Federal government outlines $83B in clean economy tax credits in bid to compete with U.S. incentives
Serious money is heading for Canadian industries looking to reduce emissions after the federal government unveiled its answer to the U.S. Inflation Reduction Act.
The spending commitments announced in Tuesday's federal budget include tax credits for investments in clean electricity, clean-tech manufacturing, and hydrogen that together are expected to cost some $55 billion through to the 2034-35 fiscal year.
- Details: Budget 2023 prioritizes pocketbook help and clean economy
- Capital Dispatch: Sign up for in-depth political coverage of Parliament Hill
Total tax incentives amount to almost $83 billion over that timeframe when the carbon capture and storage and clean-tech investments credits announced last year are factored in, both of which saw minor boosts this round.
The government says the funding is necessary to boost clean economy spending from some $15 billion a year to the $100 billion a year needed. The spending is also needed to not fall behind as other countries roll out subsidies, most notably with the US$369 billion contained in the landmark U.S. legislation passed last year.
"In what is the most significant economic transformation since the Industrial Revolution, our friends and partners around the world, chief among them the United States, are investing heavily to build clean economies," said Deputy Prime Minister Chrystia Freeland as she introduced the budget.
Tax credits are the backbone of the effort because they are stable and efficient way to roll out government support, while leaving decision-making with the expertise of the private sector, said a senior government official in the budget lockup.
Clean electricity is the biggest focus of the credits, costing $6.3 billion over the first four years starting in 2024, and $25.7 billion through to the 2034-35 year. Notably, provincial utilities and Indigenous-owned corporations will be eligible for the credits.
The spending is meant to help spur both more generation, as well as a better-connected east-west grid to meet the expected doubling of electricity demand by 2050.
The clean electricity package is where the government has likely done enough to meet its goals, said Michael Bernstein, executive director of Clean Prosperity.
Other funding areas however, including the $11.1 billion in credits for manufacturing and $12.4 billion for carbon capture through to 2034, likely aren't enough to close the gap with what the U.S. is offering, he said.
"It really is one of those situations where your competitor has stepped up and said we are going to be providing an almost unthinkable amount of money."
Canada has opted for construction-focused project support, while the U.S. IRA covers operational costs with payments based on production volumes. It's like Canada is offering a single large cup of soda, whereas the U.S. is offering endless kiddy-cup sized refills, meaning Canada needs to offer a pretty big cup to compete, said Bernstein.
Since it's not covering operations, Canada needs to move quickly on offering the carbon pricing backstop that it's promised to develop in the budget, he said.
The so-called contracts for difference would provide certainty to industry on future carbon pricing and credits, but so far they're still in consultation, as are several other key policies.
"What surprised me was how many things are still left to be determined," said Rachel Samson, vice-president of research at the Institute for Research on Public Policy.
Along with the contacts for difference, she noted that details are scarce about how the $15 billion Canada Growth Fund will be spent.
The government announced in the budget that the fund will be administered independently by the Public Sector Pension Investment Board, with money starting to flow in the first half of the year, but didn't provide guidance on priority areas.
Samson said it was good the government isn't trying to direct the money itself, but worried that pension fund managers are too cautious to put the money in the bold projects needed.
"We need projects that are more on the cutting-edge, that are riskier."
The government also pushed down the road any commitments on biofuels such as sustainable jet fuels, which surprised Samson as Canada is currently exporting the raw wood pellet feedstock and knows companies have projects ready to go.
The budget was also notable for what wasn't in it for the oil and gas industry. While it did tweak last year's carbon capture incentives, it didn't go as far as some were pushing for, while the emissions cut-off for hydrogen production will likely exclude most carbon-capture based hydrogen projects.
"Oil and gas did not get a lot of what I think it wanted in this," said Samson.
The lack of funding comes as climate advocacy groups have pushed against support for both programs as wasteful projects that don't achieve the emission cuts needed in the near term, while also pushing against support for an industry that has reported record profits.
The government has also framed the budget as one of fiscal restraint that it hopes will allow private capital to do much of the heavy lifting to keep Canada in the running.
"Canada must either meet this historic moment, this remarkable opportunity before us, or we will be left behind as the world's democracies build the clean economy of the 21st century," said Freeland.
This report by The Canadian Press was first published March 28, 2023.
IN DEPTH
Budget 2024 prioritizes housing while taxing highest earners, deficit projected at $39.8B
In an effort to level the playing field for young people, in the 2024 federal budget, the government is targeting Canada's highest earners with new taxes in order to help offset billions in new spending to enhance the country's housing supply and social supports.
'One of the greatest': Former prime minister Brian Mulroney commemorated at state funeral
Prominent Canadians, political leaders, and family members remembered former prime minister and Progressive Conservative titan Brian Mulroney as an ambitious and compassionate nation-builder at his state funeral on Saturday.
'Democracy requires constant vigilance' Trudeau testifies at inquiry into foreign election interference in Canada
Prime Minister Justin Trudeau testified Wednesday before the national public inquiry into foreign interference in Canada's electoral processes, following a day of testimony from top cabinet ministers about allegations of meddling in the 2019 and 2021 federal elections. Recap all the prime minister had to say.
As Poilievre sides with Smith on trans restrictions, former Conservative candidate says he's 'playing with fire'
Siding with Alberta Premier Danielle Smith on her proposed restrictions on transgender youth, Conservative Leader Pierre Poilievre confirmed Wednesday that he is against trans and non-binary minors using puberty blockers.
