy efficiency of ground source heat pump systems compared to traditional heating, ventilation, and air conditioning systems.

A tool developed by Oak Ridge National Laboratory researchers gives building owners and equipment manufacturers and installers an easy way to calculate the cost savings of a heating and cooling system that utilizes geothermal energy and emits no carbon.

Ground source heat pumps, or GSHPs, operate with a heat exchanger that extracts heat from the ground in winter and serves as a heat sink in summer to provide cooling.

ORNL’s free web-based application identifies the benefits and implementation costs for GSHP installation in existing U.S. buildings. Users can modify utility prices for electricity, water and natural gas. A techno-economic analysis is provided in simple charts.

GSHP Screening Tool

A techno-economic analysis tool for ground source heat pump (GSHP) applications. It allows building owners, HVAC system designers, and installers to estimate the benefits and costs of implementing a GSHP system in various buildings at all climate zones in the Us.

“You can change building characteristics, ground properties and utility rates, and the annual return on investment is updated in real time based on these inputs,” said ORNL’s Xiaobing Liu. “This is the only tool available that can automatically simulate and predict performance of GSHP applications.”

Originally published by Oak Ridge National Laboratory

Capturing Carbon Isn’t Enough. We Need to Remove It.

Analysis
March 18, 2023

Is this British government, short of cash and political capital, nimble enough to take on the US for a leadership role in the race to net zero?

In the next fortnight, Britain plans to announce a raft of environmental policies in a big splash internally dubbed “Green Day.” So, news on much-needed planning reforms, green finance, electric vehicle manufacturing, domestic insulation, heat pumps and so on is likely.

But we got a first step this week with a spending pledge on a climate technology that many view as vital to the clean-energy transition.

Chancellor of the Exchequer Jeremy Hunt announced £20 billion ($24 billion) in funding for carbon capture, usage and storage (sometimes referred to as simply carbon capture and storage, or CCS) over 20 years. It’s a punchy investment that gives certainty where it was lacking, but something is missing.

A consensus is steadily forming that carbon dioxide removal (CDR) is an essential piece of the net-zero puzzle. The Intergovernmental Panel on Climate Change (IPCC) now concedes that, due to slow action on emissions reduction, engineered carbon removal is now essential to limit warming to less than 2 degrees Celsius. In the UK, the Climate Change Committee (CCC), a government advisory body, says that 19% of the UK’s emissions abatement will come from a combination of carbon capture and removal by 2050. The UK government has already set targets to store 20-30 million tons of CO2 a year by 2050 and deploy at least 5 million tons of annual engineered greenhouse gas removals by 2030.

But CCS is not the same as CDR, and that distinction matters here.

Think of CCS as neutral emissions (or nearly neutral, as it’s not 100% efficient) – it refers to capturing carbon dioxide at the source, say a power plant or factory, and then injecting it underground. It is a proven technology, though has developed a bad reputation for its use in “enhanced oil recovery,” in which the captured CO2 is used to help to push deep or viscous oil out of wells. Not exactly good PR for a future climate technology. But there’s no doubt CCS will be helpful in the transition as an emissions reduction method, as long as it’s not used as an excuse to slow down the transition away from fossil fuels. Gas CCS is likely to play a small role in a net zero electricity grid, for example. It’ll also help reduce emissions from some hard-to-abate sectors like heavy industry.

Carbon removal, on the other hand, is about drawing down historical emissions by either utilizing nature – through reforestation, for example – or new technologies like direct air capture (DAC) and has the potential to essentially sweep up the excess CO2 we’ve pumped into the atmosphere. CDR – nature-based or otherwise – is projected to play a large role in healing our planet, but a lot of approaches are still in the early development stages and need more investment.

That’s why it’s a little disappointing that the UK’s £20 billion is only for CCS.

To be sure, many are happy to see the government finally getting behind the technology after years of lobbying. Plus, investment in CCS will benefit certain CDR methods that could share the same CO2 transport and storage infrastructure, such as DAC and bioenergy with carbon capture and storage (BECCS), as Devina Banerjee, policy and program manager at climate NGO Carbon Gap, told me.

But, as Ted Christie-Miller, head of carbon removal at the carbon market ratings firm BeZero Carbon, explained, if the UK doesn’t do something big to help foster novel carbon removal methods soon, it could lose out on an opportunity for green growth.

