Incentivizing Large-Scale CCS

Globally: Necessity of Incentives for Large-scale CCS

For countries to achieve ambitious emissions reduction goals, there needs to be accelerated progress in the commercial-scale deployment of carbon capture, utilization, and storage (CCUS/CCS) across a wide variety of applications. CCS incentives are a key answer to this challenge. Government mechanisms are needed to enable commercial CCS which could include a range of complimentary options such as certainty in CO2 value, a level playing field with alternative low-carbon technologies, and front-end development support to drive down costs and make capital investment competitive.

Already governments around the world are employing a range of policy tools and incentives including tax credits and direct government grants to address roadblocks and challenges to promote CCS projects. In the US, the expanded 45Q tax credit is regarded by many as a game-changer and is the primary reason for the significant increase in CCS deployment; while the European Union focuses more on direct government grants, including preferential loans rather than tax credits. In Canada avenues such as tax incentives, value streams, and business cases to support successful deployment are all being considered.

In Canada: CCS Tax Incentive in Development / Consultation

As consultations for capital invested in carbon capture, utilization, and storage (CCUS/CCS) projects in Canada’s Budget 2021 continues, a silence was observed in the budget on the provision for a Front-End Engineering and Design (FEED) study in the completion of a CCS project. With this, a briefing document that describes why CCS projects NEED a FEED study has been prepared by the International CCS Knowledge Centre (Knowledge Centre). This is a compendium to the messaging guide for industry organizations participating in Canada’s budget consultation period. 

See News Release: Department of Finance launches consultations on investment tax credit for carbon capture, utilization, and storage – June 7, 2021) on the recent federal budget’s proposal to introduce a new investment tax credit for capital invested in carbon capture, utilization, and storage (CCUS) projects. The consultation period will be open until September 7, 2021.

As CCUS/CCS is identified to be a critical part of Canada’s plans to get to net-zero in emission targets, the International CCS Knowledge Centre has prepared a number of supporting documents, including messaging to support industry’s participation in the consultation process: