Canada
Canadian government policies on industrial decarbonisation
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Net zero target
Further information: Net-Zero Emissions Accountability Act; 2030 Emissions Reduction Plan
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Key climate policies
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Clean Fuel Regulations
The Clean Fuel Regulations increase incentives for the development and adoption of clean fuels, technologies, and processes. The regulations require liquid fossil fuel (gasoline and diesel) suppliers to gradually reduce the carbon intensity – or the amount of pollution – from the fuels they produce and sell for use in Canada. This is expected to lead to a decrease of approximately 15% (below 2016 levels) in the carbon intensity of gasoline and diesel used in Canada by 2030.
The regulations will deliver up to 26 million tonnes (Mt) of GHG emissions reductions in 2030. The measures include the Canadian government’s recent establishment of a $1.5 billion clean fuels fund which increases support for domestic production and adoption of low-carbon fuels, such as hydrogen and biofuels.
The Clean Fuel Regulations take a lifecycle approach, considering the emissions associated with all stages of fuel production and use - from extraction through processing, distribution, and end-use. Among other ways, compliance credits can be achieved by undertaking projects that reduce the lifecycle carbon intensity of liquid fossil fuels including CCUS.
Further information: Clean Fuel Regulations
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Canadian Net Zero Emissions Accountability Act
The Canadian Net Zero Emissions Accountability Act delivers on the government’s commitment to legislate a target of net zero greenhouse gas emissions by 2050. The Act establishes a legally binding process to set five-year national emissions reduction targets for 2030, 2035, 2040 and 2045. It will help develop credible, science-based emissions reduction plans to achieve each target. The Act established an independent advisory body, the Net Zero Advisory Body to provide ongoing advice to the government. Under the scheme, emissions in excess of allowances will be charged at $65 per tonne of CO2e in 2023 and will increase by $15 per calendar year until 2030, resulting in an excess emissions charge of $170 per tonne of CO2e in 2030.
Further information: Canadian Net-Zero Emissions Accountability Act
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2030 Emissions Reduction Plan
The 2030 Emissions Reduction Plan is an ambitious roadmap that outlines a sector-by-sector path for Canada to reach its emissions reduction target of 40% below 2005 levels by 2030 and net zero emissions by 2050.
This includes developing a CCUS strategy and investment approaches, such as Carbon Contracts for Difference.
- Introducing an investment tax credit to incentivise the development and adoption of CCUS technology
- Investing CAD 194 million to expand the Industrial Energy Management System to support ISO 50001 certification, energy managers, cohort-based training, audits, and energy efficiency-focused retrofits for key small-to-moderate projects
- The plan includes projected emissions reductions from the oil and gas sector of 31% below 2005 levels, by 2030. It also projects emissions reductions from 39% below 2005 levels, by 2030 from heavy industries.
- The Climate Action and Awareness Fund is investing over CAD 200 million over five years to support projects that help build capacity and raise awareness to reduce Canada’s GHG emissions.
- The Canada Infrastructure Bank (CIB) was established to ensure that Canadians benefit from modern and sustainable infrastructure through partnerships between governments and the private sector. The government has allocated CAD 35 billion for the CIB to set out priority investment areas, which include green infrastructure (CAD 5 billion), public transit (CAD 5 billion) and clean power (CAD 5 billion).
Further information: 2030 Emissions Reduction Plan
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Carbon pricing
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Federal Fuel Charge
The fuel charge applies to 21 fossil fuels including gasoline, light fuel oil (eg. diesel), and natural gas. The fuel charge rates reflect a carbon pollution price of CAD 20/t CO2e as of 1 April 2019, rising by CAD 10/t CO2e per tonne annually to $50 per tonne as of 1 April 2022. The federal fuel charge applies in Alberta, Saskatchewan, Manitoba, Ontario, Yukon and Nunavut.
Further information: Pan-Canadian Approach to Pricing Carbon Pollution; Greenhouse Gas Pollution Pricing Act: Annual report for 2020
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Federal Output-Based Pricing System (OBPS)
The federal OBPS is designed to put a price on carbon pollution while minimising competitiveness and carbon leakage risks from exposure to the federal fuel charge. The federal OBPS is mandatory for facilities that are primarily engaged in the industrial activities listed in the OBPS Regulations and that emit 50kt CO2 per year or more. The federal OBPS applies in Manitoba, Ontario, New Brunswick, Prince Edward Island, Yukon, Nunavut and partially in Saskatchewan.
Further information: Pan-Canadian Approach to Pricing Carbon Pollution; Greenhouse Gas Pollution Pricing Act: Annual report for 2020; Output-Based Pricing System - Canada.ca
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Other Carbon Pricing Mechanism
Provincial and territorial systems continue to apply in British Columbia (carbon tax), Quebec and Nova Scotia (cap and trade), Newfoundland and Labrador (carbon tax). All provincial and territorial carbon pricing systems have to set equivalent or greater carbon prices to the federal scheme.
Further information: Pan-Canadian Approach to Pricing Carbon Pollution; Greenhouse Gas Pollution Pricing Act: Annual report for 2020
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Hydrogen strategy
30% of Canada’s end-use energy has the potential to be delivered by clean Hydrogen by 2050.
