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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That very approach that helped unleash the economic potential of Alberta’s oil sands can now be reimagined to drive progress to the growth markets of the future. In the low carbon economic transformation, Canada is well equipped to lead the way and supply growing global markets with zero-carbon products and technologies.

There are three key ingredients from AOSTRA that should inform government support for decarbonizing and diversifying our economy:

1. Right goal: Investment should avoid areas that involve incremental advances and focus instead on aspects that leverage innate competitive advantages, are disruptive and go beyond immediate commercial interests.
2. Right structure: Full backing and long-term capital from government, but independently delivered.
3. Right scale: Sufficient funding to realize the goal while taking into account available human and natural capital as well as industrial infrastructure.

If the federal government, working in partnership with provinces, takes this type of proactive approach now, it can help struggling regions thrive in the transition to a net-zero economy. Doing so will help to diversify Canada’s commodity risk, insulating us from the whims of a volatile global market that is vulnerable to structural disruption as the electrification of vehicles threatens up to one-third of the demand for crude oil.

The great strides made in the oil sands since 2000 in terms of GHG and cost reductions put the industry in good stead to supply global markets for some time to come, albeit with margins likely much slimmer than the industry used to enjoy. There now remains little doubt that disruptive large-scale growth opportunities are no longer centred on combustion of fossil fuels, but rather on what the Energy Futures Lab calls future-fit hydrocarbons, which include carbon fibres, activated carbon, hydrogen and sustainable aviation fuels.

The oil and gas extraction sector directly employs roughly 100,000 salaried and hourly people. It contributed 5.6% of our GDP in 2019 and provided $131 billion in annual export revenue last year, up 32% from 2015 (when oil prices hit a valley), but the value of exports is expected to drop significantly in 2020. Alberta Innovates estimates that oil sands revenue (which represents about two-thirds of Canada’s five million barrels per day of oil production) will dip to $27 billion in 2020.

The sector’s vulnerability to downturns in the global market puts Canadian workers and our economy at risk. During the most recent crash in oil prices, Rystad Energy said that “Canada leads the list of those in trouble” as Canadian oil companies plan to reduce production and capital expenditures to $14.5 billion – down 21% from the 2016 to 2018 average. Company restructuring plans are now emerging as investors seek greater returns in light of market volatility. Cost containment pressure and the move to automate the industry could lead to fewer, not more, jobs in Canadian oil- and gas-producing regions. An estimated 7,700 jobs were already lost in the Canadian oil and gas sector between March and April of this year.

As an illustration of the oil sector’s long-term decline, energy ​stocks’ share​ in the S&P 500 has fallen from a recent highpoint of 14% in 2009 to less than 3% today.

The opportunity

While the pandemic-induced market crash of the last few months was triggered by an unprecedented situation, the outlook for the sector was already troubled before COVID-19. The one-third drop in oil demand resulting from the temporary economic lockdown is a glimpse into a not-too-distant future where electrification could disrupt demand on a similar scale. According to BNP Parabas, “the economics of oil for gasoline and diesel vehicles versus wind- and solar-powered EVs are now in relentless and irreversible decline.” While the world will require tens of millions of barrels of oil per day for years to come, there is no avoiding the fact that we are living in an era of energy transformation.

Canada is home to a number of companies that already know the benefits of getting ahead of global market shifts. TransAlta Corp., a 109-year-old predominantly fossil-fuel power producer, ramped up its wind and hydro investments and spun these off into a separate company. TransAlta Renewables is now worth more than its parent.

Wind, solar and hydro aren’t the only options for diversifying. While still dwarfed by global crude markets, we know that there are potential multibillion-dollar markets close to the conventional energy industry that don’t involve combustion: bitumen-based carbon fibres and activated carbon, hydrogen, renewable jet-fuels and geothermal energy. On the broader natural resources front, Canada is a treasure trove of low carbon commodities the world needs to decarbonize, and we are producing those commodities in an increasingly low carbon manner.  Notably, Canada is one the top-five producers of important minerals for rapidly expanding battery markets, including nickel, cobalt and graphite (and soon lithium from Alberta’s oilfield brines could be added to that list). We have the resources and  industrial ecosystem to be a North American hub for battery production and zero emissions vehicles including freight trucks and buses. 

