WINNIPEG, Manitoba, Oct 7 (Reuters) - Oil and gas companies
have asked the Canadian government to design a tax credit to pay
for 75% of the cost to build carbon capture facilities that will
curb greenhouse gas emissions, the country's main energy
industry group said on Thursday.
The Canadian Association of Petroleum Producers (CAPP) made
the request in August to the Department of Finance just before
the federal election campaign, setting the tax credit at a level
high enough to provide an economic return, Ben Brunnen, CAPP's
Vice-President of Oil Sands, told Reuters.
Carbon capture facilities are expected to be a key part of
global efforts to contain emissions from fossil fuels
production. Canada is the world's fourth-largest oil producer
and has a set a goal of generating net-zero emissions by 2050.
The carbon captured from oil and gas operations is less
concentrated than that of some other large emitters, such as
fertilizer plants. That means that capture costs are higher on a
per tonne basis for oil companies, Brunnen said.
"Because of that, this (credit) needs to be designed to
drive a balance and reflect the economic realities," he said.
"The government role should be providing the playing field to
enable companies to make these investments."
Prime Minister Justin Trudeau's Liberal government began
industry consultations in June on the make-up of its proposed
carbon capture investment tax credit, before the national
election last month. Trudeau won a third term and discussions
are expected to resume before the government finalizes the
credit next year.
A spokesperson for Finance could not be immediately reached.
Trudeau's government has not said what level of tax credit
it is considering. At 75%, the Canadian credit would be
comparable to support offered in the United States, once
lawmakers sweeten the American tax credit, Brunnen said.
Many environmental groups oppose reliance on carbon capture
to address global warming, calling it expensive and a means of
prolonging fossil fuels production.
"We're talking about an industry that created this problem,
that also made billions of dollars over the last 40 years
knowing that climate change is a problem," said Cam Fenton,
Canada team leader for 350.org.
Although the government calls its proposed carbon capture
support a tax credit, CAPP wants it to function more as a grant,
with Ottawa reimbursing carbon capture proponents a percentage
of their costs as they build the facilities, Brunnen said.
Canada aims to provide incentives for at least two massive
carbon capture hubs https://www.reuters.com/world/americas/exclusive-canada-pushes-build-2-new-carbon-capture-hubs-document-2021-08-30
by 2030 and sequester at least 15 million tonnes of carbon
annually in total by that year. Realistically, Canada might
advance two projects in the next three years with combined
capacity for 3 million tonnes of carbon sequestration per year,
costing about C$3 billion, Brunnen said.
Several companies have stepped forward with proposals for
carbon capture hubs in Alberta, including Royal Dutch Shell
, TC Energy and a consortium of the five
biggest Canadian oil producers.
(Reporting by Rod Nickel in Winnipeg
Editing by Nick Zieminski and Aurora Ellis)