Ottawa's 'Mega Deduction' Could Unlock Pathways Carbon Capture Project

Ottawa's new 'mega deduction' could be a game-changer for the proposed Pathways carbon capture and storage project, according to Kendall Dilling, president of the Oil Sands Alliance.

The project, which aims to capture and store six million tonnes of CO₂ annually, has been facing significant investment hurdles due to its long development cycle. Traditional depreciation schedules make it difficult for investors to recover their capital, with Dilling stating that 'the hardest investor to find is the first one.'

However, the new capital-investment tax deduction announced by Prime Minister Mark Carney could help alleviate this issue. The deduction allows businesses to immediately deduct the cost of most newly acquired capital equipment and other long-term assets in the first year they are put into use.

Dilling believes that this change addresses one of the key pillars the alliance has been seeking from government, but notes that it is not enough on its own to move the project forward. The Pathways project requires a 'grand bargain' involving carbon capture, government support, expanded oil production, new pipeline capacity, and improved access to international markets.