These markets will grow quickly, driven by policy and economics – and Canada has all the ingredients to be a supplier of choice.

Carbon fibre, activated carbon and hydrogen potential

Carbon fibres (CFs) and activated carbon may be the least well understood of these opportunities for the oil sands and the ones with the most disruptive potential.

Activated carbon (AC) is a form of carbon with small, low-volume pores that increase the surface area available for adsorption or chemical reactions. Due to its high degree of microporosity, one gram of activated carbon can have a surface area of 3,000 square metres. The high surface area provides many useful applications. Further chemical treatment often enhances adsorption properties.

Commercial application of AC includes methane and hydrogen storage, air purification, solvent recovery, decaffeination, gold purification, metal extraction, water purification, medicine, sewage treatment, air filters in gas masks and respirators, filters in compressed air and teeth whitening. Alberta Innovates has done a preliminary market analysis and assessed the potential of using bitumen to make AC.

For the period of 2017 to 2023, global demand for AC is expected to be 1.3 million metric tonnes. If 15% of this demand could be satisfied by oil sands, it would represent asphaltene (the stuff that makes the oil sands so viscous) and bitumen demands of 316,000 metric tonnes (at US$2,500 per tonne) and 36,000 barrels per day, respectively. If oil-sands-derived AC could capture 15% of the total global AC market by 2030, it would create asphaltene and bitumen requirements of 1.4 million metric tonnes and 160,000 barrels per day, respectively, generating $21 billion in annual revenue.

Composed mostly of carbon atoms, CFs possess unparallelled strength and stiffness (carbon fibre is five to 10 times stronger than steel and twice as stiff) coupled with low density (making it lighter than aluminum) and high resistance to corrosion. This makes the material particularly well suited for use in electric vehicles and aviation, and commercial polymers.

Currently, most commercial CFs are made from polyacrylonitrile (PAN), and a small fraction of commercial CFs are made from petroleum pitch, mostly outside of Canada. The supply chain for making carbon fibre from PAN spans three continents, with production costs starting at about US$18/kilogram (kg) for PAN-derived CFs. Demand at the current cost is about 100,000 tonnes per year. If costs were halved to US$9/kg, some experts believe that demand would increase tenfold based solely on automobile sector uptake, with Alberta Innovates estimating a potential $44 billion in annual revenue from CFs by 2030. (Canadian CF production on this scale could help Ontario become the lowest-cost manufacturer of lightweight frames for aviation, freight and personal vehicles.)

Canadian-made CF using Alberta bitumen could be the solution for low-cost carbon fibres. Asphaltene, which makes up 15 to 20% of bitumen, is a promising feedstock for making CFs and AC. If we can crack the cost nut of extracting CFs and AC from bitumen, it has the potential to deliver four times the revenue from Alberta’s current bitumen output. By diverting 30% of current oil sands activity to high-value advanced materials such as carbon fibre, activated carbon and asphalt binder, Alberta Innovates estimates the added economic potential could be in the range of $84 billion annually (including $19 billion from asphalt binder), while reducing GHG emissions from combustion by over 120 MT CO2 per year.

Materials companies such as BASF, Zoltek, Lafarge and Mitsubishi Chemicals, not surprisingly, have their eyes on CFs as a future market. Alberta Innovates is engaged with the Oak Ridge National Laboratory and three private sector partners on scaling up CF production from Alberta bitumen. One potential first application: CF hydrogen storage tanks.

