Alberta, the primary oil-producing province in Canada, announced earlier this week that it will offer a 12% funding grant for eligible expenses for the construction of new carbon capture projects. This initiative aims to assist industries in reducing emissions responsible for climate change.
The incentive program developed by Alberta’s provincial government, in the works since January, supplements a federal government tax credit unveiled back in 2022.
At the moment there are over twenty carbon capture, utilization and storage (CCUS) proposed in the state with the largest of them being developed by the Pathways Allience – a joint effort of the six largest oil sands developers.
The Alliance signaled back in September that the project needs additional support from the government both in terms of funding but also with creating a contract for difference mechanism. Such a mechanism would set up a minimum price for the carbon credits generated by the project which would then provide investors with more certainty about their future revenue.
Chemical giant revealed that the federal and provincial CCUS incentives influenced its board’s decision to approve a $4.8 billio (C$6.5 billion) investment in its existing facility in Fort Saskatchewan, Alberta. This undertaking, known as the Path2Zero project, involves constructing a new ethylene cracker, expanding polyethylene capacity by 2 million metric tonnes per annum, and utilizing CCUS technology to achieve net-zero emissions.
Alberta’s Premier, Danielle Smith, anticipates that the incentive program will attract around C$35 billion ($25.80 billion) in capital investment. This initiative is estimated to cost the province between C$3.5 billion and C$5.3 billion.
The Pathways Alliance has indicated that it will finalize its investment decision by 2025, and welcomed Alberta’s the announcement.
The group has already allocated approximately $80 million towards preliminary engineering, design, and environmental work.
Kendall Dilling, president of Pathways, has previously expressed increased confidence about the project compared to a year ago, and he also recently announced that the company is getting ready to seek regulatory approval.