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Canada’s federal government will introduce investment tax credits for carbon capture, utilization, and storage (CCUS) and clean technology manufacturing as it aims to compete globally in clean tech and reduce its greenhouse gas emissions.
“As an important pillar of Canada’s clean economy jobs plan, the government is focused on implementing, on a priority basis, the new clean economy investment tax credits for carbon capture, utilization, and storage; clean technology adoption; clean hydrogen; clean technology manufacturing; and clean electricity,” the federal government said in the Fall Economic Statement this week.
The government aims to introduce legislation on CCUS in Parliament this fall.
Moreover, the 2023 Fall Economic Statement announced that the Canada Growth Fund would be the principal federal entity issuing carbon contracts for difference. The Canada Growth Fund will allocate, on a priority basis, up to US$5.1 billion (C$7 billion) of its current US$11 billion (C$15 billion) in capital to issue all forms of contracts for difference and offtake agreements.
The introduction of investment tax credits for CCUS is welcome news for Canadian energy companies, which have been waiting for months for details about the promised incentives for clean energy technologies.
Earlier this year, a large CCS project in Canada’s oil sands was said to be struggling to obtain a contract for difference that would guarantee its developers a minimum carbon price.
The Pathways Alliance, which includes six of the largest oil and gas companies in Canada – Canadian Natural, Cenovus Energy, ConocoPhillips Canada, Imperial, MEG Energy, and Suncor – has proposed a network that would transport and store captured CO2 from oil sands facilities and could expand to serve facilities from other industries in the region.
Commenting on the upcoming legislation on the Carbon Capture Utilization and Storage Investment Tax Credit, Lisa Baiton, president and CEO of the Canadian Association of Petroleum Producers (CAPP), said in a statement,
“The CCUS ITC as well as additional resources for carbon contracts for differences are critical pieces needed for carbon capture projects to proceed and if it is competitive with other jurisdictions, it has the potential to unlock significant private sector investment.”
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.