A government fund, set up to attract private investments, said that the project was deemed too large and risky
Pathways Alliance, an organization comprised of six oil and gas producers in Canada, was struggling to have their carbon capture and storage (CCS) projects to continue as they lack a key tool in place for them, as reported in an article by Reuters.
Canada Growth Fund (CGF), the government body set up by the Finance Ministry last year for the purposes of attracting private investments in clean tech through mitigating risks concerning finances, has stated that the project was too large and risky for a contract for difference.
This contract would have locked in the carbon credit prices in the future.
Despite the growth fund’s view of the project, Pathways Alliance was continuing negotiations with the government regarding the creation of this contract without the aid of the CGF. This is because the project would store emissions from 14 oil sands projects with a cost estimate reaching $16.5 billion by 2030.
As this would take years to build, Pathways Alliance would need the support of the government to continue. It also said that the contract would help in the payment for capital and operating costs as the federal benchmark for credits in 2030 is set cost $170 per tonne and the organization was aiming to have 14 megatonnes of carbon per year.
Finance Ministry spokesperson Jessica Eritou said that both the government and the CGF were speaking with several commercial project proponents to understand the demand for carbon contracts for difference and the best way to facilitate them.
As other industries were also eyeing the use of contracts for difference, Cement Association of Canada president Adam Auer said that these contracts were important when it comes to attracting more foreign investment.
"We need to have the details finalized and to get some contracts in place before we have the level of certainty that's needed to get some of that foreign capital into our country," he said.
Carbon credits were representations of how much carbon emissions had been reduced or avoided by companies and they were used to mitigate the greenhouse gases they commonly generated.
With Canada being the fourth largest producer of oil in the world, there had been moves to cut emissions by the government, especially as Prime Minister Justin Trudeau’s government had been guided by the principle of achieving net-zero by 2050 in the last few years.
Several environmental groups have stated that schemes involving carbon credits make it seem that companies were taking action to reduce their emissions, when in reality they were not.