Deputy Prime Minister and Minister of Finance Chrystia Freeland has released the federal government’s Fall Economic Statement 2023 (the FES). The FES sets out two areas of focus: supporting the middle class through targeted affordability, mortgage support, and price stabilization measures; and measures to support housing construction and housing affordability generally.
This bulletin outlines key energy and climate highlights from the FES:
Implementation of new clean economy investment tax credits for carbon capture, utilization and storage (CCUS), clean technology adoption, clean hydrogen, clean technology manufacturing, and clean electricity. Subject to consultations, FES commits to delivering all investment tax credits in 2024. The clean economy investment tax credits would be introduced through legislation this fall in the case of CCUS and Clean Technology, and by the end of 2024 in all other cases, with projected effective dates as follows:
- CCUS: January 1, 2022
- Clean Technology: March 28, 2023
- Clean Hydrogen: March 28, 2023
- Clean Technology Manufacturing: January 1, 2024
- Clean Electricity: Budget 2024 for projects that did not begin construction before March 28, 2023.
Expansion of the 30-per-cent Clean Technology investment tax credit. FES proposes to expand eligibility to include systems that produce electricity, heat, or both electricity and heat from waste biomass. This expansion will apply to eligible property that is acquired and becomes available for use on or after the date of the FES.
Expansion of the 15-per-cent Clean Electricity investment tax credit. FES proposes to expand eligibility to include systems that produce electricity or both electricity and heat from waste biomass. This expansion will apply to eligible projects as of the date of Budget 2024, provided that construction did not begin before March 28, 2023.
Canada Growth Fund. The Canada Growth Fund (CGF) announced its first investment on October 25, 2023, with a $90 million investment in Calgary’s Eavor Techologies Inc., a geothermal energy company. FES includes no new investments under the CGF, but it states that further investments will be announced “in the coming weeks and months”.
Carbon Contracts for Difference (CCFD). FES announces that the CGF will be the principal federal entity responsible for issuing CCFD. The CGF will allocate, on a priority basis, up to $7 billion of its current $15 billion in capital to issue all forms of CCFD and offtake agreements. FES further states that CGF is already in the process of negotiating CCFD with a number of project proponents across a range of sectors.
Carbon Price Certainty. In addition to CCFD, FES states that the government will continue to explore additional ways to provide businesses certainty regarding the carbon pricing trajectory. This may include legislative approaches and other new measures in conjunction with provinces and territories.
Regulatory Efficiency. FES reiterates the previous commitment from Budget 2023 to outline a plan to improve the efficiency of the permitting and impact assessment processes for major projects (see our earlier bulletin here). FES states that the recently announced Ministerial Working Group on Regulatory Efficiency for Clean Growth Projects is coordinating government-wide efforts, with details of the government’s plan expected in the coming months.
Mandatory Climate Disclosures. FES announces that the government will seek to expand the coverage of mandatory climate disclosures. Few details were provided, but FES states that the Department of Finance, Innovation, Science and Economic Development Canada, and Environment and Climate Change Canada will develop options for making climate disclosures mandatory for private companies.
Net-Zero Taxonomy. FES also announces that the government will advance the recent work of the Sustainable Finance Action Council and its Taxonomy Roadmap Report. The Department of Finance will work with Environment and Climate Change Canada and Natural Resources Canada to consult with regulators, the financial sector, industry and independent experts towards developing a taxonomy that is aligned with reaching net-zero by 2050.