Finance Minister Chrystia Freeland plans to expand Canada’s investment subsidies for carbon capture technology and hydrogen production and create a C$2 billion ($1.5 billion) fund for cutting emissions from heavy industry.
(Bloomberg) — Finance Minister Chrystia Freeland plans to expand Canada’s investment subsidies for carbon capture technology and hydrogen production and create a C$2 billion ($1.5 billion) fund for cutting emissions from heavy industry.
The green incentives to be unveiled in Freeland’s budget on Tuesday will be a mix of tax credits and cash programs, according to people familiar with the document who spoke on condition of anonymity. The tax credits will extend into the 2030s and the greatest fiscal impact will be in later years, they said.
A previously-announced carbon capture tax credit will be expanded to include more types of equipment, and will be sweetened for companies that pay higher wages, the people said. Canada is the largest foreign supplier of oil to the US and has the world’s third-largest reserves, but most of it is trapped in thick oil sands in northern Alberta, requiring huge amounts of energy to extract and upgrade. Carbon capture is a key part of the Canadian oil industry’s proposed approach to reducing greenhouse gas emissions.
A clean hydrogen tax credit will be expanded to include equipment that converts hydrogen into ammonia for shipping. All of the tax credits will be for capital expenses, not operating subsidies — a major difference with the US Inflation Reduction Act, which set up lucrative production tax credits for the clean energy sector.
Freeland’s budget will also allocate C$2 billion in cash grants to help heavy industry decarbonize operations, the people said. The money will be made available through the Strategic Innovation Fund.
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