Page 5 - NorthAmOil Week 12 2023

NorthAmOil COMMENTARY NorthAmOil

starting in 2026. The tax is not yet finalised. What next?
Then in early March 2023, Alberta’s Finance Since the IRA’s passage, some of Canada’s larg-
Minister, Travis Toews of the United Con- est oil producers have said that the IRA’s tax
servative Party, proposed a budget that set credit for CCS is so generous, it will lead to
aside $387mn over five years from the prov- lower investment in the sequestration tech-
ince’s carbon tax fund and another $246mn nology in Canada. “Canada really is at about
over three years from the Capital Spending half of where the [US ] is under the Inflation
Plan for CCS. Reduction Act,” said the Pathways Alliance’s
The oil sands’ largest producers have, how- vice-president of external relations, Mark
ever, been calling for more government support Cameron, in October.
for CCS for some time. The technology will be However, recent research by two think-tanks
costly and is not yet commercially viable. Petro- has disputed that. The US’ IRA legislation
leum produced from the oil sands is especially includes a performance-based credit for CCS of
carbon intensive. about $84 per tonne of stored carbon dioxide
The federal government and Alberta, Cana- (CO2) if certain labour provisions are met.
da’s oil patch, are contesting who should provide In Canada, federal and provincial support
more CCS funding. for CCS is worth a “very significant” estimated
CDN135 ($98) at least per tonne of CO2 seques-
Push for support tered for oilsands facilities in Alberta by 2030,
Nicholson’s comments come as the Pathways said the think tanks in new research.
Alliance has pushed for more government sup- The support in the US and Canada are hard The support
port for its CCS plans. The alliance’s members to compare, in part because Canada’s figure
are six major producers that operate about 95% includes avoidance of a variable carbon tax in the US and
of the oil sands production. penalty, whereas the US’ is a fully refundable Canada are hard
In January, the Pathways Alliance entered into tax credit, said the think-tanks.
an evaluation agreement with the provincial “Canadian emitters face mainly punitive to compare, in
government of Alberta for what Pathways says measures while US counterparts are provided
would be one of the world’s largest CCS projects. substantially higher ‘bankable’ incentives, part because
The proposed multi-billion-dollar hub would which vastly improve certainty in project eco-
be connected to a transportation line that would nomics,” BMO Capital Markets’ Jared Dziuba Canada’s
initially gather captured CO2 from an antici- told the Financial Post. figure includes
pated 14 oil sands facilities in the Fort McMur- He said that avoidance of carbon-tax penal-
ray, Christina Lake and Cold Lake regions of ties in the future will not be seen as an “incen- avoidance of a
Alberta. The alliance hopes to increase the tive” by oil sands producers.
transportation network to include more than 20 “Because of this, projects in the US can also variable carbon
oil sands facilities, and other industries in the be funded with debt capital, whereas too much
region interested in CCS. risk exists in Canada for major projects – so tax penalty.
The Pathways Alliance has said the project projects must be funded through equity capital
is critical for its plan to reduce CO2 emissions and/or compete for returns internally… Bottom
from member companies’ oil sands operations line: Canadian emitters need more certainty in
by 22mn tonnes by 2030, thereby enabling its bankable incentives to measure up to US policy,”
goal of net zero by 2050. he said.™

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