Ottawa unveils $2.6B carbon capture tax credit for energy sector
Ottawa is urging oil and gas companies to move quickly to take advantage of a major new tax credit for carbon capture and storage -- a pricey technology that proponents say could play an important role in reducing this country's greenhouse gas emissions.
In the federal budget announced Thursday, the Liberal government said it will allocate $2.6 billion over five years to a tax credit for companies investing in projects that employ the technology, which traps greenhouse gas emissions from industrial sources and stores them deep in the ground to prevent them from being released into the atmosphere.
Starting in 2022, companies will be able to claim a tax credit of up to 60 per cent for direct air capture projects and 50 per cent for all other eligible carbon capture projects. A 37.5 per cent tax credit is available for investment in equipment for carbon transportation, storage and use. (Enhanced oil recovery, which involves injecting carbon underground to extract more oil from older wells, is excluded from the tax credit.)
The government will decrease the tax credit rates by 50 per cent in 2031 in an effort to get companies to build their carbon capture projects now, not later.
Kent Fellows, an assistant professor of economics with the University of Calgary's School of Public Policy, said it's clear that Ottawa wants the needle to move.
"It's potentially a lot of money, and especially very quickly," Fellows said of the tax credit. "They (the government) are looking for this to happen quickly. They're looking for companies to get up off the couch, and actually get these proposals moving."
Canadian oil and gas companies have reported record profits in recent months due to soaring commodity prices. But while many companies have proposed investing in carbon capture as a way to reach their emissions reduction goals, most projects are still in the development phase.
The industry has said the large-scale buildout of carbon capture and storage in Canada will be contingent on government help. Energy producers had lobbied for a carbon capture tax credit to cover up to 75 per cent of the capital costs of investing in the expensive technology.
Some of the companies that have proposed carbon capture and storage projects include Enbridge Inc., Atco Ltd., and Capital Power. In addition, the Oil Sands Pathways to Net Zero initiative -- an alliance of Canadian Natural Resources Ltd., Cenovus Energy Inc., ConocoPhillips, Imperial Oil Ltd., MEG Energy Corp., and Suncor Energy Inc -- has proposed a major carbon capture and storage transportation line that would capture CO2 from oilsands facilities and transport it to a storage facility near Cold Lake, Alta.
That project alone could deliver about 10 million tonnes of emissions reductions per year and could be up and running by the end of the decade, according to the oilsands group.
"With this announcement, the federal government has recognized the importance of developing new technologies to help Canada fight climate change, as well as the importance of the oilsands to our country's energy security," said Kendall Dilling, interim director of the Pathways to Net Zero Alliance, in a release Thursday.
"Because of the amount of long-term capital investment required to build carbon capture and storage infrastructure, and the speed we need to move at to meet 2030 targets, the countries that are doing this successfully are all using a collaborative model where governments are co-investing alongside industry," Dilling added.
Proponents say Canada can't meet its climate goals without vastly expanding the use of carbon capture and storage technology. The government's recently released Emissions Reduction Plan envisions total emissions from the oil and gas sector -- including production, refining and transportation via pipelines -- falling to 110 million tonnes by 2030, down from 191 million tonnes in 2019.
"The International Energy Agency has determined that in order for the world to reach net zero, carbon capture and storage technologies are one of the tools in the tool box," said Mark Zacharias, special adviser to the B.C.-based think tank Clean Energy Canada.
"This (carbon capture) could be transformational," said Martha Hall Findlay, chief climate officer for Suncor. "Canada has had trouble meeting its emissions reductions targets ... and this could take us from having trouble meeting our targets to being a global leader in emissions reduction."
However, some environmentalists argue that offering a tax credit to oil and gas producers is akin to subsidizing fossil fuel production.
"Carbon capture is not a climate solution, it's a greenwashing strategy," said Julia Levin of Environmental Defence. "Instead of creating yet another fossil fuel subsidy, the government should have invested in proven climate solutions, including renewable energy, efficient affordable housing and electrification of transportation."
In late March, the government of Alberta selected six proposals from companies interested in developing what would be Canada's first carbon storage and sequestration hubs, in the Edmonton region. The proposals selected were put forward by Enbridge Inc., Shell Canada, Wolf Midstream, Bison Low Carbon Ventures, Enhance Energy and a joint-venture project from TC Energy and Pembina Pipeline Corp.
Also in Thursday's budget, the federal government announced a new 30 per cent tax credit for exploration projects related to critical minerals such as lithium and cobalt, which are used in the production of electric cars and batteries.
This report by The Canadian Press was first published April 7, 2022.
IN DEPTH
Jagmeet Singh pulls NDP out of deal with Trudeau Liberals, takes aim at Poilievre Conservatives
NDP Leader Jagmeet Singh has pulled his party out of the supply-and-confidence agreement that had been helping keep Prime Minister Justin Trudeau's minority Liberals in power.
'Not the result we wanted': Trudeau responds after surprise Conservative byelection win in Liberal stronghold
Conservative candidate Don Stewart winning the closely-watched Toronto-St. Paul's federal byelection, and delivering a stunning upset to Justin Trudeau's candidate Leslie Church in the long-time Liberal riding, has sent political shockwaves through both parties.
