Canada Joins The Race To Offer Clean Energy Manufacturing Incentives

Highlights :

  • Canada joins the US, Europe, India and other regions in offering incentives for domestic manufacturer of clean energy as part of its 2023 budget.
  • In Canada, the stress is likely to in battery raw materials and manufacturing, as the country remains a small market for solar and even Wind by global standards.

After the US and it’s Inflation Reduction Act, The European subsidies for local manufacturing and India’s very own Production Linked Incentives (PLI) scheme it is now apparently the turn of Canada to get on to the local manufacturing bandwagon.

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The federal government led by Justin Trudeau has announced plans to introduce tax credit incentives and invest in developing and manufacturing solar PV, energy storage and other renewable energy technologies in its 2023 budget.

Canada, which has one of the world’s biggest oil reserves in its Alberta sands reserves, that unfortunately also involves the most carbon intensive process to extract that oil, seems to have finally read the writing on the wall. With the highest per capita energy consumption worldwide, a stronger push for renewables was long overdue in the country that, while blessed with natural resources, is not exactly bathed in sunshine due to its location. Which is why the focus on solar manufacturing seems a little surprising.

Clean economy has been earmarked as a core priority along with healthcare and affordability. A 30% refundable tax credit on investments made by taxable entities into clean energy technologies like solar, battery storage and wind has been confirmed.

A 15% refundable tax credit for investments into clean electricity generation and energy storage by non-taxable entities – like indigenous communities and municipally-owned utilities – was also announced.

The 30% refundable tax credit will also be expanded to clean technology manufacturing, for investments into machinery and equipment used for manufacturing processes as well as extracting, processing and recycling critical materials to clean supply chains.

The Canada Infrastructure Bank has been pushed to the forefront of funding clean energy initiatives, with an initial budget of CA$20 billion (US$14.7 billion) for investments into clean energy growth and infrastructure projects, in the form of two separate CA$10 billion (US$7.3 billion) facilities through its Clean Power priority area and its Green Infrastructure priority area.

The 50% income tax cut for zero-emission technology manufacturers that was announced in 2021 has been extended for a further three years and expand to include nuclear equipment producers as well.

Canada has a very high share of Hydropower in its energy mix, with Hydropower accounting for 82 GW of capacity. Solar and Wind make up another 20 GW, with wind along accounting for over 15 GW.  Out of total installed capacity of under 150 GW, coal and natural gas account for under 32 GW, with nuclear power bringing in just over 13 GW.

 

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