The emerging lower-carbon global economy is propelled by commitments to use less, waste less and emit less. Reducing emissions to zero is a goal that was reinforced last week with the federal government’s announcement of Bill C-12. If passed, the Canadian Net-Zero Emissions Accountability Act will make it legally binding for current and future governments to outline targets that will get Canada to net-zero emissions by 2050. However, the bill leaves a big question hanging: how?
For years, Canada’s resource and energy sectors have been gripped by a crisis of reinvention as they try to figure out a suitable and competitive future. With the arrival of the pandemic, this lack of true north was further cemented, accelerating discussions around the sectors’ long-term viability.
Having contributed for decades to the country’s growth and prosperity, Canada’s bitumen is at a crossroads; it needs to evolve beyond its current use. Alberta’s massive reserves have long been used for bitumen’s lowest-value application: combustion fuels. Dense and sticky, bitumen is more difficult to process and transport than lighter oils, making it more costly. Conversely, the chemistry, composition and viscosity of bitumen make it an ideal feedstock for high-value carbon fibre materials that are strong, light and durable. These materials are key inputs for more sustainable vehicles, industrial equipment, buildings and infrastructure. Research on further uses for bitumen is still emerging, but its potential to be converted directly into other applications is very real as we look to support supply chains that are sustainable and poised for growth in the advanced materials space.
For several years now, Alberta Innovates has been driving the Bitumen Beyond Combustion (BBC) program to achieve two priorities: fund programs that lower greenhouse gas (GHG) emissions associated with oil-sands production and increase the investment value of the province’s bitumen industry. This work has yielded some promising market segments: asphalt binder, activated carbon and carbon fibre have the potential to generate a total of $84 billion annually, more than three times the $27-billion annual value of bitumen for combustion fuel – and much more sustainable for the planet.
Interestingly, BP’s Energy Outlook 2020 projects oil production of 24 million barrels per day in its net-zero 2050 scenario. It allocates 1.5 million barrels of oil per day, or the equivalent of 87 million tonnes, to asphalt in 2050. Even by conservative measures, with zero market increase after 2030, global asphalt demand would be 220 million tonnes per year by 2050. This means there could be a global asphalt shortage of up to 133 million tonnes per year in the 2050 net-zero scenario. Because Alberta bitumen contains up to 50% asphalt binder, more than any other crude oils, it would take only 7.6 million barrels of bitumen per day to satisfy the global asphalt market. With 50% of Alberta’s bitumen used for asphalt, that would still leave 50% of the distillate for use in other downstream applications. Light and medium crudes cannot satisfy the asphalt demand in the net-zero 2050 scenario. There is already strong innovation taking place that allows bitumen to be used to make asphalt more sustainably. As an example, BASF has recently launched a liquid asphalt modifier that’s designed to reduce energy, resource consumption and the need for chemical cleaning agents by paving trucks. It lowers emissions of volatile organic compounds during paving operations and enables fewer roller passes for compaction, thereby increasing efficiency and reducing the total cost of ownership.
Unlike conventional and shale oil used to make asphalt, 80% of emissions in bitumen production are from natural gas combustion, making carbon capture and storage (CCS) viable. CCS has the potential to reduce GHG emissions by 60 megatonnes (MT) annually in existing oil-sands production facilities, once CCS costs come down (one Alberta CCS project has stored more than 5 MT of CO2 to date). Also, technologies are being developed to increase the amount of asphalt that can be recycled. And as solidification technology advances, it will become possible to transport bitumen in pellets rather than in a molten state, which would lower delivery costs and emissions.
Canada has tremendous potential to deliver a global blueprint for marrying vast resource and energy sectors with sustainable low-emission targets and zero-waste ambitions. It’s time for Canada to shed its identity crisis and embrace its leadership position as a resource-rich country with much to offer the world. This can all be done sustainably, just like the further development of bitumen beyond combustion.
The road ahead is clear for Canada – we just need to start paving it.
John Zhou is the vice-president of clean resources at Alberta Innovates.
Marcelo Lu is the president of BASF Canada.