Clean hydrogen has the potential to deliver up to 6% of Canada’s end-use energy (4 Mt of hydrogen) by 2030, and 30% by 2050 (20 Mt of hydrogen) abating up to 45 Mt CO2e of GHG emissions by 2030 and 190 Mt CO2e by 2050 through deployment in transportation, heating and industrial applications.90% or greater production of hydrogen with CCUS by 2030.
The strategy states that production of hydrogen from fossil fuels without CCUS should be coupled with greater than 50% production of hydrogen from fossil fuels with CCUS, as soon as possible and move to predominantly greater than 90% production with CCUS by 2030.
Canada has the potential to produce vast amounts of hydrogen from natural gas coupled with CCUS. Thus, CCUS is an integral part of the Canada’s Hydrogen Strategy.
Further information: Hydrogen Strategy For Canada; Clean Fuels Fund
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Other policies
A Healthy Environment and a Healthy Economy is the federal plan to build a better future with a healthier economy and environment. As part of this plan, Net Zero Accelerator of CAD 3 billion over five years, is being delivered via the Strategic Innovation Fund. This will rapidly expedite decarbonisation projects with large emitters, scale up clean technology and accelerate Canada’s industrial transformation across all sectors. The plan discusses the development of a comprehensive CCUS strategy and exploring other opportunities to help keep Canada globally competitive in this growing industry.

Funding
Recent CCUS funding
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Energy Innovation Program – CCUS RD&D call
Focus Areas & Timelines:
- Capture: To drive down the cost and enhance the performance of capture technologies for different emission sources. The CCUS RD&D Capture focus area is open to R&D projects that request between CAD 500,000 and CAD 2,500,000 (comprising up to 75% of total project costs) and demonstration projects that request between CAD 1,000,000 and CAD 5,000,000 (comprising up to 50% of total project costs), both over a period of up to five years. The EIP provides non-repayable contributions for both types of projects.
Expression of Interest: Open 7 July 2022
Deadline closed: 3 October 2022
- Storage/Sequestration: To characterise and develop safe, permanent sub-surface CO2 storage to support the planning of cost-efficient storage opportunities across Canada.
Expression of Interest: 25 January 2023
Deadline closed: 17 April 2023 - Utilisation: To expand the strategic uses of CO2 and support the development of cost and energy-efficient utilisation pathways.
Expression of Interest: Opening Autumn 2023
Further information: Energy Innovation Programme
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Energy Innovation Program – FEED Studies for CCUS
- This provided up to CAD 50 million to 11 projects in April 2022 to support Front End Engineering and Design (FEED) studies for CCUS projects that have the potential to significantly mitigate emissions.
- All industrial sectors were eligible and projects between CAD 3,000,000 and CAD 7,000,000 were considered for up to 50% of total project costs.
Status: Selected projects are now undergoing Contribution Agreement negotiation
Further information: Energy Innovation Program – FEED Studies for Carbon capture, utilization and storage
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Canada Growth Fund and Carbon Contracts for Difference
- The Canada Growth Fund has been established with CAD$15bn of backing.
- The Fund will be providing contracts for difference for captured carbon, as well as hydrogen production, to give pricing certainty to project developers.
- Tailored contracts will be available for large projects, while a broader contracts for difference scheme will be consulted on later this year.
Further information: Technical backgrounder: Canada Growth Fund
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Carbon Capture, Utilization, and Storage Investment Tax Credit
- The 2023 federal budget included further detail of a proposed tax credit for Carbon Capture, Utilization and Storage, and announced a detailed legislative proposal will be published later this year.
Further information: Tax measures: Supplementary Information
Other funding opportunities
CAD 319 million
As part of its 2021 Budget, the government is investing CAD 319 million over seven years into research, development, and demonstrations to advance the commercial viability of CCUS technologies. These funds will support businesses, academia, non-profits, government and federal laboratories.
Further information: Funding Opportunity
1.5 billion CAD committed over five years to establish a Clean Fuels
The 2021 Budget committed CAD 1.5 billion over five years to establish a Clean Fuels Fund, that will de-risk the capital investment required to build new or expand existing clean fuel production facilities (including facility conversions). The Clean Fuels Fund will help Canadian companies produce clean fuels, create up to 36,000 new jobs by 2030 and enable the reduction of GHG.
Further information: Funding Opportunity
8 billion CAD provided by the Net Zero Accelerator (NZA) initiative
The Net Zero Accelerator (NZA) initiative supports Canada's net zero goals to help transform the economy for clean and long-term growth. This initiative will provide up to CAD 8 billion to support large-scale investments in key industrial sectors across the country.
The NZA investment pillars are:
- Decarbonisation of large emitters: investments aim to help Canada's largest industrial emitting sectors such as oil and gas and heavy industry dramatically reduce their current domestic GHG footprint faster and with less financial risk.
- Industrial transformation: investments aim to ensure that established industrial sectors, such as automotive transportation, aerospace, and electricity (or electrification) remain successful and competitive in the net zero global economies of the future.
- Clean technology and battery ecosystem development: investments aim to capitalise on emerging clean economy opportunities and establish Canada as a global clean tech leader and promote the development of clean technologies such as hydrogen, CCUS and a made-in-Canada battery ecosystem.
The NZA is a part of the Strategic Innovation Fund and accepts applications on an ongoing, non-competitive basis.
Further information: Funding Opportunity
