Alberta Innovates – a Crown agency – says the biggest opportunity lies in the production of carbon fibre, a high-strength material that can be used in wind turbines, automotive applications and the aerospace industry. The agency has launched a $15-million “Grand Challenge” in which 20 laboratories around the world are participating in research to commercialize the production of carbon fibre from the heavy asphaltenes contained in bitumen, in the so-called bottom of the barrel.

“We are finding new ways to use bitumen not as transportation fuel but as value-added non-combustion materials that are worth more than transportation fuel but with a low GHG emissions – products like carbon fibre,” said John Zhou, vice-president of clean resources at Alberta Innovates.

Zhou participated Wednesday in a virtual roundtable hosted by Corporate Knights and the German embassy in Canada, part of a series on rebuilding a cleaner, more sustainable economy as we recover from the COVID-19 pandemic.

He said that while technological challenges remain “very, very significant” to a commercializing bitumen-derived carbon fibre industry, progress is being made.

There are skeptics, however. Wolfgang Seeliger heads up Leichtbau BW, a German consortium of companies developing and deploying lightweight materials that reduce costs and greenhouse gas emissions in transportation and industrial processes. He said that carbon fibre production cannot compete with other lightweight materials on either cost or environmental footprint, noting that it takes more energy to produce auto parts from carbon fibre, for example, than is saved by the use of the lighter material.

Alberta Innovates estimates that diverting 30% of oil-sands production to industrial uses would reduce GHG emissions by 126 megatonnes (Mt) a year. That’s because the carbon from the thick, asphalt-like component of the bitumen would be locked in the industrial material, rather than combusted as transportation fuel or petroleum coke.

It also estimates the industry could earn $84 billion by 2030 from those industrial markets – including $44 billion from carbon fibres – while reaping $27 billion from the sale of the remaining crude.

However, the “bitumen beyond combustion” strategy would not lower emissions from oil-sands extraction and processing in Alberta. The sector currently produces more than three million barrels per day. It accounted for 77 Mt of GHG emissions in 2018, or 10.5% of the country’s total.

Canada has pledged to reduce GHGs by 30% from 2005 levels by 2030, and the federal Liberal government now says it will introduce an even-tougher 2030 goal along with its commitment to get to net-zero emissions by 2050.

Seeliger said carbon fibre will be relegated to a niche market for some time because carbon fibre is expensive and its introduction into markets like automotive, construction and aerospace will require complicated changes to certification standards. However, Zhou said the opportunities will expand dramatically if the province succeeds in driving down the cost and the environmental footprint of producing it. Alberta Innovates believes industry can reduce the cost of producing carbon fibre by more than 50% below that of current methods and reduce the carbon intensity of production by up to 90%. It estimates that a 50% cost reduction in carbon fibres would boost demand tenfold.

Suncor’s Carrie Fanai said Wednesday that Canada’s largest oil and gas producer is focused on the “need to transition to a greener economy.” Suncor has pledged to reduce the emissions intensity of its oil and petroleum products by 30% by 2030, while other companies, notably Cenovus Energy and Canadian Natural Resources Ltd., have set “aspirational” goals to have net-zero emissions at their oil-sands plants.

“For us at Suncor, that has meant not only focusing on improving the GHG intensity of our existing production but looking at new products, energy sources and related lines of business,” said Fanai, who is the company’s lead on bitumen value-chain optimization.

She noted that it is still early days in the journey to commercialization and that producers will have to work with chemical companies and manufacturers to ensure they maintain focus on potential customers.

Marcelo Lu, president of BASF Canada, said the opportunities for carbon fibre “are very large if we can crack the innovation to take the impurities out of the bitumen stream,” which is heavy in sulphur and metals. He said the massive bitumen resource represents a high concentration of low-cost feedstock for carbon fibre that could drive market developments in a way not seen before.

Alberta Innovates hopes to see a commercial-scale demonstration plant for producing carbon fibre from bitumen by the end of 2024.

