Energy minister hints at support for carbon capture in climate strategy, no mention of emissions cap

Ahead of the release of Prime Minister Mark Carney’s climate competitiveness strategy, his energy minister offered some hints of what will be included when it's introduced in Tuesday’s budget.

Energy and Natural Resources Minister Tim Hodgson spoke Wednesday ahead of meetings with officials and fellow G7 environment and energy ministers.

Stakeholders in the environment and clean tech space had expected Ottawa to release the strategy ahead of the two-day G7 meeting, which officially begins Thursday in Toronto.

But without mentioning the climate strategy specifically, Hodgson spoke about three levers guiding the government's work.

One involves "tactically using" public funding and tax credits to lessen risk and spur investment in "first-of-a-kind projects," Hodgson said. 

The goal, the minister said, is ensuring the Canadian economy "stays competitive and Canadian products compete — and win — in a low-carbon world."

The minister suggested Canada's burgeoning carbon capture, storage and removal sector could be de-risked and scaled with government funding.

He cited Arca, a Canadian company that on Wednesday announced it had signed a deal with Microsoft to remove carbon dioxide from the atmosphere. The company has received funding from NorthX Climate Tech — a Canadian organization supported by Natural Resources Canada. 

Hodgson said Ottawa is also focused on creating an environment of regulatory certainty which requires predictable policies, faster timelines and reliable permitting. The federal government is already in the process of implementing its law to fast-track major resource projects.

The minister said the final lever is the use of artificial intelligence to make energy systems "smarter, faster and more resilient."

"AI is already reshaping how we produce, move and consume energy," Hodgson said. "It is helping operators predict grid demand in real time, accelerating materials discovery for better batteries and optimizing renewable energy like wind farms."

A senior federal government source not authorized to speak publicly says the first two levers —incentivizing more investment in clean tech innovation and providing certainty to industry — are "relevant" to the climate competitiveness strategy.

Hodgson's remarks made no mention of the future of the proposal to cap industrial emissions. The budget date, Nov. 4, marks a year since the federal government released its proposed regulations to impose a hard cap on emissions from the oil and gas sector — the largest share of Canada's emissions.

A former federal government adviser on climate policy, Louise Comeau, said Hodgson is signalling that the Carney government favours carbon capture and storage over an emissions cap.