A carbon takeback obligation is the answer to the debate over CCUS

An intense debate is underway in Canada on the merits of carbon capture, utilization and storage (CCUS) and whether government should fund it via a tax credit. While both sides make valid points, it does not have to be a choice between tax credits and no CCUS.

The oil and gas industry and the federal government have argued CCUS is an essential tool to address climate change and that tax credits will motivate the technology, making it less costly and more widespread. On the other side is a large contingent of academics who oppose CCUS, arguing such tax credits merely use public dollars to fund the fossil fuel industry and delay making meaningful progress addressing the climate crisis.

But there is an answer that addresses both sides of the argument: Establishing legislation that requires producers to store a rising fraction of the carbon dioxide associated with their activities and — crucially — the products they sell. Known as a carbon takeback obligation (CTBO), such regulation would appropriately place the CCUS cost on the shoulders of industry and fossil fuel consumers, while predictably and quickly reducing emissions.

Here’s how it would work. The government would require anyone producing or importing fossil fuels in Canada to store an amount of carbon determined by the amount they sell. Failure to meet this requirement would result initially in financial penalties and ultimately in loss of the right to produce or import oil and gas. The standard would be phased in starting immediately, reaching the requirement of storing 100 per cent of emissions associated with oil, gas and any remaining coal production by 2050.

This follows the fair and reasonable concept of extended producer responsibility. A carbon takeback obligation will ensure the companies that profit from the sale of oil and gas are held responsible for the impact of these products.

Over time, some fossil fuel producers will innovate and develop large carbon capture facilities, allowing vast amounts of carbon dioxide to be permanently stored deep underground. Others will favour approaches that diversify earnings away from producing fossil fuels. But under no circumstances should Canadian taxpayers pay the bill for carbon capture, utilization and storage. The oil and gas industry can do this on its own with its enormous innovative potential and financial capacity.

From society’s perspective, carbon takeback will increase, albeit only slightly in the initial phase, the cost of petroleum-based fuels as producers pass costs to consumers. As this cost increases, alternative energy sources will become more attractive, thereby accelerating the shift in their direction.

Of course, both sides would have their objections. Environmentalists might object on the basis that this will prolong the life of the oil and gas industry. But we must continue to meet society’s energy needs while we address climate change. If the oil and gas industry can achieve net-zero emissions and provide economic energy, it could continue to exist — and should be allowed to. Oil and gas producers might object to regulation that forces them to deploy capital and participate in the climate change solution. But business as usual will not stop global warming. The climate crisis cannot wait.

A carbon takeback obligation would be a win for society, the environment and the industry as producers reinvent themselves as CCUS experts or alternative energy providers. It is time the dialogue changed from two polar views on CCUS to one where CCUS could serve both the oil and gas industry and the environment. A CTBO would provide a meaningful solution to continue benefiting from the massive amount of energy supplied by Canada’s oil and gas production while predictably reducing the associated greenhouse gas emissions.

Myles Allen, CBE, is professor of geosystem science in the School of Geography and the Environment and the department of physics at the University of Oxford, where he serves as director of the Oxford Net Zero initiative.

Hugh Helferty, PhD, started his career in Canada with Imperial Oil and led major research and engineering organizations for ExxonMobil, the largest U.S.-based oil company. He is a member of the advisory panel for Rice University’s Carbon Hub.

Jane Savage P.Eng, MBA, is a 37-year veteran of the Canadian fuel industry, where she held senior positions with Parkland Corporation, the Canadian Independent Fuel Marketers Association (now CEMA) and Imperial Oil.