Canada’s Budget was announced by the Federal government on March 28th, 2023. Announced in the budget are new strategies and programs that look forward toward Canada’s goals to become net-zero by 2050.
Budget 2023 makes significant steps to further electrify the nation, reducing emissions from the electrical grid and supporting the green economy. We looked over the new budget, organized the changes and recently introduced programs so that you can understand the changes. There are many investing initiative programs available, so knowing what might apply to your projects could mean a lot to future development.
Clean Technology Investment Tax Credit
One of the most notable ways that the Canadian Federal Government is supporting green investments is through investment tax credits.
One of these credits is the Clean Technology Investment Tax Credit is an “investment tax credit that will pose over 10 billion through 2035 (CA$4.5 billion over five years, starting in 2023-24, and an additional CA$6.6 billion from 2028-29 to 2034-35).
Announced as part of the 2022 Fall Economic Statement, this tax credit will provide a refundable 30% tax credit on the capital cost of investments made by taxable entities in wind, solar, and energy-storage technologies. Budget 2023 establishes this investment tax credit to include geothermal energy systems.
Clean Electricity Investment Tax Credit
Clean electricity development is a priority for the Federal Government, and Budget 2023 establishes how the government will support clean electricity projects.
The “Clean Electricity Investment Tax Credit” is a 15% refundable tax credit for investment in environmentally conscious electricity projects, including non-emitting electricity generation projects, and clean electricity storage and transmission projects, applicable for both taxable and non-taxable entities alike.
Clean Manufacturing Investment Tax Credit
The Clean Manufacturing Technology Investment Tax Credit is proposed to refund up to 30% of the cost of “investments in machinery and equipment used to manufacture or process key clean technologies, and extract, process, or recycle certain critical minerals essentials to clean technology supply chains”.
Clean Hydrogen Investment Tax Credit
Canada’s government unveiled the Clean Hydrogen Investment Tax Credit during the 2022 Fall Economic statement, but it took until Budget 2023 for the details of this tax credit to be unveiled.
The levels of support the Canadian government is willing to commit to clean Hydrogen projects vary between 15 and 40% of eligible product costs, with more support being given to those that produce the cleanest Hydrogen.
Net-zero Transmission Project Support
The Federal government has committed Canada to have a net-zero-emitting electricity grid by 2035.
While the Canadian Infrastructure Bank has already committed $5 Billion to advance the generation, transmission, and storage of clean electricity, Budget 2023 establishes long-term investments to help Canada reach its net-zero goals, including a proposition to provide an additional $3 billion over the next 13 years.
This funding is in part going to the Smart Renewables and Electrification Pathways Program, as well as fund renewals of the Smart Grid program and the creation of new investments to capitalize on Canada’s wind potential, particularly offshore in Nova Scotia and Newfoundland and Labrador.
Additionally on the docket for the Federal government is the advancing of the Atlantic Loop by 2030 – “a series of interprovincial transmissions lines that will provide clean electricity among Quebec, New Brunswick and Nova Scotia.”
Go to the official page for more information.
Canadian Infrastructure Bank
The Canadian Infrastructure Bank will also play a significant role in the future of Canada’s energy sector.
Budget 2023 reaffirms the Canadian Infrastructure Bank’s role in shaping a greener economy, as the Canadian Infrastructure Bank will invest at least 10 billion through its “Clean Power” and “Green Infrastructure” priority areas.
These Canadian Infrastructure Bank will be used in the development of numerous renewable energy projects, including storage, interties and transmission, as well as expanding the infrastructure for projects for Hydrogen, wastewater, carbon capture, utilization and storage, and electric vehicles.
For more info, check here.
Recapitalization of the Smart Renewables and Electrification Pathways Program (SREPs)
Another program previously announced that will see changes in Budget 2023 is the SREPs, which involves providing funding for renewable energy and grid modernization projects during their construction phase. This program can provide up to 25 million to each eligible project in funding, and will provide a total of 1.56 billion over eight years.
Budget 2023 announces that the funding for the SREPs will be recapitalized to “support regional priorities and Indigenous-led projects”.
The types of projects eligible for this funding include Established renewable resource, Emergent technologies, and Grid monetization, up to different proportions of the total project cost, with a maximum funding a project can receive being $25 million. For a more thorough look at funding information, check it out here.
While Budget 2023 has confirmed the recapitalization of the SREPs, other details including the timeline of this project are to be determined. To keep up to date with the Smart Renewables and Electrification Pathways program, you can submit a request to firstname.lastname@example.org to be added to the SREPs distribution list.
Canada Growth Fund
Another thing the government has updated from the Budget 2022 is the Canada Growth Fund (CGF)- a 15 billion dollar “low-carbon financing initiative”, designed to encourage private investment in Canadian low-carbon projects.
Budget 2023 amends the CGF to come under the management of the Public Sector Pension Investment Board (PSP Investments) to manage the $15 billion fund. The PSP’s management of 230 billion CAD in pension assets will help to ensure confidence in private investments in our green economy.