Globally, Bloomberg New Energy Finance (BNEF) recently characterized hydrogen as a clean-burning molecule that could become a zero-carbon substitute for fossil fuels in hard-to-abate sectors of the economy, including as feedstock for heavy industry. The cost of producing hydrogen from renewable sources will continue to fall, but we need to ramp up demand to drive down costs and build out the delivery infrastructure. BNEF argues that this will not happen without government targets and subsidies that BNEF pegs at US$150 billion of cumulative subsidies globally by 2030. The goal of these policy investments would drive the delivered cost of hydrogen down to $15 per million British thermal units (MMBtu) in many parts of the world by 2030 and to $7.4/MMBtu by 2050.

In Canada, an industry collaboration project is already underway in Alberta. The Alberta Zero Emissions Truck Electrification Collaboration (AZETEC) project, a $15-million, three-year joint venture between Emissions Reduction Alberta, AZETEC and the private sector, is focused on building out the infrastructure that’s needed for a wider network of hydrogen fuelling stations for long-haul transportation. Trucks are the dominant mode of moving freight in Canada, and while the largest long-haul rigs make up only 9% of the freight truck population, they account for 47% of commercial truck fuel consumption. The AZETEC project is focused on the largest vehicles on our roads. While it is uncertain whether hydrogen or electricity will power heavy freight vehicles of the future, there’s a strong consensus that both technologies will have a role to play.

The prospect of producing zero-carbon, “green” hydrogen from renewable electricity where oil and gas are produced today is within our grasp. In our Building Back Better Power scenario, we envisioned a 10-year program of wind and solar development in Alberta and Saskatchewan, complemented by energy storage and enhanced transmission capacity both within the provinces and with their hydro-rich neighbours. The investment in Alberta alone would top $50 billion over the 10-year period and create more than 50,000 full-time jobs for the rest of the decade. The $5 billion per year average capital expenditure is of the same order as recent capital investments in Alberta’s energy sector (15 to $20 billion per year in oil and gas, $3.5 billion per year in utilities). The Travers Solar Project in Vulcan County, Alberta, which has received $500 million from a Danish group, is an indicator of the growing investor interest in the solar-rich resources of southern Alberta and Saskatchewan.

Geothermal potential

Canadian resources of geothermal energy – the heat found deep underground in hot aquifers and rocks – are concentrated in western Canada and can be harnessed for both power and heat for buildings. Exploratory drilling costs usually represent a major component of the cost of developing geothermal energy, but western Canada’s geothermal energy resources have been largely located as the result of oil and gas exploration and drilling. The expertise and technical know-how required for geothermal energy development already exists in the Canadian oil and gas industry and constitutes another strategic advantage, with both the supply chains and skilled human resources readily available. In addition to their potential for baseload power production, the Energy Futures Lab suggests that geothermal resources could be used to create new district heating systems for pulp- and paper-making and agriculture.

Aviation fuel potential 

A final example of a global market that may grow substantially is sustainable aviation fuel (SAF). The World Economic Forum’s report on the Net Zero Challenge puts the cost of abating a tonne of CO2 in the aviation industry at $200, compared to cement at $90 and steel at $130. Given that the COVID-19 pandemic has forced the global aviation industry to restructure at a unprecedented scale, it remains to be seen whether the industry will stick with carbon-reduction goals established under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). It’s worth noting, though, that under the International Energy Agency’s Sustainable Development Scenario, SAF is projected to grow to 18 billion litres by 2025 and 37 billion litres by 2030. Companies such as Finland’s Neste have made bold moves to diversify into sustainable biofuels and have already developed profitable niches serving airports such as Bergen, Oslo and Stockholm, three of only five airports globally that offer regular SAF distribution. In the past five years following Neste’s big bet on sustainable biofuels, its share price has more than tripled to bring its value up to C$40 billion, while the value of oil and gas peers has been cut in half.

Given the economic opportunity in moving beyond carbon and Canada’s commitment to reach net-zero by 2050, Building Back Better means that we need to harness the growing global markets for zero-carbon products and technologies as part of the transition away from producing oil and gas.

