CarbonCapture Inc., a startup focused on carbon capture technology, has made the strategic decision to relocate its inaugural commercial pilot project from the United States to Canada. This move is primarily driven by the perceived stability of government incentives and a supportive regulatory environment in Canada, which contrasts with recent uncertainties experienced in the U.S.

The company’s subsidiary, True North Carbon, is currently constructing a direct air capture (DAC) system in Alberta, Canada, with an anticipated operational date by the end of October. Upon reaching full capacity, this system is designed to capture 2,000 tons of carbon dioxide annually, positioning it as the largest operational system of its kind in Canada. According to Adrian Corless, CEO of CarbonCapture, Canada’s tax incentives and clear regulatory landscape are expected to significantly facilitate the scaling of the carbon capture and storage industry.

Initially, CarbonCapture had planned to develop this project in Arizona, with components already manufactured and ready in a factory within the state. However, a crucial policy shift occurred earlier this year when Energy Secretary Chris Wright terminated billions in awards issued by the Office of Clean Energy Demonstrations. This action prompted CarbonCapture to swiftly pivot, shipping all the necessary equipment to a rural farmland site in Alberta within a few months. Corless expressed concerns that the U.S. program for DAC hubs, which originated under former President Joe Biden, might face cuts or scalebacks due to shifts in climate and energy policy under a changing administration. These concerns were further validated when Bloomberg News reported that CarbonCapture’s regional DAC hub project was among $7.6 billion in projects that the Energy Department intended to cancel following a government shutdown.

Canada provides substantial financial incentives, including a 60% investment tax credit for DAC projects deployed within the country. The Alberta government further enhances this by offering an additional 12% on top of the federal credit for projects based in the province. These combined incentives are critical, as Corless noted, to “significantly improve the economics” of carbon capture projects, which currently incur high operational costs of approximately $1,000 per ton at the pilot level for CarbonCapture’s technology. These incentives are deemed essential for the successful scaling of the DAC technology.

The chosen location for the 2,000-ton system is Innisfail, Alberta, situated just north of Calgary, a prominent oil and gas hub. Alberta offers a robust infrastructure conducive to carbon capture operations, boasting the world’s third-largest oil reserves, a long history of capturing carbon from industrial smokestacks, and a well-established network of CO2 pipelines, with further expansion planned. CarbonCapture has formed a partnership with the Canadian startup Deep Sky, which operates the facility housing the new system. The site features a three-story structure resembling stacks of air conditioning units, where large fans draw air through specially engineered cartridges to absorb CO2. The captured greenhouse gas is then transported via pipeline to a tank, from which it will eventually be trucked to another location for deep underground burial. Deep Sky’s facility is a collaborative hub, hosting DAC systems from five other companies, with more planned. CarbonCapture and Deep Sky will jointly manage the operational costs and share the proceeds from carbon credit sales.

This relocation follows a previous attempt by CarbonCapture to establish a DAC facility in Wyoming, which aimed to capture 5 million tons of CO2 annually by 2030. Those plans were abandoned last year, primarily due to a lack of available carbon-free energy and significant transmission constraints, making power acquisition a multi-year challenge. In contrast, Corless anticipates that interconnection in Alberta will be achieved in “a matter of months, not years,” highlighting the efficiency and readiness of Canadian infrastructure.