The US’s Inflation Reduction Act (IRA) and Bipartisan Infrastructure Act have together provided billions to support the development and deployment of carbon-removal approaches, including $3.5 billion for four DAC hubs alone. While the UK can’t compete in terms of cash, it could leverage its position as a world leader in research to nurture climate startups. Without more funding and regulatory support, UK climate innovations risk getting stuck in the so-called valley of death, a period in which a significant increase in funding is required to make the transition from academic research to commercialization. With the US offerings already tempting some startups to cross the pond, including Switzerland’s Climeworks AG, the UK could really miss out on the potential to create even more green jobs, level up its regional hubs and become an exporter of cutting-edge climate technology.

Although reducing emissions is a priority, and the government is right to put some money into developing CCS in the UK, we can’t wait to start fostering the tools of the future. Let’s hope the UK has something serious to say about supporting engineered carbon-removal methods – as well as throwing more weight behind planning reforms, renewables, heat pumps and more – later this month.

Scaling carbon removal requires a portfolio approach

BY PHILIP MOSS AND BEN RUBIN, OPINION CONTRIBUTORS 

- 03/18/23 

Steam rises from the coal-fired power plant with wind turbines nearby in Niederaussem, Germany, as the sun rises on Nov. 2, 2022. When world leaders, diplomats, campaigners and scientists descend on Sharm el-Sheikh in Egypt for talks on tackling climate change, don’t expect them to part the Red Sea or perform other miracles that would make huge steps in curbing global warming. (AP Photo/Michael Probst, File)


A preeminent climate report, co-authored by scientists from around the world and scheduled to be published next week, is expected to affirm that humans have released too many greenhouse gas emissions and that removing them is essential for a climate-safe future. A growing number of governments and corporations are responding to this climate challenge by investing in solutions that remove carbon emissions from the atmosphere. Many on the market are taking a portfolio approach, investing in a wide range of promising solutions and minimizing risk. To continue encouraging innovation and a menu of proven options, it’s imperative to keep a level playing field and avoid picking winners and losers.

The United Nations’ Intergovernmental Panel on Climate Change (IPCC), the author of the upcoming benchmark report, has previously found that gigatons of carbon already lodged in our atmosphere need to be scrubbed from the skies, in tandem with the crucial work of companies and governments reducing their emissions. While there is clarity on the need for massive amounts of carbon removal, the definition of removals is one that is still being grappled with.

The length of time that carbon stays locked away once it is removed from the atmosphere emerges as a key definitional question as the industry scales. Different forms of removal lock away carbon dioxide for different amounts of time — ranging from decades to hundreds of thousands of years. Projects should not be written off just because the carbon they sequester is shorter-term in duration. These approaches are more bountiful in the existing market and are generally more affordable. Shorter-term approaches also help give society a bit of breathing space as the crucial work of decarbonizing operations continues to ramp up. Locking away carbon today, even if it does not stay locked away forever, buys important time to avoid hitting climate tipping points.

But approaches that lock away carbon for shorter amounts of time are only one part of the equation. Solutions — such as geological mineralization or ocean alkalinity enhancement — can last for thousands and hundreds of thousands of years respectively, and help to ensure that the carbon removed from the atmosphere stays locked away. Approaches that address the fast and slow aspects of the carbon cycle should both be part of the solution, rather than facing the current competitive “either / or” approach that is at risk of roiling the carbon removal industry.

Taking an inclusive approach to carbon removals spurs private sector investment and leads to the scaling up of multiple solutions. In the same way that the cost of solar has decreased dramatically, carbon removal can follow a similar arc if tech-neutrality is enshrined in policies and investments. We see this with leadership like the U.S. Energy Department’s Carbon Negative Shot, which is designed to expedite innovation across multiple approaches to carbon removal. We also see it in the $100 million XPRIZE Carbon Removal competition, which encourages a diversity of carbon removal projects in the fast and slow carbon cycle.

Based on purchases of carbon removal credits today, there is evidence that many corporations already are taking a portfolio approach to support climate actions in a range of ways that remove carbon dioxide from the atmosphere. Doing so helps them to manage risk and ensures that as many climate solutions as possible are supported. A portfolio approach does not mean that each ton of carbon removed from the atmosphere is or should be priced the same. Longer-term storage solutions generally come with a higher price tag, with the costs of innovative approaches needing to be covered in order to continue scaling up.

