CALGARY — The federal government’s proposal to subsidize billion-dollar carbon-capture and -storage projects is reigniting long-standing divisions around the controversial technology, potentially undermining Ottawa’s hopes that Canadian taxpayers will be willing to foot the bill. 

The Liberals have pinned much of their net-zero climate efforts on carbon-capture, -utilization and -storage (CCUS) technology, with plans to sequester 15 million tonnes of pollutants per year by 2030, up from around four million tonnes today. Last June, the government launched consultations on a major investment tax credit for CCUS projects, expected to be unveiled in the next federal budget.

CCUS, which involves injecting pollutants deep into underground reservoirs or converting them into other products, also lies at the core of major oil-sands producers’ plans to reduce their on-site emissions to net zero by 2050.

But developing CCUS will come at enormous cost, leading some academics, scientists and taxpayer groups to raise concerns over potentially massive federal subsidies. Suncor Energy CEO Mark Little has estimated it will cost $75 billion for oil-sands operations to reach net-zero emissions, likely requiring large sums of that price to be paid from public coffers. The Alberta government has sought $30 billion from Ottawa over the next decade to support CCUS.

“We’re concerned about the price tag,” said Franco Terrazzano, director of the Canadian Taxpayers Federation. “We’d have to see the full details when they’re released, but whenever you have politicians and bureaucrats in a room with Big Industry and they’re talking about taxpayers’ money, we’re always going to be concerned for taxpayers’ wallets.” 

Last month, a group of more than 400 academics and scientists urged Finance Minister Chrystia Freeland to abandon the tax credit for CCUS, arguing it is “prohibitively expensive” and would amount to a public endorsement of fossil fuel development.

Such criticisms could tinge the public’s opinion of the relatively nascent technology, and has fed some industry concerns that Ottawa’s tax credit will be too small to fully incentivize investments. (The Canadian Association of Petroleum Producers has claimed that the federal government will need to cover as much as 75 per cent of construction costs to make them viable.) 

Proponents of CCUS say the technology is a vital piece of Canada’s efforts to meet its climate targets, particularly in a world where fossil fuels are expected to be a part of the energy mix for decades. Some see CCUS as the cornerstone of a brand new multibillion-dollar industry in Canada built around lower-emissions, value-added petroleum products. 

“To me, [CCUS] underpins the growth opportunity for Alberta and Western Canada,” said Mark Plamondon, executive director of Alberta’s Industrial Heartland Association, which represents a cluster of refineries and petrochemical facilities near Edmonton. 

Plamondon said he’s seen a high level of interest among oil-sands and electric-utility companies in building out CCUS capacity, particularly among heavy emitters that face increasing pressure to drive down emissions.

“We can’t have a conversation with a company without them wanting to discuss how they are going to manage their CO2 emissions,” he said. 

Others are far from convinced, and view the technology as a costly gamble that would only deepen the country’s dependence on fossil fuels. Jason MacLean, a law professor at the University of New Brunswick, said the recent calls for CCUS subsidies highlights a desperate push to keep a dying industry afloat. Oil-sands producers face a host of existential risks, including the intensifying push for sustainable finance, an eventual decline in oil demand, and a cap on oil-sands emissions.

“They’re demanding this government lifeline because without it, they’re going to meet their horizon even faster,” said MacLean, one of more than 400 academics and scientists who signed the letter to Freeland. 

Disagreements over the viability of CCUS tend to revolve around long-term projections for oil demand, and uncertainty about how quickly demand will peak. The often-cited International Energy Agency forecasts global oil demand will continue to rise until at least 2030 if current government policies remain in place. Natural gas, meanwhile, is expected to continue feeding growing demands on electricity grids. 

MacLean concedes that might be true to an extent, but said the oil and gas industry vastly exaggerates global dependence on fossil fuels. 

“Nobody is arguing that the spigots are going to be turned off overnight,” he said. 

The technology still has a long way to go. Canada boasts just four commercial CCUS projects, including the Quest facility majority owned by Canadian Natural Resources that was initially built as a demonstration project. Shell Canada, which operates Quest, is contemplating another CCUS project in Alberta that could eventually store as much as 10 million tonnes of CO2 per year. Oil-sands producer Imperial Oil is looking to leverage the technology in its plans to develop “renewable diesel.”

Industry representatives acknowledge that the early nature of CCUS technology and the oil and gas sector’s dependence on it could fuel some discontent among the public about whether it should be subsidized. But they hope those sentiments might be reversed if they continue to lobby for what they see as its greatest benefits. 

“It would be very easy for many Canadians, from a headline standpoint, to interpret this as a fossil-fuel subsidy,” said Adam Legge, president of the Business Council of Alberta. “But I think that the real important part is helping educate and build awareness to Canadians that there’s so much of our economic and energy and environmental future tied to this, and that it’s a sound investment.”

The Business Council of Canada has been ramping up CCUS lobbying efforts, releasing recommendations last week that called on Ottawa to “aggressively pursue” the technology, as well as introducing additional low-cost financing. The recommendations included input from top executives at Suncor, Cenovus, Enbridge and Shell.

Plamondon of the Heartland Association said CCUS represents the deep contradiction at the core of fossil-fuel development, where society has come to depend on the immense energy density provided by burning hydrocarbons, while detesting the emissions that combustion generates. 

“In my view, society and governments need to focus research dollars specifically on keeping what we like, which is the gigajoules associated with that exothermic reaction, and dealing with what we don’t like, which is the emissions,” he said.