Exclusive-Ottawa vs. Alberta: Who must pay to lift Canada’s carbon capture credits? By Stocksak


© Stocksak. FILE PHOTO – A tanker truck that transports oil products is seen at Brooks, Alberta, Canada, April 18, 2018. REUTERS/Todd Korol


By Steve Scherer & Nia Williams

OTTAWA (Stocksak), Canada’s federal government and Alberta, the main oil-producing province in Canada, are at odds over who should pay for tax credits to increase and scale up a critical technology that will help the country achieve its net-zero emission goal. Two sources familiar with the matter told Stocksak.

After the United States passed Inflation Reduction Act in August, which included large tax credits to develop carbon storage and capture (CCS) there (CCS), the Canadian oil-and-gas industry sought an increase to the promised April federal budget.

The sources claim that Prime Minister Justin Trudeau’s Government has instructed oil and gas companies to look at the government of Alberta, saying that it has yet to do its share.

CCS is becoming a key pillar in the fight against global climate change and carbon pollution. Canadian oil and natural gas industry wants equal playing fields as Ottawa targets net zero emission by 2050, the same goal set forth by Joe Biden, the U.S. president.

Canada has the third-largest oil reserve in the world and is the fifth largest producer of. The industry believes it needs more government rebates to scale up CCS technology.

Canada estimates that it will spend C$2.6 billion ($1.9B) on tax credits in the first five year, and C$1.5 billion annually through 2030.

“We’ve done a lot… “We’ve given a lot…

Canada’s most polluting industry, oil and gas is also a major employer and contributor to the national GDP. CCS supporters argue that it is essential to keep the western oil patch working while allowing Canada to fulfill its commitment to reduce carbon emissions.

“We’ve ponied-up big time,” said another senior source on Friday. “The province can also play a role in this… They can be fully partners in this.”

Both sources were not authorized for speaking on the record.


The province reacted by hitting back at the federal government.

“We are strongly urging Ottawa to expand the proposed investment tax credit to meet or exceed the Inflation Reduction Act – otherwise, carbon capture investments will be drawn south of the border,” Alberta Energy ministry spokesperson Alex Puddifant said.

Puddifant stated that the province has already “invested” or committed C$1.8 billion ($1.3 million) to CCS development. The province and oil and gas companies have not yet disclosed how much additional spending is required.

Over the past decade, Alberta’s government has invested in infrastructure, including the Quest carbon-capture project, operated jointly by Shell (LON), and the Alberta Carbon Trunk Line.

Canada welcomes the IRA’s introduction. It puts the United States on a track to the green transition and doesn’t penalize Canada with consumer tax credits for electric vehicles only for American carmakers as originally announced.

Chrystia Freiland, Finance Minister, said this week she would look to boost incentives in some areas – without naming which ones – to help the industry scale up clean technologies to level the playing field against the United States.

Alberta selected six proposals to proceed with the development of a carbon storage center near Edmonton in March. It released a list earlier this month of 19 other projects that were selected to explore potential storage hubs. One was by the Oilsands Pathways Alliance (NYSE:) Resources Ltd. The Oilsands Pathways Alliance (NYSE:) Energy (NYSE:).

“We continue having discussions with both the federal and provincial governments regarding the level of financial support necessary to kickstart major CCS Investment in Canada,” Mark Cameron, vice president for external relations at Pathways Alliance, said.

He said that the United States offers financial incentives that are more generous than those in Canada to fund major CCS projects.

($1 = 1.3663 Canadian dollars)

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