Energy Transition In Canada Would Cost $2 Trillion And Carbon Capture Is Part Of It

Energy Transition In Canada Would Cost $2 Trillion And Carbon Capture Is Part Of It

The energy transition in Canada is underway and carbon capture technologies are part of it. The Canadian Minister of Environment and Climate Change Steven Guilbeault is sharing details about the state of progress and the technologies the country is counting on. 

The Canadian government is planning to come out with an emissions reduction plan due this month. It will map out specific actions to meet its goal of cutting emissions 40% to 45% below 2005 levels by 2030.

According to Mr Guilbeault, existing policies, including phasing out coal-fired electricity generation and adopting a national carbon tax, already are putting the country on track to reduce emissions by 36%. However, surpassing the 40% threshold will require “a lot of heavy lifting.”

Steven Guilbeault | Credit: Wikimedia Commons

Most of that heavy lifting is due to investments needed over the next three decades to get Canada to net zero. The estimated amount comes to $2 trillion which according to the Royal Bank of Canada, translates to at least $60 billion a year in spending.

“There’s no way we get there without investing year after year… There’s no government that can fund the transition on its own,” added Mr Guilbeault.

Relevant: Canada’s Budget Set To Support Carbon Capture Tax Credit

Carbon capture technologies are also part of the net zero plan, even though it has been slammed by some environmental groups. They claim the technology costs tens of billions of dollars to implement, the government must pay too much and a carbon capture tax credit would be essentially a new fossil fuel subsidy that would help oil and gas companies boost production.

The tax credit in Canada, supporting carbon capture projects, should come in the 2022 budget and would likely be similar to the one offered in the US called Section 45Q tax credit. However, some scientists and eco-activists are doubting the efficiency of the technology. In January 2022, more than 400 Canadian climate scientists and other academics sent a letter to Finance Minister Chrystia Freeland pleading to give up her plan to create the tax credit.

Relevant: Canadian Scientists Plead Rejection Of The Carbon Capture Tax Credit

Guilbeault is favoring the tax credit, pointing to the Intergovernmental Panel on Climate Change that recommends carbon capture as a necessary element in getting to net zero. “You can’t have it both ways,” added Guilbeault explaining that you either trust the United Nations body as an authority on climate change, or you don’t.

Apart from oil and gas, carbon capture is also needed in other critical sectors for the economy like cement, aluminum, steel and transportation. Policymakers are supporting the idea of helping oil and gas along with other hard to abate sectors.

EVs are also put forward as a solution to reaching net zero targets. Guilbeault pointed out the importance of having all new cars sold be zero emission by 2035. There are challenges convincing people that driving an EV is safe in a cold country like Canada. Drivers need to be reassured they won’t get stranded roadside in the middle of winter. Guilbeault, however, rejected the idea that Canada faces an unusually difficult situation compared to other countries when it comes to developing the EV sector for the energy transition.

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