By revealing how the industry will be able to receive the billions in federal funding promised for carbon capture and storage projects, the federal government has turned the Bloc Québécois against its most recent budget law.
In total, Ottawa intends to devote $12.5 billion to make these technologies flourish until 2035. Federal aid takes the form of tax credits, retroactive to 2022, to give a boost to heavy industrial activities aimed at preventing greenhouse gases from entering the atmosphere, most often by injecting them underground.
“Carbon capture and storage should not be the focus of policy to combat climate change. Experts are unanimous around the world,” denounces Bloc MP Gabriel Ste-Marie. He sees these tax benefits as a gift to Western Canada’s fossil fuel industry.
He warns that his party will try to delete these chapters from Bill C-59, tabled last Thursday in Parliament, which implements the last federal economic statement of the fall. The text must amend the Income Tax Act to allow tax credits for investment in carbon capture, utilization and storage (CUSC).
“It’s tailor-made to support the oil and gas industry, to produce more [d’énergie fossile] », laments Mr. Ste-Marie, also vice-president of the Standing Committee on Finance.
15% of green investments
The duty was able to consult a document from the Ministry of Finance which presents the breakdown of the approximately 80 billion in clean investments promised in the 2023 federal budget. These measures were presented as a response to the Inflation Reduction Act of the Biden government in the United States.
About 15% of this sum, or $12,492 million, must be dedicated to carbon capture, use and storage by industry. These amounts are consistent with the Liberal promise to invest one and a half billion per year in this type of project from 2026-2027.
Although it is true that the tax credits are mainly intended for oil and gas producers, other large carbon emitters could also benefit, such as refineries, thermal power plants or cement plants, which could embed CO2 in cement, explains Michel Malo, associate professor at the National Institute of Scientific Research (INRS).
“Critics say that CO capture and storage2 This is not a panacea, this is not what will reduce greenhouse gases on the planet. […] No one believes that this is what will make us reach the targets of the Paris agreement, but it can reduce our carbon footprint,” comments the expert. He believes that these industrial methods have proven themselves, particularly in the United States.
Not in Quebec
However, one of the uses of carbon dreamed of by the oil industry will be excluded from the federal tax credit, underlines Michel Malo. Enhanced oil recovery, or the injection of carbon captured into old oil wells to exploit them to the last drop, is not eligible for federal assistance.
Furthermore, projects located in only three provinces will be able to qualify: British Columbia, Saskatchewan and Alberta. The other provinces and territories have not adopted laws or regulations to regulate these practices. However, the Deep Sky project in Quebec is attempting to develop this technology.
In an email, the office of the Minister of Finance of Canada, Chrystia Freeland, describes as “historic” the announcements of investments in clean technologies, estimated at $120 billion, including the tax credit for CUSC.
“These tax credits are deliberately retroactive because we know that Canada, including Quebec, cannot afford to miss this opportunity to build a clean economy that is sustainable, growing and provides economic opportunities for all Canadians and the Canadians,” writes his press secretary, Katherine Cuplinskas.
The fall economic statement, presented on November 21, presents the CCUS as an integral part of its “Canadian plan for jobs in a clean economy”, alongside other aid, such as for the production of hydrogen (17.7 billion until 2035) or clean electricity (25.7 billion).