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Carbon Capture and Storage

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Environment and Climate Change Canada (ECCC) today published the preliminary draft Direct Air Carbon Dioxide Capture and Geological Storage federal offset protocol (the DACCS Protocol). The DACCS Protocol is intended to create an incentive for proponents to undertake projects that capture carbon dioxide (CO2) directly from the atmosphere and store it in subsurface geological formations. Eligible projects would be able to generate federal offset credits under the Canadian Greenhouse Gas Offset Credit System Regulations (see our earlier bulletin here).   Overview. Eligible projects under the DACCS Protocol must generate CO2 removals (CDRs) from the storage of CO2 captured directly from the atmosphere in onshore, subsurface geological formations. Project sites must be located in Canada, in a single province or territory, and the capture facility within the project site must have been operating on or after January 1, 2022. Projects cannot take place on land that is not covered by a CO2 geological storage regulatory framework and CDRs cannot be generated from (i) the storage of point-source captured CO2 (e.g. an industrial facility), (ii) the storage of CO2 in any materials or products (e.g. concrete and mining waste), or (iii) the use of CO2 for the purposes of enhanced oil recovery (EOR).    Eligible project activities. Eligible project activities under the DACCS Protocol include: Operation of a capture facility within the project site. There is no restriction on the specific direct air CO2 capture processes used, including liquid solvents, solid sorbents, or any other existing or emerging methods. Further, during the crediting period, the capture facility within the project site may provide captured CO2 for purposes/end uses other than CO2 geological storage.  Operation of transport infrastructure within the project site (e.g. pipeline, rail, truck). The DACCS Protocol provides that the transport infrastructure within the project site used to transport the captured CO2 may have been operating prior to January 1, 2017,…

Canada’s Minister of Environment and Climate Change (the “Minister”), in collaboration with the Minister of Energy and Natural Resources, has announced the release of proposed Clean Electricity Regulations (the “Proposed Regulations”) (see our earlier bulletin on prior consultations here). The Proposed Regulations would establish significant and ambitious emission performance standards (“EPS”) to reduce greenhouse gas (“GHG”) emissions from fossil fuel-generated electricity generation facilities in all provinces and territories across Canada starting in 2035. Environment and Climate Change Canada (“ECCC”) estimates that the Proposed Regulations would result in a net reduction of 342 million metric tonnes (Mt) of CO2e emissions between 2024 and 2050 and a net benefit to society of $28.9B. The Proposed Regulations also impose significant registration, record keeping, and reporting obligations on covered electricity generation facilities. The Proposed Regulations represent a significant foray by the federal government into electricity policy, which has traditionally been an area of provincial jurisdiction. In their current form, the Proposed Regulations are expected to attract opposition from some provincial governments, and potential constitutional legal challenges. ECCC is seeking feedback on the Proposed Regulations. Interested stakeholders are encouraged to review the Proposed Regulations and submit detailed comments by no later than November 2, 2023.  We anticipate that policy developments are being targeted for announcement before or at the UNFCCC Conference of the Parties meetings (COP28 Paris Agreement negotiations) that start on November 30, 2023, in Dubai, UAE. This bulletin briefly summarizes key details of the Proposed Regulation: Application. The Proposed Regulations would apply to any “unit” (defined as an assembly comprised of any equipment that is physically connected and that operates together to generate electricity, and (a) must include at least a boiler or combustion engine and (b) may include duct burners and other combustion devices, heat recovery systems, steam turbines, generators, emission control devices and carbon capture and storage (“CCS”) systems) that meets the three following criteria:…

Environment and Climate Change Canada (ECCC) today released the 2030 Emissions Reduction Plan (the Plan) under the Canadian Net-Zero Emissions Accountability Act (the Act; read our earlier bulletin on the Act here). The Plan sets out current actions, additional funding of $9.1B, and several new initiatives to meet Canada’s emissions reduction target of 40-45% below 2005 levels by 2030, as provided last year in an update to Canada’s Nationally Determined Contribution (NDC) under the Paris Agreement (read our earlier bulletin on Canada’s updated NDC targets here).   The Plan also sets a new interim objective of reducing GHGs by 20% below 2005 levels by 2026, noting that this interim objective is not an official target akin to Canada’s 2030 NDC, but that progress towards achieving the objective will be a cornerstone of progress reports associated with the Plan in 2023, 2025, and 2027.   This bulletin highlights key parts of the Plan and summarizes the newly announced funding and initiatives, across the following categories: Carbon pricing Clean fuels Clean growth funding Methane Buildings Electricity Heavy industry Oil and gas Transportation Agriculture Waste Nature-based solutions Clean technology and climate innovation Sustainable finance Jobs, skills, and communities Prime Minister Justin Trudeau launched the Plan in an address at the GLOBE Forum in Vancouver earlier today.  Carbon pricing. The Plan notes the measures undertaken to address economy-wide emissions including the federal fuel charge and the Output-Based Pricing System for industrial emitters under the Greenhouse Gas Pollution Pricing Act. Escalating the federal benchmark price to $170 by 2030 is meant to further support the 2030 targets of the federal government along with continued consultations on a possible border carbon adjustment (read our earlier bulletin here). Very significantly, the Plan puts forward the concept of investment approaches, like carbon contracts for differences, which enshrine future price levels in contracts between the federal government and low-carbon…

The Ontario Ministry of Northern Development, Mines, Natural Resources and Forestry (the Ministry) is seeking stakeholder feedback on proposed legislative changes to improve regulatory clarity and remove prohibitions on granting authorizations to use Crown land for carbon capture and storage (CCS) activities. The Ministry has also released a discussion paper on carbon storage, providing background on CCS and potential suitable sites in Ontario. This bulletin briefly summarizes the key changes:   Amendments to the Oil, Gas and Salt Resources Act   Proposed Amendments to the Oil, Gas and Salt Resources Act include: narrowing the prohibitions on the injection of carbon dioxide so that, going forward, the prohibition would no longer apply to potential carbon storage projects related to activities in wells regulated under the act other than for the purpose of carbon sequestration, when used in association with a project to enhance the recovery of oil or gas; adding the ability for the Ministry to enter into agreements with companies that want to use wells to explore, test, pilot or demonstrate new technologies (such as CCS) in relation to wells used for oil, gas, solution-mined salt as well as underground storage resources subject to Indigenous consultation requirements; and enhancing provisions for corporate accountability and allowing for the issuance of orders to prevent risks to the public or environment. Amendments to the Mining Act   Proposed changes to the Mining Act would allow the Ministry to grant authorizations to use Crown land for carbon storage activities.   Purpose   The Ministry notes that the proposed legislative amendments seek to provide greater regulatory clarity and support new energy concepts and technologies including CCS, as CCS is not currently subject to the provisions of the Oil, Gas and Salt Resources Act framework. The Ministry indicated that entering into agreements with CCS project proponents at the pilot and demonstration stage will provide valuable knowledge, learning,…