Canada to offer substantial carbon capture incentives
Canada will offer a substantial incentive to companies that invest in carbon capture technologies and will set aside as much as $3 B over eight years to accelerate critical mineral exploration, extraction and processing as it seeks to cut carbon emissions.
In this year's budget, Canada is introducing a 60% tax credit for equipment used to capture carbon from the air, and 50% for all other capture equipment, plus a 37.5% credit for transportation and storage equipment.
CSS facilities are expected to be a key part of global efforts to contain emissions from fossil fuels. Canada is the world's fourth-largest oil producer and has a set a goal of generating net-zero emissions by 2050.
"For the oil and gas sector this tax credit, combined with the fact they are generating massive revenues right now, is more than enough to reduce the risk associated with going ahead with CCS projects," said Chris Severson-Baker, Alberta regional director at the Pembina Institute, a clean energy think-tank.
The tax credit is projected to cost the government $2.1 B over five years. The incentive is below the 75% level the Canadian Association of Petroleum Producers requested last year, and one industry group said it would look for additional funding from programs like the Canada Infrastructure Bank and Emissions Reduction Alberta.
"This in and of itself probably isn't enough for a final investment decision, but it's a very important step. We're generally pleased," said Mark Cameron, senior advisor to the Oil Sands Pathways to Net Zero alliance, which consists of six companies representing 95% of oil sands output.
The budget has numerous other measures aimed at pivoting the economy toward a low-carbon future.
(Reporting by Steve Scherer, additional reporting by Nia Williams in Calgary; Editing by Denny Thomas and Aurora Ellis)
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