Carbon capture tax credit plan is progress but has a vital flaw: Brad Wall
The former premier of one of Canada’s largest oil-producing provinces said the federal government’s new carbon capture tax credit doesn’t quite live up to its full potential even if it's a step in the right direction to reduce fossil fuel emissions.
Brad Wall, special advisor at Osler Hoskin & Harcourt LLP and former Saskatchewan Premier, said there’s a key industrial process – called enhanced oil recovery – that he wishes the tax credit would be eligible for.
“[The federal government] stopped short of actually giving this quiver all the arrows that it could and, very significantly, that would be enhanced oil recovery,” Wall said in an interview on Thursday.
Enhanced oil recovery is a process used in oil production to make it easier to extract crude from underground.
In its federal budget released this month, the Liberals proposed a much-anticipated tax credit for carbon capture, storage and utilization to help Canada reduce its emissions and meet its climate targets. Companies can receive a 50 per cent tax credit if they invest in various carbon capture equipment and a 37.5 per cent credit for investments in the transportation, storage and usage of carbon.
“Let me say that the 50 per cent tax credit is a step in the right direction,” Wall said.
However, because enhanced oil recovery isn’t eligible for the credit, he added that he thinks “what we're depriving ourselves of, in terms of this new tax credit, is the opportunity for a more rapid and broader base deployment of this technology.”
Carbon capture projects can essentially remove and store carbon dioxide so it’s not released into the atmosphere, and it’s being examined by governments and the energy industry as a way to reduce emissions, though several environmental groups would rather see oil production scaled back altogether.
“My counterpoint would be oil is going to be in demand,” he said.
“As long as it is, Canada should be at the front of that line in supplying it. I think it's actually the responsible thing globally and certainly good for our economy, as well as the benefits of Canada supplying it. So therefore, why not … use your existing [carbon capture] tax credit you've approved in the budget [and] allow it to be deployed in enhanced oil recovery, so you can meet the demand is there anyway, someone's gonna buy it and in a way that's more sustainable.”