When the Alberta government announced last week that it would be handing over $745 million to Shell Canada so it could move ahead with its Quest commercial-scale CCS project, and when the federal government said it would chip in another $120 million, it didn’t sit well with environmental and energy think-tank The Pembina Institute.

It’s not that Pembina is against developing this technology. What it doesn’t particularly like, and I can’t help but agree, is the fact that the Alberta and federal governments’ are covering two-thirds of the cost for this $1.35 billion project, which will be designed to capture CO2 from the steam methane units at the Scotford Upgrader in Fort Saskatchewan. It’s part of the Athabasca Oil Sands Project, a joint venture among Shell (60 per cent), Chevron Canada (20 per cent) and Marathon Oil Sands (20 per cent).

Why, Pembina asks, are taxpayers covering the majority of a project’s costs when the companies benefitting from this public freebie are some of the most profitable companies in the country? Pembina is also opposed to the governments being “singularly focused” on end-of-pipe technologies, such as CCS, at the expense of investments in technologies and energy sources that reduce or altogether eliminate carbon emissions at the front of the pipe — renewables, energy efficiency, etc…

Rather than carry the load for the private sector, the government should be moving quickly to establish a cap-and-trade regime that would put a sufficient price on carbon, Pembina argues. Ultimately, polluters should cover the whole cost of CCS deployment and that will only happen when they factor in the cost of not doing so once carbon pricing hits their bottom line. Pembina also argues that the government shouldn’t be so narrowly focused on CCS that it ignores the much broader, and less risky opportunities out there. “In parallel to its support for CCS, the government needs to support a massive scale-up in renewable energy and energy efficiency, the most sustainable solutions to climate change,” it says.

Fact is the federal government appears to be pulling its support from the ecoEnergy for Renewable Power program, which covers 1 cent of the cost for every kilowatt-hour of electricity produced from green energy sources, primarily wind. The program has been successful and is expected to run out of allocated money this fall. Here’s the problem: even if the government at some point renews the incentive, and there’s no indication it will, the fact that there’s likely to be a period of inactivity creates a boom-bust situation for renewable energy developers. We saw the negative impact this had on the U.S. wind industry just a few years ago, so it’s concerning to see the Canadian government heading in this direction. I asked Lisa Raitt, Minister of Natural Resources, about this concern and she’s very aware of it. But she said the government has to be cautious about how it spends money over the next few years given the huge deficits caused by unprecedented stimulus spending and lower government revenues. Translation: end-of-pipe projects that allow us to produce more oil and coal, those are fine, but lower priority goes to renewable energy that avoids emissions in the first place. Don’t even get me started about the government’s complete lack of interest and support for geothermal power.

The other concern has to do with the enormous risks associated with CCS. According to a recent report out of the Munk Centre for International Studies at the University of Toronto, “The technology holds the promise of massive reductions in emissions but any success may ultimately be limited to a relatively few projects due to cost, liability, technology, scale and public skepticism.” It goes on to say that CCS “may turn out to be another costly Faustian bargain” because it merely justifies and prolongs our addiction to fossil fuels while offering no long-term certainty:

Nobody knows how billions of tonnes of highly compressed carbon dioxide will behave underground. Could CO2 eventually leak and find its way into underground sources of drinking water (USDW)? Could plumes of pressurized carbon dioxide displace salt water from the saline aquifers into USDW? What would happen if sequestered carbon dioxide were to leak into the atmosphere or creep into an underground source of drinking water 50 years from now? Who would be responsible? Who would monitor the carbon dioxide underground for centuries? What would happen if carbon dioxide injected in one jurisdiction migrated into a neighbouring jurisdiction?

In other words, are we really willing to put so many eggs — and future generations — in one basket? The reality, according to the Munk report, is that “Instead of buying us time to find alternate sources of clean energy, CCS is buying politicians’ time to avoid making tough, unpopular decisions.”

Those tough, unpopular decisions can be found in the International Energy Agency’s World Energy Outlook 2009, or at least an early excerpt from that outlook. To limit CO2 levels in the atmosphere to 450 parts per million, the agency estimates that $10.5 trillion (U.S.) will need to be spent globally between 2010 and 2030 on top of what’s been spent or committed up to mid-2009. In total, $6.6 trillion will need to be invested in “low-carbon power generation,” with 72 per cent of that committed to renewables, 19 per cent to nuclear, and 9 per cent to CCS. The good news is that total fuel savings are estimated to be $8.6 trillion over that period, so there are clearly economic and environmental benefits to aggressively pursuing this path.

But let me just emphasize: The IEA figures 72 per cent of those trillions should be spent on renewables, with just 9 per cent spent on CCS. It also says fossil fuel energy consumption must peak by 2020 and then begin falling to achieve the 450 parts per million target. Given this, why is the Canadian government giving so much attention to CCS, a technology that encourages greater fossil fuel consumption and is burdened with massive risk, when the world’s energy agency clearly shows that limiting fossil fuel use and spending heavily on renewables should be the chief goal?

I think it’s a fair question for all Canadians to be asking. The country’s national energy and climate policy shouldn’t be primarily based on the economic interests of Alberta.