Endnotes, Removals into Revenue Methodology
This supplementary appendix provides details on the design of the model used in the analysis detailed in the main report.
Tools
The economic analysis was conducted using Navius’ proprietary gTech and Integrated Electricity Supply and Demand (IESD) software, which account for Canada’s macroeconomy, technology choice decision-making across all economic sectors, hourly dispatch of electricity in each province, and electricity system capacity expansion.
gTech is designed to simulate the impacts of government policy and other external developments on both technological adoption and the broader economy. It simulates how firms and consumers make decisions in the real world, describing likely outcomes rather than simply prescribing financial cost-optimized solutions. Notably, gTech uses behaviourally-realistic discount rates (8-25%) to reflect a higher priority placed by households and businesses on near-term costs, rather than ‘financial’ discount rates (5-10%).
IESD is a capacity addition and dispatch tool that simulates how utilities across Canada build capacity and then use that capacity on an hourly basis. It is able to simulate North America’s electricity systems and account for hourly consumption and generation. This granularity enables it to identify the potential and limits of emerging technologies.
Together, gTech and IESD are integrated by passing key information back and forth for each simulated year until convergence is achieved.
The model is structured into:
- Economic sectors (e.g. transportation), which have energy demand and emissions-related end-uses like high and low heat or methane management;
- End-uses, which can be met by technology archetypes (e.g. on-road freight transportation can be met by conventional internal combustion enginers);
- Technology archetypes, which characterize technologies that can be used to meet these end-uses, and;
- Fuels and other relevant commodities like agricultural waste products which are created or consumed by these technologies.
In total, the model includes over 400 technologies (e.g. electric vehicles, industrial heat pumps, anaerobic digestors) across over 100 end-uses (e.g. light-duty vehicles, industrial process heat, manure management) relevant for GHG emissions reductions and removals in Canada, including technologies that are both available now or likely to be available in the coming decades.
Additionally, gTech accounts for all relevant existing provincial and federal policies, including their interactions.
Demands for labour and services for each sector are defined within the model, and labour markets are modelled dynamically. Further details on this, in addition to other details about the technology, can be found in the downloadable model documentation for the Canada Energy Dashboard.
Representation of carbon removal
Most of the carbon dioxide removal pathways modeled here were newly added to Navius’ model for the purpose of this project, resulting in insights that were not previously available. The parameters for these pathways were constructed by Navius in collaboration with Carbon Removal Canada, drawing on insights from literature as well as expert consultation. A conservative approach was taken on cost assumptions, balanced by testing cost sensitivity with low cost scenarios separate from the reference case.
The model includes six different carbon removal pathways included in the model. Key assumptions and characteristics are mentioned below. The parameters that define the archetype for each carbon removal method serve as the inputs that dictate their costs over time, how they are deployed within the model and ultimately the economic impact they create as a result.
Costs for process inputs like energy and forest residues are solved within the model, based on interactions with energy supply and demand from other sectors, rather than being fixed inputs.
Direct air capture
Direct air capture is represented as its own sector. Captured carbon dioxide can be used for underground storage or enhanced oil recovery. The sector is assumed to have an equal mix of solid sorbent and liquid solvent designs. The availability of direct air capture is restricted to regions with access to nearby geologic storage.
Variables used to define the DAC archetype in the model are based on Fasihi (2019)¹, Larsen et al. (2019)² and Keith et al. (2018)³, and has been compared against the 2022 Oxy Low Carbon Ventures investor presentation.⁴ The reference costs were conservatively based on the higher end of cost estimates from literature, while a separate scenario with lower cost assumptions was also explored.
Bioenergy and carbon capture and storage (BECCS)
BECCS is represented both as a fuel – providing electricity and industrial process heat – and as a technology. While many bioenergy pathways are represented in the model, bio-pellets with CCS and renewable natural gas with CCS are the archetypes used to represent BECCS as a carbon removal method. Black pellets offer substitution potential for thermal coal in sectors like electricity generation and cement production. One assumption is that a max blend rate of 70% of bio-pellets can be done with coal without requiring boiler retrofits. The parameters of the bio-pellet archetype are based on Sarker et al. (2023).⁵
Constraints on bio-pellet production include the availability and cost of agriculture and forestry waste product feedstocks, which are used as inputs for other technologies like biochar and biofuels. Bio-pellet feedstock imports from the U.S. are restricted from rising above 2025 levels.
CCS technologies are parametrized based on analysis from the Global CCS Institute⁶ and the International Energy Agency.⁷ Capture rates are assumed at 90% for all CCS applications (including BECCS) except for formation carbon dioxide, which has an assumed 99% capture rate.
