Sumitomo Corp. has interests in numerous industries worldwide, including oil and gas, steel, transportation, and others.Toru Hanai/Reuters
Japanese trading house Sumitomo Corp. SSUMY has joined a Calgary-based company that is pushing for Indigenous participation in energy transition projects for a proposal to build a carbon transport network in southern Alberta.
Reconciliation Energy Transition Inc. said on Thursday it signed a joint development agreement with Sumitomo, which will acquire a large equity interest in a venture called the East Calgary Region Carbon Transportation and Sequestration Hub. The project could begin operations as early as 2026.
Reconciliation Energy Transition, or RETI, is an offshoot of Project Reconciliation, an organization that has been planning to bid for the newly expanded Trans Mountain oil pipeline on behalf of 120 Western Canadian First Nations.
However, the two operations are separate and not reliant on each other, said Stephen Mason, RETI’s chief executive officer. His group conceived its energy transition unit while Ottawa’s sale process for the government-owned Trans Mountain project dragged on.
RETI seeks Indigenous partnerships for all its ventures, and southern Alberta’s Siksika Nation has a material interest in the carbon hub proposal, he said.
The venture is being designed to provide industrial emitters with access to storage capacity for up to 10 million tonnes of CO2 per year for a fee. It would include compression equipment, a pipeline network and injection wells for sequestration of the carbon in deep saline aquifers east of Calgary.
Sumitomo began talks with RETI more than a year ago, and the two signed an exclusivity agreement in October, Mr. Mason said.
“They bring a lot to this table other than just their name and their capital,” he said in an interview. “They are very active in this space globally. We’re very pleased with the partnership structure and the relationship that we’ve built.”
The project is expected to cost at least $100-million, though if Enmax, Calgary’s municipal utility, signs on as a customer with its major natural-gas-fired Shepard generating plant in the region, it could be much more, Mr. Mason said. Enmax has been studying the potential for carbon capture at that plant.
Beyond the carbon network, the two companies are considering related ventures. RETI is doing early design work on a sustainable aviation fuel facility that could take CO2 from the carbon stream, and Sumitomo may lead development of a direct air capture plant that would remove carbon from the atmosphere.
Sumitomo has interests in numerous industries worldwide, including oil and gas, steel, transportation, construction, media and digital, minerals, as well as the energy transformation sector. The company has a market capitalization of US$32-billion. It has set a goal to be carbon neutral by 2050.
Sandro Hasegawa, general manager of Sumitomo Americas’ energy innovation initiative and director of its carbon-capture unit, said his company’s values are aligned with those of RETI, and that the project could lead to future ventures in Alberta.
“RETI has a team with vast experience and strong relationships with the local Indigenous communities and has their project located in a region which is ideal for several significant regional emitters,” Mr. Hasegawa said in a statement to The Globe and Mail.
The proposal will require Ottawa to finalize legislation for investment tax credits offered to proponents of carbon-capture projects. The development would also need a price guarantee such as a carbon contract for difference. The federal government has been providing low-carbon projects with investments and pricing arrangements through its $15-billion Canada Growth Fund.
Last year, the fund announced a deal with Entropy Inc., a subsidiary of Advantage Energy Ltd., to buy carbon credits at a fixed price that stem from the company’s Alberta carbon-capture plant.
However, the technology has hit bumps in the province, which sees it as key to reducing CO2 emissions. Early this month, Capital Power Corp. cancelled a $2.4-billion project to capture and store carbon at its Genesee gas-fired power plant, saying the costs were too high. Meanwhile, the major oil sands producers that make up the Pathways Alliance have not yet committed to a long-planned $16.5-billion CCS project they have said requires significant taxpayer subsidy.
Still, Mr. Hasegawa said incentives being offered by the federal and provincial governments make the East Calgary project attractive. Transport and storage costs would be covered by the project partners, and the tax credit and provincial incentive programs support the emitters, he said.
“We hope that the government can continue adding support,” he said. If Ottawa amends its proposed clean electricity regulations to make them more favourable for power generators, “I feel that there is the possibility to develop commercially viable projects, all subject to due diligence, discussion and negotiation with the emitters, of course,” he added.
RETI said Royal Bank of Canada RY-T has signed on as lead placement agent and financial adviser for its portfolio of projects, including the carbon hub and sustainable aviation fuel proposal.