What are Canada's federal investment tax credits for clean technology?

Canada introduced a suite of refundable federal investment tax credits between 2022 and 2024 to support the clean-technology transition and match the United States' Inflation Reduction Act incentives. The credits cover Carbon Capture, Utilization and Storage (CCUS), Clean Hydrogen, Clean Technology, Clean Electricity, and Clean Technology Manufacturing. Together they represent more than $80 billion in federal commitments over the next decade, the largest industrial-policy package in Canadian history.

The CCUS Investment Tax Credit, announced in the 2022 Budget and implemented in 2023, provides a 50 per cent refundable tax credit on capital costs for direct air capture, 50 per cent for CO2 capture from industrial sources, and 37.5 per cent for transportation, storage, and use equipment, dropping by half after 2030. The Pathways Alliance's proposed $16 billion CCUS project is the largest user of the credit. The Clean Hydrogen Investment Tax Credit, also announced in 2022, ranges from 15 to 40 per cent depending on the carbon intensity of the hydrogen produced.

The Clean Technology Investment Tax Credit, introduced in the 2023 Budget, provides a 30 per cent refundable credit on equipment for renewable electricity, energy storage, low-carbon heating, and zero-emission vehicles, falling to 15 per cent in 2034. The Clean Electricity Investment Tax Credit, introduced in the 2023 Budget, provides 15 per cent for non-emitting electricity generation, storage, and inter-provincial transmission, with a higher 25 per cent rate for Indigenous-owned projects. The Clean Technology Manufacturing Investment Tax Credit provides 30 per cent on capital costs for manufacturing critical-mineral processing and clean-technology equipment.

Canadian provinces and the federal government layered the credits with Strategic Innovation Fund contributions for major battery and EV investments. Stellantis-LG Energy Solution in Windsor, Volkswagen PowerCo in St. Thomas, Northvolt in Saint-Basile-le-Grand, and Honda in Alliston each received combinations of federal Investment Tax Credits, federal SIF, provincial Crown contributions, and federal Strategic Innovation Fund support, totalling over $50 billion in committed federal-provincial contributions for these four projects alone.