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Canada Implements Clean Economy Investment Tax Credits

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This bulletin complements last week’s update on the Fall Economic Statement Implementation Act, 2023 (Bill C-59). In addition to the climate-related amendments to the Competition Act (read our earlier bulletin here), Bill C-59 implements significant clean economy investment tax credits (ITCs), for clean technology (CT) and carbon capture utilization and storage (CCUS), as well as clean hydrogen (CH) and clean technology manufacturing (CTM). This bulletin briefly summarizes the amendments to the Income Tax Act (the Act) and Income Tax Regulations (the Regulations) that implement the CT ITC and CCUS ITC. Clean Technology Investment Tax Credit. Bill C-59 amends the Act and Regulations to implement the CT ITC, initially proposed in the 2022 Fall Economic Statement and expanded in both the 2023 Fall Economic Statement (FES) and 2023 Budget (read our earlier bulletins here and here). Key provisions of the now implemented and expanded CT ITC include: refundable tax credit for capital invested in the adoption and operation of new clean technology property in Canada from March 28, 2023, to December 31, 2034; rate may be up to 30% of the capital cost of CT property that is acquired and that becomes available for use from March 28, 2023, to December 31, 2033; rate may be up to 15% for property acquired and that becomes available for use in 2034, and will be unavailable after 2034; available for investments in the following types of CT property: equipment used to generate electricity from solar, wind and water energy; stationary electricity storage equipment that does not use any fossil fuel in operation (such as batteries and pumped hydroelectric storage); active solar heating equipment, air-source heat pumps and ground-source heat pumps; non-road zero-emission vehicles and related charging and refueling equipment that is used primarily for such vehicles; equipment used exclusively for the purpose of…

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Climate-related Amendments to the Competition Act Become Law as Bill C-59 Receives Royal Assent

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The Fall Economic Statement Implementation Act, 2023 (Bill C-59) yesterday received royal assent, implementing (1) key climate-related “truth-in-advertising” amendments to the Competition Act and (2) two important investment tax credits (ITCs) for clean technology and carbon capture utilization and storage. Omnibus Bill C-59 was introduced in the House of Commons in November 2023 (and amended several times since then) to implement certain provisions of the Fall Economic Statement (FES) tabled in Parliament in November 2023 (see our earlier bulletin here) and certain provisions of the budget tabled in March 2023 (Budget 2023) (see our earlier bulletin here). This bulletin summarizes the climate-related amendments to the Competition Act. A subsequent bulletin will cover the ITCs. Deceptive marketing practices. Part VII.1 of the Competition Act sets out a number of deceptive marketing practices that are considered “reviewable conduct” under the legislation, and therefore subject to scrutiny by the Competition Tribunal and the courts and related administrative remedies. For example, section 74.01(1)(a) contains a general prohibition on representations to the public that are materially false or misleading, and made for the purpose of promoting the supply or use of a product or a business interest (directly or indirectly). Where the Competition Tribunal or a court determines that a corporation is engaging (or has engaged) in reviewable conduct, it may order the corporation: not to engage in the conduct or substantially similar reviewable conduct; to publish a notice providing a description of the reviewable conduct and related details; and to pay an administrative monetary penalty in an amount not exceeding the greater of $10M (and, for each subsequent order, $15M) and three times the value of the benefit derived from the deceptive conduct (or 3% of the corporation’s annual worldwide gross revenues, if such an amount cannot be reasonably determined). Bill C-59 amendments. The…

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Government of Canada Releases Fall Economic Statement: Key Energy and Climate Highlights

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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…

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Federal Government Releases 2023 Budget Long on Clean Economy Investment

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Deputy Prime Minister and Minister of Finance Chrystia Freeland today released Budget 2023: A Made-in-Canada Plan (Budget 2023). Resilient’s bulletin outlines key climate, energy, and Indigenous highlights from Budget 2023.   Clean Electricity, Clean Economy Budget 2023 introduces “Canada’s Plan for a Clean Economy” (the Clean Economy Plan) with the following priorities: electrification; clean energy; clean manufacturing; emissions reduction; critical minerals; infrastructure; electric vehicles and batteries; and major projects. The Clean Economy Plan is centred on three tiers of federal financial incentives: (i) an anchor regime of clear and predictable investment tax credits; (ii) low-cost strategic financing; and (iii) targeted investments and programming to respond to the unique needs of sectors or projects of national economic significance.   Clean Electricity. Budget 2023 notes that Canada’s electricity demand is expected to double by 2050 and will require electricity capacity to increase by 2.2 to 3.4 times compared to current levels and proposes the following new funding and investments to support clean electricity in Canada: Canada Infrastructure Bank (CIB) will invest at least $10B through its Clean Power priority area, and at least $10B through its Green Infrastructure priority area, at least $20B to support the building of major clean electricity and clean growth infrastructure projects; $3B over 13 years to Natural Resources Canada to: Recapitalize funding for the Smart Renewables and Electrification Pathways Program to support critical regional priorities and Indigenous-led projects, and add transmission projects to the program’s eligibility; Renew the Smart Grid program to continue to support electricity grid innovation; and Create new investments in science-based activities to help capitalize on Canada’s offshore wind potential, particularly off the coasts of Nova Scotia and Newfoundland and Labrador. funding to advance the Atlantic Loop and support ongoing negotiations with provinces and utilities to identify a clear path to deliver the project by 2030. Clean Economy. Budget 2023 proposes the following new funding and support for…

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Ontario Proposes Changes to Emissions Performance Standards Program

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Ontario’s Ministry of the Environment, Conservation and Parks (the Ministry) has launched public consultations on proposed regulatory amendments for the Emissions Performance Standards (EPS) program. The proposed changes are meant to ensure that the EPS program meets the updated benchmark under the Greenhouse Gas Pollution Pricing Act (the Act) set by the federal government for 2023-2030 (see our earlier bulletin on the Ministry’s prior EPS consultation here) as the current EPS program only applies to 2022. This bulletin briefly summarizes key proposed changes and provides important information on stakeholder participation in the consultation. Carbon Price. The Ministry is proposing to align the EPS program and the price of excess emissions units (EEUs) with the minimum carbon price set out in the updated federal benchmark ($65 for the 2023 compliance period rising to $170 for the 2030 compliance period). Program Scope. The Ministry is proposing to add the following sectors represented by the North American Industrial Classification System (NAICS) to the list of covered industrial activities based on a preliminary assessment of carbon leakage and competitiveness: Fruit and vegetable preserving and specialty food manufacturing; Meat product manufacturing; Beverage manufacturing; Converted paper product manufacturing; Plastic product manufacturing; Rubber product manufacturing; Forging and stamping; Spring and wire product manufacturing; Machine shops, turned product, and screw, nut, and bolt manufacturing; Engine, turbine and power transmission equipment manufacturing; Other general-purpose machinery manufacturing; Aerospace product and parts manufacturing; Office furniture (including fixtures) manufacturing; Other miscellaneous manufacturing; and Dairy product manufacturing. Registration and Cessation of Coverage. The Ministry is proposing to allow EPS facilities that expect to emit at least 10,000 tCO2e/year within three years following a major retrofit or expansion to apply to register in the EPS program as soon as production has started to increase. The Ministry is also proposing to facilitate a pathway for…

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