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OIES Paper: ET No. 02
The Oxford Institute for Energy Studies, Oxford
Canada has been an enthusiastic developer and implementer of carbon capture, utilization and storage (CCUS) technologies, currently accounting for nearly 20 per cent of installed CCUS capacity globally. Along with a steep hike in the federal carbon price announced in 2020, the government has crafted a hydrogen-centric strategy to support a decarbonized economic transition, with CCUS identified as a key enabler of both pathways. On the one hand, CCUS justifies continued investment in the oil and gas sector through the permanent sequestering of CO2. On the other hand, creating additional economic value from the blue hydrogen generated from CCUS can demonstrate the viability of carbon-negative hydrogen production using bioenergy with carbon capture and storage (BECCS) or from electrolysis with offsets from direct air capture with carbon storage (DACCS). Oil and gas firms, supported by their peers in heavy industry, have announced blue hydrogen, oilsands CCUS, and carbon transportation projects which – if implemented – could transform the province of Alberta and disrupt the Canadian economy. Despite the bold vision of the government’s strategy and the announced projects, there are potential challenges to widespread CCUS deployment, including technological scope, project finance, and regulatory assurance. Carbon pricing will support project economics, but only up to a certain point, especially given the volatility of commodity markets and declines in Canadian oil and gas sector investment. And federal and provincial regulations – with the allied components of social, Indigenous and environmental support – will require clarity if announced projects are to be implemented.
"blue" hydrogen
Carbon pricing
Energy Transition
Oil and Gas
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Working Paper

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