If it succeeds in reducing the cost of production, the province could produce 326,000 tonnes per year of carbon fibres from the asphaltenes contained in one million barrels per day of bitumen, which would be worth an estimated $44 billion annually in today’s prices, the agency estimates. It says there is also potential to produce activated carbon and asphalt binder from the asphaltenes in another two million barrels per day of production.

The total value of the “non-combustion” products would be $84 billion. At the same time, industry would sell higher-quality crude, “de-asphalted” oil for $27 billion. Total value: $111 billion a year, compared to the $27 billion a year the sector expects to earn by selling three million barrels a day at $25 per barrel.

As part of its Build Back Better series last spring, Corporate Knights recommended that the federal government provide $1.4 billion in funding over five years to help the industry commercialize carbon-fibre production. Environmental groups have called for an end to subsidies for the fossil fuel industry, arguing that government efforts should be focused on the transition off oil.

Shawn McCarthy writes on sustainable finance and climate for Corporate Knights. He is also senior counsel for Sussex Strategy Group.

With the support of the Embassy of the Federal Republic of Germany in Canada.

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Longer-range capabilities and the new federal incentive program, iZEV, are combining to make battery electric vehicles a more appealing and attainable option than ever. But if you’re looking for even more motivation to choose an EV, consider the lower total cost of ownership.

EVs don’t have oil to change or sparkplugs to replace, and that means fewer trips to the shop. According to current estimates, EV owners can expect to spend roughly a third less on maintenance over the life of their vehicles as compared to their internal combustion engine (ICE) equivalents.

Add in the fuel savings and the differences can be stark. Here, we’ve analyzed the popular Nissan Qashqai subcompact crossover against a similarly sized battery electric, the Kia Niro EV, and we’ve compared the Mercedes-Benz C-Class Sedan to the Tesla Model 3. As was the case when Corporate Knights conducted faceoffs with the Nissan Leaf, Chevy Bolt and Hyundai Kona Electric, the numbers show the benefits of choosing electrons over emissions.

Here’s an explanation of the figures we’ve used in this analysis:

• As of this writing, fuel prices are at historic lows due to the market forces at play during the COVID-19 pandemic. However, these prices are not expected to last. Since we’re assuming a 10-year period of ownership in our estimates, and prices over the past 10 years have swung anywhere from the current $0.75 to as much as $1.50 per litre in some markets, we’ve chosen a median average per-litre (L) cost of $1.25, understanding that this is the most volatile variable. For power rates, we’ve used a figure of $0.10 per kilowatt-hour (kWh). The published range and efficiency figures are as rated for each model by Natural Resources Canada (NRCan), (population-weighted average electricity bill per province, including taxes, assuming majority of charging occurs during off-peak hours).
• We’ve assumed the EV buyer would be a new owner, so we’ve factored in the purchase and installation cost for a Level 2 charger, using the total cost for a FLO Home unit of $1,745.
• We’ve made our calculations using the national average Canadian sales tax of 11.075%.

Kia Niro vs. Nissan Qashqai

Crossovers have become wildly popular with Canadians, and several EVs sporting this body style have hit the market to compete with mainstream equivalents.

One is the Kia Niro EV, the battery electric version of this subcompact crossover, which is also available in ICE and plug-in hybrid variants. The EV has an impressive 385-kilometre (km) range and comes in two models, or trims; here we examine the SX Touring trim, which is more expensive, at a manufacturer’s suggested retail price (MSRP) of $54,995 and a total cost of $55,929 with fees. Since the base model is priced under $50,000, this trim also qualifies for the iZEV program, and yet it adds features owners won’t want to live without, such as a heated steering wheel, front and rear heated seats, and a heat pump, which not only make it more suited to Canadian life but also make in-cabin comfort significantly more efficient (heated seats use less energy than cabin heaters and therefore less electricity, increasing the EV’s range). NRCan doesn’t account for these differences in efficiency in its ratings, which show the Niro EV averaging a combined 18.6 kWh/100 km.

