By James Millar
Slowly but surely, we are moving toward a state where companies planning to build carbon capture and underground storage (CCS) facilities have the ability to make decisions to put shovels in the ground. Bringing these projects to life in Canada, and globally, will play a big role if we are to actually make a dent in the 38 million tonnes of carbon dioxide released into our atmosphere each year by Canadians.
The Government of Canada’s consultation period on its draft legislation for an investment tax credit (ITC) for new CCS projects ended Sept. 8, with many watching what the next steps will be. The timing of those next steps will be key as to whether Canada can meet its defined climate targets of a 40 to 45 per cent reduction in emissions by 2030 compared to 2005 levels.
The ITC is the federal government’s central CCS support vehicle, designed to give heavy industry what it needs to build such projects by covering 50 per cent of project capital costs between 2022 and 2030.
To give you a sense of the scale needed to try to slow the pace of CO2 emissions, the Canadian government wants to see projects capture between 15 and 20 million tonnes of CO2 per year built by 2030 — a tripling of what we currently capture. It’s a huge task.
Through its ITC legislation and other proposed policy tools, Canada doing its part to contribute to the boom of CCS projects needing to be built. And while the cost to build these major infrastructure pieces is significant, the opportunities they represent for communities — and the country as a whole — are staggering.
As one example — a review by our organization of the draft regulations found that to receive the largest possible tax credit, developers must meet two main labour requirements: pay workers equivalent union-scale wages and ensure 10 per cent of the labour is done by apprentices.
The added benefit outside of tackling climate change is a tremendous boost for those starting their careers in skilled trades, as well as experienced workers being in high demand as these large-scale capital projects ramp up in the years ahead.
Indeed, CCS and other emissions-reduction projects are some of the largest investments being planned across Canada’s heavy industries. Virtually all the country’s resource-based firms — from cement, steel and fertilizer manufacturers, to mining, electricity, and oil and gas — are looking to add CCS. Each one of these projects represents the potential for thousands of high-quality jobs, economic partnerships with Indigenous groups, and ongoing employment for running and maintaining these facilities.
There is a caveat to this rosy picture, however, as it is critical that government and industry make plans to ensure adequate qualified tradespeople and apprentices are available given the short time frame of eligibility for the full tax credit before 2030. With the typical lead time to plan, build and bring a one-megatonne CCS facility into service being at least six years, it is no secret that a serious scramble for workers is shaping up, particularly in western provinces where CCS projects are moving toward final investment decisions.
Certainly, we should take steps to avoid a repeat of the labour shortages, housing crises, unrealistic wages and incentive structures, and myriad other challenges that accompany overheated economies, as we saw in Canada’s energy sector earlier this century.
If there is one thing we know, it’s that leveraging our knowledge and experience from the past leads to greater success in the future.
Canada’s leadership in building the first generation of CCS facilities has given us a competitive advantage. It is up to our generation to ensure we don’t squander it — not just for our own benefit, but for the good of everyone on this ever-warming planet.
James Millar is president and chief executive officer of the International CCS Knowledge Centre.