By Steve Scherer
OTTAWA (Reuters) – Canada will finance investment tax credits for carbon capture and storage (CCS) and for net-zero energy technologies, following through on previously announced subsidies meant to attract more green investment, its Fall Economic Statement (FES) said on Tuesday.
The financing of two of the investment tax credit (ITC) programs, and the legislation of the labor requirements that will be tied to them, was reported exclusively by Reuters on Monday.
CCS is seen as key to decarbonizing Canada’s oil sands. Canada is the world’s fourth-biggest petroleum producer. Prime Minister Justin Trudeau has said he wants Canada to be a leading global supplier of green technology.
The ITCs and contracts for difference are meant to help Canada compete with the United States, which is offering generous incentives through the Inflation Reduction Act introduced more than a year ago.
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.
ITCs for clean hydrogen and for clean technology manufacturing will be launched after the spring budget, according to the FES, while those for clean electricity will follow at the end of next year.
The FES on Tuesday also announced a new ITC covering 30% of an investment in waste biomass that produces heat and electricity, and covering 15% of waste biomass that produces electricity.
Through the Canada Growth Fund, Canada will ramp up contracts for difference, which help guarantee the future price of carbon credits for investors. The FES stipulates that the fund will allocate, on a priority basis, up to C$7 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 said.
($1 = 1.3718 Canadian dollars)
(Reporting by Steve Scherer in Ottawa; Editing by Matthew Lewis)
