By Jim Harding
The expensive carbon capture and storage (CCS) project at Boundary Dam is back in the news. It should be! The NDP opposition is doing its job raising questions about the cost effectiveness of the Sask Party’s mega-project.
Premier Wall showcases this project as proof of his environmental commitment. It was highlighted during all his lobbying for the Keystone XL pipeline. According to the Mar. 5, 2014 National Newswatch, Wall was quite transparent about his objective in Washington, “selling the merits of Saskatchewan’s carbon-capture technology that he says could benefit both the coal and oil industries in the U.S.”
The Sept.15, 2014 Toronto Star reported that the Sask Party paid at least $3 million dollars to hire a U.S. lobbying firm to promote Keystone. The firm included the former U.S. ambassador to Canada. President Obama has now turned down Keystone so it’s time to look at the factual basis of Wall’s promotions. Is the $1.5 billion dollar Sask Power project what it seems?
The mainstream press hasn’t done much in-depth reporting on this issue. It perhaps wants to be seen as a cheer-leader for Sask Party’s resource-driven economic growth. This is unfortunate for this CCS project was questionable from the start, even when the previous NDP government launched a pilot project. The science has always been questionable in terms of carbon reduction cost-effectiveness.
It’s reasonable to assume the government knew this. A May 24, 2012 Sask Power memo recently leaked to the NDP admitted the need for the “vast advancement of existing technology, the economics of which are unclear”. But Wall’s government carried on; he was in “good company” with the previous Harper government also blocking advances in sustainable non-fossil fuel technologies.
The Nov. 2, 2015 Regina Leader Post (RLP) published a helpful chronology. In 2010 the writing was already on the wall when the U.S. government decided not to fund Montana’s proposed partnership with Saskatchewan on the costly project. It would be revealing to know the behind-the-scenes reasons why the Sask Party decided to go it alone. Certainly big corporations have benefitted.
First they partnered with SNL Lavalin, which was already getting a questionable global reputation. After some tricky regulatory negotiations, the Sask Party government gave the go-ahead for the then $1.4 billion dollar megaproject. It was called “economically viable”. In 2013 they signed a 10-year contract to provide carbon to Cenovus for oil recovery. The megaproject was to recover 90% of the carbon (an estimated one million tonnes per year) from the coal-fired electrical plant.
By 2014 the project was still not operating and over budget; Premier Wall admitted that there was “a lot of taxpayer’s money riding on the project”. In 2015 the CCPA issued a report on the risks and costs of the project. The Sask Party however continued with its cross-border bragging, with Wall hosting U.S. politicians at the CCS plant near Estevan.
When the plant finally started on Oct.1, 2014 the Premier tweeted “Sask, we’re fully operational and making history”. We now know it wasn’t operating at anywhere near the capacity promised. The NDP recently received documents showing that while Wall was bragging, the plant was only operating at 40%. A lot of spin has been required to try to rationalize such high costs and poor results. Sask Power spokespeople have tried to redefine “operational”, saying, according to the RLP, that “fully operational means the plant is now running”. We now know that some components already had to be replaced in 2015 and that another $80 million is required for deficiencies. The Province claims it will recoup some of this from the contractors; we’ll see.
Sask Power has had to pay $12 million in penalties to Cenovus because it couldn’t provide the carbon contracted for oil recovery. More penalties may be required this year. The zinger in terms of government spin was the Sask Power pronouncement about “statements made that were missing a word or two and things (that) were taken out of context.”
What is the overriding context? Trying to salvage an old coal-fired electrical plant was nonsensical from the start. The price of wind and solar has been competitive with coal for some time. When you factor in the actual environmental benefits, including phasing out coal mining with its destructive footprint, and the added financial and huge energy requirements of CCS, there’s no longer an economic debate.
Also what is the trend for the overall fossil fuel industry? While Wall was showcasing CCS to win support for Keystone XL, the U.S. was becoming the world’s largest producer of oil, now ahead of Saudi Arabia. Meanwhile Canada is in 5th position, behind Russia, which is close to the top two producers, and China. Canada only produces one-third (4 million barrels a day) of what is coming out of the U.S. ground. Saudi oil can be produced for one-fifth the price of the tarsands; no wonder oil prices tumbled and we’ve finally seen Harper’s back. Without its $3 billion dollar subsidy in Canada the fossil fuel industry would be in even greater decline.
To be fair, previous NDP governments were also unwilling to seriously start the economic conversion away from carbon. So this is where we end up. We are collectively paying $1.5 billion dollars to ineffectively remove carbon from a relatively small 120 megawatt (MW) plant, on a nearly 4,000 MW provincial grid. This carbon will, in turn, be used to bring more oil and carbon into the atmosphere. And after this wasteful expense, we remain dependent on fossil fuels. We remain among the highest per capita carbon producers and lowest per capita renewable energy producers in the country. Even so Sask Power is still considering CCS projects at larger coal-fired plants, which would be even more money down the drain.
Minister Boyd says we have 300 years of coal, like this is an argument for CCS. We have a much longer supply of the sun’s energy. Are the political cheer-leaders for the fossil fuel industry really working for the public and the taxpayer? Or are they more like used car salesmen trying to sell a lot full of Edsels? We know that SNC Lavalin has benefitted from the massive public investment. But will the environment of our grandchildren?
Thankfully the NDP has stepped up to critique this nonsensical direction. Will they now run on a platform so that Saskatchewan is no longer such a laggard on climate change?