Canada should follow the example set by the Inflation Reduction Act, which motivates US energy companies to adopt carbon-reduction technology with generous credits rather than emissions caps, according to an Enbridge executive.
The legislation passed last month offers nearly $370 billion to address climate change with grants and tax credits for more renewable fuel and power development. Long sought by the Biden administration, the law passed last month after West Virginia’s holdout Democrat Senator Joe Manchin brokered a compromise that made it more palatable to the oil industry by tying renewable projects on federal land and water to more drilling leases.
“That’s a lot of carrot and I think it’s going to help accelerate their advancement toward an important goal,” Colin Gruending, Enbridge’s president of liquids pipelines, said in an interview in Calgary Tuesday. “Canada has done a good job of providing tax credits but there can be more here to level the playing field.”
Canada wants to reduce emissions by 42 per cent by 2030 and is primarily focused on reaching that goal by making the oil industry cleaner. Canadian crude produced from oilsands is among the most carbon intensive in the world. The government is offering 50 per cent tax credits for projects that would store carbon emissions underground. Many affiliated with the energy industry say the reduction target is too ambitious and could strain the oil patch labor force.
“We all want to strive for targets that are inspiring but I think a dose of realism would be good,” Gruending said on a panel at the Energy Disrupters conference.
The credits are expected to cost taxpayers C$2.6 billion ($1.9 billion) during the first five years.
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