The Alberta Energy Minister is critical of the federal budget’s lack of clarity on programs related to carbon capture investment tax credits.
“This is the third budget in a row that the federal government has failed to provide clarity on the kinds of financial incentives that we are expecting to see here in Alberta,” said Peter Guthrie in an emailed response.
On April 5, Federal Minister of Environment and Climate Change, Steven Guilbeault, highlighted the Clean Investment Tax Credits featured in Budget 2023 to help fight climate change, but no further details on the Investment Tax Credit (ITC) for Carbon Capture, Utilization, and Storage (CCUS) were given.
“There has never been a more impactful budget in the history of Canada to fight climate change and create a clean, electrified economy. This budget outlined over $80 billion in new measures to fight climate change, starting with five major new tax credits to accelerate clean tech in Canada,” said Guilbeault in a press release.
The five tax credits Guilbeault highlighted included the Clean Electricity Investment Tax; Clean Technology Manufacturing Tax Credit; Clean Hydrogen Investment Tax Credit; the Clean Technology Investment Tax Credit; and the Carbon Capture, Utilization, and Storage (CCUS) Investment Tax Credit.
Guthrie said the federal Investment Tax Credit on CCUS was announced two years ago, but there has been no legislated action.
“The longer this goes on the more opportunities we miss as a province and Canada as a whole,” said Guthrie.
Guilbeault did not respond to a request for comment on Guthrie’s criticisms in time for publication, but Budget 2023 documents said legislation is coming.
“A full package of legislative proposals will be released for consultation in the coming months. Once legislated, the tax credit will be retroactively available to businesses that have incurred eligible CCUS expenses, starting in 2022,” Budget 2023 documents said.
After the ITC for CCUS was announced in Budget 2022, consultation and draft legislation was launched in August 2022. The draft legislation “provided the Department of Finance with submissions that have informed additional design elements of the investment tax credit,” according to the budget.
Budget 2023 includes additional proposals for the ITC for CCUS including “dual use heat and/or power equipment and water use equipment, with tax support prorated in proportion to the use of energy or material in the carbon capture, utilization, and storage process, subject to certain conditions.”
Projects that store C02 in concrete would be required to have their storage validated by a third-party “based on an ISO standard prior to claiming the investment tax credit.”
There would also be a recovery calculation for the ITC in respect of refurbishment property, budget documents stated.
The federal government also intends to include labour requirements to the ITC for CCUS which will kick in on Oct. 1, 2023. However, the details of the labour requirements will be announced at a later date, the budget stated.
Prime Minister Justin Trudeau, at a press conference in Alliston, Ont. On April 5, said Budget 2023 is the very first-time tax credits have been tied to labour requirements, a move they made to ensure clean energy jobs are “well paid.”
Trudeau also highlighted tensions between the government and opposition party.
“Conservative politicians say they're going to oppose this budget — opposing this plan for great careers, opposing this plan to create a clean economy and fight climate change, opposing the plan to make life more affordable for people” Trudeau said.
Back in Alberta, Guthrie said the province has been clear.
“I think we have been clear – the Alberta government supports reducing emissions while keeping energy affordable for Albertans and Canadians,” he said.
