Canada’s plans to kickstart clean technology projects with financial incentives have hit a roadblock. Without timely implementation, over $50 billion in investments could be jeopardized, warn industry groups.
The government, under Prime Minister Justin Trudeau’s leadership, had committed to investing approximately $27 billion in investment tax credits (ITCs) over five years. However, the government has yet to release any of this money.
The missing incentives threaten Canada’s cleantech sector, especially given the competitive landscape in the United States. Billions in clean energy incentives are already flowing south of the border as a result of President Biden’s Inflation Reduction Act.
In an interview with Global News, Bob Masterson, President and CEO of the Chemistry Industry Association of Canada, urged the government to expedite the release of funds to prevent investors from looking elsewhere. With over $25 billion worth of proposed investments awaiting the incentives in various industries, time is of the essence.
The government initially announced $10 billion in ITCs for net-zero technologies and carbon capture and storage (CCS) 17 months ago, and they recently concluded consultations on the legislation. Another $17 billion worth of ITCs for clean hydrogen, electricity, and manufacturing were announced six months ago. These ITCs will be applied retroactively once fully legislated.
Although some companies are already investing based on the assurance that the funds will be available, there is a pressing need to distribute the ITCs as soon as possible.
A finance ministry representative told Global that the consultation process took time to ensure that the legislation would be effective. The representative said that distributing the ITCs is a top priority, without specifying a timeline.
Trudeau has prioritized the shift to a low-carbon economy as a fundamental aspect of his economic strategy. Incentives play a crucial role in helping Canada achieve net-zero emissions by 2050, one of the prime minister’s key ambitions.
One of the companies, Lafarge, is relying on ITCs to support its Exshaw plant in Alberta. The Exshaw plant aims to capture 1 million metric tons of carbon emissions annually.
The company’s sustainability heads expressed in a joint statement to Reuters that having ITCs in place in Canada would significantly boost the project’s viability. ITCs would also encourage further investment in decarbonization.
According to Dennis Darby, President of the Canadian Manufacturers & Exporters (CME), CME members need to allocate between $25 and $50 billion in green investments over the next four to five years to remain competitive with the United States.
Masterson highlighted a planned Dow Chemicals project in Fort Saskatchewan, Alberta. The plant would become the world’s first decarbonized petrochemical facility.
He emphasized that if uncertainty surrounding ITCs halts this project, it will negatively impact Canada’s standing in the global chemistry industry.
A spokesperson for Dow Chemicals confirmed that the company is collaborating with the Canadian government to secure the necessary incentives to make a final investment decision this year.