Biochar
Biochar production is represented as a sector and biochar is represented as a commodity. The archetype for biochar uses slow pyrolysis for production and applies the biochar to agricultural land. The parameters are based on Brown et al. (2011)⁸, Timmons et al. (2017)⁹, and Patel et al. (2024).¹⁰ Constraints on biochar include the availability of agricultural land and the application rate, assumed at 1.5 tonnes of biochar per hectare per year. Biochar competes with bio-pellets and other biofuels for the use of agriculture and forestry waste product feedstocks.
Secondary potential impacts of biochar soil application, including reducing nitrous oxide emissions, are not included due to high variability in the magnitude of impact across application settings and an incomplete understanding of the underlying processes. Increased agricultural productivity was tested as a cost sensitivity in a separate scenario.
Enhanced rock weathering
The archetype for enhanced rock weathering (ERW) takes alkaline rock from feedstock mining and applies it to agricultural fields. It is an end-use and technology within the agricultural sector. Alkaline feedstock mining and processing costs are based on Haque et al. (2020)¹¹ and Strefler et al. (2018).¹² The alkaline feedstock potential is assumed to be 0.3 tonnes of carbon dioxide removal per tonne of feedstock applied.
Deployment is constrained by the availability of agricultural land and application rates, assumed to be five tonnes per hectare every five years. The model allows for both biochar and ERW to be applied on the same land with no synergistic benefits assumed, taking a conservative assumption informed by expert opinion.
Parameters are based on Haque et al. (2020),¹³ Strefler et al. (2018),¹⁴ Beerling et al. (2025),¹⁵ Power et al. (2025)¹⁶ as well as expert consultation.
Ocean alkalinity enhancement
The archetype for ocean alkalinity enhancement takes the same feedstock as enhanced rock weathering and applies it to coastal regions via existing industrial infrastructure. The main constraints are the number of industrial facilities along Canada’s coastline that can be used for deployment and application rates. This results in a maximum carbon removal contribution of 56 megatonnes of carbon dioxide removal per year from ocean alkalinity enhancement. Allowing for deployment through mechanisms other than existing industrial infrastructure would increase that amount.
Carbon mineralization
The archetype for carbon mineralization is focused on surficial mineralization of mine tailings at active mine sites via rock churning. The mine tailings result from nickel ore mining and carbon removal potential is assumed at 42 tonnes of carbon dioxide removed per tonne of nickel produced. Parameters were set based on expert consultation. More public data on mineralization potential of other types of mines, as well as inclusion of mine tailings of defunct operations like asbestos mines in Quebec, would increase the availability of carbon mineralization.
Summary of cost assumptions by technology
The table below summarizes the reference costs for each carbon dioxide removal technology. The costs change for subsequent deployments over the timeframe of the simulation based on model-determined market prices for commodities agricultural and forestry residues, as well as capital cost reductions achieved over time.
Table 1: Example levelized cost assumptions per carbon removal technology, assuming a 15% discount rate, 30-year plant lifespan, $27.13/GJ electricity price, and $2.64/GJ natural gas price, where applicable.
|
Technology |
Reference levellized cost (2020 CAD$/tCO2) |
Low cost scenario (2020 CAD$/tCO2) |
|
Direct air capture |
666 |
356 |
|
BECCS (bio-pellets) |
~230* |
~180* |
|
Biochar |
156 |
<156** |
|
Enhanced rock weathering |
327 |
253 |
|
Ocean alkalinity enhancement |
273 |
198 |
|
Carbon mineralization |
489 |
437 |
* Variation depending on CCS application
** Low cost biochar scenario applies a 10% agricultural yield increase, value of which is determined by the model.
Scenario Design
Several policy-based scenarios were studied in order to understand the impact of carbon removal on the path to net-zero.
A constraint of achieving net-zero by 2050 is applied, by following current policies to 2030, after which a national cap on GHG emissions is applied in 2035 which linearly declines to net-zero by 2050.
Emissions mitigations from land-use, land-use change and forestry (LULUCF) are fixed model inputs at rates of -30 megatonnes starting in 2035 and -50 megatonnes at 2050, in alignment with projections from Canada Energy Regulator.¹⁷
The model simulates how different actors would act to comply with the net-zero by 2050 requirement, considering all the tools at their disposal. Each decision impacts the interconnected fuels, commodities and technology pathways, all of which is simulated within the model.
Three different policy-based scenarios were simulated:
- No CDR scenario – this scenario considers a net-zero future in which no opportunities for negative emissions are available aside from the prescribed LULUCF amounts, and acts as the counterfactual against which the impacts of CDR can be measured. Renewable natural gas with CCS is still available in this scenario.
- Baseline CDR scenario – this scenario enables the carbon removal pathways above to be available as options to address emissions. Existing legislated policies that provide support for some types of carbon removal, like the CCS investment tax credit, which are available for direct air capture and BECCS, are available. Enhanced CDR scenario – this scenario enables carbon removal like the baseline CDR scenario, and expands on the policy supports by widening them to all listed types of carbon removal and extending their support to 2050.