Nissan’s subcompact Qashqai is a popular player in this growing segment. The SL Platinum grade carries an MSRP of $34,133 – slightly higher than advertised because there are no zero-cost paint colours – and a total of $36,213 with fees. This model matches the Niro EV SX Touring closely in features but offers one significant difference: it comes with all-wheel drive (AWD), which is desirable in winter driving and on imperfect roads but drives up its fuel use. According to NRCan, a Qashqai AWD averages 8.4 L/100 km combined, as opposed to the 8.2 L/100 km average seen in front-wheel-drive models.

We calculated based on both vehicles needing to be financed in full, less a $1,000 deposit, and used a 2.9% interest rate over a 72-month term, which are common numbers for each of these vehicles.
After running these through our estimator using the assumptions outlined above, the Niro EV ends its 10 years of ownership with a total cost of $86,264.50, which is $833.72 less than the Qashqai’s $87,098.21 – and all while producing 45.3 tonnes less in CO2 emissions over its life.

Tesla Model 3 vs. Mercedes-Benz C-Class

To look at this comparison fairly, we need to assess the Tesla Model 3 against the only four-door, non-performance variant of the Mercedes-Benz C-Class sold in Canada: the C-Class 300 4MATIC (AWD). This model has an MSRP of $46,400 and costs $48,575 after fees, and has a combined fuel efficiency rating of 9.4 L/100 km.

Longer-range models are available, and a lower-cost, “million-mile” battery has been announced that will debut in the Model 3 in China late this year or early next. For now, we presume for the purposes of this comparison that the buyer wants a Model 3 variant that qualifies for the iZEV program, making the best match the Standard Range Plus. This strikes a good balance between price and capability, with an estimated range of 402 km and an advertised price of $55,990, which includes destination charges and delivery fees. However, it comes equipped as rear-wheel drive only; to get the two-motor, AWD version, it’s necessary to pay $10,000 more for the Long Range model and give up the rebate, for a total hit of $15,000. The trade-off is in efficiency, which in the Standard Range Plus model is the best in the Model 3 lineup, at 14.9 kWh/100 km combined. This variant has heated 12-way front seats and includes the autopilot feature, but it doesn’t come equipped with self-driving features like autopark and summon, which are available only as a post-delivery, added-cost option.

We’ve also factored in a deposit of $5,000 since luxury brands typically request a down payment of 10%. In preparing this comparison, we found different interest rates on offer: Mercedes-Benz advertises a rate as low as 1.9% on the C-Class for qualified buyers, while Tesla’s website shows 4.6%.

Even in doing so, our model estimates the total cost of ownership for the Model 3 at $90,866.90 over 10 years versus $102,475.95 for the C-Class, for a savings of $11,609.06 over 10 years – and 50.9 tonnes less CO2 being pumped into the atmosphere.

According to a study cited recently by incoming Honda Canada president Jean Marc Leclerc, Canadians are currently willing to spend up to $700 more to buy EVs, which doesn’t cover the difference in production cost. Would more effective communication of the total cost of ownership, which clearly demonstrates savings of much more than $700 over the long-term, help car buyers mentally bridge the gap and tolerate higher up-front vehicle prices? Perhaps incorporating these figures into window stickers and engaging in education programs would help push electric vehicles into the consciousness of everyday consumers and bring this technology into the mainstream.

Stephanie Wallcraft is a multiple-award-winning automotive journalist based in Toronto and is the president of the Automobile Journalists Association of Canada (AJAC).

The post Assume EVs are pricier? Our latest showdown proves otherwise appeared first on Corporate Knights.

This story is more than 50 years old, a story of how the oil sands came to be an economically viable global scale resource development and Canadian success story. If we now focus on the low-carbon growth opportunities staring us in the eye, it could also be our future.

