On November 28, 2023, the Alberta government launched the Alberta Carbon Capture Incentive Program (ACCIP). The new incentive aims to advance investment in carbon capture, utilization and storage (CCUS) projects in the province.

This new provincial grant, when coupled with federal CCUS investment tax credits, is expected to provide a substantial spark for prospective investors in this space.

Supporting Alberta's economy

CCUS is currently viewed as the only viable option for hard-to-abate industries to significantly reduce their greenhouse gas emissions. CCUS technology is crucial for reducing emissions in industries with a large economic presence in Alberta, while still supporting the province's diverse economy.

ACCIP will provide major industries with grants up to 12% of the eligible capital costs for new CCUS facilities. Grants will be paid to operators in three installments over three years starting after one year of operations. The program will be available to support a variety of sectors including oilsands, oil and gas production, enhanced oil recovery production, petrochemicals, power generation, manufacturing and cement production, among others.

The federal government's investment tax credit covers up to 50% of capital spending on CO2 capture equipment and 37.5% for transportation and storage with legislation to backdate the credit to 2022. The provincial ACCIP grants will also be backdated to 2022.

ACCIP will be funded in part by Alberta's Technology Innovation and Emissions Reduction (TIER) program. The anticipated program cost is between $3.5 billion to $5.3 billion over the coming decade. Provincial funding for ACCIP will be available once the federal government has legislated its CCUS investment tax credit and related operating supports, such as contracts for differences.

Big picture

ACCIP is part of a larger suite of actions to stimulate commercial scale carbon storage in Alberta, including the development of 25 carbon hubs. According to the Alberta government, by 2035, CCUS development is expected to generate approximately $35 billion in investment in the province's economy, along with 21,000 jobs.

It remains to be determined whether and to what extent ACCIP will supersede any existing incentives for CCUS offered by the province (such as Emissions Reduction Alberta initiatives funded by the TIER program, Alberta Innovates funding for CCUS projects including the Clean Technology Fund, and the Industrial Energy Efficiency, Carbon Capture Utilization and Storage Grant Program).

MLT Aikins has in-depth knowledge of CCUS technologies and has advised on some of Western Canada's major carbon capture projects. Our Energy lawyers actively follow developments in the sector and are involved in a broad range of work relating to CCUS, including advising on regulatory and compliance issues.

If you're interested in advancing a CCUS project in Western Canada, we would be delighted to speak with you. Contact us to learn how we can help.

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