Canada's Carbon Future - Are we there yet?

October 14, 2025 at 15:20 PM EDT

Oct 14, 2025 – TheNewswire

Fall always feels more like the start of a new year to me – summer vacations are over, kids are back to school, and a wave of climate events kick off, from Canada's National CCUS Convention to the UK’s Carbon Capture and Storage Association’s conference, and the United Nations Climate Change Conference of the Parties. This season sets the stage for gathering lessons from abroad and speculating what they could mean for projects here at home.

With a new federal government, the launch of a major projects office, several provinces advancing their carbon storage legislation, and others navigating changes to their industrial emission pricing systems… it feels like the end of 2025 is also the start of a new defining year for Canada’s carbon management landscape.

Canada’s projects have influenced carbon capture, utilization and storage (CCUS) development worldwide, with key lessons informing policy and deployment strategies across Europe, the U.S., and Asia. The Weyburn-Midale Enhanced Oil Recovery (EOR) project has provided extensive evidence supporting the long-term safety and security of storage in the Western Canadian Sedimentary Basin. Boundary Dam, Quest, and the Alberta Carbon Trunkline have proven that industrial emissions can be captured and stored at meaningful commercial scales. Recently, ambitious projects by Canadian companies like Entropy, Svante, and Deep Sky demonstrate we can build, scale, innovate and implement carbon capture technologies right here at home. Most importantly, the lessons learned from all these projects continue to shape the development of carbon management technologies globally, successfully positioning Canada at the forefront of global climate solutions.

Over the past 25 years, Canada has captured nearly 22 million tonnes of CO2 and safely stored over 62 million tonnes underground. (Fun fact: Canada stores more than is captured, as CO2 captured at the Great Plains Synfuels Plant in North Dakota is transported to Saskatchewan to be injected for EOR on Canadian soil). Canada has demonstrated real leadership; the carbon management projects here have helped shape the development of CCUS globally. And this matters. International bodies such as the IEA and IPCC identify CCUS as one of the few emission reduction technologies ready for large-scale deployment today. This assurance offers a critical bridge, enabling emissions reduction in hard-to-abate sectors immediately, while other decarbonization solutions are still developing.

The economics of adding capture to any industrial process is challenging. In addition to the upfront capital of the equipment, the ongoing operational costs can be substantial - and the capture plant may impact the facility’s core operations. Unless there is demand for a decarbonized product - and a market willing to pay a higher price for that product - companies will have a hard time making capture investable, without government intervention.

And I haven’t even mentioned the costs of transportation and storage, which can dramatically fluctuate depending on operational locations and proximity to storage basins.

Canada can learn from other jurisdictions where CCUS projects are advancing. Norway has a long-standing carbon tax which is set to increase to USD$220/tonne by 2030, making the cost of emitting without solutions challenging for most industries. The Norwegian government has also committed both capital and operational funding for the Longship project, supporting two capture facilities and an offshore transportation and storage system. The United Kingdom is also creating a major push for CCUS investments, committing over CAD$40 billion in multi-structured investments covering all parts of the CCUS value chain. The United States offers the 45Q tax credit, which allows companies to claim up to CAD$118/tonne for every tonne stored and up to CAD$249/tonne for direct air capture, both of which will increase with inflation. The 45Q approach is also layered on top of billions invested directly in specific projects across the country.

Here in Canada, industrial carbon pricing is set to rise annually, reaching $170/tonne by 2030. However, in many provinces, the market value of credits currently lags behind the headline price, creating uncertainty for project developers. Currently, the largest incentive for Canadian projects is the CCUS investment tax credit (CCUS-ITC), providing capital expense support where captured CO2 is injected for permanent storage or used in concrete. The Canada Growth Fund also invests in projects through offtake agreements or tailored investment support. Each province has different incentives, such as Alberta’s Carbon Capture Incentive Program, and there are several government departments continuing to invest in research, development and pilots.

Even with all of this in place, we’re not seeing many projects reach a positive financial investment decision.

We know Canada doesn’t currently have the same spending appetite or capacity as some other countries… nor do we have the desire to increase penalties for emitting industries as it puts our economic development at risk amidst the worlds geo-political uncertainty. However, there are four things I think could greatly improve our continued ability to lead CCUS efforts for decades to come.

First, greater policy certainty is necessary. Industries and investors need to be confident that things aren’t going to change dramatically with elections, and that their product holds long term value for the Canadian economy. Investors will seek assurance that billion-dollar projects are designed for long-term durability and sustainability. There needs to be unified, consensus between government levels across party lines on our major climate approaches to create stability.

Second, we need to incentivize industrial projects where CO2 is produced as a by-product of processes such as ethanol, ammonia and urea plants. These industries have very narrow margins, so while capturing the CO2 may not be as capital intensive as other industries, the cost of transporting and storing the CO2 can still be significant. If projects aren’t near existing infrastructure and storage sites, changes will be required for us to see new projects in those areas.

Third, broadening CO2 utilization could improve project economics. EOR is one example of use where CO₂ is stored, monitored and verified, ensuring it remains securely contained underground. In turn, EOR is a carbon credit pathway for provincial emission pricing systems and the federal Clean Fuel Regulation and Clean Electricity Regulation. However, it’s not an eligible use under the CCUS-ITC. Uses that can verify permanent removal should be eligible for all incentives available, and I’d argue uses that offset future petroleum needs should also have a pathway to eligibility.

Fourth, we need stronger and more effective carbon markets. Today, most provincial markets are oversupplied with credits, and lack differentiation between fundamentally different activities. For example, the treatment for a credit that is generated by adding a capture facility vs repairing a methane leak. Both actions cut emissions and create costs for a company, but fixing a methane leak creates a product that can be sold, while capturing CO2 doesn’t generate revenue and is treated as a waste stream. Also, credit markets are currently provincial, which creates challenges as companies operate interprovincially, and storage capacity and regulations are not equivalent across the country. At a minimum, increasing pricing transparency and making genuine efforts to expand carbon markets regionally or nationally are essential short-term steps toward unlocking the markets full potential.

These aren’t small challenges to tackle - but as I speculate about the year ahead, they’re challenges I hope we can address. Our continued leadership depends on it.

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Canada's Carbon Future - Are we there yet?

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