Liberals ‘dawdle’ on billions in net-zero investment tax credits: NDP critic

Two years after the federal government began announcing what it calls “clean investment tax credits” to jump-start an anticipated net-zero investment bonanza, no company has managed to access the incentives.

The government says it is still finalizing the terms of the investment tax credits, or ITCs. Industry and other climate policy researchers say ITCs are needed to decarbonize Canada’s economy and achieve net-zero emissions by 2050.

The incentives, which could be worth $27 billion over five years, include refundable tax credits for clean electricity generation, hydrogen and carbon capture utilization and storage.

Some of these measures were announced as recently as March, while others, such as the clean technologies and hydrogen credits, were announced a year ago during the 2022 fall economic statement.

The carbon capture utilization and storage credit was announced way back in budget 2021.

Canada risks falling behind in the global race to attract billions of dollars in low-emission investments — especially given the rapid pace of the Biden administration’s efforts to green the U.S. economy — said NDP natural resources critic Charlie Angus.

“It seems like the Liberals are continuing to dawdle around and talk about it,” Angus told CBC News. “Meanwhile … the Biden administration is driving an economic transformation unlike anything we’ve ever seen.

“And we risk being left at the side of the road if we do not move quickly.”

Angus cited International Energy Agency (IEA) reports that predict a radically different energy market by 2030. The IEA projects that by then, nearly half of the world’s electricity supply will come from renewable sources and heat pumps, and other electric heating systems will outsell fossil fuel systems.

“This is an industrial revolution that’s happening at an accelerated level. International investors are choosing where to go,” Angus said.

Angus’s comments echo a warning delivered by the Macdonald Laurier Institute policy think-tank this week.

During her testimony before a House of Commons committee, Heather Exner-Pirot, the institute’s director of natural resources, energy and the environment, told MPs the federal government developed the tax credits in response to the Biden administration’s Inflation Reduction Act (IRA).

The IRA is a multi-billion-dollar program that pledges government funding for developing low-carbon energy. The IRA looks to boost the country’s manufacturing sector and takes aim at China’s dominant position in the clean energy technology supply chain. The law is regarded as the most ambitious climate bill ever passed in the U.S.

The Commons standing committee on natural resources is looking at whether Canada’s clean energy plans meet the challenge posed by the IRA.

“As of today, none [of the ITCs] are in force,” Exner-Pirot told the standing committee. “Delays in finalizing the terms and conditions of each ITC through law effectively freezes capital and diminish Canada’s ability to achieve its emissions reductions targets.”

While draft legislation has been published for the clean technology and carbon capture and storage tax credits, she said, the tax credits for hydrogen, clean manufacturing and clean electricity “remain conceptual.”

Freeland working to get the ITCs across the line

Finance Minister Chrystia Freeland was in Calgary Wednesday to announce the first investment from the government’s Canada Growth Fund — a $15 billion arm’s-length public investment vehicle to support Canada’s clean economy.

Through the fund, Ottawa will invest $90 million in the Calgary-based geothermal energy company Eavor Technologies.

Freeland suggested the investment tax credits will be finalized soon.

“Our government absolutely shares that sense of urgency, and you will hear more from us soon about getting all of those ITCs across the line and available for companies like this one,” Freeland told reporters.

In follow-up comments, Freeland’s senior communications adviser said tax credits for technology, manufacturing, and carbon capture, utilization and storage tax would be backdated — so some investments being made now could still qualify.

“The tax credits are retroactive, deliberately, as we know Canada cannot afford to miss out on this opportunity to build a thriving, sustainable, clean economy with economic opportunities for Canadians across the country,” said Katherine Cuplinskas in a media statement.

Although Freeland hinted there could be more news about investment tax credits soon, the tax credits would still need to be tabled in legislation and approved by Parliament.

Meanwhile, companies are postponing investment decisions, said Green Party MP Mike Morrice.

“I am hearing directly from clean tech companies in my community that the decision to purchase and move ahead is being delayed,” said Morrice, the MP for Kitchener Centre.

“And that’s the real concern here and why it is so important for these tax credits to be put in legislation as soon as possible.”