The Digital Journal has reported that more than 400 climate scientists and other academics from Canadian universities have sent a letter to the Deputy Prime Minister and Minister of Finance, Chrystia Freeland, urging her not to introduce an investment tax credit for carbon capture, utilisation and storage schemes. The signatories argue that such an incentive would amount to “a substantial new fossil fuel subsidy” (something the government promised to eradicate by 2023), thereby “undermining government efforts to reach net-zero by 2050”. Such a tax credit, perhaps similar to the 45Q scheme in the USA, based on each stored (or utilised) tonne of CO2, would divert funds away from “proven, more cost effective” reductions technologies/investment options such as renewable energies, electrification and energy efficiency. By contrast, the academics describe CCUS as “neither economically sound nor proven at scale, with a terrible track record and limited potential to deliver significant, cost-effective emissions reductions” (though this is taken from a reference that is now six years old). Furthermore, the signatories argue that CCUS in the oil and gas industry does not and will not lower greenhouse gas emissions, as most CCUS in the industry is used for enhanced oil recovery. In addition, they point to safety concerns and the issue of “unverified tons of captured carbon” in the United States, where an Internal Revenue Service investigation found that 87% of claimed credits “were not in compliance with the Environmental Protection Agency”.
Supporters of carbon capture and storage would propose a number of counterarguments. While it is true that CCUS technology has been in development for decades (as the letter claims) and requires policy support to be financially feasible, one could have argued against renewable energies for the same reason. CCUS technology is becoming more efficient and cheaper as development continues. The real question is if CCUS is necessary for net-zero targets. The authors do not propose any alternative technologies for industries other than oil and gas, and in fact argue that if a tax credit is instituted, it should at least not be allowed in the oil and gas sector, an implicit recognition of the relative dearth of alternatives in industries such as cement manufacturing and steelmaking. While 87% of claimed credits in the USA were not found to be compliant with the EPA, more than half of these were disallowed – this perhaps points more to the need for more rigorous and systemic auditing in an incipient industry than a fundamentally unworkable problem. CCUS in the oil and gas industry does have a less clear-cut need, yet this too is debatable. Current high oil and gas prices around the world show that demand is strong and will remain so for years to come (something that Canadian academic Vaclav Smil would agree with), and it is fairly certain that CCUS deployment in the oil and gas industry will help improve the technology for use in other industries. The question for CCUS in the oil and gas industry then becomes: given that oil and gas will continue to be produced and used in large quantities for years to come, would it be better to have facilities equipped with CCUS or not?