Investment Tax Credit for Carbon Capture, Utilization and Storage (CCUS)

The Canadian government set up an investment tax credit for Carbon Capture Utilisation and Storage (CCUS) projects in 2021, which details were outlined in 2022. The incentive applies to CCUS projects that permanently stored captured CO2 via dedicated geological storage, or storage of CO2 in concrete. Enhanced oil recovery projects are not eligible.

From 2022 through 2030, the tax credit rates will be set at:

• 60% for investment in equipment to capture CO2 in direct air capture projects
• 50% for investment in equipment to capture CO2 in all other CCUS projects
• 37.5% for investment in equipment for transportation, storage and use

To encourage the industry to move quickly to lower emissions, these rates will be reduced by 50% for the period from 2031 through 2040.

The scheme was expanded in 2023 to cover dual use equipment that produces heat and/or power or that uses water. Labour requirements will apply for support eligibility.

Want to know more about this policy ? Learn more