Canada’s Carbon Strategy Fuels Next-Phase CCUS Growth

Clearer rules and tax credits energize Canada’s CCUS sector, but most large-scale projects remain years from full build-out

12 Feb 2026

Canada has placed carbon capture, utilisation and storage at the centre of its industrial climate policy, betting that clearer incentives and rules will unlock large-scale investment while preserving heavy industry.

Under its Carbon Management Strategy, Ottawa is offering investors regulatory certainty and financial support, anchored by a federal CCUS Investment Tax Credit now written into law. The measure provides capital backing for projects that often require billions of dollars in upfront spending.

The policy framework is in place, but most developments remain at the stage of engineering studies, financing negotiations and regulatory approvals. Construction on many flagship schemes has yet to begin.

Some progress is visible. Pathways Alliance, a group representing leading oil sands producers, is advancing plans for a carbon capture network in Alberta. The project would gather carbon dioxide from multiple facilities and store it underground. However, it is not fully financed and has not entered construction. Its timetable depends on co-ordination between federal and provincial authorities, as well as sustained policy support.

Shell Canada has moved further on two projects, Polaris and Atlas, both of which have reached final investment decisions. Operations are expected later this decade. These commitments suggest confidence in Canada’s policy direction, though commercial returns remain several years away.

Ottawa views carbon management as essential to achieving its target of cutting greenhouse gas emissions by 40 to 45 per cent below 2005 levels by 2030. In sectors such as cement, steel and oil sands, electrification alone is unlikely to deliver deep reductions. CCUS is seen as one of the few scalable options available to curb industrial emissions without closing facilities.

Yet the path forward remains complex. Environmental assessments and consultations with Indigenous communities are mandatory and can alter project timelines. Industry executives argue that policy ambition must translate into predictable regulatory decisions if capital is to be deployed at scale.

With the US and Europe introducing generous clean energy subsidies, Canada faces growing competition for investment. Whether its strategy can convert tax credits and policy clarity into operating infrastructure will shape its industrial transition in the years ahead.