Results
The economic impacts of carbon removal were found by calculating the difference in economic outcomes like GDP and jobs between the No CDR scenario and the Baseline CDR scenario. Since the only difference between the designs of these two scenarios are the availability of carbon removal technologies, any changes in economic outcome can be attributed to carbon removal.
Accounting for economic outcomes like jobs created is built into the gTech model. These can be direct jobs required by these activities as well as indirect jobs related to these activities like manufacturing and construction.
In the Baseline CDR scenario, the resulting 171 megatonnes of annual carbon removal by 2050 informed the conclusions on how much carbon removal was found to be economically efficient on a path to net-zero by 2050 within Canada. This number depends on the cost of other abatement technologies as well as the cost and availability of CDR pathways, and could be higher if more low-cost CDR pathways become available. Many of the abatement options that were offset by carbon removal include activity reduction or production losses, carbon leakage, and technology retirement before the end of their useful lifespan. These abatement options had higher costs compared to carbon removal options and thus were not selected by firms within the simulation.
Permutations of the scenarios were studied to conduct a sensitivity analysis of various assumptions including cost assumptions across technologies. Additional scenarios that enforced certain amounts of carbon removal to be developed by 2050 were also explored, to test the economic impact of scaling the industry to certain magnitudes.
References
- Fasihi et al. (2019). Techno-economic assessment of CO2 direct air capture plants. Journal of Cleaner Production, 224, 957-980.
- Larsen et al. (2019). Capturing Leadership, Policies for the US to Advance Direct Air Capture Technology. Rhodium Group.
- Keith et al. (2018). A process for Capturing CO2 from the Atmosphere. Joule, 2, 1-22.
- Available here: https://www.oxy.com/siteassets/documents/investors/lcv-investor-update/oxy-low-carbon-ventures-investor-update—selected-presentation.pdf
- Sarker, T. R., German, C. S., Borugadda, V. B., Meda, V., & Dalai, A. K. (2023). Techno-economic analysis of torrefied fuel pellet production from agricultural residue via integrated torrefaction and pelletization process. Heliyon, 9(6).
- Global CCS Institute. (2021). Technology Readiness and Costs of CCS. Available from: https://www.globalccsinstitute.com/wp-content/uploads/2022/03/CCE-CCS-Technology-Readiness-and-Costs-22-1.pdf
- International Energy Agency. (2021). Is carbon capture too expensive? Available from: https://www.iea.org/commentaries/is-carbon-capture-too-expensive
- Brown, T. R., Wright, M. M., & Brown, R. C. (2011). Estimating profitability of two biochar production scenarios: slow pyrolysis vs fast pyrolysis. Biofuels, bioproducts and biorefining, 5(1), 54-68.
- Timmons, D., Lema-Driscoll, A., & Uddin, G. (2017). The economics of biochar carbon sequestration in Massachusetts. UMass Clean Energy Extension, University of Massachusetts.
- Patel, M. R., & Panwar, N. L. (2024). Evaluating the agronomic and economic viability of biochar in sustainable crop production. Biomass and Bioenergy, 188, 107328.
- Haque, F., Santos, R. M., & Chiang, Y. W. (2020). CO2 sequestration by wollastonite-amended agricultural soils–An Ontario field study. International Journal of Greenhouse Gas Control, 97, 103017.
- Strefler, J., Amann, T., Bauer, N., Kriegler, E., & Hartmann, J. (2018). Potential and costs of carbon dioxide removal by enhanced weathering of rocks. Environmental Research Letters, 13(3), 034010.
- Haque, F., Santos, R. M., & Chiang, Y. W. (2020). Optimizing inorganic carbon sequestration and crop yield with wollastonite soil amendment in a microplot study. Frontiers in plant science, 11, 1012.
- Strefler, J., Amann, T., Bauer, N., Kriegler, E., & Hartmann, J. (2018). Potential and costs of carbon dioxide removal by enhanced weathering of rocks. Environmental Research Letters, 13(3), 034010.
- Beerling, D. J., Kantzas, E. P., Lomas, M. R., Taylor, L. L., Zhang, S., Kanzaki, Y., … & Val Martin, M. (2025). Transforming US agriculture for carbon removal with enhanced weathering. Nature, 1-10.
- Power, I. M., Hatten, V. N., Guo, M., Schaffer, Z. R., Rausis, K., & Klyn-Hesselink, H. (2025). Are enhanced rock weathering rates overestimated? A few geochemical and mineralogical pitfalls. Frontiers in Climate, 6, 1510747.
- https://www.cer-rec.gc.ca/en/data-analysis/canada-energy-future/2023/results/
