Canada Expands Carbon Capture Credits to Oil Recovery

The federal government has expanded its carbon capture tax credit program to include enhanced oil recovery (EOR), formalizing a reversal of its earlier position.

EOR involves injecting captured CO₂ into aging oil fields to extract additional crude. While the process uses carbon capture technology, it also increases oil production, making the policy shift controversial.

Critics argue the move undermines Canada’s climate goals and effectively subsidizes fossil fuel expansion. They point out that the government had previously signaled EOR would not qualify for these incentives.

Ottawa, however, says the change is about staying competitive—particularly with the United States, where similar tax incentives already exist—and attracting investment into carbon capture infrastructure.

The decision highlights the ongoing tension between economic priorities and environmental commitments in Canada’s energy policy.