Canada will present legislation this month to start paying subsidies for carbon capture and net-zero energy projects, Reuters reported, citing a source with knowledge on the matter. The new law would be part of a plan worth approximately $20 billion over five years.
A prolonged wait for state backing for carbon capture utilization and storage (CCUS) projects and equipment used for low-carbon energy production led industry groups to caution in September that about CAD $50 billion (USD $36 billion) in investments could be jeopardized without prompt government action.
Canada’s Finance Minister, Chrystia Freeland, is set to reveal the funding for the investment tax credit (ITC) during her presentation of the Fall Economic Statement (FES) to parliament on Tuesday afternoon, according to Reuters’ source.
The upcoming FES legislation, scheduled to be submitted to parliament later this month, will incorporate the details, according to the source. Earlier budget documents projected that the collective impact of all five ITC programs would channel approximately C$27 billion ($19.7 billion) over their initial five years of operation.
At the same time, the government will present to parliament the labor provisions associated with most of the ITCs. These provisions mandate that investors adhere to the prevailing union wage and offer apprenticeship opportunities to qualify for the maximum subsidy.
CCUS is considered crucial for reducing emissions from Alberta’s oil sands without compromising production, especially as Canada ranks as the world’s fourth-largest oil producer. The move towards a low-carbon economy stands as a foundational element in Prime Minister Justin Trudeau’s economic policy. Investment tax credits (ITCs) play a pivotal role in aiding the government’s pursuit of achieving net-zero emissions by 2050.
There is “a global race for capital and investments in these sorts of projects,” the source told Reuters. “The government is trying to provide certainty to investors.”