Rejecting carbon capture risks increasing emissions. Here’s why

By Michael Bernstein and Ed Whittingham. Original published by Canada’s National Observer.

A single tax incentive under consideration in Ottawa has the potential to create jobs, grow businesses and investment, and cut Canada’s carbon emissions. It’s called the investment tax credit for carbon capture, utilization, and storage.

Dozens of Canadian companies, not-for-profit associations, unions, provincial governments, Indigenous groups, environmental NGOs and think tanks have asked for it. The federal government has committed to introducing it this year.

Then last week, a group of Canadian academics decided to publicly oppose the new tax credit in an open letter to the federal finance minister. Late to the game, this letter really misses the mark. Here’s why.

Technologies to trap industrial carbon emissions and store them deep underground, to suck CO2 directly out of the atmosphere and inject it into building products like cement, are proven and viable. We have been sequestering carbon dioxide below ground safely and effectively since the 1970s.

Our challenge is that almost all carbon capture projects are uneconomic when their only incentive is today’s carbon price. On that point, we and the signatories agree.

But that’s about where agreement ends.

The academics argue that carbon capture has a “limited potential to deliver … emissions reductions” and is not needed to reach Canada’s climate targets. This runs contrary to the conclusions of experts like the International Energy Agency (IEA), the National Academies of Sciences, Engineering, and Medicine and the Intergovernmental Panel on Climate Change (IPCC).

recent report from the IPCC, the pre-eminent group of global climate scientists, showed that every scenario that keeps the planet from exceeding 1.5 C of warming will require large-scale removal of carbon from the atmosphere.

Rejecting carbon capture technology won’t reduce emissions the way these dissenting academics hope — in fact, it’s likely to increase them. Consider the cement industry, for example, which produces eight per cent of global greenhouse gas output. A significant share of that CO2 comes from unavoidable chemical reactions, rather than the burning of fossil fuels. The only viable solution available today is to capture those emissions.

Moreover, how do we stay within safe levels of warming without capturing carbon dioxide from the air? Even if we meet the global goal of net-zero by 2050, we will need to remove billions of tonnes of CO2 from our atmosphere this century using technologies like direct air capture. Cancelling the investment tax credit will make it much more difficult to start building out that industry.

Put simply: Canada and the world need carbon capture in the toolkit to address climate change and meet international climate obligations.

But it’s not just the climate impact that the academics overlook. They also seem to misunderstand the state of play in the carbon capture industry. Their letter states that carbon capture is not “proven at scale” and is not “economically sound.” But there are more than 36 million tonnes of CO2 being captured around the world annually from a variety of industries and sources, including projects capturing carbon at a cost well below $50 per tonne. Early small-scale direct air capture projects are now operating, too, and bigger projects are in the works.

Further deployment has been limited not by fundamental technical problems, but by a lack of policy support and potential revenue sources. The investment tax credit for carbon capture, combined with Canada’s carbon pricing system and high-integrity regulation, can grow the industry. This will, in turn, create jobs, cut emissions, and reduce technology costs. Let’s remember it took solar energy decades of public support to become inexpensive and broadly deployed.

Other countries are already investing aggressively in carbon capture. Look south of the border, where a mix of regulations and incentives are stimulating the investment needed to get carbon capture going, with more than 25 commercial-scale carbon capture projects in development.

Canada needs to replicate this success, and already has most of the right ingredients: a carbon pricing system, an active research and innovation ecosystem, suitable geology for permanent carbon storage, and a skilled workforce that can engineer, build, and run carbon capture projects.

What’s missing are the right policy incentives. Canada’s carbon credit market is still in its infancy, so most investors are wary of lending to projects that rely on it for future revenues. By complementing the carbon price and regulations like the Clean Fuel Standard with an investment tax credit, government can lower the risk and make projects more attractive to private capital. That’s what we need to get this industry off the ground.

If we’re serious about reducing our emissions — and growing Canada’s cleantech sector — we are going to need all the tools in our toolkit, including carbon capture. That’s why we need a carbon capture tax credit, and a supportive ecosystem — including academia — to help us put it to work.

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