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ARTICLE · 31 MAY 2021

Carbon Capture Tax Credit Consultation Process Underway

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The 2021 Federal Budget announced much anticipated tax credits for carbon capture, utilization and storage projects (CCUS, often referred to as CCS).

CanadaTax
Deron Kuski, K.C.
Deron Kuski, K.C.
Jodi Wildeman
Jodi Wildeman
Andrew Konopelny
Andrew Konopelny
Bennet Misskey
Bennet Misskey
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The 2021 Federal Budget announced much anticipated tax credits for carbon capture, utilization and storage projects (CCUS, often referred to as CCS).

The budget outlines the following key aspects of the CCUS tax incentives:

  • Budget 2021 proposes to introduce an investment tax credit for capital invested in CCUS projects, with the goal of reducing emissions by at least 15 megatonnes of CO2 annually. This measure will come into effect in 2022.
  • The Government will move quickly with a 90-day consultation period with stakeholders on the design of the investment tax credit, after which it will announce more details-including the rate of the incentive.
  • It is not intended that the investment tax credit be available for Enhanced Oil Recovery projects. The Government intends to make the credit available for direct air capture projects.

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