Canada to set up tax credits for clean tech, launch growth fund – hydrogen included.
Canada will introduce refundable tax credits for clean technologies worth up to 30% of investment costs, in a bid to close competitive gaps with the United States in scaling up green technologies, the government said.
It will also launch a growth fund, first announced in April, by the end of the year with a capitalization of C$15 billion ($10.92 billion) to help mitigate the risks private investors take on when investing in new technologies and infrastructure.
The clean-tech tax credits will be offered for investors in net-zero technologies, battery storage and clean hydrogen, according to the so-called fall economic statement (FES) presented to the House of Commons by Finance Minister Chrystia Freeland.
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Scott MacDougall, a senior advisor at the Pembina Institute, a clean energy think-tank, said:
The new green transition measures are a step in the right direction, but still not enough.
Freeland last month promised an initial “response” to the U.S. Inflation Reduction Act (IRA), which was signed into law by U.S. President Joe Biden earlier this year and contains generous incentives for consumers and businesses to make the low-carbon transition.
Canada on Thursday also proposed a 2% tax on corporate stock buybacks, similar to a measure in the IRA, that is meant to “encourage corporations to reinvest their profits in their workers and business,” the FES said.
The tax will generate an estimated C$2.1 billion over five years and will come into force on Jan 1, 2024.
“In terms of trying to foster business investments, I don’t think it’s well targeted,” said Robert Asselin, senior vice president of policy at the Business Council of Canada.
One of the investment offerings foreseen by the growth fund are so-called “contracts for difference”, which could help investors in carbon capture and storage mitigate the risk that a future government eliminates Canada’s carbon pricing system.
In next year’s budget, Canada will introduce new measures to increase advanced manufacturing competitivness, the document said.
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Canada to set up tax credits for clean tech, launch growth fund, Ottawa, November 3, 2022
