The federal government of Canada has announced plans to extend tax credits for enhanced oil recovery (EOR) projects involving carbon capture and storage technologies.
The move was welcomed by Alberta officials, who said the policy could help attract further investment into the province’s energy sector.
Enhanced oil recovery involves injecting captured CO2 into oil reservoirs to increase production while storing the emissions underground. Thus, supporters argue the approach can both boost oil output and contribute to emissions reductions.
Alberta Premier Danielle Smith described the measure as an important step for the province’s carbon capture ambitions. “EOR offers a more cost-effective and accessible pathway for companies to adopt CCUS technology,” she said.
Debate Continues Over Carbon Capture Support
One of the projects already using EOR in Alberta is Enhance Energy’s Clive facility. According to the company, the operation has permanently stored more than 7 million metric tons of CO2 captured from industrial facilities since 2020.
The Alberta Energy Regulator said the project stores emissions that would otherwise have been released into the atmosphere. However, the policy has also drawn criticism from some political figures who argue it amounts to additional support for the oil and gas industry.
Bloc Québécois leader Yves-François Blanchet criticised the move, saying public funds continue to support fossil fuel expansion.
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The announcement comes as Canada seeks to strengthen its position as a major global energy supplier. Prime Minister Mark Carney’s government has recently introduced new energy and infrastructure initiatives as part of a broader economic strategy focused on exports and industrial development.
Meanwhile, the Bank of Canada kept its key lending rate unchanged at 2.25%, while warning that global instability and higher oil prices continue to create economic uncertainty.
Canada’s economy is currently expected to grow by 1.2% this year. The development highlights the increasingly complex role carbon capture technologies are playing in balancing energy production and climate policy.
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