The cleantech investment tax credit first promised in the 2023 federal budget is a major step closer to reality this week after Parliament adopted Bill C-59, an omnibus bill that included provisions to get the ITC up and running.
While the ITC approval Wednesday received far less attention Thursday than a landmark anti-greenwashing provision contained in the same legislation, it closes the circle on tens of billions of dollars in tax incentives that were first unveiled by Finance Minister Chrystia Freeland in March, 2023.
“The Clean Technology ITC will drive momentum for the renewable energy and energy storage industries in Canada,” Canadian Renewable Energy Association (CanREA) President and CEO Vittoria Bellissimo said in a release. “It will make Canada a more competitive place to invest, creating new opportunities for our members in all provinces and territories.”
The release explains that C-59 opens up the ITC “to companies looking to invest in Canada’s wind energy, solar energy, and energy storage industries,” covering 20 to 30% of their capital costs in a refundable tax credit.
A day later, a cabinet sub-committee chaired by Labour Minister Seamus O’Regan released a plan to speed up approvals for major projects, with the aim of getting them off the ground in less than five years.
“The race is on to build some big projects and secure our energy future,” O’Regan said. “We need to build more mines, we need to build more dams, we need to build more nuclear, we need to build more solar, and we need to build more wind farms.”
In the CanREA release, Federal Director Fernando Melo said the investment tax credit “is potentially worth billions to the renewable energy and energy storage industries,” with a “relatively straightforward” design that puts Canada “in a competitive position relative to the U.S. and other jurisdictions.”
He said Ottawa will have to make “much more progress” bringing Indigenous communities and businesses into the clean electricity sector.
Melo said adoption of Bill C-59 positions Canadian firms to begin claiming the tax credit as early as this summer. Some of the fine implementation details are still being hammered out, he told The Energy Mix in an email. But CanREA is working with officials at the Canada Revenue Agency and Natural Resources Canada to develop the “final guidance” companies will need to start applying the credit to their renewable energy and energy storage projects.
In anticipation of the legislation, CanREA members have already “begun to factor the cleantech ITC into their bids on calls for power across the country,” he wrote. “I think it is fair to say that companies will be able to see an impact of this ITC fairly quickly.”
With a federal election on the horizon, many in the climate and energy community have been looking ahead to next steps if there’s a change in governing philosophy in Ottawa. Melo said the investment tax credits “are good for business and good for Canada, and all provinces and territories will benefit. The ITCs will have a meaningful impact on affordability of electricity for all Canadians.”
