Canadian Gov’t Sets out $83B for Clean Investment Tax Credits
- Media Manager
- Mar 28, 2023
- 2 min read
Updated: Jul 12, 2023
Carbon Credits.com
Written By: Jennifer L
Published: March 29, 2023
Canadian industries seeking to slash their carbon footprint can expect $83 billion in clean investment tax credits after the federal government of Canada unveiled its 2023 budget.
The 2023 federal budget includes tax credits for these three investments – clean electricity, clean-tech manufacturing, and hydrogen. Adding investment credits in carbon capture and storage brings the total tax incentives to about $83 billion through to 2034-35.
Canada’s Clean Investment Tax Credits
The Canadian government said the spending is crucial to bolster the clean energy transition. It is also in response to other countries’ subsidies, particularly the U.S. Inflation Reduction Act passed in August 2022. IRA unlocked $369 billion to help heavy industries decarbonize through production tax credits.
Deputy Prime Minister Chrystia Freeland, who introduced the federal budget, noted that:
“In what is the most significant economic transformation since the Industrial Revolution, our friends and partners around the world, chief among them the United States, are investing heavily to build clean economies.”
The largest focus of the tax credits is on clean electricity, which costs more than $6 billion over the first 5 years beginning in 2024. That amount will go up to over $25 billion until 2034-35.
Indigenous-owned companies and provincial utilities can benefit from the clean tax credits.
Cleantech manufacturing will get about $11 billion in credits while carbon capture will take over $12 billion through to 2034-35.
The clean hydrogen credit is worth about $5.6 billion over 5 years. Higher rebates go to projects that produce the cleanest hydrogen.
Some industry players believe that the credit package for clean electricity is the most significant for meeting Canada’s climate goals.
Canada adopted construction-focused project support, while the US opted for operational incentives depending on production volumes. In a sense, Canada has to offer more to compete with the US which rolled hundreds of billions of tax incentives.
