Freeland said the multi-billion dollar tax credit is key to attracting investment in costly carbon capture projects
Finance Minister Chrystia Freeland is confident her government’s new carbon capture tax credit is going to succeed in luring large-scale investment in the technology in Canada. The response from potential investors when the credit was announced, she said, was almost immediate.
“Within 24 hours of tabling the federal budget, I was hearing from major global investors, people who I know from my days at the Financial Times, who said, ‘we read your budget, we want to learn more,’” Freeland said on April 14 at a news conference in Calgary.
“So there is money there to be drawn in.”
Freeland was in her home province of Alberta to sell the Liberal’s 2022 budget and to promote new measures aimed at driving investment in carbon capture, utilization and storage (CCUS) technologies. The deputy prime minister toured a carbon capture research and development facility in Calgary alongside industry executives and provincial officials.
The refundable CCUS investment tax credit will cover half the cost of equipment to capture carbon dioxide, and 37.5 per cent of the capital costs for transportation, storage and use of CO2 emissions — a potentially massive assist to heavy-emitting sectors like oil and gas which are under increasing pressure to lower greenhouse gas emissions.
The federal budget also included a 60-per-cent credit for investment in direct-air capture technologies to remove carbon from the atmosphere.
Justin Trudeau’s government has been criticized for relying too heavily on carbon capture technology in its plans to achieve emissions reductions over the next eight years. Opponents of the technology say it’s unproven and could fail to curb emissions enough to achieve Canada’s target of 40 to 45 per cent below 2005 levels by 2030.
The Liberal government, however, has sided with energy experts, including the International Energy Agency (IEA), who have argued that CCUS technology will be needed globally if industrial countries are to meet their net-zero emissions targets.
Freeland said the multi-billion dollar tax credit is key to attracting investment in costly large-scale carbon capture projects.
“New stage technology is risky,” Freeland said. “I think at this moment, when these new technologies are being developed, this is the moment that we need governments to come in, to give that little push to provide that de-risking, to get these technologies adopted at scale quickly.
“We need to do that because we need to get our emissions down. And frankly, we need to to that because I want to seize a competitive advantage for Alberta and Canada.”
Shell Canada president and country chair Susannah Pierce, who toured the Alberta Carbon Conversion Technology Centre with Freeland, agreed that the tax credit will make a difference.
“I think this is enough to build momentum,” Pierce said in an interview. “When you look at things like the investment tax credit, those are upfront incentives to really make you feel more comfortable that these projects can be economic.”
Once up and running, Pierce said, Shell’s proposed Atlas sequestration hub east of Edmonton could capture up to 10 million tonnes of CO2 per year. Atlas would be Shell’s second carbon capture facility in Alberta. The company’s Quest facility at the Shell-owned Scotford refinery and chemicals plant has been operational since late 2015.
“My company looks at Canada as what we call a mature regime,” Pierce said. “The Quest project, which Shell has been operating for some years now has already captured around seven million tonnes. So CCS is in fact a proven technology.”
Atlas was one of six carbon capture proposals greenlit last month by the Alberta government for further evaluation and negotiations over pore space.
The province is currently under pressure from industry and the federal government to pony up more money to help accelerate the development of CCUS projects. Industry groups like the Canadian Association of Petroleum Producers (CAPP) had previously said they would like to see government support of up to 75 per cent for carbon capture.
“We do want to continue working with the province to find ways that we can be even more supportive,” Freeland said.
“A good step from our perspective would be to ensure that federal and provincial support can be stackable.”
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TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
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