Overview
- The Spring Economic Update released Tuesday makes enhanced oil recovery eligible for the federal carbon-capture investment tax credit, reversing a 2025 pledge to exclude it.
- Enhanced oil recovery injects captured carbon dioxide into oilfields to raise pressure so more oil flows, with some of the CO2 left underground.
- The measure takes effect immediately and is projected to raise $395 million in federal revenue over the next three years.
- Projects using EOR qualify for lower credit rates of 25% for capture equipment and 18.75% for transport and storage, and are limited to provinces with rules that ensure permanent CO2 storage such as Alberta, British Columbia and Saskatchewan.
- Environmental groups call the move a subsidy for more oil production, industry groups say it will unlock investment, and Finance Minister François‑Philippe Champagne says it will help store more carbon.