TransAlta Abandoning Canada Carbon-Capture Project

TransAlta Corp. (TA), Canada’s largest publicly traded electricity producer, abandoned a project to trap and store emissions from an Alberta coal-fired power plant, delaying global efforts to foster a carbon dioxide capture and storage industry.

TransAlta said the potential revenue from selling carbon didn’t justify the cost of completing the project, according to a statement yesterday.

Carbon-capture and storage projects in at least five countries have been delayed or canceled in the last year over environmental concerns and questions about the technology’s economics that thwarted TransAlta.

‘The technology works and capital costs are in line with our expectations,’’ Dawn Farrell, the Calgary-based company’s chief executive officer, said yesterday on a conference call. “However, the markets for CO2 sales and the price of emission reductions are not sufficient at this time to allow the project to go ahead.”

Project Pioneer would have been able to trap as much as 1 million tons of carbon dioxide a year from the flues at the Keephills 3 coal-fired power plant west of Edmonton, and then sell the gas to energy companies to use in enhanced oil recovery operations.

Construction was due to start this year. TransAlta was working with Enbridge Inc., Canada’s largest oil-pipeline company, Capital Power Corp., and the provincial and federal governments.

‘Little Certainty’

“It is no surprise the partners abandoned the project,” Cheryl Wilson, carbon-capture and storage analyst at Bloomberg New Energy Finance in Washington, said today in an e-mail.

The current price for carbon dioxide doesn’t support the cost of the project, and there’s “little certainty on future revenue,” she said. “Pioneer had too many factors working against it.”

The U.K. canceled plans in October to provide 1 billion pounds ($1.6 billion) for a carbon-capture project in Scotland, and expects to offer the funds to other projects. An initiative in Italy by Enel SpA is on hold, and Vattenfall AB scrapped a 1.5 billion-euro ($2 billion) system in Germany in December. American Electric Power Co. shelved plans in July for the first U.S. commercial-scale carbon-capture initiative.

Efforts to introduce CCS are falling behind, Richard Jones, deputy executive director at the Paris-based International Energy Agency, told energy ministers from 23 nations April 25 in London.

The International Energy Agency estimates that 3,400 CCS plants are needed by 2050 to meet a goal of cutting carbon emissions in half.

To contact the reporter responsible for this story: Sally Bakewell in London at Sbakewell1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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