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Varcoe: Alberta companies anticipate new federal particulars to spur billions in carbon seize initiatives

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Billions of {dollars} of proposed CCUS initiatives within the province have been introduced over the previous three years however the potential to use for a federal tax credit score has been gradual to crystalize.

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Alberta companies looking for to decarbonize their operations via billion-dollar carbon seize and storage initiatives ought to lastly see a payoff for his or her endurance.

Greater than two years after first unveiling its plans for a federal funding tax credit score for carbon seize, utilization and storage developments, the Trudeau authorities is anticipated Tuesday to maneuver forward with incentives for such initiatives.

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As a part of the autumn financial assertion, federal Finance Minister Chrystia Freeland will launch particulars on the long-awaited funding tax credit score for CCUS and proceed with required laws to begin paying incentives for eligible initiatives, a supply instructed Reuters.

In Alberta, a number of corporations, business teams, and the provincial authorities expect extra particular data to be launched on federal incentives for such developments, which seize carbon emissions after which retailer them deep underground.

Billions of {dollars} of proposed CCUS initiatives tied to petrochemical services, oilsands crops and power-generating services within the province have been introduced over the previous three years.

Turning these proposals into actuality will likely be vital for decarbonizing key industries and creating jobs within the province, because the nation strives to achieve net-zero emissions by 2050.

But, the power to use for the funding tax credit score has been gradual to return to fruition.

Chrystia Freeland
Federal Finance Minister Chrystia Freeland at a press convention in Ottawa on Oct. 5, 2023. Tony Caldwell/Postmedia file

“We’re monitoring not less than a dozen — most likely now greater than 15 — proposed petrochemical investments within the province of Alberta and practically each a type of will contain (CCUS) actions,” Bob Masterson, CEO of the Chemistry Business Affiliation of Canada, mentioned Monday.

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“It’s going to want some help.”

Initially proposed within the 2021 federal price range, the Trudeau authorities later introduced in its April 2022 price range that the brand new funding tax credit score could be set at 50 per cent for spending on gear that’s wanted to seize CO2.

A 37.5 per cent credit score could be supplied for investments in gear utilized in transportation and storage for such developments.

“It’s actually necessary for the vitality business in Canada as a result of it extends the lifetime of Canada’s largest industrial sector and maintains our competitiveness over the long run,” mentioned Scott Crockatt with the Enterprise Council of Alberta.

“What we actually have to see is the {dollars} flowing to get the information on the bottom and it feels like that’s what we’re going to see.”

A number of big-ticket initiatives are already being examined. Capital Energy is engaged on a proposed $2.3-billion carbon seize and storage improvement close to its Genesee Producing Station.

Dow Inc. has proposed constructing the world’s first net-zero carbon emissions ethylene cracker and derivatives advanced at Fort Saskatchewan, which may doubtlessly price $10 billion to develop. Captured carbon dioxide could be sequestered off-site.

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A gaggle of six main oilsands producers — the Pathways Alliance — needs to construct a $16.5-billion carbon seize community within the province, with a CO2 trunk line connecting oilsands services to an underground storage hub close to Chilly Lake.

Shell Canada has proposed a large-scale CCUS venture close to Edmonton, capturing carbon dioxide from the Scotford refinery and chemical compounds plant advanced.

Nonetheless, few initiatives have acquired the inexperienced gentle as corporations have been ready for closing funding tax credit score program particulars and essential federal funding to again it up.

Whereas the province has been working by itself CCUS incentive bundle, the Alberta authorities has expressed frustration with the Liberal authorities for dragging its ft on its program.

“We hope Ottawa lastly follows via on these commitments with particulars and a program that business can instantly entry,” Alberta Vitality Minister Brian Jean mentioned in a press release.

“Personal business is ready for the federal authorities to behave.”

Companies have additionally been intently watching because the Biden administration assembled an aggressive incentive bundle with its U.S. Inflation Discount Act final yr, sparking considerations that funding {dollars} in decarbonization ventures will circulate south of the border.

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Business leaders are additionally ready to see if Ottawa will set up a contract that may lock in a nationwide carbon value into the long run, offering extra certainty for long-term investments.

Tristan Goodman
Tristan Goodman, president of the Explorers and Producers Affiliation of Canada (EPAC), speaks through the Canadian Affiliation of Vitality Contractors 2023 drilling forecast luncheon on the Westin Calgary on November 23, 2022. Gavin Younger/Postmedia file

“There’s no query that we actually now want these particulars,” mentioned Tristan Goodman, president of the Explorers and Producers Affiliation of Canada.

“We have to know the small print of precisely when it’s carried out, who would even have entry to this, and what are the monetary circumstances related to it.”

The Worldwide Vitality Company notes that greater than 500 proposed CCUS services are in varied levels of improvement.

Carbon seize, electrification and methane discount are three of the important thing alternatives for the oil and fuel sector to considerably reduce emissions over the following 5 to 10 years, Goodman mentioned.

Canada’s oil and fuel sector generated about 28 per cent of all emissions within the nation in 2021.

Ian Nieboer, managing director of vitality transition analysis at consultancy Enverus, mentioned CCUS expertise is critically necessary for the business, each in Canada and internationally, to decarbonize.

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Corporations want certainty round authorities guidelines and incentives earlier than they will make closing funding choices.

“Within the absence of readability, folks can speak recreation and get enthusiastic about what they could do,” he mentioned.

“Nevertheless it’s very laborious to speak about what they’ll do and make these commitments (with out readability). Crossing the following bridge … is a extremely huge deal.”

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Premier Danielle Smith mentioned final month her authorities expects to roll out its personal incentive bundle for CCUS on the COP28 local weather summit, which begins on Nov. 30.

The premier just lately pointed to the present Alberta Petrochemicals Incentive Program (APIP), which presents grants value 12 per cent of a venture’s eligible capital prices, as a possible mannequin for a brand new carbon seize and storage help bundle.

“If it goes forward the best way it’s been mentioned, I’m envisioning one thing that might price — if it’s just like APIP … it doubtlessly might be between $3 (billion) and $5 billion, say over 10 years to Alberta,” Finance Minister Nate Horner mentioned Friday.

“The feds are going to must put their {dollars} in earlier than Alberta will spend any.”

Chris Varcoe is a Calgary Herald columnist.

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