A tax credit for carbon capture and storage is one of numerous measures in the federal budget designed to reduce carbon emissions as the clock ticks for the federal government to reach goals it has set for reduced carbon emissions by 2030.
Budget 2022 included a refundable investment tax credit for carbon capture, utilization, and storage (CCUS) projects. From 2022 through 2030, the federal government will refund 60 percent of equipment costs for direct air capture projects, 50 percent for equipment costs of other kinds of CCUS projects, and 37.5 percent for equipment for transportation, storage, and use.
The tax credit is expected to cost $2.6 billion over five years starting in 2022–23, peaking at about $1.5 billion in 2026–27 and continuing at that level annually until 2030. From 2031 through 2040, the tax credit rates will drop in half.
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