The proposal

In previous installments of this Building Back Better series, we have outlined the economic and job-creation potential in Canada from public and private sector investments in retrofitting buildings, decarbonizing the power grid, greening heavy industry, electrifying vehicles, promoting active transportation, and innovating nature-based climate mitigation solutions in forestry and agriculture. For the oil-producing provinces of Alberta, Saskatchewan and Newfoundland, these proposals include $200 billion in capital investments that generate 140,000 full-time jobs over the 10-year recovery program. All combined, the lion’s share of this activity would be in Alberta – $140 billion and 100,000 full-time jobs.

In addition, the federal government should create a $40 billion Natural Resources and EV Innovation Fund, which would be endowed through the issuance of sovereign green bonds, taking advantage of low borrowing rates.

Building on the lessons from AOSTRA, the Natural Resources and EV Innovation Fund would need:

1. Right goal: The goal of the fund should be rapid research, development and deployment to de-risk breakthrough technologies and to produce zero-carbon commodities, batteries and EVs on a commercial scale to sell into growing global markets where Canada has a competitive advantage. Opportunity areas include bitumen-based carbon fibre and activated carbon as well as green hydrogen, geothermal heat loops and sustainable aviation fuels. Assuming moderate levels of follow-on investment by the private sector to deploy the new technologies to produce the zero-carbon commodities (financed via debt capital markets for which the federal government could offer public incentives), it’s estimated that investment in these sectors on this scale would create up to 100,000 permanent high quality jobs over the next 10 years.

2. Right structure: The fund will be independently delivered by an organization with strong technical capacity, with government setting goals that prioritize public benefit over the long-term with two buckets: one for R&D and one for commercial deployment. As with AOSTRA, the ownership of intellectual property (IP) should remain in public hands so that it will be widely used for the benefit of all Canadians. Organizations with the technical expertise to deliver on this mandate include Alberta Innovates and Emissions Reduction Alberta. And unlike AOSTRA, which was strictly an R&D vehicle, the fund would have a mandate (in an expanded and revamped version of the Strategic Innovation Fund, or possibly as a new sleeve within the Canadian Infrastructure Bank) to make direct investments to deploy these commercial technologies and would take minority equity stakes in exchange for these direct investments. Two important things to note:

• AOSTRA made their investment over 30 years and then hit the exit after they had proven the viability of SAGD (steam-assisted gravity drainage) technology in extracting bitumen from underground oil sands deposits. Given the realities of today’s strained provincial and corporate balance sheets, the pace of change in global energy markets, and the scale of the incumbent industry (which makes the stakes higher for getting it right), we are looking at a compressed time scale that requires more investment in less time.
• It is important to get IP protection right. We can invest a lot of money and develop successful technologies, but we may lose out on benefits if we lose control of IP. The government will need to fund 100% cash for R&D up to the point of deployment in order to own IP for any research that involves non-Canadian entities. Industry co-investment may give partners usage rights but not IP ownership.

3. Right scale: A 10-year investment by the federal government of $40 billion ($5 billion for R&D and $35 billion to deploy and crowd in private sector investment), with the objective of securing triple that amount from the private sector and support from provinces as per their capacity. The fund would be fully endowed to insulate it from changing political priorities and to take advantage of low interest rates.

While drawing lessons from AOSTRA, we also need to be mindful that 2020 is not the 1970s in two important respects:

• The scale of human capital and infrastructure for Canadian innovation today is much greater than in 1974, when AOSTRA was established.
• In response to post-pandemic recovery needs, the federal government is poised to make large-scale (once-in-a-generation levels) public investment over the coming years to help Canada build back better.

We have a lot more to lose if we don’t invest wisely now to create an economic engine for the future. At the same time, the current moment offers an opportunity to act quickly and place Canada in a leadership position in fast-growing global markets.

