Madam Speaker, it is an honour to rise today to speak to my colleague's bill on the important issue of carbon capture and utilization or storage. He is a fellow member of the Standing Committee on Natural Resources.
I would like to begin by recognizing the news from a few weeks that the Supreme Court of Canada dismissed the challenge of Jason Kenney, Doug Ford and Scott Moe in a clear ruling that it is within the ability of the federal government to put a backstop price on pollution if the provinces and territories fail to act. This is important because, as written in the decision, “The evidence clearly shows that establishing minimum national standards of GHG price stringency to reduce GHG emissions is of concern to Canada as a whole. This matter is critical to our response to an existential threat to human life in Canada and around the world.”
It is well settled by climate policy experts, and particularly economists, that any credible climate plan needs to price pollution. It is necessary, but alone it is not sufficient. Investing in technology alone is a gamble, at best a calculated gamble, the results of which can be speculative, while to rely on regulations alone is known to be a significantly more costly approach to achieving the same levels of emissions reductions.
Utilizing market-based mechanisms is a conservative idea by origin, one adopted by a Conservative-leaning government in my home province of B.C. over a decade ago and accepted by Conservative governments in places all around the world. It bears questioning why any party that believes in the free market and is honest in its commitment to addressing climate action would reject it.
I raise this because Bill C-262 lives within this policy context in seeking to provide a tax credit for carbon capture utilization storage, which I will refer to as CCUS henceforth. While a majority of focus of carbon pricing in Canada has been situated on a consumer-facing pollution fee and dividend model, industry faces a price on pollution through the output-based performance standard, which approximates a cap and trade model.
If companies exceed the level of emissions established for their sector, they need to buy credits from counterparts that have been able to reduce their emissions through offsets from the market more widely. Carbon leakage of emitting projects moving to jurisdictions without carbon pricing systems is mitigated by how these standards are set. These standards get stricter over time, providing an incentive to cut pollution in the most affordable way possible. The proceeds collected from industry are used to support industrial projects that cut emissions and use cleaner technologies and processes, so it reinforces this transition.
The clean fuel standard rounds out these market-based systems by requiring liquid fuel suppliers to gradually reduce the carbon intensity of the fuels in Canada by 2030 or else purchase carbon credits from the market. Given that the oil and gas industry is the largest source of Canada's emissions, at about 25%, with transport coming in at second, it is critical we have measures like these to have any hope in meeting our 2030 goals and to set ourselves on a path to get to net-zero emissions by 2050.
These market-based mechanisms are the stick, so to say, but they can also be the carrot. With the Supreme Court's affirmation a few weeks ago, businesses have the certainty there will be a steadily increasing cost associated with polluting in Canada, so they can plan appropriately to reduce their emissions through actions they can take within their own operations or by procuring more affordable emissions reductions elsewhere.
There are many ways emissions reductions can take place within our largest emitting sector such as switching to renewable energies to power operations, tightening leaks from facilities of methane and other pollution, and the subject matter of today, CCUS. We need to focus on the cheapest and best way of pursuing all of these angles and do so in a way that promotes Canadian ingenuity.
Innovation here can also create technologies and services we can sell to the world. This is why our government proposed to level the playing field for all technology by cutting corporate taxes in half for companies that make net-zero emissions technologies. Until these breakthrough technologies mature, commercialize and become cheaper, there is a role for Canada to support the most promising examples.
This is the approach in our government's strengthened climate plan, which is called “A Healthy Environment and a Healthy Economy”. This plan was released in December. In this plan, we reaffirmed our promise to develop a CCUS strategy and further reiterated our commitment to exploring every opportunity that will help keep Canada globally competitive in this growing industry.
Some of the actions will include launching a net-zero challenge for large emitters to support Canadian industries in developing and implementing plans to transition their facilities to net-zero emissions by 2050, making investments to support decarbonization through the strategic innovation fund's net-zero accelerator fund with an investment of $3 billion over five years, and investing $1.5 billion in a low-carbon and zero-emissions fuel fund to increase the production and use of low-carbon fuels.
More recently, on March 8, we announced a joint steering committee with Alberta on CCUS. Canada was an early mover in CCUS with the Boundary Dam carbon capture project, where many lessons were learned. Canada has made significant strides in this sector, which in part have been funded by Natural Resources Canada. The Alberta Carbon Trunk Line system, one of world's newest integrated large-scale CCUS systems, currently sequesters about 1.6 million tonnes of CO2 per year, and the Shell Quest facility has already sequestered over five million tonnes of CO2 to date.
The strategic innovation fund has funded Canadian clean tech companies that are world leading, most notably, Carbon Engineering, located in Squamish of my riding, which has been directly capturing CO2 from air since 2015. Carbon Engineering also recently partnered with Canada's largest company by market capitalization, which is Ottawa-based Shopify, to reduce its own emissions.
Carbon Engineering is now constructing the world's largest direct air capture plant in the Permian Basin of west Texas. Once operational, this plant will directly capture up to one million metric tonnes of atmospheric CO2 annually.
Other countries around the world are launching CCUS projects. In Norway, the $2.6-billion Northern Lights project will capture and sequester up to five million tonnes of CO2 per year, which was overwhelmingly funded by the Norwegian government. The U.K. is also investing about $100 million in its HyNet North West project, which will create hydrogen from natural gas and capture the carbon underground. I mention these projects to highlight that we are operating in a very competitive international environment.
It is important that we take advantage of the human capital from our existing projects, our infrastructure assets and the natural assets that we have. This is what informs the hydrogen strategy that we announced in December of last year. This strategy will pursue non-emitting, green hydrogen from renewable energy that can be produced from the 82% of our grid that is already non-emitting, and from future projects that will be built. For the purposes of today, it also seeks to leverage the natural gas resources we have throughout the west, the geology throughout sedimentary basins for capturing carbon, as well as the expertise of our energy sector workers to create low-carbon, blue hydrogen. In total, this sector could represent 350,000 jobs by 2050 and help ensure that Canada can provide the low-carbon energy resources that the world increasingly demands.
I believe the end goal in growing the economy and supporting innovation while cutting emissions is one that I share with the member for Calgary Centre. However, Bill C-262 is fundamentally flawed in its approach. As written, the bill would undermine Canada's pollution pricing regime and would therefore undermine the stated purpose of the bill, which is fighting climate change. This is because Bill C-262 would create a situation where the government is heavily and perhaps fully subsidizing a project by tying the rate of tax credit to the pollution price, and as our pollution price steadily rises and our industry pricing becomes more strict, the tax benefit would grow disproportionately.
The bill would give an unfair advantage to CCUS as the choice for emissions reductions, whereas there may be much cheaper ways of achieving the same emissions reductions. I do not believe that is the most responsible use of the public purse. Rather than prejudge what the most efficient solution is, our approach is to utilize the market to decide for us. It may be CCUS, and we are developing a plan for that, but it cannot and will not be the whole plan.
Our approach is utilizing the stick of increasing the cost of pollution to encourage business to invest in greening their operations or to invest in emissions reductions elsewhere, and we are using the carrot through the competitive challenges to find the best solutions to reduce emissions from our biggest point sources. We are making calculated investments through the most promising technologies, through the strategic innovation fund's net-zero accelerator program, and our approach will ensure that we achieve the greatest results in emissions reductions at the lowest cost, while supporting Canada's clean tech sector to continue to punch well above its weight domestically and internationally.
For that reason, Bill C-262 would undermine this system and economical climate action overall and, as a result, I will be voting against it.