The Canadian government announced greater investment tax incentives for hydrogen and clean technology in its fall economic statement. The proposed credits would allow the country to equal the financial incentives provided to American manufacturers by the Inflation Reduction Act (IRA).
The government suggested a tax credit of up to 30% of the capital cost of investments in small modular nuclear reactors, wind, hydro, and solar systems, battery energy storage, low-carbon heating equipment, and industrial zero-emission vehicles used in mining or construction.
Clean hydrogen investments could be eligible for a 40% tax credit. The tax credit will be accessible once the 2023 budget is finalized and will gradually disappear after 2030. The clean technology and clean hydrogen tax credits, according to Deputy Prime Minister Chrystia Freeland, are intended to boost the appeal of investing in Canada for firms.
In order to be qualified, businesses must meet a number of labor conditions, such as paying market-rate salaries and providing employees with training opportunities.
The government also established the Canada Growth Fund to boost emissions reductions by accelerating the development and deployment of low-carbon hydrogen and other decarbonization projects. The government made the initial contribution of C$15 billion ($11.12 billion) to the fund.
The government also committed to increase funding for agencies in charge of clean energy projects, which will expedite the approval process and ensure Canada’s competitive advantage in international clean energy markets.
