Freeland unveils tax credits of 30-40% for investment in clean technology and hydrogen

In its fall economic statement, the federal government proposed new tax credits for investments in clean technology and hydrogen in order to keep up with the financial supports provided to manufacturers in the United States through the recently passed Inflation Reduction Act.

It proposed a tax credit of up to 30 per cent of capital costs for investments in electricity generation systems, such as small modular nuclear reactor and systems that depend on wind, water and solar, in storage such as batteries, in low-carbon heat equipment and in industrial zero

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From the first day of next year's federal budget, the credit will be available.

A tax credit of at least 40 per cent is possible if you invest in the production of hydrogen. The level of support required for production is being worked on. The tax credit will be phased out after the year 2030.

It will be more attractive for businesses to invest in Canada to produce the energy that will power a net-zero global economy with major investment tax credits for clean technology and clean hydrogen, according to the deputy prime minister.

Companies will need to meet labour conditions that include paying wages based on market conditions and ensuring training opportunities for workers to be eligible for the highest level of tax credits, according to the federal government. Freeland said that the new approach to tax credits was "entirely reasonable".

The bill, which passed the U.S. House of Representatives in August, will result in dramatic changes to the American economy in service of the country's climate goals through a mix of tax incentives, grants and loan guarantees

Canada will benefit from the IRA's US$7,500 subsidy for the production of electric vehicles.

Without new measures to keep pace, Canada risks being left behind, according to the fall economic statement.

At a time when democratic countries in North America, including Canada, have been trying to offset China's dominance of the battery supply chain for electric vehicles, the demand for which has been on the rise in recent years, the tax credits have been announced.

China dominates the EV supply chain through its refining and processing industries, despite the fact that most of the metals required by EV are mined outside the country. Three Chinese companies were ordered by Canada to give up their investments in three Canadian juniors. Canada raised the bar for foreigners to join last week.

The government believes that this ongoing shift is the most significant opportunity for Canadian workers and businesses in a generation.

The email address is nkarim@postmedia.com.

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