We estimate that the prize for getting this right is being the supplier of choice for $125 billion zero-carbon commodities per year by 2030, while creating 1,000,000 person years of employment.

To paraphrase the philosopher George Santayana, those who learn from the past are empowered to win the future.

Ralph Torrie is senior associate with Sustainability Solutions Group and partner at Torrie Smith Associates.

Céline Bak is the founder and president of Analytica Advisors.

Toby Heaps is the CEO and co-founder of Corporate Knights. 

With files from Aleena Naseem and Laura Väyrynen

Notice to reader: Please be aware some of the figures and other details in this white paper have been updated in the Final Report to reflect feedback.

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Carbon fibre is a material perfectly suited to electric vehicles. Manufactured from long strands of carbon blended with plastic resin (think fibreglass, with carbon replacing the glass), it’s far stronger than steel – up to 10 times as strong – and much lighter. Plus it doesn’t corrode. Owing to these advantages, carbon fibre has been coveted by car makers since it was first introduced in the early 1980s. Because of its steep price, though, it has until recently been used primarily in racing cars and next-generation prototypes. (Carbon fibre costs as much as US$7 per pound wholesale, compared to about 40 cents per pound for steel or 80 cents for aluminum.) The explosive growth in electric vehicle sales, however, creates a unique and potentially enormous market for carbon fibre – especially if the manufacturing costs of the stuff can be slashed somehow.

And this is where Alberta’s oil sands come in. Alberta produces nearly three million barrels of bitumen from the oil sands each day – heavy oil in need of expensive and energy-intensive processing to be turned into transportation fuel. The industry faces an uncertain and perilous future as the high cost and large carbon footprint of its product becomes harder and harder to sell as demand for oil begins to level off and eventually decline, in part due to the rise of emissions-free technologies such as electric cars. Might there be a place for bitumen instead in the carbon-fibre frames of those vehicles?

This was the question Alberta Innovates, the Alberta government’s research arm, aimed to answer with its Bitumen Beyond Combustion program, launched three years ago to begin exploring new commercial uses for bitumen. The program’s research identified a range of potential new markets, including asphalt for paving and the production of vanadium, a metal present in relatively abundant quantities in bitumen and in increasing demand as a component in new battery technology. But nothing else so far has shown the “major mid- to long-term potential” that carbon fibre has. What’s more, its greatest weakness as a transport fuel – its heaviness, owing to the very large carbon molecules that comprise it – becomes an asset.

“Bitumen is a bigger molecule, and you are competing with lighter oils as transportation fuel,” John Zhou, vice president of clean energy at Alberta Innovates, explains. “You are always at a disadvantage. But when you are making big molecules like carbon fibre, that high carbon in the bitumen compared with other oil becomes a competitive advantage.”

To transform bitumen into the lighter crude oils that are refined into gasoline and transportation fuels, oil sands operations either add a lighter petroleum product called diluent to their bitumen to make it flow down a pipeline to a distant heavy oil refinery or use costly, energy-intensive upgrading facilities that “crack” the bitumen into smaller molecules, turning it into synthetic crude. In recent years, oil sands companies have been developing “partial upgrading” technology, which cracks off a smaller piece of the bitumen molecule and allows it to be shipped without diluent. One of the heavy carbon molecules cracked off the raw bitumen is called asphaltene, and it shows enormous promise as a feedstock for producing the long carbon fibres that go into the lightweight, ultra-strong carbon-fibre panels used in cars like the Toyota Prius Prime.

Asphaltenes make up around 15 to 18% of a typical barrel of bitumen. Produce 100 barrels of bitumen and send them through a partial upgrader, in other words, and you have 15 to 18 barrels of asphaltene on your hands. The world’s current supply of carbon fibre is about 100,000 tonnes per year, a total that oil sands operators could easily exceed with the widespread use of partial upgrading.