'We will go with the majority': Liberals slammed by opposition over proposal to delay next election
The federal Liberal government learned Friday it might have to retreat on a proposal within its electoral reform legislation to delay the next vote by one week, after all opposition parties came out to say they can't support it.
Budget 2024 prioritizes housing while taxing highest earners, deficit projected at $39.8B
In an effort to level the playing field for young people, in the 2024 federal budget, the government is targeting Canada's highest earners with new taxes in order to help offset billions in new spending to enhance the country's housing supply and social supports.
'One of the greatest': Former prime minister Brian Mulroney commemorated at state funeral
Prominent Canadians, political leaders, and family members remembered former prime minister and Progressive Conservative titan Brian Mulroney as an ambitious and compassionate nation-builder at his state funeral on Saturday.
Opinion
opinion Don Martin: Gusher of Liberal spending won't put out the fire in this dumpster
A Hail Mary rehash of the greatest hits from the Trudeau government’s three-week travelling pony-show, the 2024 federal budget takes aim at reversing the party’s popularity plunge in the under-40 set, writes political columnist Don Martin. But will it work before the next election?
opinion Don Martin: The doctor Trudeau dumped has a prescription for better health care
Political columnist Don Martin sat down with former federal health minister Jane Philpott, who's on a crusade to help fix Canada's broken health care system, and who declined to take any shots at the prime minister who dumped her from caucus.
opinion Don Martin: Trudeau's seeking shelter from the housing storm he helped create
While Justin Trudeau's recent housing announcements are generally drawing praise from experts, political columnist Don Martin argues there shouldn’t be any standing ovations for a prime minister who helped caused the problem in the first place.
opinion Don Martin: Poilievre has the field to himself as he races across the country to big crowds
It came to pass on Thursday evening that the confidentially predictable failure of the Official Opposition non-confidence motion went down with 204 Liberal, BQ and NDP nays to 116 Conservative yeas. But forcing Canada into a federal election campaign was never the point.
opinion Don Martin: How a beer break may have doomed the carbon tax hike
When the Liberal government chopped a planned beer excise tax hike to two per cent from 4.5 per cent and froze future increases until after the next election, says political columnist Don Martin, it almost guaranteed a similar carbon tax move in the offing.
CTVNews.ca Top Stories
NDP needs to decide whether 4 million Canadians deserve dental care: minister
Procurement Minister and newly appointed Quebec lieutenant Jean-Yves Duclos is warning the NDP that the dental care program it helped put into place will be in jeopardy if it pulls its support from the governing Liberals.
2 suspended from U.S. college swim team after report of slur scratched onto student's body
At least two students at Gettysburg College in Pennsylvania have been suspended from the swim team after a report that a racial slur was scratched onto a student's body, officials said.
The City of Calgary ended water restrictions for the city at a Sunday morning update.
Myths busted and lessons learned: John Vennavally-Rao on his surgery to reverse his ostomy
Twenty-seven year Â鶹´«Ã½ reporter and anchor John Vennavally-Rao shares his story of what it was like to have an ostomy bag as part of his health-care battle. 'I’m grateful for what it did to extend my life,' he writes in a personal column for CTVNews.ca.
Kate, the Princess of Wales, makes first public appearance after cancer treatment
Kate, the Princess of Wales, made her first public appearance Sunday since she announced she had completed chemotherapy and would return to some public duties.
'Hubris and greed': Takeaways from the first week of U.S. Coast Guard inquiry into the Titan submersible disaster
More than a year after the Titan submersible imploded, killing all five voyagers on board, the story of the ill-fated expedition to the Titanic has taken the form of a modern-day Greek tragedy overflowing with mortal pride and heedlessness.
What is the U.S. Electoral College? America's path to the presidency, explained
In less than two months, Americans will go to the polls to choose their next president. But the process that translates those millions of votes into one seat in the Oval Office is much more complicated than a straight tally.
Trump's goal of mass deportations fell short. But he has new plans for a second term
Donald Trump has long pledged to deport millions of people, but he's bringing more specifics to his current bid for the White House: invoking wartime powers, relying on like-minded governors and using the military.
A Nova Scotian YouTuber has launched a mini-truck bookmobile.
Local Spotlight
Cole Haas is more than just an avid fan of the F.W. Johnson Wildcats football team. He's a fixture on the sidelines, a source of encouragement, and a beloved member of the team.
Getting a photograph of a rainbow? Common. Getting a photo of a lightning strike? Rare. Getting a photo of both at the same time? Extremely rare, but it happened to a Manitoba photographer this week.
An anonymous business owner paid off the mortgage for a New Brunswick not-for-profit.
They say a dog is a man’s best friend. In the case of Darren Cropper, from Bonfield, Ont., his three-year-old Siberian husky and golden retriever mix named Bear literally saved his life.
A growing group of brides and wedding photographers from across the province say they have been taken for tens of thousands of dollars by a Barrie, Ont. wedding photographer.
Paleontologists from the Royal B.C. Museum have uncovered "a trove of extraordinary fossils" high in the mountains of northern B.C., the museum announced Thursday.
The search for a missing ancient 28-year-old chocolate donkey ended with a tragic discovery Wednesday.
The Royal Canadian Mounted Police is celebrating an important milestone in the organization's history: 50 years since the first women joined the force.
It's been a whirlwind of joyful events for a northern Ontario couple who just welcomed a baby into their family and won the $70 million Lotto Max jackpot last month.