Canada has committed to financing investment tax credits (ITCs) for carbon capture and storage (CCS) and net-zero energy technologies, as outlined in its Fall Economic Statement (FES) released on Tuesday. This move follows previously announced subsidies aimed at attracting increased investment in sustainable initiatives.
The FES, responding to the push for decarbonizing Canada's oil sands, includes the legislation of labor requirements tied to the ITC programs, with a specific focus on CCS. Canada, as the world's fourth-largest petroleum producer, aims to position itself as a leading global supplier of green technology, aligning with Prime Minister Justin Trudeau's vision.
The ITC programs, coupled with contracts for difference, are designed to enhance Canada's competitiveness in comparison to the United States, which has been offering substantial incentives through the Inflation Reduction Act introduced over a year ago. U.S. President Joe Biden has praised the economic impact of the IRA, estimating over $132 billion in investment across more than 270 new clean-energy projects.
According to the FES, ITCs for clean hydrogen and clean technology manufacturing will be introduced after the spring budget, while those for clean electricity are scheduled for the end of the following year.
Additionally, the statement unveils a new ITC covering 30% of investments in waste biomass generating heat and electricity, along with 15% for waste biomass producing electricity.
Through the Canada Growth Fund, the country plans to escalate contracts for difference, ensuring the future price of carbon credits for investors. The FES specifies that up to C$7 billion ($5.1 billion) of the fund's C$15 billion capital will be allocated on a priority basis.
Michael Bernstein, Executive Director of Clean Prosperity, a climate policy advocacy group, praised the announcement, stating, “Today's announcement is an important step for stimulating Canadian low-carbon economic growth and for climate action.”
