Federal government launches clean economy investment tax credits
By Plant Staff
Cleantech Canada Industry Innovation & Technology News Sustainability Energy Government Manufacturing cleantech financing government manufacturingThe Clean Technology Manufacturing ITC will provide support to Canadian companies that are manufacturing or processing clean technologies and their precursors.
OTTAWA — The Cdn. government’s announcement of introducing Clean Economy Investment Tax Credits (ITCs) is aiming to play an essential role in attracting investment and driving Canada’s economy toward net zero by 2050.
On Jun. 21, Jonathan Wilkinson, Minister of Energy and Natural Resources, and Marie-Claude Bibeau, Minister of National Revenue, announced the passing into law of the first four Clean Economy Investment Tax Credits: the Clean Technology ITC, the Carbon Capture, Utilization and Storage (CCUS) ITC, the Clean Technology Manufacturing ITC, and the Clean Hydrogen ITC.
With the Royal Assent of Bill C-59, the Fall Economic Statement Implementation Act, 2023, eligible businesses can now apply for and claim the Clean Technology and CCUS ITCs. The Clean Technology ITC and CCUS ITC are anticipated to provide eligible companies approximately $11.4 billion in support through 2027–28.
With the Royal Assent of Bill C-69, the Budget Implementation Act, 2024, No. 1, eligible businesses should be able to apply for tax credits this fall for clean technology manufacturing and clean hydrogen projects. The federal government says that further information on applying for the Clean Technology Manufacturing ITC and Clean Hydrogen ITC will be provided in the coming months.
The Clean Technology ITC will provide support to qualifying taxpayers who are investing capital in specified clean technologies in Canada. The Canada Revenue Agency (CRA) is responsible for administering the Clean Technology ITC, including assessing claims and issuing payments, while Natural Resources Canada (NRCan) is responsible for providing guidance on what qualifies as a clean technology property. Examples of eligible clean technologies include clean electricity generation equipment such as wind turbines and solar panels, stationary electrical energy storage, low-carbon heating systems such as ground and air source heat pumps, and non-road zero-emission vehicles.
The CCUS ITC, administered jointly by NRCan and the CRA, will provide support to taxable Canadian corporations that incur eligible expenditures for qualified CCUS projects. The CCUS ITC is available to a broad range of CCUS applications and projects across different industrial sectors.
The Clean Technology Manufacturing ITC will provide support to Canadian companies that are manufacturing or processing clean technologies and their precursors, providing support for 30 percent of the cost of investments in new machinery and equipment used to manufacture or process key clean technologies, and extract, process, or recycle key critical minerals.
The Clean Hydrogen ITC will provide a 15 to 40 percent refundable tax credit for investments in projects that produce hydrogen, with the projects that produce the cleanest hydrogen receiving the highest levels of support. Equipment needed to convert hydrogen into ammonia, in order to transport hydrogen, may also be eligible.
“Clean technology innovation and projects will be a key driver of how we decarbonize, create jobs and bring investment to Canada as we build a prosperous net-zero economy in 2050. Canada’s Investment Tax Credits will reduce emissions and create hundreds of sustainable jobs for Canadians, exemplifying how climate action and economic growth go hand in hand. We are bringing benefits for Canadians today and into the future, and ensuring Canada is a global economic leader of the future,” said Jonathan Wilkinson, Minister of Energy and Natural Resources.
