The Government of Alberta has taken another step towards a sustainable future with the introduction of the Alberta Carbon Capture Incentive Program (ACCIP). Through this program, Alberta seeks to demonstrate its commitment to reducing emissions by supporting and accelerating the development of new carbon capture, utilization and storage (CCUS) infrastructure for at least the next decade. Through the ACCIP, the province plans to commit an estimated CA$3.2 to CA$5.3 billion of support between 2024 and 2035, which is poised to drive CA$35 billion in new investments and create up to 21,000 jobs.

Project grants

The ACCIP will assist the development of new CCUS infrastructure by providing a grant of 12% on capital costs for new eligible CCUS projects. The grant will be paid in three installments over three years starting after one year of operation. Applicants must meet reporting requirements by providing project reports between the grant instalment payments.

A portion of ACCIP funding will come from Alberta's existing Technology Innovation and Emissions Reduction (TIER) fund, which is funded by industry.

Project eligibility

Under the current ACCIP guidelines, CCUS projects will be considered eligible for grants retroactive to January 1, 2022. Projects are eligible for ACCIP funding if:

• The project is physically located in Alberta; and
• The project deals with the capture, preparation, compression, transportation, storage, or utilization of carbon dioxide (CO2).

Capital costs eligible for the grant includes:

• Costs to convert existing equipment to monitor and track CO2 for CCUS;
• Purchase and installation of approved equipment for an eligible CCUS project, provided an eligible storage or use of the CO2 exists (any utilization which permanently sequesters CO2 will be eligible); and
• Dual-use equipment (still under consideration by the Government of Alberta).

If the project has already received funding from the Alberta Petrochemicals Incentive Program, or any other Alberta royalty regime, it may not receive any benefits under the ACCIP for the same costs.

Next steps

Pre-approval is available now to industry applicants to determine whether their project may be eligible for ACCIP, and to receive an estimate of potential funding. Final approval applications will open later in 2024, after stakeholder information sessions are complete and ACCIP guidelines are finalized. The ACCIP will align with the federal government's CCUS investment tax credit (CCUS ITC), and will be finalized after the CCUS ITC is enacted.

Alberta has a strong track record of supporting CCUS, having already invested over CA$1.8 billion in projects like the Alberta Carbon Trunk Line and the Quest project, which combined have captured and stored over 12 million tonnes of CO2. Industries such as the Alberta oil sands, petrochemicals, power generation, manufacturing, and cement will greatly benefit from the ACCIP, as CCUS will enable them to make significant emissions reductions. By incentivizing investment and development of CCUS, this program marks a significant milestone in Alberta’s journey along its Emissions Reduction and Energy Development Plan to achieve a carbon neutral economy by 2050.

Additionally, in the recent Budget 2024: Fairness for Every Generation (see Dentons’ Insight for more details), the Federal Government announced that Bill C-59, which contains the CCUS ITC, is anticipated to come into force on June 1, 2024. To learn more about the CCUS ITC, please refer to previous Dentons article.

Follow Dentons Insights to stay up to date on developments on ACCIP and CCUS ITC. For any questions, or if you require any guidance on navigating the application process for ACCIP or CCUS ITC, please contact the authors, George Antonopoulos, Dan Collins, Byron Reynolds, Bernard J. Roth, Hazel Saffery and Jesse Standing.

The authors would like to thank articling students George Hua and Jack Yuan, for their assistance in preparing this insight.