Canada’s Fall Economic Statement (FES) has announced that the country will finance investment tax credits (ITCs) for carbon capture and storage (CCS) and net-zero energy technologies. This move followed the recently announced subsidies meant to attract more green investment.
CCS is considered crucial in Canada’s efforts to decarbonize its oil sands, as the country is the world’s fourth-largest producer of petroleum. Prime Minister Justin Trudeau has expressed his desire for Canada to become a leading global supplier of green technology.
The ITCs and contracts for difference are intended to help Canada compete with the United States, which has been offering generous incentives through the Inflation Reduction Act introduced over a year ago.
According to Reuters, U.S. President Joe Biden has lauded the $430 billion IRA passed in August 2022 as an economic powerhouse. Bank of America estimates it has already spurred $132 billion of investment across more than 270 new clean-energy projects.
The FES also announced that ITCs for clean hydrogen and clean technology manufacturing will be launched after the spring budget, while those for clean electricity will follow at the end of next year.
Additionally, a new ITC covering 30% of investment in waste biomass that produces heat and electricity and 15% for waste biomass that produces electricity will also be introduced.
Through the Canada Growth Fund, the country will increase its contracts for difference, which guarantee the future price of carbon credits for investors.
The FES states that the fund will prioritize allocating up to C77 billion ($5.1 billion) of its C$15 billion in capital.
“These contracts have the potential to get some of Canada’s most promising industrial emissions reduction projects off the ground, creating good jobs for Canadians,” said Michael Bernstein, executive director of Clean Prosperity, a climate policy advocacy group.
“Today’s announcement is an important step for stimulating Canadian low-carbon economic growth and for climate action,” Bernstein added.
