Which of These are the Voices of Reason over a Proposed Tax Credit for Carbon Capture, Utilization, and Storage (CCUS)?

Which of These are the Voices of Reason over a Proposed Tax Credit for Carbon Capture, Utilization, and Storage (CCUS)?

On March 7, 2022, former Liberal Minister of the Environment Catherine McKenna had severe reservations over giving a tax credit to the fossil fuel industry as an incentive to invest in CCUS. She said the following in her conversation with The Energy Mix:

“What is extremely frustrating is that we know a large part of what works” to reduce emissions, and “that includes actually doing the hard work of reducing emissions and not waiting for some innovation,” McKenna told The Mix. “And it’s an open question how much government should be supporting innovation in a sector that has very large budgets,” like oil and gas.

“When you see companies issue large dividends, fail to invest in technology, and make large profits, then ask the government to step up but say there’s no way they would do it themselves, it actually makes you wonder about their business model.”

The backdrop to that question is that, “by the way, we’re cleaning up their messes,” added McKenna, who served as Canada’s first-ever environment and climate change minister from 2015 to 2019. “Why are we having to [fund reclamation of] abandoned wells? That’s their mess, whether it’s companies that went out of business or not, it’s the industry.” And after all the “pushback and hopes and prayers for the future” McKenna said she encountered as minister, the massive tailings ponds in the Alberta tar sands/oil sands are still “the mess we’ve all inherited as taxpayers”.

End of quote from The Energy Mix:

The fossil fuel companies she mentioned that went out of business and left us with abandoned oil wells to clean up should have paid for the clean up before they went out of business: namely with increased royalties at time they created those oil wells.

Similarly, the fossil fuel companies that are polluting the atmosphere now should be concurrently paying for their own “clean up” of the atmosphere by paying for their own CCUS, instead of forcing that expense onto us the taxpayers. That would be a more fair “business model,” as McKenna phrased it.

In other words, the government should make it a “stick” (ie. a legal requirement) instead of a “carrot” paid for by us taxpayers, in many cases at high risk.

Then, on March 14, Ministers Wilkinson and Ministers Guilbeault wrote in the National Observer:

“As a government, we want to make sure we support this innovation. That’s why we’re proposing a tax credit to help drive the growth of Canadian CCUS technologies in industries like concrete, steel, plastics, fuels and hydrogen. The oil and gas industry, which contributes 26 per cent of Canada’s overall emissions but also employs over 70,000 people directly, shouldn’t — and won’t — be excluded. That said, the tax credit cannot be used for CCUS activities designed to extract more petroleum.

The tax credit is an important part of our plan to mobilize substantial private capital towards clean technologies. To those who view CCUS as being too expensive, the tax credit will accelerate the private investment, driving down costs and encouraging widespread market adoption.”

End quote.

Our response to Ministers Wilkinson and Ministers Guilbeault, takes the same approach that former Liberal Minister McKenna takes:

If you really think that part of your climate plan must be distracted by CCUS, then paying for those high risk endeavors should be a legal requirement of the fossil fuel industry -- instead of providing them with a no-risk tax incentive paid for by us the taxpayers. In other words, make it a stick instead of a carrot paid for, at high risk, by us taxpayers.

Furthermore, you have said that “the tax credit cannot be used for CCUS activities designed to extract more petroleum.” But, even so, if there is any tax credit associated with any CO2 producing activity, regardless of whether that activity is extraction or not, then that tax credit is alleviating the costs of that activity, thus directly and/or indirectly incentivizing that CO2-producing activity. Reducing emissions is all about not incentivizing any CO2-producing activity.

Furthermore consider the fact that some of the CCUS technology is more proven and reliable than others. This means that each of these varying degrees of reliability carries with it varying degrees of risk when we, the taxpayers, invest in each one of them. Why should the taxpayer be burdened with the high risks of new venture capital? Most business models that include new venture capital will build in their own risk models to be paid for by their own investment, not externalized onto the taxpayer.

Speaking of externalizations of environmental costs, what happens if many or most of these new CCUS activities spend away our precious remaining carbon budget and end up not being able to retrieve the carbon that was put into our atmosphere? Wouldn't it be better not to emit that CO2 in the first place?  There is no planet B.

If there is no planet B, why are we not acting like it when it comes to CCUS high risk technologies? The stakes could not be higher.

With the stakes so high, the most rational voice is that of Robert Watson, chair of the Intergovernmental Panel on Climate Change (IPCC) from 1997 to 2002, who stated: “Relying on untested carbon dioxide removal mechanisms to achieve the Paris targets when we have the technologies to transition away from fossil fuels today is plain wrong and foolhardy. Why are we willing to gamble the lives and livelihoods of millions of people, the beautiful life all around us, and the futures of our children?”

Which of these are the voices of reason over a proposed tax credit for Carbon Capture, Utilization, and Storage (CCUS)? You decide. 

Also see this well researched researched report on CCUS by Environmental Defence called, "Buyer Beware: Fossil Fuel Subsidies and Carbon Capture Fairy Tales in Canada"

Additional thoughts:

The above discussion is focused on the particular tax credit proposed by Ministers Wilkinson and Ministers Guilbeault in March 2022. A tax credit is a tool used in free market capitalism. Therefore the above discussion is held within the parameters of the assumption that free market capitalism is the only economic model worthy of discussion. That is a huge assumption.  

Is the preservation of the capitalist model more important than human life itself?

No. Therefore in my future blog posts I will try to open up the discussion to include ecosocialist perspectives.