(Calgary) A new carbon capture and storage tax credit, set to be unveiled in next week’s federal budget, is sparking debate among those who say it will help Canada meet its reduction targets emissions and those who view it as a thinly veiled subsidy to the oil and gas industry.
Posted at 5:43 p.m.
Ottawa is expected to announce its carbon capture investment tax credit in next week’s federal budget. Although details have yet to be spelled out, the federal government’s emissions reduction plan, released on Tuesday, said advancing carbon capture and storage projects was in the mix of “all credible avenues.” to achieve carbon neutrality by 2050, including scenarios established by the United States, the United Nations and the International Energy Agency.
“We shouldn’t see this as a silver bullet. This should not be the starting point for our climate change strategy,” said Environment Minister Steven Guilbeault in an interview on March 27. “But (carbon capture) is going to be one of several components, and one of the tools in our toolbox. »
Carbon Capture and Storage (CCS) technology captures greenhouse gas emissions from industrial sources and stores them deep underground to prevent them from being released into the atmosphere.
It is an expensive technology that has been slow to develop, although it has been around for decades. Only a handful of CCS projects are currently operating in Canada, but the proposals are numerous, including those from Enbridge, ATCO, TC Energy, Capital Power and Pembina Pipeline.
In addition, the Carbon Neutral Oil Sands Initiative – an alliance of Canadian Natural Resources, Cenovus Energy, ConocoPhillips, Imperial Oil, MEG Energy and Suncor Energy – is proposing a transmission line that would capture carbon dioxide carbon from oil sands facilities and transport it to a storage facility near Cold Lake, Alberta.
This project alone could reduce emissions by around 10 million tonnes and could be operational by the end of the decade, argued Mark Cameron, senior adviser to the Initiative, who works for MEG Energy.
But he added that the companies needed the help of a tax credit to make the project economically viable.
“We are competing for international capital for these projects,” Cameron said. “And jurisdictions like the United States, like the Netherlands, like Norway, have very, very generous financial conditions for carbon capture and storage. »
According to the Pembina Institute, an environmental think tank, capturing and storing carbon from oil sands facilities, refineries and gasworks could reduce Canada’s emissions by 15 million tonnes by 2030.
The emissions reduction plan tabled by the federal government on Tuesday projects that total emissions from the oil and gas sector — including production, refining and pipeline transportation — will decline to 110 million tonnes by 2030, compared to 191 million tons in 2019.
“Carbon capture plays an important role in decarbonizing the oil and gas industry,” said Simon Dyer, Deputy Executive Director of the Pembina Institute. “We don’t know any details about the investment tax credit yet. But we are not opposed to this type of investment to, in a way, revive this industry. »
Another form of subsidy
However, other environmental organizations are calling on the Trudeau government to drop the promised tax credit. They argue that funding carbon capture and storage projects is just another way to subsidize the oil and gas industry.
“I understand that the government is under a lot of pressure from industry, especially oil and natural gas, who continue to hope that there is some kind of technological solution that does not involve reducing the amount of oil and natural gas that we extract,” said Sven Biggs of Stand Group. Earth. “But so far, the science just doesn’t support that view. »
Mr. Biggs explained that his organization would rather see federal money spent on advancing renewable energy technologies and transitioning oil and natural gas workers in affected communities, rather than offering credit for taxes on oil companies which are currently reaping record profits due to high commodity prices.
“Accelerating the electrification of things, like our fleet of trucks and heavy-duty trucks, would do more to reduce emissions and reduce our dependence on oil and natural gas in the long run,” he argued.