1) Alberta invested $2B to support 3-5 commercial scale carbon capture and storage (CCS) projects by 2015 and inject 5Mt of CO2. 2) Key lessons included ensuring transparency in project selection, using third party expertise, and addressing any regulatory gaps to provide certainty for investors. 3) Contract negotiations for CCS projects are complex with many details to consider around risk sharing, amendments, knowledge sharing, and defining commercial operations.

1. Lessons Learned in
Alberta
May 8,2012
Mike Fernandez, Alberta Energy

2. Climate Change Strategy
200Mt
• 2050 -- 200Mt
reduction or 50%
below projected
business as usual
and 14% below
2005 levels

3. Alberta’s CCS Program
MONEY
• Financial support of $2B to support 3-5
commercial scale CCS projects and inject 5Mt
of CO2 by 2015.
RULES
• New legislation in 2010, and 2011. Detailed
regulatory audit in 2012.

4. Lesson 1 – Transparency is key.
MONEY
• Open and transparent process
– Full Project Proposals and all materials were made public
• Fairness Monitor (Third party oversight)
– Oversaw the entire FPP process
• Be clear in your announcement of who is in and who is out.
– Absolute clarity of who we selected
RULES
• Regulatory work includes stakeholders.

5. Lesson 2 – Third party expertise is
invaluable.
MONEY
• Financial and economic support used during our
evaluation of proposals.
• Expert support on Knowledge Sharing provisions.
RULES
• Lots of consultants and stakeholders working on
regulatory advice.

6. Lesson 3 - Address regulatory gaps.
MONEY
• So important to investors.
• Sort out long-term liability and tenure ASAP.
RULES
• Start with an Audit
– Do a thorough analysis of all regulatory gaps and
address them.

7. Lesson 4 - Contract negotiations
are complex.
MONEY
• Front end principles around risk sharing save a lot of
pain.
• Provide for amendments…you’ll need them.
• Parallel negotiations can be a positive or a negative.
• Defining “commercial operations” has been a hurdle.
• Be clear on Knowledge Sharing provisions.
• These discussions take a lot of time…plan for it.

8. Lesson 5 - Collaboration
MONEY and RULES
• Climate change is a shared outcome of many
departments.
• Cross ministry Deputy Minister Committee to
support CCS.
• Partner with industry
– Alberta industry are vocal proponents and
advocates of CCS

9. Lesson 6 – Making payments takes
time…
MONEY
• Sort out financial security well ahead of time.
• If you use third parties to help certify a milestone:
– Ensure the proponent helps scope
– Start early
– Be prepared for lengthy debates between engineers
• Do not link payments to your fiscal year end as
it’s a serious constraint.

10. Thank-you
Mike.Fernandez@gov.ab.ca