While Canadian oil and gas will remain a significant part of the global energy mix for some time, we have to take advantage of new opportunities that offer attractive growth prospects. The temporary economic lockdown triggered by the 2020 pandemic is giving us a glimpse into a not-too-distant future where the transformation of our energy system could disrupt demand on a similar scale. Disruption breeds opportunity and forward-looking companies and countries will need to step up and lead.

Now is the time to take a big step forward. As the history of the oil sands reveals, disruption and transformation are nothing new for Albertans and we’re optimistic that the Canadian energy industry is up to the challenge and best positioned to invest in and lead energy transformation.

Here’s why. The oil and gas industry is one of the largest markets for, and potentially investors in, clean technology in Canada.  The challenges faced by the sector, combined with an entrepreneurial culture and the motivation to thrive in tomorrow’s low-carbon economy provides a wealth of opportunity for clean technology investment by the sector. Canada needs to ensure these opportunities aren’t ignored.

Companies like Suncor not only conduct extensive internal technology development, they also monitor and invest in technologies developed by others. Consider Suncor’s partnership with Enerkem, which turns household garbage into biofuels. In addition to an equity investment, Suncor seconded a dozen operations experts. Working together, in the first month, Enerkem produced more cellulosic ethanol than it had in its history, demonstrating the potential for the energy industry to provide innovative technologies and processing expertise to help scale renewable production.  It’s partnerships like these that combine the expertise from different sectors that will lead to breakthroughs, significant growth opportunities and provide the greatest opportunity for Canada to succeed on the world stage.

Canada has an abundance of bio-based natural resources, the waste residues of which are ideal feedstock for biofuels. Beyond biofuels, there are other significant growth opportunities where we have all the ingredients needed to win on the world stage.

For example, the carbon density of Canada’s bitumen reserves make it uniquely suited for advanced manufacturing and materials processes that could create billions of dollars in additional value. Foremost among these Bitumen Beyond Combustion opportunities is carbon fibre, a strong, lightweight material increasingly important for producing lighter vehicles (including EVs) and building materials that store rather than emit carbon in their fabrication. Asphaltene makes up 15 to 20% of bitumen and is the feedstock for making carbon fibres. If we can figure out how to do this affordably at scale, it has the potential to quadruple the revenue from Alberta’s current bitumen output. Alberta Innovates estimates the added economic potential of carbon fibre, activated carbon and asphalt binder alone could be in the range of $84 billion annually.

The seeds for all of these ideas have already been planted in Alberta, nurtured by the Energy Futures Lab, Alberta Innovates, some leading energy companies and other collaborative efforts. It shows what’s possible when we seek common ground and use past and current strengths to build what the future requires of us. Those who can learn from the past are empowered to win the future.

Now is the time for the federal government to support disruptive innovation in the same spirit as the Alberta Oil Sands Technology and Research Authority (AOSTRA), which was launched in 1974 and made technological breakthroughs that unlocked hundreds of billions of dollars of value from the oil sands in subsequent decades benefitting all Canadians.

Three points to keep in mind:

1. Think big: Focus investments on disruptive technologies that can unlock value in global growth markets where Canada has a competitive advantage.
2. Empower a local public agency to get results: Fully fund an independent public agency to work with industry and academics to bring production of low-carbon options such as hydrogen, renewable jet fuel and carbon fibre to commercial scale.
3. Establish meaningful partnership with indigenous communities: This is the right thing to do, and the only way that large-scale projects will happen.

As we emerge from the COVID-19 crisis, the same approach that helped unlock the economic potential of the oil sands decades ago can now be reimagined to drive progress to the low-carbon growth markets of the future, leveraging the natural resources, highly skilled workforce and industrial infrastructure already found in regions that produce oil and gas.

We cannot predict the future, but we can shape it.

Mark Little is president and CEO of Suncor Energy Inc.

Laura Kilcrease is the CEO of Alberta Innovates.

The post Canada’s oil sands are best positioned to lead the energy transformation appeared first on Corporate Knights.