Oil and gas companies have asked the Canadian government to design a tax credit to pay 75 percent of the cost of building carbon capture facilities that will reduce greenhouse gas emissions, the leading industry group said Thursday. energy of the country.
The Canadian Association of Petroleum Producers (CAPP) made the request in August to the Department of Finance just before the federal election campaign, setting the tax credit at a high enough level to provide an economic return, Ben Brunnen, Vice President of Petroleum from CAPP Sands, he told Reuters.
Carbon capture facilities are expected to be a key part of global efforts to contain emissions from fossil fuel production. Canada is the fourth largest oil producer in the world and has a goal of generating net zero emissions by 2050.
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Carbon captured from oil and gas operations is less concentrated than from some other large emitters, such as fertilizer plants. That means capture costs are higher per ton for oil companies, Brunnen said.
“Therefore, this (loan) must be designed to create a balance and reflect economic realities,” he said.
“The role of the government should be to provide the playing field to allow companies to make these investments.”
The liberal government of Prime Minister Justin Trudeau began industry consultations in June on the composition of its proposed carbon capture investment tax credit, ahead of last month’s national elections. Trudeau won a third term and discussions are expected to resume before the government ends the loan next year.
A spokesperson for Finance could not be immediately reached.
The Trudeau administration has not said what level of tax credit it is considering. At 75 percent, the Canadian credit would be comparable to the support offered in the United States, once lawmakers sweeten the American tax credit, Brunnen said.
Many environmental groups oppose relying on carbon sequestration to tackle global warming, calling it expensive and as a means of prolonging fossil fuel production.
“We’re talking about an industry that created this problem, that also made billions of dollars in the last 40 years knowing that climate change is a problem,” said Cam Fenton, 350.org Canada team leader.
Although the government views its carbon capture support proposal as a tax credit, CAPP wants it to function more like a grant, with Ottawa reimbursing carbon capture proponents a percentage of their costs as they build the facilities. Brunnen said.
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Canada aims to provide incentives for at least two massive carbon sequestration centers by 2030 and sequester at least 15 million tons of carbon annually in total for that year. Realistically, Canada could advance two projects in the next three years with a combined capacity of 3 million tons of carbon sequestration per year, at a cost of around C $ 3 billion, Brunnen said.
Several companies have stepped up with proposals for carbon sequestration centers in Alberta, including Royal Dutch Shell, TC Energy and a consortium of the five largest Canadian oil producers.
– Reporting by Rod Nickel in Winnipeg, editing by Nick Zieminski and Aurora Ellis.
Reference-globalnews.ca