Each carbon removal approach provides a unique series of benefits beyond just locking away carbon, from the local jobs that can be created to new sources or revenues for communities. While methods to remove carbon vary, there are points of commonality across all of them. At the project level, maximizing co-benefits and building community support are crucial elements of responsible deployment. For companies or governments realizing a net-zero or net-negative pledge, there is a benefit to supporting dual and reinforcing targets that provide clarity about how much carbon to limit from entering the atmosphere and how much to remove. We must break away from the status quo forestry policies of the last 30 years Texas ruling could not only harm women, but also the legitimacy of the judicial branch

In the race to reach gigaton-scale removals, the more crowded the playing field, the better. The key to success is keeping the field level so that multiple forms of carbon removal can scale to spur innovation and protect communities from the impacts of climate change.


Philip Moss is the global director of tech removals at South Pole, a company that develops and implements comprehensive emission reduction projects, and he is the chairman of the board for the NextGen CDR Facility.

Ben Rubin is the executive director of the Carbon Business Council, a tech neutral coalition with more than 80 carbon management companies.

IPC CEO urges Canada to offer more funding to build carbon capture

Mar 20, 2023

By Nia Williams

March 19 (Reuters) -International Petroleum Corp IPCO.TO, the first foreign oil company to sanction a project in Canada's oil sands in more than a decade, could add carbon capture and storage (CCS) to the plant if more government financial incentives become available, its CEO told Reuters.

Geneva-based IPC, part of Sweden's Lundin Group, sanctioned phase one of the 30,000 barrel-per-day (bpd) Blackrod thermal project in northern Alberta last month.

The company joins Canada's biggest oil producers in urging policymakers to boost public funding for the costly technology that is seen as key to cutting emissions from the carbon-intensive oil sands.

Industry says CCS projects need more government support to be financially viable, while Ottawa and the oil-rich province of Alberta are at odds over who should provide increased funding.

"There's still an opportunity - if we can have some sensible government decisions about getting serious about meeting climate targets - that if the right incentives come along, we're in a very good position to look at carbon capture down the line," CEO Mike Nicholson said in an interview in late February.

Until then, the company will pay Canada's carbon tax, set to rise to C$170 a tonne by 2030, Nicholson said.

IPC, a 50,000-bpd producer with assets in Canada, France and Malaysia, will spend $850 million developing phase one of Blackrod. First oil is expected in 2026, and IPC has regulatory approval to produce up to 80,000 bpd.

The plant is the first greenfield oil sands project to be sanctioned since Imperial Oil Ltd IMO.TO gave the go-ahead to its Aspen plant in 2018, only to shelve it indefinitely just months later.

It comes after years of tepid foreign investment in the oil sands, with international firms deterred by high upfront capital costs, crippling export pipeline congestion that hascurtailed production, and concerns about bitumen's high carbon intensity.

Nicholson said IPC's decision was underpinned by new Canadian export pipeline capacity and IPC's own strong financial position.

The petroleum industry's recent focus on paying down debt and buying back shares has also left global oil supplies extremely tight, he added.

"Our industry hasn't been invested in for more than a decade, all the recent investment has been very short-cycle," Nicholson said.

"There's still definitely a preference for shareholder returns. But that's not how you build long-term sustainable businesses."

RISING PRODUCTION, EMISSIONS

IPC's investment underlines the importance of Canada's vast bitumen deposits, the world's third-largest crude reserves, amid global concerns about energy security following Russia's invasion of Ukraine.

But Blackrod, though relatively small, also highlights how growing production risks derailing Canadian Prime Minister Trudeau's emissions-cutting goals and cementing Canada's place as a climate laggard.

Canada's oil sands produced a record 3.15 million bpd in 2022 and are forecast to hit 3.7 million bpd by 2030, according to S&P Global.

Meanwhile emissions from the oil sands have jumped 137%, or 48 megatons, between 2005 and 2021, according to the Canadian Climate Institute.

They are forecast to rise another 23 megatons by 2030 unless CCS projects take off and the federal government passes tougher climate legislation, including a controversial federal oil and gas emissions cap, the think-tank said.

