Canada’s energy service contractors seek new tax credit to help cut emissions

The Canadian Association of Energy Contractors (CAOEC), which has a mandate to promote a strong energy services industry in Canada, is lobbying the federal government for a 50% refundable tax credit for drillers looking to put new carbon-abatement technologies into service.

“The challenge for our industry is there’s a lack of capital interest in the energy services space,” said CAOEC president Mark Scholz at an association event this week. “We’re excited about the future, but we need support to get there.”

Scholz said there are existing technologies, including hydrogen-powered rigs, fuel-switching technology and on-site carbon capture, that the drilling industry could deploy immediately to begin cutting emissions. But, due to a seven-year down cycle in Canada’s oil and gas industry that came to an end this year, technology investments have been uncommon for some time.

“I wouldn’t describe our industry as profitable or sustainable yet. We will get there. The challenge is we have a 2030 target of reducing emissions,” Scholz said. “We’re going to need government collaboration to get there.”

Scholz noted that the federal government’s fall economic statement proposed a refundable tax credit for investments in clean technology. He’s hopeful that a credit will be available to drillers interested in investing in carbon-reduction technologies and cleaner energy sources.

“My members now are not only drilling for hydrocarbon resources; they’re drilling for lithium, they’re drilling for geothermal, for helium,” Scholz said. “They’re going to continue to drill for natural gas, which is going to be the feedstock for the hydrogen industry. You cannot have a successful transition or transformation of our energy system without our members.”

Kim Biggar

Kim Biggar started writing in the supply chain sector in 2000, when she joined the Canadian Association of Supply Chain & Logistics Management. In 2004/2005, she was project manager for the Government of Canada-funded Canadian Logistics Skills Committee, which led to her 13-year role as communications manager of the Canadian Supply Chain Sector Council. A longtime freelance writer, Kim has contributed to publications including The Forwarder, 3PL Americas, The Shipper Advocate and Supply Chain Canada.

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