Supports for passengers, farmers, artists: 7 bills from MPs and Senators to watch in 2024
When parliamentarians return to Ottawa in a few weeks to kick off the 2024 sitting, there are a few bills from MPs and senators that will be worth keeping an eye on, from a 'gutted' proposal to offer a carbon tax break to farmers, to an initiative aimed at improving Canada's DNA data bank.
Opinion
opinion Don Martin: Gusher of Liberal spending won't put out the fire in this dumpster
A Hail Mary rehash of the greatest hits from the Trudeau government’s three-week travelling pony-show, the 2024 federal budget takes aim at reversing the party’s popularity plunge in the under-40 set, writes political columnist Don Martin. But will it work before the next election?
opinion Don Martin: The doctor Trudeau dumped has a prescription for better health care
Political columnist Don Martin sat down with former federal health minister Jane Philpott, who's on a crusade to help fix Canada's broken health care system, and who declined to take any shots at the prime minister who dumped her from caucus.
opinion Don Martin: Trudeau's seeking shelter from the housing storm he helped create
While Justin Trudeau's recent housing announcements are generally drawing praise from experts, political columnist Don Martin argues there shouldn’t be any standing ovations for a prime minister who helped caused the problem in the first place.
opinion Don Martin: Poilievre has the field to himself as he races across the country to big crowds
It came to pass on Thursday evening that the confidentially predictable failure of the Official Opposition non-confidence motion went down with 204 Liberal, BQ and NDP nays to 116 Conservative yeas. But forcing Canada into a federal election campaign was never the point.
opinion Don Martin: How a beer break may have doomed the carbon tax hike
When the Liberal government chopped a planned beer excise tax hike to two per cent from 4.5 per cent and froze future increases until after the next election, says political columnist Don Martin, it almost guaranteed a similar carbon tax move in the offing.
CTVNews.ca Top Stories
Judge in Trump's hush money trial threatened to throw witness out of court for behavior on stand
Michael Cohen testified Monday that he stole tens of thousands of dollars from his ex-boss Donald Trump’s company, an admission defence lawyers hope to use to undermine Cohen’s credibility.
What is BORG drinking, and why is it a dangerous trend? An expert explains
If you've been to a party lately and haven't seen someone drinking a BORG, you're likely not partying with college students.
The world's best airline is paying staff a bonus of 8 months' salary
Singapore Airlines will reward its employees with a bonus worth nearly eight months of salary, a person familiar with the matter told CNN on Friday.
Oilers win Game 7 over Canucks, advance to Western Conference Final
The Edmonton Oilers weathered a late Vancouver Canucks charge on Monday night, beating the hosts 3-2 to win their seven-game second-round playoff series in the decisive showdown.
McGill says pro-Palestinian protest outside senior administrator's home 'crosses the line'
McGill University has denounced a pro-Palestinian protest held Sunday outside the home of one of its senior administrators.
Red Lobster probes 'endless shrimp' losses after bankruptcy filing
U.S.-based restaurant chain Red Lobster has filed for Chapter 11 bankruptcy protection in a Florida court after securing $100 million in financing commitments from its existing lenders, the company said on Sunday.
Katy Perry sings goodbye to 'American Idol'
Katy Perry said her goodbyes on 'American Idol' after seven seasons. On Sunday night’s live 'idol' season finale, a medley of Perry's hit songs were performed, including 'Teenage Dream,' 'Dark Horse' and 'California Gurls.'
Microsoft's AI chatbot will 'recall' everything you do on a PC
Microsoft wants laptop users to get so comfortable with its artificial intelligence chatbot that it will remember everything you're doing on your computer and help figure out what you want to do next.
Judge cites error, will reopen sentencing hearing for man who attacked Nancy Pelosi's husband
A federal judge will reopen the sentencing hearing for the man who broke into Nancy Pelosi's San Francisco home and bludgeoned her husband with a hammer after the judge failed to allow him to speak during his court appearance last week.
Local Spotlight
VIDEO Born without front legs, this dog has been inspiring the world for 3 years: Dresden farm owner
A sanctuary dedicated to animals with disabilities is celebrating the third birthday of one of its most popular residents.
7-year-old Pokémon prodigy heading to Hawaii for world championship tournament
Catching 'em all with impressive speed, a 7-year-old boy from Windsor, Ont. who only started his competitive Pokémon journey seven months ago has already levelled up to compete at a world championship level.
From DVDs to rehearsals: Halifax theatre company transforms Video Difference building into arts hub
2b Theatre recently moved into the old Video Difference building, seeking to transform it into an artistic hub, meeting space, and temporary housing unit for visiting performers in Halifax.
'Another pair of eyes watching over me:' How a B.C. woman's service dog saved her from drowning
A B.C. woman says her service dog pulled her from a lake moments before she had a seizure, saving her life.
Starbucks fan on decades-long journey to visit every store in the world
A Starbucks fan — whose name is Winter — is visiting Canada on a purposeful journey that began with a random idea at one of the coffee chain's stores in Texas.
'Sacred work': Sask. First Nation learning how to conduct its own underground searches
Members of Piapot First Nation, students from the University of Winnipeg and various other professionals are learning new techniques that will hopefully be used for ground searches of potential unmarked grave sites in the future.
'It could mean a cure': Cautious optimism for groundbreaking ALS research at Western
ALS patient Mathew Brown said he’s hopeful for future ALS patients after news this week of research at Western University of a potential cure for ALS.
B.C. musician's song catches attention of Canucks
When Adam Kirschner wrote 'Slap Shot,' he never imagined the song would be embraced by his favourite team.
'We're on standby': Team ready to help entangled right whale in Gulf of St. Lawrence
A team is ready to help an entangled North Atlantic right whale in the Gulf of St. Lawrence.