Strong global crude prices mean oil sands production will likely continue to climb through existing project expansions, analysts said, even though a wave of greenfield projects like Blackrod are unlikely.

"The oil sands are long-life, low-decline assets," said Wood Mackenzie analyst Scott Norlin. "We use the term 'cash-flow generating machines'. They just print money, especially when oil is above $70."

Reporting by Nia Williams
Editing by Denny Thomas and Marguerita Choy

Carbon capture won’t fix our climate problem

By June Sekera | Opinion | March 20th 2023

According to the IPCC’s Working Group III report, carbon capture is one of the least-effective, most-expensive climate change mitigation options on Earth.

 Photo by Shutterstock

This week, oil and gas lobbyists are gearing up for a busy few days. Today, the IPCC — the UN experts on climate science — is publishing a new report on the impact of global warming and our best options to slow it down.

Expect lots of spin about carbon capture and storage (CCS): the machinery and chemicals that aim to capture CO2 as it emerges from the smokestacks of factories and power plants burning fossil fuels. Theoretically, the idea is to reduce the amount of CO2 pumped into the atmosphere and store it underground or use it elsewhere. Don’t be misled when fossil lobbyists once again push the message that UN scientists say it’s a technology we must rely on to limit climate change.

I’ve spent several years studying carbon capture and my research is cited in the IPCC Working Group III report. I can tell you that when you look at the details of the IPCC’s findings, the scientists say something quite different.

According to the IPCC’s Working Group III report, carbon capture is one of the least-effective, most-expensive climate change mitigation options on Earth. Scientists rank it close to the bottom of a long list of options, easily outstripped by more affordable solutions like wind and solar energy. And it scores fire-alarm red for cost.

Figure SPM.7: Overview of mitigation options and their estimated ranges of costs and potentials in 2030. Source: IPCC



The IPCC report notes that limiting warming to 2 C will require “rapid and deep and, in most cases, immediate” greenhouse gas emission reductions in all sectors, mainly through cuts to fossil fuel use.

The same IPCC report shows that rather than carbon “capture” or mechanical carbon “removal”, the more effective and faster way to remove billions of tons of CO2 from the atmosphere is to restore and expand the carbon sequestration capabilities of plants and soil. My latest research supports this finding. So long as biological sequestration is not connected to carbon “offset” schemes, it can be a powerful tool to address climate change.

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The collapse of the Very Good Food Company
By Marc Fawcett-Atkinson | News | March 17th 2023

Carbon capture, on the other hand, is a placebo. It gives oil and gas companies a story to tell about acting on emissions while they keep extracting, and we keep burning, fossil fuels.


Take the case of the Boundary Dam in Saskatchewan. It captures some of the CO2 pumped out from the coal-fired power station — then pipes it directly to an oilfield where it’s injected underground to squeeze even more oil from the Earth.

Factor in emissions from burning that oil, it’s clear carbon capture doesn’t fix the fossil fuel emissions problem. Research on carbon capture processes, like that of the Boundary Dam, found they can emit three to four times as much CO2 as they inject underground.

Carbon capture is a placebo. It gives oil and gas companies a story to tell about acting on emissions while they keep extracting, and we keep burning, fossil fuels, writes June Sekera. #cdnpoli #CCUS #cdnpoli #ClimateAction #IPCC #IPCCSynthesisReport


Tellingly, the fossil fuel industry isn’t prepared to pay the price of this technology. In Canada and the U.S., CCS is enabled by massive public subsidies. In Canada, ratepayers have paid higher electricity prices triggered by the Boundary Dam carbon capture scheme. Under a proposal announced last year, Canadian taxpayers would be on the hook for a new carbon capture tax credit, despite pleas from over 400 scientists against it.

In the U.S., ExxonMobil wants to build a giant carbon capture “hub” in Texas, but says it needs government subsidies to make it feasible. Oil and gas firms are some of the world’s richest companies. If they really believe in this technology, why won’t they pay for it?

Carbon capture schemes don’t just fail as climate solutions — they harm people. Research shows that carbon capture at scale would require a network of tens of thousands of kilometres of pipelines across the country. Ask the town of Satartia, Miss., what happens when a CO2 pipeline ruptures. In 2020, people collapsed in their homes and trucks, dazed and nauseous when the fast-spreading, odourless, colourless gas displaced oxygen. Car engines died, so people couldn’t escape. Nearly 50 people were taken to hospital. As always, disasters like these hit rural communities, poor people, and people of colour first and worst.


