A price on carbon and Project Pioneer

On October 14, 2009, Prime Minister Stephen Harper visited Alberta to announce that his government was committing $342.8 million toward a carbon capture and storage project at TransAlta’s Keephills 3 plant.

According to a story that appeared in the Stony Plain Reporter two days later, Mr. Harper was asked at the announcement what incentive would exist for companies to pursue carbon capture and storage.

During questioning, Harper was asked what incentives exist for large CO2 emitters to implement the new technology. “There will be compliance mechanisms that set a price on carbon but obviously that will come into effect when we have continental or perhaps even an international cap and trade regime,” he said.

A report from the Canadian Press put it this way.

Critics have long pointed out that carbon capture and storage is expensive technology and will require huge public subsidies without a mandated price for carbon in the range of $70 to $80 per tonne. Alberta’s current price is $15. Harper said market signals will eventually result from ongoing talks with the United States on a cap-and-trade system for carbon. “There will be compliance mechanisms that effectively set a price on carbon but obviously that will come into effect when we have a continental or even an international cap-and-trade regime,” he said.

This past April, less than three years after the Prime Minister’s announcement, TransAlta abandoned the project.

TransAlta said it found no firm buyers for the carbon dioxide to be captured at the plant, and said there is, as yet, no cap-and-trade system that would let TransAlta and its partners sell emission-reduction credits. “Two things were instrumental in our decision,” said Don Wharton, vice-president, policy and sustainability for TransAlta. “One was the lack … of a suitable price for the pure CO2 created by the project. The second was the uncertainty around the value of emission reductions that would be created by Project Pioneer under regulatory frameworks that are still being developed.”

Here again is a rough guide to the Conservatives’ carbon tax farce.