How FEED Studies De‑Risk Carbon Capture (CCUS) Projects in Canada

Carbon capture, utilization, and storage (CCUS) projects can cost hundreds of millions of dollars to build. For most project teams, the biggest risk comes before construction begins. Front-End Engineering and Design (FEED) studies help reduce this risk and make projects ready for investment. In Canada, the federal government is funding FEED work through the Energy Innovation Program (EIP) to help strong CCUS projects reach a final investment decision.

What Is a FEED Study and Why Does It Matter?

A FEED study is a detailed engineering phase that comes after a project’s concept design but before construction. For CCUS projects, FEED usually matches FEL‑3 (Front-End Loading Level 3) readiness.

A good FEED study helps CCUS projects in four important ways:

Cost certainty: Creates a Class 3 cost estimate, accurate to within ±10–15%, which banks and investors expect.
Technical validation: Confirms the right technology, how it fits with existing facilities, and designs for CO₂ capture, transport, and storage.
Schedule confidence: Sets a realistic timeline for construction and commissioning.
Permitting readiness: Finds out which regulatory approvals are needed and addresses environmental and Indigenous consultation requirements early.

Most CCUS projects need a strong FEED study to secure financing or government support for construction. Without it, moving forward is difficult.

How the Energy Innovation Program (EIP) Supports CCUS FEED Studies

The Energy Innovation Program (EIP): CCUS Front-End Engineering and Design (FEED) Call for Proposals is a federal, non-repayable grant managed by Natural Resources Canada (NRCan).

Key Program Facts

Funding amount:
- $3 million to $7 million per project
- Covers up to 50% of eligible costs
- Covers up to 75% for Indigenous applicants
Purpose:
Supports FEED studies for advanced CCUS projects to reduce risk for investors and help grow Canada’s CCUS sector.
Eligible applicants:
- For-profit businesses
- Utilities
- Indigenous governments or organizations
  Applicants must be Canadian legal entities responsible for the CCUS capital investment.
Project location:
All activities must take place in Canada.
Ineligible projects:
Projects mainly focused on enhanced oil recovery (EOR) are not eligible.

You can use GrantHub’s eligibility matcher to compare CCUS funding programs by province, technology, and project stage.

What Activities Are Funded in a CCUS FEED Study?

The EIP CCUS FEED program has a clear focus. Funding is meant to help projects reach an investable stage—not cover early research.

Eligible activities usually include:

Detailed process and mechanical engineering
Choosing and improving capture technology
Designing CO₂ compression, transport, and storage systems
Preparing Class 3 capital and operating cost estimates
Doing risk assessments and planning for problems
Creating project schedules and execution plans
Developing permitting strategies and regulatory analysis
Planning for Indigenous engagement

All activities must support FEED outcomes and show technical, commercial, and financial readiness.

Why Do Investors and Lenders Care About FEED?

From a financing point of view, FEED is what turns a project from an idea into something investors can trust.

Investors and lenders look for:

Verified capital costs
Clear project scope with few design gaps
Known regulatory and environmental risks
A strong plan for getting the project built

By supporting FEED, the federal government takes on some early risk. This makes it easier for private investors to join later. This is especially important for CCUS, where many projects are first-of-their-kind and face higher risks.

Common Mistakes to Avoid

Applying too early
Projects that are not at FEL‑3 readiness likely won’t be competitive. FEED funding is not for early-stage concepts.
Not planning for cost-sharing
Most applicants must match funding dollar-for-dollar. Secure your matching cash before you apply.
Including EOR economics
If your project relies on enhanced oil recovery, even in part, it may not qualify.
Weak permitting plans
Applications that do not clearly explain how they will handle environmental and regulatory approvals may be rejected.

Frequently Asked Questions

Q: How much funding can a CCUS FEED project receive in Canada?
Most projects can receive between $3 million and $7 million, covering up to 50% of eligible costs. Indigenous applicants may receive up to 75% cost coverage.

Q: What level of readiness is required for EIP CCUS FEED funding?
Projects must show advanced technical, commercial, and financial readiness, usually at FEL‑3 standards.

Q: Are utilization projects eligible under the CCUS FEED call?
Yes, utilization can be eligible if it is part of a larger CCUS system and meets the program’s goals.

Q: Is CCUS FEED funding taxable in Canada?
Government grants are usually considered taxable income. Check with your tax advisor for details based on your company’s structure.

Q: Can FEED funding be combined with other programs?
Combining funding may be allowed, but there are limits. Always disclose all sources of funding.

To compare clean energy and industrial decarbonization funding options—including CCUS grants—consider using resources like GrantHub.

Next Steps

If you are developing a CCUS project, completing a FEED study is a key step to make your project ready for investment. Federal programs like the EIP CCUS FEED call are designed to help good projects move forward by reducing early-stage risk. Before spending more on engineering, review your eligibility for federal and provincial funding programs.

How FEED Studies De‑Risk Carbon Capture (CCUS) Projects in Canada