Panelists: Canadian Federal Government’s CCUS Incentive Falls Short

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Edmonton — The carbon capture utilization and storage (CCUS) tax credit in this year’s federal budget is missing key components, say members of a recent panel.

This incentive incorporates 60 per cent for direct air capture, 50 per cent for point source capture and 37.5 per cent transportation, storage, and use.

Heather Campbell, executive director, clean technology, Alberta Innovates, said this criteria overlooks other valuable phases of a lengthy process.

“That investment tax credit excludes feasibility studies and pre-feasibility studies,” she said. “That, for me, personally, is a little bit disappointing.”

Campbell was a participant on a panel dubbed Supporting Canada’s Carbon Opportunity at the Carbon Capture Canada convention in Edmonton on Sept. 20. She was joined by Lisa Tebbutt, director of business development at Wolf Midstream, and Candice Paton, executive director, regulatory affairs and external relations at Enhance Energy. Paton is also the chair of Carbon Capture Canada.

Without the feasibility and pre-feasibility steps, said Campbell, the tax credit “fails to acknowledge that long development path for the commercialization of CCUS as a project.

“It disrespects that project life cycle a bit,” she added. “That early stage CCUS research and innovation is so fundamental and contributes so much to those early-stage projects and their ability to actually capture tangible quantities of CO2.”

Gains in this area can influence other sectors seen as potential contributors to a low carbon future. Campbell drew a line to hydrogen production in Alberta, which she said is meant to occur with the enablement of CCUS.

“That CCUS investment tax credit has the potential to actually stimulate CCUS investment which would then stimulate hydrogen development and low-carbon hydrogen development,” she added. “This is another piece of thinking about policy framework … and realizing the web of connectivity and the complexity of this space.”

Paton singled out enhanced oil recovery (EOR) as another miss in this year’s budget.

“It is a disappointing circumstance for Canada … at the end of the day, we have to put all of these tools to work to get our emissions reduced quickly,” she added. “I think, when we are talking about permanent sequestration, if you’ve got it going into enhanced oil recovery, you’ve got permanent sequestration, if you’ve got it going into saline, you’ve got permanent sequestration.

“I think, when we’ve got tools like this, we need to think about how they work together,” she added. “What helps us achieve our goals at the lowest cost, and [is] most effective, and at the most rapid pace that we can.”

Paton highlighted the recent spike in support for CCUS advancement in the United States. Modifications to the 45Q tax credit through the Inflation Reduction Act include improved incentives, such as credit hikes of $35 to $60 per metric ton of CO2 for EOR, and $50 to $85 per metric ton of CO2 stored through secure geological storage.

“I think the projects in the United States are just going like gangbusters,” said Paton. “It’s exciting to see down there, the momentum they have … to come to the U.S. and pilot and test these technologies and put all of these pieces to work is tremendous. We don’t want to fall behind in Canada, we want to keep the momentum going.”

Tebbutt said there are risks continuing to circle CCUS. Wolf along with Whitecap Resources Inc. and their First Nations partners were among the six project proponents to this year win approval from the Alberta government to advance evaluations and plans to construct potential CCUS hubs.

“We are moving ahead very quickly,” said Tebbutt. “We recognize very much there is still uncertainty around the sequestration part of this CCUS puzzle and this … storage part of the puzzle.”

An evaluation well is expected to be drilled by the end of this year, along with the collection of site-specific data and reservoir testing. The targeted timeline for a commercial in-service date is the end of 2024.

“In just over two years we are going to have an open-access operational sequestration hub,” Tebbutt said. “That’s a huge risk reduction mechanism for emitters. For facilities that are planning an in-service date of 2027 or 2030 to have an operational project that you can count on to store your CO2, it’s fantastic.”

Speaking to other CCUS proponents and those working across the value chain, she added, “Every project we do, whether it’s small, whether it’s large, it really helps decrease the risk for the next project, or decreases the risk for a different project along the value chain.

“As we continue to decrease the risk, we will see more of these projects move forward.”

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