Justin Trudeau’s government is set to provide a substantial boost to the green economy, including carbon capture, with its 2023 budget. Canada is set to spend $61 billion (C$83B) over the next ten years to promote decarbonization through clean economy tax credits across its energy industry.
Targeting renewable electricity production, clean-tech manufacturing and hydrogen, the tax credits are touted as a watershed moment for the Canadian economy.
While introducing the budget Deputy Prime Minister Chrystia Freeland said: “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.”
Electricity generated by renewable sources like wind and solar, among others, will receive the lion’s share of funds with $4.65 billion (C$6.3 billion) in the four years between 2024-28, with the amount increasing to $19 billion (C$25.7 billion) until the 2034-35 fiscal year.
The money will be distributed through a 30% tax credit for cleantech manufacturing (including critical minerals), a 15% tax credit for renewable projects and another 15% credit for technology that is involved in hydrogen to ammonia conversion.
The new $9.15 billion (C$12.4 billion) increase for carbon capture can be seen as incremental, but with it essentially directed at oil & gas companies, it’s possible that the government prefers not to allocate funds to an industry that has largely had a bumper year.
The move follows pressure from last year’s Inflation Reduction Act in the U.S., which could provide up to $1 trillion for eligible projects. Companies from Canada, the UK and the EU have indicated that these incentives could make them move to the U.S.
Eligibility for carbon capture projects has also been widened to include cement plants. The cement industry is responsible for 8% global emissions.