In the competition to develop a carbon dioxide removal industry, the United States seemingly dominated the puck from the opening faceoff while Canada was still lacing up its skates.
But rather abruptly, the situation has changed. The U.S. had a substantial lead in developing this new sector based on cutting-edge technology, one many experts firmly believe will be a keystone of the future economy. Now, there’s a new head coach in town, and he appears to have benched all his players.
Should we stop and stare at this bizarre behaviour? Of course not. We don’t need an empty net, but let’s not waste an advantage.
Carbon dioxide removal, commonly called CDR, is a suite of methods that pull carbon dioxide out of the air to limit the damage caused by climate change. This emerging industry is a potential economic powerhouse that could create 95,000 to 130,000 jobs per year if we removed the equivalent of just 15 per cent of Canada’s annual emissions, according to a recent Rhodium Group report.
But carbon dioxide can be captured anywhere. And the U.S. seemed to have the edge with significant funding for CDR in the Inflation Reduction Act. It pledged US$3.5-billion to build four direct air capture hubs, a technology that uses giant fans to pull in air before selectively absorbing the carbon dioxide. They also offered generous production tax credits to spur the work. But under the chaotic decisions being made by the Trump administration, funding for these projects is frozen and uncertain.
This is a chance for Canada to generate some offence and take the lead. And luckily, there are signs of real momentum. Within the past three months, three provinces – Ontario, B.C. and Alberta – and the federal government have launched consultations to integrate CDR within their carbon compliance systems and establish regulations for carbon storage. Carbon dioxide must be safely and durably stored once removed from the atmosphere. Often, this takes the form of underground storage, and provinces such as Alberta and Saskatchewan are blessed with an abundance of the required geological features.
Ontario’s consultation on its proposed Geologic Carbon Storage Act just wrapped up in January. The province says a benefit of enabling carbon storage is that it will attract investment and encourage innovation.
Alberta just published a new version of its Carbon Dioxide Capture and Permanent Geologic Sequestration Protocol, which now recognizes carbon dioxide captured from the atmosphere, as well as biomass. This would allow industrial emitters in Alberta to purchase carbon removal credits to comply with emissions regulations.
And B.C. continues to move its Carbon Capture and Sequestration Protocol forward with a recent update that proposes improvements to monitoring requirements.
The federal government has released a draft of its much-anticipated direct air capture protocol as well, which would enable direct air capture projects to generate credits in provinces and territories without their own protocols.
And while all this regulatory change is happening, corporate buyers are signalling their interest in carrying the puck up the ice when lanes are clear. In 2024, buyers announced commitments to purchase more than 70,000 tonnes of carbon dioxide removal from Canadian projects.
This recent momentum is exciting, but we will need more scoring chances to make up for those early U.S. goals. As with any emerging sector, provincial governments have a key role to play and will need to deftly stickhandle the design of regulations that allow a diverse range of CDR methods to be responsibly deployed. It would help if the provinces co-ordinated their efforts on this, so developers don’t have to learn a new set of rules every time they set up in another jurisdiction. And if they want to give developers the confidence they need to invest and grow their businesses in Canada, provincial and federal governments should set an example by buying carbon removal credits to provide an initial boost in demand.
This is a critical time to set up the foundations of what could be a vital contributor to the Canadian economy. Canada has natural advantages in becoming a CDR world leader. We should capitalize on them to put thousands of people to work and do our part to protect the planet for future generations.
