Clean Investment Tax Credits: A Federal Priority in 2024
In the 2023 Federal Fall Economic Statement, Canada underscored its commitment to a net-zero economy. With an escalating emphasis on clean energy and sustainable production across diverse industries, the government has introduced grant initiatives like the Canada Growth Fund, aimed at supporting businesses in their pursuit of sustainability.
Recognizing the ongoing need for additional measures, the government is also eager to unveil new programs and tax incentives to further propel these endeavors. In Budget 2023, the Minister of Environment and Climate Change highlighted the transformational new big five Clean Investment Tax Credit which aims to help produce, manufacture, or transition to clean energy in Canada, while supporting job creation across the Canadian middle class.
Big Five Clean Investment Tax Credits
While these tax credits have not yet been passed into law, this remains a federal priority. For the moment, the five proposed refundable tax credits include:
The Clean Technology ITC
The Clean Technology ITC is a refundable tax credit of up to 30% of investments in eligible property acquired and available for use on or after March 28, 2023, and before 2034. For property that becomes available for use in 2034, this tax credit would be up to 15%. No tax credit would be available for property that becomes available for use after 2034.
The Carbon Capture, Utilization, and Storage ITC
The CCUS investment tax credit is a refundable tax credit for expenditure incurred between January 1, 2022 and December 31, 2030 of:
- Up to 60% of Qualified Carbon Capture Expenditures incurred to capture carbon from ambient air;
- Up to 50% of Qualified Carbon Capture Expenditures incurred to capture carbon other than directly from ambient air; and
- Up to 37.5% of Qualified Carbon Transportation Expenditures, Qualified Carbon Storage Expenditures and Qualified Carbon Use Expenditures.
For the period between January 1, 2031 to December 31, 2040, the tax credit will be reduced by one-half and no tax credit will be available after 2040.
The Clean Electricity ITC
The Clean Hydrogen ITC is a refundable tax credit up to 15% of investments in projects that generate clean electricity, transmit electricity between provinces, and store electricity without the use of fossil fuels.
This tax credit is available as of the day the 2023 federal budget was announced for projects that did not begin construction before March 28, 2023. No tax credit will be available after 2034.
The Clean Hydrogen ITC
The Clean Hydrogen ITC is a refundable tax credit of up to 40% of investments in projects that produce hydrogen and become available for use on or after March 28, 2023, and before 2034.
For investments that become available for use in 2034, this tax credit would be reduced by one-half. No tax credit would be available for property that becomes available for use after 2034.
The Clean Technology Manufacturing ITC
This is a refundable tax credit of 30% of investments in eligible property to be used in clean technology manufacturing and critical mineral extraction and processing that is acquired and available for use in 2024 to 2031. This tax credit would reduce to 20% for 2032, 10% for 2033, and 5% for 2034.
Sustainability Grants Across Canada
For the Canadian government, sustainability and net-zero goals are a top priority. While going green as a business can be difficult and high costs, the Canadian government will support companies environmental projects through grants.
Some noteworthy programs geared towards sustainability interests in Canada include the Strategic Innovation Fund (SIF) and the Low Carbon Economy Fund. Our Cleantech Funding Directory also offers up-to-date grant information on funding opportunities.
In 2024, we expect to see many sustainability initiatives both from the government and businesses across Canada. Join our newsletter to stay updated on the latest sustainability initiatives within the grant space and align your upcoming projects with Canada’s net-zero goals.
