(Bloomberg) -- The Canadian federal government’s proposed tax credits to support carbon capture projects already are “robust” and probably won’t be increased, the country’s natural resources minister said.
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The federal government has offered oil-sands industry 50% tax credits for the cost of building carbon capture and storage plants, and talks are underway with Alberta’s provincial government over additional support. Oil-sands producers are waiting to learn what kinds of federal and provincial help they will receive before greenlighting construction of a C$16 billion ($12 billion) carbon capture system aimed at helping slash 22 million metric tons of emissions by 2030.
“The investment tax credits are pretty robust,” Jonathan Wilkinson, Canada’s natural resources minister, said in Calgary on Thursday. “They actually cover a significant portion of the capital cost of these projects. I don’t think we’re looking at actually augmenting that.”
An oil-sands producers group called the Pathways Alliance has warned that it needs to know this year what federal and provincial support it will receive in order to start buying materials for a carbon dioxide pipeline early next year. Without secure support, deadlines for slashing emissions could be missed, the group has said. The industry has been shunned by some investors for producing some of the world’s highest-emitting grades of crude.
Alberta Premier Danielle Smith said last month that the provincial government would announce its own credit program, along with the federal plan, at the United Nations climate conference in Dubai in November.
A major hurdle for the industry is determining which level of government will underwrite contracts, called contracts for difference, that would guarantee a minimum carbon price needed to make the project financially viable.
Discussions about those contracts are ongoing, “but we certainly hope to be in a position to actually have something to say with Alberta and Pathways in the near term,” Wilkinson said.
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