2023 Federal Budget ushers in new era for Canadian renewables

Recognizing the need for a Canadian response to the Inflation Reduction Act passed last summer in the United States, the Canadian Renewable Energy Association (CanREA) advocated for refundable investment tax credits for renewable energy and green hydrogen investments. Today, CanREA is excited to see our recommendations strongly reflected in Budget 2023, presented by Federal Minister of Finance, the Honourable Chrystia Freeland.

“The choice to pursue investment tax credits for clean technology, like wind, solar, storage and green hydrogen, will allow Canada to take a competitive lead in accelerating the decarbonization of the energy sector,” said Evan Wilson, Senior Director of Policy and Government Affairs at CanREA, who was on site for the introduction of the Budget today. 

As noted in CanREA’s 2050 Vision, Canada needs to expand wind and solar energy capacity almost ten-fold in order to meet our commitment to achieving net-zero GHG emissions by 2050.

“The 2023 Budget demonstrates Canada’s strong leadership in leveraging policy, programs and the tax system to accelerate decarbonization while supporting a strong economy, with new investment certainty for solar energy, wind energy, energy storage and green hydrogen,” said Brandy Giannetta, CanREA’s Vice-President of Policy and Government Affairs. 

With the support of these new investment tax credits, CanREA expects the deployment of new wind solar and storage to accelerate significantly, compared to the Association’s most recent data, released in January 2023. 

“Today’s announcements are a strong and necessary step, accelerating our progress toward net zero. Canadian investment tax credits will stabilize investment opportunities, while safeguarding affordability for Canadians,” said Vittoria Bellissimo, President and CEO at CanREA.

“These new incentives will help create good jobs in clean energy and make Canada a leader in the energy transition.”

Details

The 2023 Budget includes the following measures to ensure Canada can accelerate the deployment of wind, solar, energy storage and other clean-energy technologies:

• Clean Technology Investment Tax Credit: A refundable 30% tax credit on capital cost of investments made by taxable entities in wind, solar PV and energy-storage technologies.  This Credit will be available to all project spending starting today, March 28, 2023, though to 2034.
• Clean Electricity Investment Tax Credit: A newly announced, refundable 15% tax credit on the capital costs of investments made by non-taxable entities, such as Indigenous communities, municipally owned utilities and Crown corporations that make investments in renewable energy, energy storage and inter-provincial transmission and other non-emitting electricity infrastructure.
• Clean Manufacturing Investment Tax Credit: Budget 2023 also introduces a 30% refundable ITC for investment in machinery and equipment used to manufacture clean technology and extract relevant critical minerals. This tax credit is available for the manufacturing of renewable energy and energy-storage equipment, and the recycling of critical minerals.
• Clean Hydrogen Investment Tax Credit: A refundable 40% investment tax credit on green hydrogen, starting in Budget 2023.
• Net-zero Transmission Project Support: There will be an upcoming consultation on the “best means” to support intra-provincial transmission that support Canada’s net-zero grid objectives.
• Canadian Infrastructure Bank:  Budget 2023 also includes $20 billion in support for Clean Electricity investments, including at least $10 billion through the Clean Power priority area and at least $10 billion through the Green Infrastructure priority area.
• Recapitalization of SREPs: The Smart Renewables and Electrification Pathways (SREPs) program will receive a total of $3 billion to support regional priorities and Indigenous-led projects.
• Canada Growth Fund: The Budget provides an enhanced commitment to carbon-price stability via new tools in the Canada Growth Fund, which will be managed by the Public Sector Pension Investment Board.

Quotes

“Today’s announcements are a strong and necessary step, accelerating our progress toward net zero. Canadian investment tax credits will stabilize investment opportunities, while safeguarding affordability for Canadians. These new incentives will help create good jobs in clean energy and make Canada a leader in the energy transition,” says Vittoria Bellissimo, President and CEO, CanREA.

“The 2023 Budget demonstrates Canada’s strong leadership in leveraging policy, programs and the tax system to accelerate decarbonization while supporting a strong economy, with new investment certainty for solar energy, wind energy, energy storage and green hydrogen,” says Brandy Giannetta, Vice-President of Policy and Government Affairs, CanREA.

“The choice to pursue investment tax credits for clean technology, like wind, solar, storage and green hydrogen, will allow Canada to take a competitive lead in accelerating the decarbonization of the energy sector,” says Evan Wilson, Senior Director of Policy and Government Affairs Canada, CanREA.