Clean Energy Canada | Budget 2023 a smart response to America’s clean energy investments
March 28, 2023
OTTAWA — Mark Zacharias, executive director at Clean Energy Canada, made the following statement in response to the federal government’s Budget 2023:
“With the U.S. investing half a trillion dollars into clean energy, Canada simply had to respond. Vital investment decisions are being made today that will shape the global energy landscape for decades to come, and Canada needs to put its best cards on the table.
“Budget 2023 is a carefully considered hand. While the transition to clean energy is a nation-building project that won’t be complete in one fell swoop, Tuesday’s budget builds on Canada’s pre-existing climate measures while injecting capital into a clean industrial strategy, helping secure our nation’s many competitive advantages.
“Foremost is a historic investment in building Canada’s clean electricity supply, with at least $20 billion of existing funding for the Canada Infrastructure Bank now earmarked for building new generation and infrastructure, along with another $3 billion to advance offshore wind projects, smart grids, and projects built in partnership with Indigenous nations.
“These actions are in addition to a 15% investment tax credit for new clean electricity projects estimated to be worth more than $6 billion over four years. In short, this budget recognizes that abundant, affordable clean electricity is the backbone of a sustainable economy and central to Canada’s competitiveness going forward.
“Canada’s EV battery supply chain could support up to 250,000 jobs by 2030 and add $48 billion to the Canadian economy annually. While the federal government, Ontario, and Quebec have all made laudable investments in key projects, Budget 2023 will further anchor Canada’s battery supply chain with a 30% clean technology manufacturing tax credit and $500 million added to the Strategic Innovation Fund.
“Rightly, Budget 2023 underpins Canada’s ambitions to be a battery superpower that uses Canadian metals and minerals in batteries manufactured in Canada. Batteries will be the heart of our clean energy system, and the federal government clearly recognizes their importance. That said, we encourage the federal government to move forward with the release of a national battery strategy.
“Finally, three other important commitments from the budget are worth highlighting: streamlining regulatory processes to get projects built faster, ensuring workers are properly compensated by linking tax credits to fair wages, and consulting on a broad-based carbon contracts for difference policy to provide greater certainty to investors in clean energy projects.
“As Clean Energy Canada highlighted in a study released last week, a net-zero 2050 can deliver 700,000 more Canadian energy jobs than exist today. We commend Deputy Prime Minister and Finance Minister Chrystia Freeland for a budget that takes seriously the realities of a transformed global landscape and invests in a stronger, more secure economy for Canada.”
Budget 2023 includes the following clean-energy-related measures:
- A proposed 15% refundable tax credit for eligible investments in clean electricity including wind, solar, hydro, wave, tidal, nuclear, energy storage and electricity transmission. The credit is also available for abated natural gas, subject to an emissions intensity threshold compatible with a net-zero grid by 2035. In order to access the tax credit, provinces and territories will also need to commit to ensuring the federal funding will be used to lower electricity bills and achieve a net-zero electricity sector by 2035.
- $3 billion over 13 years to advance offshore wind projects, support critical regional priorities, transmission projects, Indigenous-led projects, and renew the Smart Grid program to continue to support electricity grid innovation.
- A clean technology manufacturing tax credit equal to 30% of the cost of investments in new machinery and equipment used to manufacture or process key clean technologies and critical minerals. This is estimated to cost $4.5 billion over five years, starting in the next year, with an additional $6.6 billion invested between 2028 and 2035.
- A clean hydrogen investment tax credit with levels of support varying between 15% and 40% of eligible project costs. This will also extend a 15% tax credit to equipment needed to convert hydrogen into ammonia for transportation.
- $500 million over ten years to the Strategic Innovation Fund to support the development and application of clean technologies in Canada.
- To be eligible for the highest clean technology and clean hydrogen tax credit rates, businesses must pay a total compensation package that equates to the “prevailing wage.”
- A commitment to outline a plan to “improve the efficiency of the impact assessment and permitting processes for major projects.” This is accompanied by $11.4 million over three years to engage Indigenous communities and update the federal guidelines for doing so.
Report | A Pivotal Moment: A net-zero 2050 can deliver 700,000 more Canadian energy jobs than exist today