What On Earth

New tax credit for carbon capture will only delay climate action, warns environmental advocate

The federal government’s new carbon capture tax credit will delay Canada’s progress on climate action, extending our production of fossil fuels, says an environmental advocate.

The federal government spends big on carbon capture, but is it a climate win?

Carbon capture and storage technology collects the carbon dioxide and stores it deep underground. A handful of these projects already exist in Alberta, including the Quest facility, which is located at Shell's Scotford complex northeast of Edmonton. (Kyle Bakx/CBC)

The federal government's new carbon capture tax credit will delay Canada's progress on climate action, extending our production of fossil fuels, says an environmental advocate.

"It's good news for the fossil fuel lobbyists whose activities are fuelling the climate catastrophe," Julia Levin, senior climate and energy program manager at the non-profit group Environmental Defence, told What On Earth host Laura Lynch.

As part of its 2022 budget revealed on Thursday, the government has promised up to $10 billion and counting to support carbon capture projects — including proposals from the oil and gas industry — with climate-specific spending totalling $9.1 billion.

The investment tax credit would reimburse carbon capture projects that grab pollution at the source to prevent new emissions by up to 50 per cent. Successful projects that remove carbon dioxide from the atmosphere, reducing existing pollution, would be reimbursed up to 60 per cent.

Currently, most of the captured carbon dioxide in Canada is used in a decades-old process called enhanced oil recovery, where CO2 is pushed into an oil or gas reservoir to scrub out more fossil fuels. While that process is excluded from the credit, fossil fuel companies are still eligible to apply.

While Levin says she's pleased enhanced oil recovery is "off the table," she notes it would be hard to enforce how captured carbon dioxide is used in the future.

Michael Bernstein is the executive director of Clean Prosperity. The group's website describes it as 'a Canadian non-profit that works toward market-based solutions to the climate crisis.' (Clean Prosperity)

For Michael Bernstein, executive director of non-profit group Clean Prosperity, the move to include the oil and gas sector makes sense.

"If the oil and gas sector has projects that will reduce those greenhouse gas emissions and the government believes that those are sensible investments, I don't see why we would exclude those," he said.

In January, 400 academics signed a letter to Finance Minister Chrystia Freeland urging the exclusion of the oil and gas sector from the credit. In March, Environmental Defence published a report outlining concerns about the use of the tax credit to extend the life of oil and gas production in Canada.

Levin doesn't oppose fossil fuel companies building carbon capture to reduce the emissions-intensity of oil and gas production. But she says the responsibility to pay for that should be up to industry.

She also argued the federal government could put a cap on greenhouse gas emissions from the oil and gas industry, then allow companies to figure out how to meet those limits.

"Taxpayers' … dollars should not be on the line to subsidize the most profitable sector in the country and one that's fuelling the climate crisis," she said.

Julia Levin is senior climate and energy program manager at the non-profit group Environmental Defence. (Submitted by Julia Levin)

Bernstein sees the financial reward of the investment tax credit as a way for Canada to continue its production of fossil fuels for now. He cautions that all approved projects need to meet their promises of capturing or removing carbon dioxide.

However, the details on how the government will monitor or enforce that are "a bit thin," he said.

Our track record is, time and time again, letting oil and gas companies off the hook.- Julia Levin, Environmental Defence

"I can tell you from talking to officials within the finance department that they are committed to actually clawing back money … to take the money that they've invested in these projects away from the companies if they don't fulfil the promises they've made," said Bernstein.

For Levin, Canada's track record of holding oil and gas companies accountable on environmental rules doesn't give her confidence it will be any different with carbon capture.

"Our track record is, time and time again, letting oil and gas companies off the hook," she said.

Against the backdrop of the latest United Nations climate report and a stark warning from UN Secretary General Antonio Guterres calling "new fossil fuel infrastructure is moral and economic madness," Levin hoped for more investment in renewable energy. 

According to a report by Environmental Defence, between 2018 and 2020 the federal government spent 14 times more money on financing the fossil fuel sector than it did on renewables like wind and solar. 

"That ratio's not okay," said Levin. 

WATCH | Liberals promise lower deficits as billions earmarked for housing, climate change

Liberals promise lower deficits as billions earmarked for housing, climate change

3 months ago
Duration 2:31
Finance Minister Chrystia Freeland’s second federal budget came with a promise of more fiscal restraint, acknowledging the government’s ability to spend is ‘not infinite.’ In the budget, billions of dollars have been allocated to tackle housing affordability and climate change.

The latest budget lumps all climate spending together; including money for retrofits, grid electrification, zero-emissions vehicles, agriculture initiatives and more. Within that spending, $600 million is allocated to "smart renewables and electrification," and another $2.2 billion toward the "low carbon economy fund" which includes the development of renewable energy. 

"It does concern me to some degree," said Bernstein of the discrepancy between climate spending and carbon capture spending. 

"There is a lot more money that is going to be needed for many other technologies, whether that's wind or solar or hydrogen electric vehicles," said Bernstein. 

The investment tax credit is "a step in the right direction" for what he thinks could be an industry dedicated to "carbon management," he said. 

Other industries are poised to benefit from the investment tax credit, including cement, steel and chemical production — all processes which produce greenhouse gasses. New projects designed to remove carbon dioxide from the atmosphere will also be eligible. According to Levin, all of these initiatives already have funding available from the federal government. 

"This tax credit is about a giant new subsidy to oil and gas companies. It's not about those other sectors," she said.

Written and produced by Molly Segal.


  • A previous version of this story attributed the pull quote to the incorrect guest.
    Apr 11, 2022 11:05 AM ET

Add some “good” to your morning and evening.

A variety of newsletters you'll love, delivered straight to you.

Sign up now


To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.

Become a CBC Member

Join the conversation  Create account

Already have an account?