Incentivizing Large-Scale CCS in Canada, a White Paper, jointly released by RSM Canada and the International CCS Knowledge Centre (Knowledge Centre), identifies venues within the Canadian tax and grant systems to incent large-scale carbon capture and storage (CCS) technology in its pivotal role to create an economically sustainable route to deep emissions cuts.
CCS is identified by the International Energy Agency and the Intergovernmental Panel on Climate Change as critical to achieve global carbon reduction goals and temperature targets.
Given that Canada is not on track to meet its Paris Agreement commitments to reduce its greenhouse gas (GHG) emissions by 30% below 2005 levels by 2030; and given the fact that the Canadian economy has most recently been hampered by impacts of the pandemic, this White Paper highlights pathways in the Canadian tax system that could spur economic growth and boost productivity by supporting industry to kickstart increased CCS deployment – allowing Canada to achieve emissions reductions while aligning with the continued development of the Pan-Canadian Framework on Clean Growth and Climate Change.
Once seen as a leader in CCS technology, Canada has an opportunity to join other governments around the world who are employing a range of policy tools and incentives including tax credits and direct government grants to address roadblocks for CCS. Meeting Paris Agreement targets will require Canada to employ a concerted and near-term effort that has a combination of the right policies, significant investments, and continued innovation in large-scale CCS.
The White Paper shows that the economic impact related to the development of CCS projects is substantial, for example, the construction and development of three CCS projects over four years would generate $2.7 billion in GDP across Canada and support over 6,100 jobs over the construction horizon
The White Paper examines Canada’s climate commitments, its current status in CCS, explores deployment-enabling policy options based on jurisdictional review, and recommends the ideal incentive scenarios for Canada.
Three policy options recommended within the report, include:
Option 1: A refundable capital tax credit provided in advance of construction of CCS facilities to the company who will be capturing their emissions.
Option 2: A tax credit focused on expenditures during the study and design phase of a CCS project that would allow certainty for investment and offset capital costs of construction.
Option 3: A production tax credit, similar to that of the 45Q CCS incentive in the United States, to address competitiveness issues.
MEDIA RELEASE: ‘Incentives for Large-Scale CCS’ are Critical for Climate Action & Economy - White Paper (Released October 29, 2020)
WEBINAR RECORIDING: Incentivizing Large-Scale CCS in Canada (November 18, 2020)
In this webinar following the release of the International CCS Knowledge Centre and RSM Canada's Whitepaper: "Incentivizing Large-Scale CCS In Canada," Beth (Hardy) Valiaho, VP of Strategy & Stakeholder Relations at the International CCS Knowledge Centre & Alex Kotsopoulos, Partner at RSM Canada, discuss Canada’s climate commitments, its current status in CCS, explores deployment-enabling policy options based on jurisdictional review, and recommends the ideal incentive scenarios for Canada. The paper identifies venues within the Canadian tax and grant systems to incent large- scale CCS technology in its pivotal role to create an economically sustainable route to deep emissions cuts. It also shows that the economic impact related to the development of CCS projects is substantial, for example, the construction and development of three CCS projects over four years would generate $2.7 billion in GDP across Canada and support over 6,100 jobs over the construction horizon. For more info, visit: https://bit.ly/Incent-CCS
About the International CCS Knowledge Centre (Knowledge Centre): The International CCS Knowledge Centre (Knowledge Centre) is dedicated to advancing the understanding and use of large-scale carbon capture and storage (CCS) as a means of managing greenhouse (GHG) emissions. Through experience-based guidance, the Knowledge Centre provides the know-how to implement and optimize large-scale CCS projects through the base learnings from both the fully-integrated Boundary Dam CCS Facility, and the comprehensive second-generation CCS study, known as the Shand Study. The Knowledge Centre was founded in 2016 as a non-profit organization by BHP and SaskPower. For more info: https://ccsknowledge.com/
About RSM Canada LLP (RSM): RSM’s purpose is to deliver the power of being understood to our clients, colleagues and communities through world-class audit, tax and consulting services focused on middle market businesses. RSM Canada LLP provides public accounting services and is the Canadian member firm of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries. RSM Canada Consulting LP provides consulting services and is an affiliate of RSM US LLP, a member firm of RSM International. For more information visit rsmcanada.com, like us on Facebook, follow us on Twitter and/or connect with us on LinkedIn. For more info: https://www.rsmcanada.com/
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