Canada’s CCUS ITC: Five More Years at Full Rates

Rates and the Window

Rates apply to qualified expenditures as incurred — the CCUS ITC runs on cumulative expenditure tracking rather than the available-for-use convention of the other credits, with a refurbishment credit capped at 10 percent of pre-operational spend available through the roughly twenty-year project review period. Labour requirements apply, with the standard ten-point reduction where the election is not made.

Eligibility and the NRCan Gate

Eligible projects capture CO₂ from air or point sources and commit it to dedicated geological storage in a designated jurisdiction — Alberta, Saskatchewan and British Columbia today — or to storage in concrete. Projects must be expected to support capture across a twenty-year review horizon, and eligibility runs through NRCan: a project plan and initial evaluation before any claim, FEED-stage documentation, and annual progress reporting thereafter.

Recovery mechanics police the plan: at five-year intervals across twenty years, actual eligible use is measured against the plan, with recovery taxes on shortfalls and recapture on disposition or export of credited property.

The EOR Reversal

Budget 2025 expressly declined to make enhanced oil recovery an eligible use. The April 2026 Spring Economic Update — delivering on the Canada–Alberta memorandum of November 2025 — reversed course: EOR-destined capture would earn half the standard rates (30 percent DAC, 25 percent other capture, 18.75 percent transport and storage) for expenditures from April 28, 2026, conditional on at least 95 percent permanent storage, jurisdictional designation, and weighted-average treatment for mixed projects.

Draft legislation had not been released as of late August 2026 — the proposal is real enough to plan around and unfinished enough to keep conditions under watch.

Against the US 45Q

Both regimes carry validation and recovery machinery; neither is claimable on the same equipment as its hydrogen credit.

Stacking With Clean Fuel Programmes

The capture capital earns the ITC once; the tonnes keep earning in the operating programmes. Upstream CCUS creates credits under the Clean Fuel Regulations — the Canada–Alberta Implementation Agreement contractualises a 20 percent minimum CFR credit creation rate for upstream CCUS — and capture at industrial facilities generates emission performance credits under TIER and its provincial counterparts. Where the capture sits on a fuel production process, the CI reduction deepens the plant’s CFR or BC LCFS pathway on every unit sold.

Designing the ITC claim, the CFR quantification and the TIER position together — rather than as three files owned by three teams — is what turns a capture project from a compliance cost into a credit portfolio.