The International CCS Knowledge Centre applauds the Canadian government in taking serious climate action through the inclusion of carbon capture and storage (CCS/CCUS) in Budget 2021

Analysis by the International Energy Agency has determined that deployment of carbon capture technology is critical to achieve mid-century global carbon reduction goals and temperature targets. Currently, Canada is not on track to meet its Paris Agreement targets to reduce its greenhouse gas (GHG) emissions by 30% below 2005 levels by 2030.
For Canada to achieve these substantial emissions reduction commitments, a combination of the right policies, significant investments in clean energy and greening of industrial processes, and continued innovation in all areas including large-scale CCS/CCUS are essential. It is important that there are value streams and business cases to support successful deployment of CCS/CCUS – and that they tie into sustainability and environmental policies. 

With Budget 2021’s proposal to introduce an investment tax credit for capital invested in CCS/CCUS projects -with a target to see a cut in emissions by at least 15 megatonnes of carbon dioxide per year - signals an important step toward making major strides in both emissions reductions and capitalizing on Canadian expertise.

Canada’s record as a large-scale CCS/CCUS leader dates back to 1999 and the country’s expertise continues to advance second-generation CCS/CCUS accelerating its progress in the commercial-scale deployment of CCS/CCUS across a wide variety of applications. In fact, Alberta and Saskatchewan continue to lead the world in CCS/CCUS by the creation of new ‘hubs’ where carbon captured from high-emitting facilities can be efficiently captured, transported, stored, or used.

Yet, as there still remains a need for kickstart incentives, it is encouraging to see in Budget 2021 the provision of $319 million over seven years, (starting this year) to support research, development, and demonstrations that will improve the commercial viability of carbon capture, utilization, and storage technologies.

Tax credits have a history of acting as effective environmental levers. Canadian companies realize that while government mechanisms are needed, it is imperative for sectors to transition from a reliance solely on grants to industry uptake. However, in the near term, government support remains crucial. This coupled with policy certainty is a necessary next step to aid in the cost hurdles of deployment until costs are reduced with scalable iterations.

The benefits of deploying CCS are substantial for the country. As underscored in Budget 2021, CCS/CCUS is the only currently available technology with the potential to generate negative emissions. Investment in the CCS/CCUS will help Canada achieve net-zero emissions by 2050. 

Aside from helping Canada achieve its ambitious emissions reductions targets, CCS/CCUS technology plays a vital part in creating an economically sustainable route to deep emissions cuts. Deployment of large-scale CCS/CCUS has the ability to spur economic growth, boost productivity, and support the diversification of Canada’s economy. At a time of building back better, the economic impact related to the development of CCUS projects is substantial. As noted, in the White Paper – Incentivizing Large-Scale CCS in Canada, the construction and development of just three large-scale CCS projects would generate $2.7B in GDP across the country and support over 6,100 jobs over the construction horizon. With 15Mt targeted to be reduced, this number could increase 3-fold.

At the International CCS Knowledge Centre, we look forward to participating in the consultation period with stakeholders on the design of the investment tax credit and its rate.