Canada Alberta's UCP government 'pleased' with federal budget's carbon capture tax credit

05:40  08 april  2022
05:40  08 april  2022 Source:   edmontonjournal.com

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Finance Minister Travis Toews. © Chris Schwarz/Government of Alberta Finance Minister Travis Toews.

Alberta’s UCP government says it’s encouraged by Ottawa’s offer to cover half the cost of new carbon capture technology to cut down greenhouse gas emissions.

Federal Finance Minister Chrystia Freeland introduced the 2022 budget Thursday , which includes a proposed $2.6 billion tax credit over five years for companies that invest in carbon capture utilization and storage (CCUS), representing the single biggest new climate change initiative in the budget.

It will cover 50 per cent of the cost of equipment to capture and store carbon dioxide beginning this year, but enhanced oil recovery projects that use pressurized carbon dioxide to extract more oil or gas won’t be eligible.

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The credit is aimed at getting investors to act quickly, with rates set to be cut in half starting in 2031.

Alberta’s Finance Minister Travis Toews said in an interview with Postmedia Thursday the government is “pleased” to see the measure, but disappointed enhanced oil recovery projects weren’t included.

“That’s very, very expensive technology, and the federal government has come forward with very, very aggressive timelines and emission reduction targets, and we really believe this (tax credit) needed to be calibrated appropriately and accordingly,” said Toews, adding the provincial government needs to do more analysis to understand how well proposed credits, varying from 37.5 per cent to 60 per cent, will work for different types of equipment costs.

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Alberta has leaned heavily into investing in CCUS technology to tackle its emissions, and federal credits of up to 75 per cent have been called for by some industry proponents. In late March , Prime Minister Justin Trudeau’s Liberals announced a goal of reducing emissions more than 40 per cent below 2005 levels by 2030 — a target that would need to see the oil and gas sector cut its emissions by 42 per cent.

Kendall Dilling, interim director of the Oil Sands Pathways to Net Zero initiative, an alliance of six major oil producers, welcomed the CCUS credit in a statement Thursday.

“The federal government has recognized the importance of developing new technologies to help Canada fight climate change, as well as the importance of the oilsands to our country’s energy security,” said Dilling.

However, environmentalist groups said the move undermines climate investments and delays Trudeau’s commitment to eliminate fossil fuel subsidies.

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“Today’s budget includes positive investments in climate action, but there’s an inherent contradiction in offering a giant tax credit to the very companies fuelling the climate crisis,” David Suzuki Foundation climate director Sabaa Khan said in a Thursday news release.

Eddy Pérez at Climate Action Network Canada said it’s clear Canada “still intends to keep the fossil fuel industry in the driver’s seat by giving them expensive tax credits instead of using those funds to invest in a safe, sustainable future.”

At a news conference at the Manitoba legislature Thursday, NDP Leader Rachel Notley said the fiscal plan doesn’t offer much-needed support for workers affected by a transition to a low-carbon economy.

“You cannot have a single solitary emissions target that is not also paired with a jobs target,” she said.

The Liberals have promised a $2 billion Futures Fund towards skills development and retraining to help gear up energy workers for jobs in green technology, but the government is still in consultations on its Just Transition plan.

Mike Holden, chief economist at the Business Council of Alberta, told Postmedia the CCUS tax credit is positive, but the budget is silent on addressing the regulatory burden for projects that are needed to reach climate change goals, from liquid natural gas pipelines to hydrogen infrastructure.

“You want to build to get shovels in the ground as quickly as possible and (if) it takes a minimum of five years to open up a new lithium mine, it’s gonna be tough to build new batteries,” he said.

— With files from Jason Herring and Catherine Lévesque



Mandryk: Moe criticizes federal budget for same thing his government is doing .
Premier Scott Moe bitterly complained Thursday of an arrogant and out-of-touch higher level of government heaping unjustifiable taxes on a lower jurisdiction while remaining oblivious to funding shortfalls for badly needed programs. Of course, the Saskatchewan premier was talking about the “dreaded federal carbon tax ” hammering us each and every time we fill up. If only we could fuel vehicles in this province on the inexhaustible and ever-renewable supply of hypocrisy our politics pumps out.

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This is interesting!