By Rod Nickel and Nia Williams
WINNIPEG, Manitoba/CALGARY, Alberta (Reuters) – Canada is pushing to provide incentives for at least two new massive carbon capture projects by 2030, a federal government document showed, with nearly a dozen oil and gas companies already pursuing rights to store carbon dioxide in Alberta’s vast underground caverns.
The hubs to collect carbon from clusters of emitters would advance Prime Minister Justin Trudeau’s goal of cutting carbon emissions by 40-45% from 2005 levels by 2030. The global oil industry is betting heavily that carbon capture utilization and storage (CCUS) can become a multi-billion-dollar global business with government and private investment.
To encourage private investment in CCUS projects, Canada is counting on its carbon price, which is set to rise to C$170 ($134.8) per tonne of carbon by 2030 from C$40, a planned tax credit, and its Clean Fuel Regulation (CFR), which requires lower emissions intensity in fuel.
The cost of building the projects, and their locations, are not yet known.
The two carbon storage hubs would be planned or under construction by 2030, with Canada sequestering at least 15 million tonnes of carbon annually by that year in total, according to the Natural Resources Department’s draft CCUS strategy, obtained by Reuters after it was shared privately in July with industry stakeholders.
“The big takeaway is the federal government is pretty serious about CCUS,” a Calgary oil industry source said.
Canada’s four existing projects, representing 15% of global facilities, currently capture 4 million tonnes per year, according to the Canadian government.
Canadians vote for a new federal government on Sept. 20. On Sunday, Trudeau, whose party is in a tight race with the Conservatives, said he would cut oil and gas sector emissions based on five-year targets starting in 2025.
The Natural Resources Department is doubtful, however, whether its incentives will be enough to stimulate widespread adoption.
“It is not yet clear whether this elevated pricing signal, combined with other federal policies yet to be implemented, such as the CFR and the investment tax credit announced, will be sufficient to drive widespread CCUS adoption,” the federal strategy said.
The government’s doubts highlight challenges such as high costs and complex technology required to capture carbon.
Natural Resources Minister Seamus O’Regan could not be immediately reached.
($1 = 1.2609 Canadian dollars)
(Reporting by Rod Nickel in Winnipeg and Nia Williams in Calgary; Editing by Denny Thomas and David Gregorio)
