On April 17th the Government of Canada announced the federal budget for 2024, and the main measures to be applied over the next few years. The budget proposes $52.9 billion to improve home and building construction, clean electricity projects, incentives for renters, carbon rebates, student grants, grocery costs, and much more.
The main goal of the budget called “Fairness for every generation” is making residents’ lives more affordable, considering that in the last years, the prices in general have risen across the country, decreasing consequentially the buying power. Here are the topics related to the energy market important to be highlighted:
Energy Bills
The government will launch a Canada Green Buildings Strategy to help lower home energy bills and reduce building emissions by supporting energy-efficient retrofits ($800 million over five years, starting in 2025-26). The plan is also investing $73.5 million to renew /modernize existing energy efficiency programs and continue developing a national approach to home energy labelling, which will empower prospective home buyers with information about the energy efficiency of their new homes.
Tax Credits and Net-Zero Economy
A net-zero economic plan was announced, which will invest over $160 billion including an unprecedented suite of major economic investment tax credits. The focus is keeping Canada on track to reduce pollution and reach net zero by 2050.
Clean Electricity Future
Building major clean electricity and clean growth infrastructure projects it is on track, with investments of at least $20 billion from the Canada Infrastructure Bank.
Business Income
The Clean Electricity Investment Tax Credit proposed is a 15 % refundable tax credit rate for eligible investments in new equipment or refurbishments related to:
- Low-emitting electricity generation systems using energy from wind, solar, water, geothermal, waste biomass, nuclear, or natural gas with carbon capture and storage.
- Stationary electricity storage systems that do not use fossil fuels in operation, such as batteries and pumped hydroelectric storage.
- Transmission of electricity between provinces and territories.
EV Tax Credit
Canada will be an electric vehicle supply chain hub for all steps along the manufacturing process. Businesses that manufacture electric vehicles and their precursors would already be able to claim the 30% percent Clean Technology Manufacturing investment tax credit on the cost of their investments in new machinery and equipment.
The new Electric Vehicle Supply Chain investment tax credit introduces an additional 10% tax break on the cost of buildings related to EV production. To qualify for the new tax credit, businesses must claim the Clean Technology Manufacture tax credit in at least two of the following segments:
- Electric vehicle assembly
- Electric vehicle battery production
- Cathode active material production
The new tax credit would apply to properties that are acquired and will become available for use on or after January 1, 2024. The credits would be reduced to 5% for 2033 and 2034 and would no longer be available after 2034. It is expected to cost $80 million over five years, starting in 2024-2025, and $1.02 billion from 2029-2030 to 2034-2035.
EV Rebate Program
The federal Incentives for Zero-Emission Vehicles (iZEV) program will receive a top of $607.9 million over the next two years – in 2024 and 2025. In 2023, the iZEV program awarded $701 million in rebates, an increase from $260 million in 2022. The top-up extends the program past its original expiration date, March 31, 2025. Since 2019, the iZEV program has offered rebates of up to $5,000 for the purchase or lease of eligible zero-emission vehicles. To learn more, check out our article on EV incentives in Canada.
A noticeable absence from the 2024 budget is funding for charging infrastructure. Instead, the federal government reiterated its commitment to investing $1 billion in charging infrastructure through Natural Resource Canada’s Zero Emission Vehicle Infrastructure program (ZEVIP) as well as projects funded by the Canadian Infrastructure Bank (CIB).
Natural Gas
The government is proposing new measures to support biofuel production in Canada, with a focus on renewable diesel, sustainable aviation fuel, and renewable natural gas, aiming to capitalize on the increasing demand for these fuels and strengthen Canada’s position in the market.
Indigenous, Northern, and Remote Communities
It was a project of unique assistance for energy projects in these areas, including in the planning and feasibility stages. $3 billion was proposed to recapitalize the Smart Renewables and Electrification Pathways Program, which builds more clean, affordable, and reliable power, and to support innovation in electricity grids and spur more investments in Canadian offshore wind.
What does all of that mean to the utility bills?
Although it is impossible to predict the energy market and what energy bills will look like in the future, the announcements seem to have a big focus on energy efficiency upgrades and the sustainability of the Canadian energy grid in the long term. So, some of the measures announced may not work as an emergency relief on the short-term side of things.
However, with the growth of the renewable energy industry and more energy-efficient households across the country, some of these measures can help make energy more affordable and sustainable for Canadians in the long run.
To check the governmental summary (from rent to grocery costs) on the Budget 2024 ,you can click here.
