Canadian scientists urge rejection of carbon capture tax credit

Gas pumps Source; iStock

Canada’s plans to introduce a tax credit for carbon capture in the country’s oil patch would amount to a fossil fuel subsidy for an ineffective technology, a group of academics said in a letter to the deputy prime minister.

Carbon capture, where the carbon dioxide from oil and gas production facilities is sequestered and injected back into the ground, is economically unsound and has a “terrible track record” of delivering emissions reductions, the Canadian academics and scientists said in their letter to Chrystia Freeland. The money would amount to a subsidy for the fossil fuel industry that would be better spent on renewable energy, electrification, and energy efficiency. 

“The introduction of this tax credit would contradict the promise made by your government to Canadians during the election period to eliminate fossil fuel subsidies by 2023 as well as our international commitments under the Paris Agreement,” the group said in the letter.

The federal government will probably include the tax credit in the next budget and detail the goal to cut emissions 40 per cent to 45 per cent below 2005 levels by March, Jonathan Wilkinson, Canada’s natural resource minister, said in an interview this month. Oilsands companies have announced a goal to zero out carbon emissions from their operations by 2050, mostly through carbon capture with government support, as their carbon intensive business faces increasing scrutiny from climate-conscious investors. 

Such efforts would have little impact on the crude oil they produce and ship to refineries for making fuel. The combustion of fuel accounts for 80 per cent of emissions stemming from oil and gas, which the industry’s plan doesn’t address, Jason MacLean, a University of New Brunswick law professor who co-signed the letter, said by phone.

“The danger of using further public money to support oil and gas production is that it will prolong and expand oil and gas production,” he said. What’s more, if oil consumption plummets as the world moves aggressively to decarbonize, the investment in carbon capture infrastructure could create “stranded assets” as oil production in Canada declines. 

© 2022 Bloomberg L.P.

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