Carbon capture grabs big chunk of budget

OTTAWA, CANADA - The federal government has promised major spending to support efforts by oil companies and coal-dependent utilities to reduce greenhouse gas emissions, and to boost Canada's nuclear industry.

But in his budget released just recently, Finance Minister Jim Flaherty gave short shrift to the country's renewable energy sector, by failing to extend a popular program that supports clean power.

In a budget that offered some $40-billion in stimulus measures over two years, the Harper government provided $2.4-billion over five years for clean energy and efficiency projects.

Much of that money is earmarked for large projects meant to demonstrate the viability of carbon capture and storage (CCS) technology, which diverts carbon dioxide from smokestacks, purifies it, and pipes it underground for permanent storage. The Alberta-based oil industry has urged Ottawa to support development of CCS, a technology that producers contend would allow the reduction of greenhouse gas emissions even as the country expands its oil sands production.

In addition to the direct support that will be offered under two separate $1-billion funds - a green infrastructure fund and a green energy fund - Mr. Flaherty indicated Ottawa is prepared to provide accelerated tax writeoffs for companies that invest in CCS demonstration projects.

The government also announced $351-million in spending for Canada's flagship nuclear company, Crown-owned Atomic Energy of Canada Ltd. The budget plan said AECL will use the one-year allocation to continue developing its Advanced Candu Reactor, and to "maintain safe and reliable operations" at the corporation's Chalk River laboratories, northwest of Ottawa.

Critics complain that the federal effort on clean energy and the environment pales in comparison to U.S. President Barack Obama's focus on green technology.

"This budget would place Canada quite far behind the U.S. when it comes to fighting global warming," said Matthew Bramley, a researcher with the Calgary-based Pembina Institute.

New Democratic Party Leader Jack Layton said the priorities of the budget are wrong. "There's no effort to transform the economy to the greener, more efficient energy economy that we need," he said.

The five-year, $1-billion green energy fund that was unveiled yesterday will provide $150-million over five years toward research, and another $850-million for clean-energy demonstration projects, including CCS.

Mr. Flaherty did not extend financing under the ecoEnergy program that provides grants for wind, small hydro and other clean-energy projects. That program is due to expire in the coming year, and the wind industry, in particular, was keen to see it replenished. Instead, the budget allocates $300-million in funding for energy-saving home retrofits.