New clean economy legislation to propel Canada’s net zero by 2050 goal

The Government of Canada has passed into law the first four Clean Economy Investment Tax Credits (ITCs), set to attract investment, boost innovation, create jobs, and steer the nation’s economy towards achieving net-zero emissions by 2050.

The Clean Technology ITC, the Carbon Capture, Utilization and Storage (CCUS) ITC, the Clean Technology Manufacturing ITC, and the Clean Hydrogen ITC, which represent $93 billion in federal by 2034-2035, were announced by Jonathan Wilkinson, Minister of Energy and Natural Resources, and Marie-Claude Bibeau, Minister of National Revenue, earlier this month.

“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,” said Wilkinson.

With the Royal Assent of Bill C-59, eligible businesses can now apply for the Clean Technology and CCUS ITCs, expected to provide around $11.4 billion in support through 2027-28. 

Also, Bill C-69 will allow businesses to apply for tax credits for clean technology manufacturing and clean hydrogen projects this fall. More details on applying for these ITCs will be provided in the coming months, said the Government of Canada.

The Clean Technology ITC offers support to taxpayers investing in specified clean technologies in Canada. The Canada Revenue Agency (CRA) handles the administration, assessment of claims, and issuing of payments, while Natural Resources Canada (NRCan) provides guidance on qualifying clean technology properties. Eligible technologies include wind turbines, solar panels, stationary electrical energy storage, low-carbon heating systems like ground and air source heat pumps, and non-road zero-emission vehicles.

The CCUS ITC, administered by NRCan and the CRA, supports Canadian corporations with eligible expenditures for qualified CCUS projects across various industrial sectors. 

The Clean Technology Manufacturing ITC is to support Canadian companies manufacturing or processing clean technologies and their precursors, for 30% of the cost of investments in new machinery and equipment for manufacturing or processing key clean technologies, and extracting, processing, or recycling critical minerals, said the Government of Canada.

The Clean Hydrogen ITC offers a refundable tax credit of 15 to 40% for projects that produce hydrogen, with the cleanest hydrogen projects receiving the most support. Equipment for converting hydrogen into ammonia for transport may also be eligible.

“Our government is committed to empowering Canadian businesses to excel as global leaders in the pivotal industries that will grow our clean economy. Providing business tax incentives that contribute to Canada’s economic well-being is at the core of the Canada Revenue Agency’s mandate. We will continue to champion Canada’s clean economy, and the visionary businesses investing in it, through our ongoing engagement with industries, stakeholders and the tax professional community,” said Marie-Claude Bibeau, Minister of National Revenue.

Marine Renewables Canada has voiced its support for the initiative, stating that this new legislation implements major economic ITCs to attract private investment, create jobs, and grow the economy through clean energy, including Marine renewable energy.

This milestone comes after the Government of Canada released the Tidal Energy Task Force’s final report in February 2024, to clarify regulatory requirements for tidal energy projects in the Bay of Fundy to define the path for growth of the industry. 

The Government of Canada noted it was working with the province of Nova Scotia, indigenous communities, and industry to support the development of clean technology and energy projects, including tidal projects in the Bay of Fundy.