With a windfall from Ottawa comes great climate expectations for the oilpatch
CBC
For more than a decade, the oilpatch has pitched a particular solution to its problem of being the largest source of carbon emissions in the country — to bury them.
There are many ways the industry is trying to tackle its greenhouse gas woes, but the tool with the most potential is carbon capture and storage technology, which collects the carbon dioxide and stores it deep underground.
A few of the projects already exist in Saskatchewan and Alberta, with some facilities more successful than others.
As the need for the world to act on climate change grows, and the pressure on the oilpatch mounts, the industry has increasingly pushed for more government support to develop, construct and scale up carbon capture and storage (CCS).
The federal government came to the table on Thursday, pledging immediate and long-term financial support for CCS in the budget.
It's not a big-ticket expense for the government in the next few years, but it will escalate as construction gets underway on the plethora of proposed facilities. Beginning in 2026, the tax credit is expected to cost $1.5 billion annually.
Attached to the funding, though, comes a stiff warning from the federal government for the sector not to drag its feet but, instead, to turn talk into action and deliver on its promises — and quickly.
It's as if Ottawa just called the industry's bet.
Ottawa has funded various projects to reduce emissions in the oilpatch over the past few years, but the federal budget included the most ambitious initiative yet with its new investment tax credit.
The federal government is pledging to cover 60 per cent of equipment used in direct air capture projects and 50 per cent if the emissions come from an industrial facility. The tax credit also covers 37.5 per cent of other eligible equipment used for transport and storing the carbon dioxide.
"It's about jump-starting a critical technology and getting the development going at scale to hit our targets for 2030," said Kevin Birn, vice president of greenhouse gas emissions co-ordination at S&P Global.
Some companies collect their emissions and pump the gases into oilfields to boost production, which is known as enhanced oil recovery. The government won't give any tax credits toward that use, which some in the industry aren't pleased about.
However, the government is keeping the door open for supporting the use of captured emissions to be used in concrete.
The federal government gave other support to the oilpatch in Thursday's budget by pledging $120.6 million over five years toward developing small modular nuclear reactors, which could provide low-emission electricity to many industries.
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