2023-11-20 21:05:37
The federal government will introduce legislation this month to provide grants for carbon capture and carbon neutral projects, as part of a plan worth about $20 billion over five years, according to an anonymous source with direct knowledge of the matter.
Industry lobbies said in September that investments worth more than $50 billion were at risk if the Canadian government did not act quickly. They denounce the delay in state support for carbon capture, utilization and storage (CCUS) projects as well as equipment used to produce low-carbon energy.
The source adds that Canada’s Finance Minister, Chrystia Freeland, will make the investment tax credit funding announcement when she presents her Fall Economic Statement (FAS) on Tuesday.
Labor provisions related to most investment tax credits will also be presented. They require investors to pay workers the prevailing union wage and provide apprenticeship opportunities in order to receive the maximum subsidy.
Previous budget documents estimated that all five investment tax credit programs together would raise about $27 billion over their first five years of operation.
Incentives in the United States
Compared to the United States, Canada lags behind when it comes to providing financial incentives for new technologies to reduce greenhouse gas emissions
Washington is providing financial incentives to clean energy companies due to the Inflation Reduction Act (IRA) passed in August 2022. More than US$430 billion has been invested in the IRA.
US President Joe Biden considers it an economic driver. Bank of America estimates that this has already spurred $132 billion in investment through more than 270 new clean energy projects.
The source maintains that there is a global race for capital and investment in this type of project and that the government is trying to provide certainty to investors.
Canada is the world’s fourth largest oil producer.
Carbon capture, utilization and storage (CCUS) technology is seen as essential to reducing emissions from Alberta’s oil and gas companies without reducing their production. The investment tax credit is central to helping the government achieve its net zero emissions targets by 2050.
Existing measures
The CCUS was announced in 2021 and the clean technology investment tax credits were announced a year later, both before the IRA was launched. However, Canada is only now beginning to put in place the legislation needed to keep the money flowing.
Chrystia Freeland will also announce a timetable for other promised investment tax credits as well as a public consultation for two of the three remaining programs that begin this year, says the source who is not authorized to speak officially .
She adds that the minister will also announce legislation for all of these programs by the end of next year.
According to this same source, the government will announce investment tax credits for the machinery and tools necessary to build green technologies and produce hydrogen in spring 2024.
With information from Archyde.com
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