Alberta offers to work with Canadian govt on carbon capture incentives

FILE PHOTO: Alberta Premier Danielle Smith meets with Canada's Prime Minister Justin Trudeau as Provincial and Territorial premiers gather to discuss healthcare in Ottawa, Ontario, Canada, February 7, 2023. REUTERS/Blair Gable

(Reuters) - Canada's Alberta province on Thursday offered to collaborate with the federal government to incentivize carbon capture utilization and storage (CCUS) investments, as long as Ottawa refrains from introducing climate policies that impact the oil and gas sector without Alberta's consent.

In an open letter to Prime Minister Justin Trudeau, Alberta Premier Danielle Smith said those policies included a proposed oil and gas emissions cap, Just Transition legislation and clean electricity regulations.

Canada is the world's fourth-largest oil producer and emissions from the oil and gas sector make up more than a quarter of its total carbon output. The country's biggest producers want to develop CCUS technology to store emissions underground, but are asking for more public money to help fund the multi-billion-dollar projects.

Smith proposed coordinating a federal CCUS income tax credit with an expansion of Alberta's Petrochemicals Incentive Program (APIP) to include CCUS projects. She requested the creation of a federal and provincial working group led by ministers to reach an agreement on the joint incentive program in coming weeks.

However, she said the invitation came with "one non-negotiable condition," which was that the province needs to be consulted and in full agreement with any climate polices impacting the Alberta's oil and gas sector.

"Although Alberta is willing to work as an active partner with the federal government on a coordinated approach to reducing Alberta's and Canada's net emissions, under no circumstances will our province accept the imposition of arbitrary and unachievable targets or policies that spell the end of meaningful long-term investment in Alberta's energy sector," Smith wrote.

In a recent interview, Alberta's environment minister told Reuters the emissions cap, which Ottawa sees as a crucial part of its goal to cut carbon pollution 40-45% below 2005 levels by 2030, was holding up progress on other issues such as CCUS support.

(Reporting by Nia Williams; Editing by Chris Reese and Marguerita Choy)