Report shows substantial increase to Canadian GDP & employment with large-scale CCS - an economically sustainable route to deep emissions cuts.
REGINA, Saskatchewan, Oct. 29, 2020 (GLOBE NEWSWIRE) -- A new White Paper, Incentivizing Large-Scale CCS in Canada, jointly released today by RSM Canada and the International CCS Knowledge Centre (Knowledge Centre), identifies venues within the Canadian tax and grant systems to incent large-scale carbon capture and storage (CCS) technology in its pivotal role to create an economically sustainable route to deep emissions cuts.
CCS is identified by the International Energy Agency and the Intergovernmental Panel on Climate Change as critical to achieve global carbon reduction goals and temperature targets. Given that Canada is not on track to meet its Paris Agreement commitments to reduce its greenhouse gas (GHG) emissions by 30% below 2005 levels by 2030; and given the fact that the Canadian economy has most recently been hampered by impacts of the pandemic, this White Paper highlights pathways in the Canadian tax system that could spur economic growth and boost productivity by supporting industry to kickstart increased CCS deployment – allowing Canada to achieve emissions reductions while aligning with the continued development of the Pan-Canadian Framework on Clean Growth and Climate Change.
The White Paper shows that the economic impact related to the development of CCS projects is substantial, for example, the construction and development of three CCS projects over four years would generate $2.7 billion in GDP across Canada and support over 6,100 jobs over the construction horizon.
Once seen as a leader in CCS technology, Canada has an opportunity to join other governments around the world who are employing a range of policy tools and incentives including tax credits and direct government grants to address roadblocks for CCS. Meeting Paris Agreement targets will require Canada to employ a concerted and near-term effort that has a combination of the right policies, significant investments, and continued innovation in large-scale CCS.
The White Paper examines Canada’s climate commitments, its current status in CCS, explores deployment-enabling policy options based on jurisdictional review, and recommends the ideal incentive scenarios for Canada.
“We have informed the US of considerations during their creation of 45Q. We see the number of projects that it has spurred. CCS is necessary for climate change mitigation - especially when we talk about net zero. Canada needs CCS - and Canada's tax system can be utilized to support its climate goals.”
- Beth (Hardy) Valiaho, VP Strategy & Stakeholder Relations, International CCS Knowledge Centre
“The impact of CCS is substantial with the potential to boost economic growth in Canada and also achieve climate objectives. While governments around the world already employ a range of policies and incentives in support of CCS projects, this white paper suggests that Canada must level the playing field for investment in CCS technologies on a global scale. Policy tools and incentives, including tax credits and direct government grants, could help direct investment towards CCS technology.”
- Alex Kotsopoulos, Partner at RSM Canada
Highlights of: Incentivizing CCS in Canada – a White Paper
CCS is vital to Canada in order to meet its Paris Agreement commitments (30% below 2005 levels by 2030); nor its target to achieve net-zero emissions by 2050.
An accelerated and focused federal government approach to financially support CCS deployment is currently needed. Canadian companies need a range of complimentary options such as certainty in CO2 value, a level playing field with alternative low-carbon technologies, and short-term demonstration support to drive down costs and make capital investment competitive.
Economic Impact of CCS investment in Canada is substantial. By example, the construction and development of three CCS projects in four years would generate $2.7 billion in GDP across Canada and support over 6,100 jobs over the construction horizon.
Three policy options recommended within the report, include:
Option 1: A refundable capital tax credit provided in advance of construction of CCS facilities to the company who will be capturing their emissions.
Option 2: A tax credit focused on expenditures during the study and design phase of a CCS project that would allow certainty for investment and offset capital costs of construction.
Option 3: A production tax credit, similar to that of the 45Q CCS incentive in the United States, to address competitiveness issues.
Climate Change Links
CCS is considered essential in three of the four pathways to keep global warming within 1.5oC - Intergovernmental Panel on Climate Change: Global Warming of 1.5 Degrees Celsius
Most of the world can’t meet emissions targets without CCS – and for those that can, the median increase in mitigation cost is 138% - Intergovernmental Panel on Climate Change: IPCC AR5 2014
About the International CCS Knowledge Centre (Knowledge Centre): The International CCS Knowledge Centre (Knowledge Centre) is dedicated to advancing the understanding and use of large-scale carbon capture and storage (CCS) as a means of managing greenhouse (GHG) emissions. Through experience-based guidance, the Knowledge Centre provides the know-how to implement and optimize large-scale CCS projects through the base learnings from both the fully-integrated Boundary Dam CCS Facility, and the comprehensive second-generation CCS study, known as the Shand Study. The Knowledge Centre was founded in 2016 as a non-profit organization by BHP and SaskPower. For more info: https://ccsknowledge.com/
About RSM Canada LLP (RSM): RSM’s purpose is to deliver the power of being understood to our clients, colleagues and communities through world-class audit, tax and consulting services focused on middle market businesses. RSM Canada LLP provides public accounting services and is the Canadian member firm of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries. RSM Canada Consulting LP provides consulting services and is an affiliate of RSM US LLP, a member firm of RSM International. For more information visit rsmcanada.com, like us on Facebook, follow us on Twitter and/or connect with us on LinkedIn. For more info: https://www.rsmcanada.com/
Jodi Woollam, Head of Communications & Media Relations
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