With CCS, we are building “a taxpayer-financed sewer system for the fossil fuel industry,” says Kert Davies, director of the Climate Investigations Center. It’s time to end the era of public subsidy for CCS. It’s not taxpayers who should pay for these costly experiments, it’s the businesses profiting from pollution. You can’t reap record profits from high oil prices and then claim you don’t have the funds to deal with your emissions. Legislation should require that carbon capture at emissions sources is only ever done at the producer’s expense.

You may hear a lot of news about carbon capture this month. When you do, realize that — even with all this spin and all those subsidies — the great expectations for carbon capture have not been met.

Every dollar we spend on this dangerous and counter-productive technology is a dollar we can’t spend on real solutions to climate change — wind, solar, and energy efficiency. As climate change wrecks more of our homes, that’s a path we can’t afford to take.


June Sekera is a public policy practitioner and researcher whose work and publications are focused on the public economy and public goods production. She is a visiting scholar at the New School for Social Research, Heilbroner Center for Capitalism Studies, where she is the director of the Public Economy Project. Sekera's scientific research on carbon capture and storage (CCS) has been cited by the IPCC.

March 20th 2023

June Sekera

How Does Carbon Capture Work?

The idea of removing carbon dioxide from the atmosphere to turn back the clock on climate change is an appealing one. 

Can these technologies deliver on their promise?


By Eden Weingart

The New York Times

March 19, 2023


The world has a carbon problem. To solve it will require moving away from burning carbon-emitting fuels and relying instead on cleaner energy sources like wind turbines and solar cells. But is there anything we can do about all the carbon dioxide that is already in the air, and the millions of tons being emitted every day?

For most of human history, carbon emissions were balanced out by nature, said Rebecca Benner, a deputy director of the Nature Conservancy, but now we are “producing CO2 much faster than nature can recapture it.”

Carbon capture is an umbrella term for technologies, some of them first proposed in the 1980s, that aim to take carbon dioxide out of the atmosphere or catch emissions and store them before they are released into the air.

Though carbon capture is not yet being done on a large scale, it is being pushed by companies and politicians as a key part of plans to guide the country to a carbon-neutral future. Encouraged by tax incentives included in the Inflation Reduction Act, some companies have proposed projects in the United States to capture CO2 and either use it or store it deep underground. Those proposals have been met with skepticism, though, by some environmentalists who say carbon capture could distract from efforts to reduce emissions in the first place.

What is carbon capture, exactly?

Natural ecosystems like wetlands and forests absorb carbon from the air and turn it into biomass, a part of Earth’s natural carbon cycle. So planting trees is a low-tech way to capture carbon, and one that we know works on a large scale. But with continued use of fossil fuels, the amount of carbon dioxide in the atmosphere is rising faster than natural processes alone have been able to counteract, and experts have sought ways to augment what nature can do.

Efforts to plant trees and other small-scale experiments are happening around the country. And two larger-scale methods are being developed: post-combustion capture and direct air capture.

Post-Combustion Capture

This technology captures emissions — called flue gas — from smokestacks at coal or natural gas power plants or factories that produce materials like concrete and steel. It is currently the main carbon-capture method being pursued in the United States, including projects in the Midwest that would trap emissions from ethanol plants. Industrial processes account for 24 percent of global carbon emissions.

Once the flue gas is captured, CO2 is separated from the gas’s other components and then either put to a new use or stored.

“There are different post-combustion technologies you can use,” said Howard Herzog, a research engineer at the Massachusetts Institute of Technology’s Energy Initiative. The “most mature” and commercially viable method, he said, uses chemicals called amines to “scrub” the CO2 out of the flue gas. The amines bind to CO2 at lower temperatures, and then will release it again when heated, yielding close to pure carbon dioxide.




4.

The separated CO2 is then pressurized and ready for transport or use.


2.

The gas is released through smokestacks.


5.

The amine solution is sent back to the first chamber.


1.

To isolate CO2, gas captured from a plant is put into a chamber with amine solution. The amine binds with CO2, separating it.


3.

In a second chamber, at a higher temperature, the amine releases the CO2.