“The supply is not the issue,” Zhou says. The big question is whether carbon fibre produced from bitumen could cut carbon fibre costs to the point where the material made sense not just for a flagship Prius but for Honda Civics and Ford Fusions. “If you can reduce the cost of carbon fibre by 50% or more, you will have a chance to get into medium-priced vehicles. So you will open up a much greater market.”

It’s an enticing possibility, especially for an oil sands industry battered by low prices, fleeing investment capital and a barrage of criticism over its expanding greenhouse gas emissions and other environmental impacts. “It’s early days in looking at the potential for carbon fibre production from bitumen; however, we think there’s value in looking at different ways of optimizing our barrels – value in the traditional sense and in potential environmental benefits,” says Carrie Fanai, who is leading Suncor’s participation in the carbon fibre project at Alberta Innovates. With partial upgrading technology perhaps only three years away from commercial-scale operation, oil sands companies will soon have stronger motivation to find uses for the by-products of bitumen processing.

“When you are making big molecules like carbon fibre, that high carbon in the bitumen becomes a competitive advantage.”

–John Zhou, Alberta Innovates

The carbon fibre market, though, remains a young and volatile one, and that means any plans regarding its future role come freighted with caveats. Cecilia Gee, an analyst with Lux Research who tracks the carbon fibre market, explains that carbon fibre is at present a niche product, and many factors beyond the price and availability of the raw material, in the automotive market and beyond, will determine future demand. At present, the use of carbon fibre in EVs, for example, is limited by a lack of standardized production and supply chain certainty, and as much as 70% of the cost associated with using carbon fibre comes from the high price of manufacturing and installing components made from carbon fibre – not from the cost of the raw material the oil sands might one day supply. Meanwhile, plummeting battery prices are taking some of the pressure off EV manufacturers to pay a premium to reduce the weight of their vehicles. BMW, for example, recently announced it will no longer be using carbon fibre in some of its electric cars as it expands production.

“Is there an opportunity for the oil sands? Yes,” Gee says. “Are there a lot of unknowns about that future? Also yes. But if they have the opportunity to make things more circular, more green, why not?”

In any case, Alberta’s carbon fibre industry is a long way from supplying frames for hundreds of thousands of Civics; at present, it’s not even an industry. In the wake of the Bitumen Beyond Combustion program’s final report in January 2018, Alberta Innovates freed up $2 million in seed money for a handful of initiatives, one of which is a laboratory at the University of Alberta now working on developing an industrial process for converting bitumen-derived asphaltenes into carbon fibre. The early results have been so promising that Alberta Innovates has already connected the lab with industry heavyweights like BASF and Mitsubishi Chemical. A representative from SGL, a market leader in carbon fibre manufacturing, has paid multiple visits to the lab and has made plans to connect the researchers with similar projects at the Oak Ridge National Laboratory, the U.S. Department of Energy’s top energy research lab.

These are, to be sure, very early days. There remain many hurdles yet to clear. But presuming that partial upgrading expands at the rate Zhou and his colleagues in the oil sands hope it does and that the lab research on bitumen-derived carbon fibre continues apace, there could be viable commercial-scale carbon fibre production in Alberta by around 2030 – which just so happens to be around the time experts predict electric vehicle sales will roar into overdrive worldwide.

Zhou concedes that from an investor’s point of view, the project is very much in the high-risk, high-reward category. At a recent funding meeting with federal officials in Ottawa, he compared it to the $50 million the government recently invested in General Fusion, a Vancouver start-up working on nuclear fusion reactors. Still, the long timeline and uncertain payoff don’t worry Zhou much. “If in 10 to 15 years we can create a multi-billion-dollar business in Alberta, I will be very happy,” he says. Significantly less time, come to think of it, than it took bitumen production to go from Karl Clark’s lab at the University of Alberta to the first mine site north of Fort McMurray.

Chris Turner’s most recent book is The Patch: The People, Pipelines, and Politics of the Oil Sands.

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