It has been more than a year since Canada initially promised incentives to kickstart clean technology initiatives, but no money has yet started to flow. If this doesn’t change soon, industry groups said, more than C$50 billion ($37 billion) in investments may be at danger.
In order to encourage investment in green technologies, the Liberal administration of Prime Minister Justin Trudeau has promised a plethora of investment tax credits (ITCs) totaling approximately C$27 billion over five years. This move is in part a reaction to the significant incentives that have been available in the United States for more than a year.
Given the assurance that businesses have in the U.S., according to Bob Masterson, president and chief executive officer of the Chemistry Industry Association of Canada, businesses will become weary of waiting. The federal government “urgently needs to get as much of this out the door this fall as possible.”
In more than a dozen projects in his business, according to Masterson, there are “well beyond C$25 billion of proposed investments” awaiting the incentives.
Approximately C$10 billion in ITCs for investments in net-zero technologies, such as wind or solar power, and for carbon capture and storage (CCS), were first promised by the government 17 months ago. This month, industry consultations on the law were completed.
A further C$17 billion in ITCs for sustainable electricity, manufacturing, and hydrogen were announced six months ago, albeit they are still in the early stages.
According to a finance ministry official, both sets of ITCs will be applied retroactively to the dates mentioned earlier once fully legislated. Some businesses have already begun investing since they are confident enough that the money will come in.
The official explained that the consultation process took time because the government wanted to write the legislation correctly. The official went on the record since the material was sensitive. The official stated that passing the first set of ITCs was a major priority but did not provide a timeframe.
The prime minister’s goal of having Canada reach net-zero emissions by 2050 will only be achieved with the help of incentives, which Trudeau has made a cornerstone of his economic strategy.
Lafarge, a manufacturer of cement, is one of the businesses relying on ITCs for its Exshaw, Alberta factory, where it intends to capture 1 million metric tons of carbon emissions annually.
The company’s two heads of sustainability said in a joint statement to Reuters that “having ITCs in place in Canada will certainly help the project’s business case and in ensuring investment in decarbonization occurs in Canada.”
There is a sense of urgency, according to Dennis Darby, president of Canadian Manufacturers & Exporters (CME), a trade association that represents 2,500 businesses.
To compete with the United States, Darby predicted that CME members would need to invest between C$25 and C$50 billion in green projects over the following four to five years.
Cement Association of Canada President Adam Auer stated that his organisation’s members have “billions” of projects waiting for ITCs.
The first decarbonized petrochemical factory in the world would be a Dow Chemicals project at Fort Saskatchewan, Alberta, which Masterson used as an example.
“It’s difficult to see how the rest of the world’s chemistry industry looks at Canada and says, “I should go kick the tires and see if I can make a decarbonized investment in Canada,” “if that project does not go forward because of uncertainties surrounding ITCs,” he added.
“We are working with the Canadian government to confirm necessary incentives so that we can make a final investment decision this year,” said Rachelle Schikorra, a spokesman for Dow Chemicals, to Reuters.