Alberta – the heart of the country’s oil and gas industry – is expected to offer more support for carbon capture utilization and storage (CCUS) projects now that the federal government has its incentives in place, the federal natural resources minister told Reuters on Thursday.
CCUS is one of the key technologies Canada is relying on to help reach net-zero emissions by 2050, and industry says additional government incentives are the last piece of the puzzle needed to kickstart the projects.
This week, Canada’s federal budget expanded eligibility for CCUS investment tax credits over the next five years, by adding C$520 million to the C$2.6 billion program laid out in last year’s budget.
Prime Minister Justin Trudeau’s Liberal government and the province of Alberta, however, have been at odds over who should pay to increase funding for CCUS, which industry says is needed because the U.S. is offering much more generous incentives.
Natural Resources Minister Jonathan Wilkinson said he has had many conversations with the Alberta government on CCUS, including one earlier this week, and he hopes to see some of the major CCUS projects launched by end-year.
“They are working through their internal process about what mechanism they may use… But my sense of the government of Alberta is they are fully aware of that and intend to be part of this,” Wilkinson said in a telephone interview from Berlin, where he is meeting officials to advance cooperation on the shift to clean energy.
Alberta’s Premier Danielle Smith, who is facing a May election to stay in power, has said she is open to bolstering CCUS financial support, but she has been highly critical many of Trudeau’s climate policies, including a planned emissions cap for the oil and gas industry.
Canada is the world’s fourth-largest oil producer and the energy sector is the country’s highest-polluting industry and it needs to drastically cut emissions if Canada is to achieve its climate commitments.
Gabrielle Symbalisty, press secretary for Alberta’s Energy Minister Pete Guthrie, said the province is exploring covering eligible capital costs of CCUS by expanding its petrochemical incentive program, and that it would work with the federal government to coordinate federal and provincial incentives.
In an interview with Reuters in January, Trudeau urged Alberta to contribute to CCUS.
The Pathways Alliance, a collaboration between Canada’s six largest oil sands producers targeting net-zero emissions by 2050, is planning to develop a CCUS hub in northern Alberta, expected to cost C$16.5 billion ($12.2 billion) by 2030.
“To advance a project on this scale will require co-investment by federal and provincial governments along with industry,” Pathways’ vice president of external relations, Mark Cameron, said.