Direct Air Capture

To a layman, the words “carbon capture” might suggest something like a giant air filter. A technology like that does exist, and the Infrastructure Investment and Jobs Act, passed in 2021, includes money to finance a series of testing sites. But experts say that so far, direct air capture is too expensive and uses too much energy for the volume of carbon dioxide that it can capture.

Gas from an ethanol plant

Over 90% CO2


Gas from a cement plant

15% CO2


Air

0.04% CO2
The New York Times

Carbon capture is more efficient when it is used on sources with high concentrations of carbon dioxide, like the gas released during ethanol production, which is almost entirely CO2. Cement production releases a gas that is around 15 percent carbon dioxide. The atmosphere, by contrast, is about 0.04 percent carbon dioxide, so over one thousand tons of ordinary air would have to be processed in order to capture a single ton of CO2.

It’s been captured. Now what?

Once captured and isolated, the CO2 is pressurized into a liquid state so that it can be transported by a pipeline to a place where it can be used or stored. Two pipeline projects currently in the works would carry carbon dioxide from Midwestern ethanol plants to sites in North Dakota and Illinois.

A Different Kind of Pipeline Project Scrambles Midwest Politics
Plans that would bury carbon underground rather than release it in the air have stoked debate over climate and property rights, creating unlikely alliances and stirring memories of fierce battles over oil.
By Mitch Smith and Alyssa Schukar
March 20, 2023

There are risks: Like any pipeline, a CO2 pipeline can rupture, as one did in Mississippi in 2020, raising concerns about safety.

“We’re not just talking about pipelines in the Midwest, but a massive nationwide build-out,” said Jim Walsh, policy director for Food & Water Watch, an environmental group that opposes the Midwestern pipeline projects. “And there is no federal oversight body for CO2 pipeline projects.”

Putting carbon dioxide to use

There are commercial uses for carbon dioxide, but many of them result in the gas eventually being released back into the atmosphere. The CO2 used to carbonate beverages, for example, begins to escape the moment a soda can is cracked open, and dry ice returns to the air as it melts.

The other primary use of CO2 is in the energy industry. The gas is injected into dwindling older oil wells to try to force more crude out of the ground. Many environmentalists are skeptical of a process that uses captured carbon to obtain more fossil fuels that will release more carbon.

Oil well


CO2 injection well


CO2 pipeline


In enhanced oil recovery, CO2 is injected into an oil reservoir, creating enough pressure to push leftover oil to existing wells.


Water


CO2


Oil


The New York Times
Sequestration

The alternative to using the carbon dioxide is storing it where it cannot escape into the atmosphere. Today, this is done by injecting it deep underground.



CO2 injection well


Monitoring well


CO2 pipeline


Water aquifer


Nearby, a second well is drilled to detect leaks.


Shale layer


To store CO2 underground, it is injected at least 2,600 feet, under an impermeable layer of rock.


Porous rock


The New York Times

Only certain rock formations are suitable for storing carbon this way. The rock must be at least half a mile underground, deep enough to stay clear of ground water. It must be porous and permeable, like sandstone or limestone, so there will be space within it for the injected gas to occupy, the way water poured into a bucket of sand fills the spaces between the grains. And the formation must have a layer of dense rock, like shale, above it, so that the carbon dioxide won’t, in theory, be able to seep out to the surface.

Can these technologies make a significant difference to climate change?

Some experts and environmentalists have pushed back against efforts to develop carbon capture, saying it is at best only a partial solution, and at worst it may impede a global transition to clean energy by letting the fossil fuel industry continue doing business as usual.

“If you’re doing too little on the emissions mitigation side, then there is no point of carbon dioxide removal,” said Glen Peters, research director at the Center for International Climate Research in Norway.

A recent study found that after taking into account the energy used to capture and isolate CO2 from flue gas at a fossil fuel-burning industrial plant, the carbon capture system would reduce the plant’s net emissions by only 10 to 11 percent, not the estimated 80 to 90 percent cited by proponents.

Others say that we need to pursue multiple routes to slow climate change “There is no 100-percent solution,” Dr. Herzog of M.I.T. said. “We need a lot of 10- and 20- percent solutions, and this is one of them.”


Additional development by Leo Dominguez. Special thanks to Aatish Bhatia.