Page 4 - NorthAmOil Week 15 2022

NorthAmOil COMMENTARY NorthAmOil

Canada unveils details of

carbon capture tax credit

Ottawa has unveiled details of its long-awaited tax incentives to

help fund carbon capture projects in Canada

CANADA THE Canadian government has unveiled details invest in carbon capture more quickly, the rates
of its long-awaited tax incentives to help fund will be halved over 2031-40, potentially acceler-
WHAT: carbon capture projects in the country. ating planned projects so they can benefit from
The Canadian government The incentives form part of Canadian Prime higher rates in the nearer term.
has unveiled details of tax Minister Justin Trudeau’s new fiscal plan, and The tax credit is expected to cost CAD2.6bn
incentives to help fund are aimed at spurring investment in carbon ($2.1bn) during the first five years and around
carbon capture projects. capture, utilisation and storage (CCUS) tech- CAD1.5bn ($1.2bn) per year until 2030.
nologies. Canada is trying to balance a goal of The level of the credits on offer is below the
WHY: net-zero emissions by 2050 with the continued 75% that the Canadian Association of Petro-
Ottawa wants to help the production of oil and gas – at least in the shorter leum Producers (CAPP) had called for last year.
oil and gas industry to term – and CCUS is thought to be crucial to Nonetheless, the industry group welcomed the
decarbonise in line with striking this balance. However, oil and gas play- announcement, describing the tax credit as “an
its national emissions- ers making forays into CCUS have called on important step to achieve national reductions”
reduction goals. government support to help with the economics alongside an extension of the Canadian Infra-
of such projects. structure Bank’s mandate to support investment
WHAT NEXT: into hydrogen, nuclear and carbon capture.
New CCUS projects are Credit details The tax credit was also welcomed by the Oil
still at an early stage but In Canada’s budget for this year, unveiled on Sands Pathways to Net Zero alliance, which
the tax credits make them April 7, Trudeau has proposed a refunda- comprises Canadian Natural Resources Ltd
more likely to advance. ble investment tax credit for carbon capture. (CNRL), Cenovus Energy, ConocoPhillips
Between 2022 and 2030, the investment tax Canada, Imperial Oil, MEG Energy and Sun-
credit rates would be set at 60% for investment in cor Energy. Together, the companies account
equipment for direct air capture (DAC) projects, for around 95% of Canada’s oil sands produc-
50% for equipment in all other carbon capture tion, and they are aiming to bring the emissions
projects and 37.5% for transportation, storage from those operations down to net zero by 2050.
and usage. In a bid to encourage companies to CCUS forms a major part of their initiative,

Canada’s oil sands
producers see CCUS as
playing a major role in
their decarbonisation
targets.

P4 www. NEWSBASE .com Week 15 14•April•2022