That exceeds the value of the U.S. 45Q tax credit, which is estimated to be worth around $115/tonne sequestered for oil production south of the border.
There’s a catch. The report’s authors acknowledge the two regimes generate value to oil producers very differently. The bulk of Canada’s incentives are attributable to gains that would come from avoiding a carbon-tax penalty through sequestration. The U.S. doesn’t have a carbon tax and producers there are effectively paid to store carbon through a fully refundable tax credit for each tonne of CO2 under the IRA’s expanded 45Q.
Another important qualification, and a point seized upon by industry players, is that the analysis does not reflect how private companies perceive the political risk to carbon pricing in the future without further guarantees from governments — a reality the report’s authors acknowledge.Article content
“A provincial election turnover could result in further changes to program, for example, that possibly throws off the balance of future supply/demand for credits,” Dziuba wrote in an email. “Regime change at both the provincial and federal level are likely over the window of 25-year CCUS projects.”Jared Dziuba
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