OTTAWA – The federal government’s spring economic update today formalizes a pivot in climate policy that was first made in last year’s energy agreement with Alberta.
In the 2025 budget, the Liberals promised to not make enhanced oil recovery eligible for a tax credit for the development of carbon capture and storage systems.
But 10 days after that budget passed the House of Commons it extended that tax credit to enhanced oil recovery projects in its energy memorandum of understanding with Alberta.
Today’s spring economic update proposes make that pledge official, projecting the measure will generate $395 million in federal revenue over the next three years.
Enhanced oil recovery funnels captured carbon emissions back underground to increase pressure and push more oil out of the ground.
Environmentalists see the extension of the tax credits to enhanced oil recovery as a direct subsidy of oil production, while the industry says tax credits are not subsidies and making EOR eligible for them is a game-changer.
The report by The Canadian Press was first published April 28, 2026.