Canada Introduces Inflation-Like Act to Support Renewable Energy
Recently, the federal government of Canada passed a new investment tax credit for six years, and from now until the end of March 2034, newly deployed solar, wind and energy storage projects in Canada will enjoy the tax credit provided by the Canadian government.
The tax deduction (ITC) is in two phases: the refund rate will be 30% by the end of December 2033 and reduced to 15% in 2034. In the 2023 budget approved by the Canadian government, the ITC policy is extended to geothermal energy, solar, wind energy and energy storage, as well as new hydropower, wave/tidal energy, nuclear energy, natural gas power generation, etc. In addition, for eligible hydrogen projects, the Canadian government will grant up to 40% ITC tax relief.
The 2023 budget released by the Government of Canada shows that the development of a clean economy is listed alongside health care and “affordability” as one of the core priorities.
Under the budget, the government confirmed a 30% refundable credit for taxable entities’ investments in clean energy technologies such as solar, battery storage and wind. The measures build on the Fall 2022 Economic Declaration plan, which was reported by our sister site EnergyStorage.news.
In addition, the Canadian government announced a 15% tax rebate for investments in clean power generation and energy storage by non-tax-paying entities, such as local communities and municipal utilities.
The Canadian government is also proposing to introduce a 30% rebate credit for cleantech manufacturing, applying to investments in machinery and equipment used in manufacturing processes, as well as extracting, processing and recycling critical materials in the clean supply chain.
As part of the budget announcement, the Canadian Infrastructure Bank will invest up to C$20 billion (US$14.7 billion) in clean energy growth and infrastructure projects in the form of two separate C$10 billion (US$7.3 billion) facilities in the Clean Power Priority and Green Infrastructure Priority Areas. The government says the investments will come from existing resources.
In Budget 2021, the government announced a 50% income tax cut for manufacturers of zero-emission technologies, and the new Budget 2023 will be extended for another three years and extended to nuclear equipment manufacturers.
The budget also includes a 13-year plan to invest C$3 billion ($2.2 billion) to support clean energy projects through infrastructure, smart grid development and research into offshore wind.
The Canadian Renewable Energy Association welcomed the 2023 budget announcement as a boon for boosting the industry’s competitiveness, said Evan, the association’s senior director of policy and government affairs “Choosing investment tax credits for clean technologies such as wind, solar, energy storage and green hydrogen puts Canada in a competitive lead in accelerating decarbonization of the energy sector,” Wilson said. ”
In its official statement, the Canadian Renewable Energy Association said, “Supported by these new investment tax credits, we expect the development of new wind, solar and energy storage to accelerate significantly.” “
Stefano Romanin, CEO of Westbridge Renewables, a Canadian renewable energy company, at a presentation to PV “With Canada’s electricity consumption expected to double by 2050, it is imperative to invest in clean technologies to help us meet this demand in a sustainable way,” a Tech statement said. These measures will not only further support companies working directly in this area, but also help attract nearly $150 billion in investment to help Canada meet its goal of net-zero emissions by 2050. “
The Inflation Reduction Act (IRA), passed last year in the United States, sets aside huge credits for investments in the energy transition. Canada’s Finance Minister Cristia Freeland Freeland) pledged to support Canada’s green energy stimulus, saying the bill provides a huge incentive for those investing in clean technology in the United States.