April 19, 2024
Carbon capture and hydrogen tax credits expected to cost government more than $11 billion: PBO


New analyzes from the Parliamentary Budget Office (PBO) reveal that the federal government intends to provide more than $11 billion to companies investing in carbon capture and hydrogen technologies.

The findings published Thursday are based on cost estimates for Ottawa’s Carbon Capture, Utilization and Storage (CCUS) Investment Tax Credit and its Clean Hydrogen Investment Tax Credit. The PBO estimates that the CCUS tax credit will cost $5.7 billion over six years, while the clean hydrogen tax credit will cost $5.7 billion over five years.

According to the analysis, the latest figures could cost the public about $1 billion more than previously thought. However, as designed, there is no upper limit on the CCUS investment tax credit, meaning the public could lose even more.

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The CCUS tax credit allows for reimbursement of 37.5 percent to 60 percent of carbon capture equipment, while the Clean Hydrogen Tax Credit allows for a refund of between 15 percent and 40 percent depending on how carbon-dense the hydrogen is.

Both tax credits aim to attract private investment by returning a significant portion of the costs to companies. However, as mentioned earlier national observer of canada, they are not direct investments. Canada is not taking equity positions in the companies it is financing, meaning the federal government subsidizes private sector profits by taking on some of the risk.

Catherine Kaplinskas, spokesperson for Deputy Prime Minister and Finance Minister Chrystia Freeland, said, “The federal government is making a historic investment of more than $120 billion to grow Canada’s clean economy, including an unprecedented investment tax credit that extends zero and low -Supports carbon emissions projects.” “CCUS and the Clean Hydrogen Investment Tax Credit will remain in place for more than a decade because we know Canada cannot afford to miss clean economy opportunities and we want to encourage businesses to reduce their emissions as quickly as possible.” Want.”

The tax credit was unveiled in last year’s federal budget. That budget was dominated by corporate subsidies, which one senior official called the “workhorse” of the government’s plan to reach a net-zero emissions economy – a vague term generally understood to mean a decarbonized economy where Any planet-warming greenhouse gas emissions produced are offset.

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However, environmental advocates warn that these investment tax credits undermine promised climate action. Canada has promised to eliminate “inefficient” fossil fuel subsidies, countering what some see as billions of dollars being used to subsidize investments in carbon capture technology used in the oil and gas industry. Its difficult.

Finance Canada says the carbon capture tax credit is not an “inefficient” fossil fuel subsidy based on its definitions.

“We need public funding for projects that create good green jobs and support community-led renewable energy – not for dangerous distractions that provide a lifeline to a sunset industry.” #cdnpoli

A 2022 study by the Institute for Energy Economics and Financial Analysis (IEEFA) examined 13 major carbon capture projects around the world and found that 10 of them failed or underperformed by a large margin compared to their designed capacity. Was the one.

IEEFA also found that “about three-quarters” of the captured carbon dioxide was re-injected into oil and gas fields to allow even more extraction; This is called “enhanced oil recovery”. These findings led IEEFA to conclude that “using carbon capture as a greenlight to extend the life of fossil fuels.” [and] Power plants are a significant financial and technical risk.”

Finance Canada said carbon capture tax credits will not be allowed to be used for enhanced oil recovery.

“The oil and gas industry is reaping windfall profits and unleashing unlimited pollution while Canadians grapple with the cost of living and climate impacts,” said Caroline Brouillette, executive director of Climate Action Network Canada. “Now, the Parliamentary Budget Office has found that these two tax credits have cost taxpayers more than $11 billion, most of which will go to fossil fuel companies.

“We need public funding for projects that create good green jobs and support community-led renewable energy – not for dangerous distractions that provide a lifeline to a sunset industry.”

In a comprehensive report published last year, the Intergovernmental Panel on Climate Change, widely considered the gold standard of climate science, described carbon capture, utilization and storage as the most expensive and least effective option for reducing emissions.

Source: www.bing.com

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