Thank you for the opportunity to appear today concerning Canada's clean energy plans in the context of North American energy transformation. One of the key themes of budget 2023 was the announcement of a made-in-Canada plan to build a clean economy. Investment tax credits are a key part of that plan. My remarks today will focus on these investment tax credits.

Let me start with the investment tax credit for carbon capture, utilization and storage, or CCUS, which was first announced in budget 2021 with further details proposed in budget 2022 and budget 2023. CCUS technologies are an important tool for reducing emissions in high-emitting sectors where other pathways to reduce emissions may be limited or unavailable.

The intent of this tax credit is to incentivize businesses to invest in CCUS to reduce their greenhouse gas emissions. It would provide a refundable tax credit of 50% for investments in capture equipment—60% for direct air captures—and 37.5% for investment in transportation, storage and use equipment. It would be available to the extent that projects use captured CO2 for dedicated geological storage or storage in concrete, but not enhanced oil recovery.

Second would be the investment tax credit for clean technology, the details of which were first announced in the 2022 fall economic statement. The intent of this tax credit is to incentivize businesses to adopt clean technologies to support decarbonizing electricity generation, heating and industrial activity. It would provide a refundable tax credit of 30% to investments in eligible clean technologies. The credit would be available to businesses that incur eligible expenses starting on March 28, 2023.

Third is the investment tax credit for clean hydrogen, which was first announced in the 2022 fall economic statement. The intent of this tax credit is to incentivize businesses to invest in clean hydrogen production. As an energy source and an energy carrier that does not release greenhouse gases, hydrogen is becoming an increasingly important source of clean energy to global net-zero strategies. It would provide a refundable tax credit that varies based on the lifecycle carbon intensity of the produced hydrogen, as measured by Environment and Climate Change Canada's full life cycle assessment model, with lower carbon intensity projects receiving higher credit rates.

In terms of eligible investments, it would be available for equipment required to produce hydrogen from electrolysis, and to produce hydrogen from natural gas with CCUS.

The fourth investment tax credit announced by the government is the investment tax credit for clean technology manufacturing, which is meant to incentivize businesses to invest in the equipment needed to manufacture clean technologies. It would provide a refundable tax credit of 30% to support investments in machinery and equipment used in the manufacturing of clean technologies, as well as in the extraction and processing of key critical minerals essential for clean-technology supply chains. The credit will be available to businesses that incur eligible expenses starting on January 1, 2024.

Last is the investment tax credit for clean electricity, which is intended to incentivize all power producers, both private and public, to make investments that support net-zero electricity and an expanded clean electricity grid. It would provide a refundable tax credit of 15% to support investment in clean electricity infrastructure. To access the credit, commitments would have to be made by a competent authority in each province and territory that the federal funding would be used to lower electricity bills and to achieve a net-zero electricity sector by 2035. The credit would be available as of the day of budget 2024, but only for projects that did not begin construction before March 28, 2023.

One novel feature that I would like to highlight is the inclusion of labour requirements that are meant to ensure that workers share the benefits of these investments. In the case of the investment tax credit for CCUS, clean technology, clean hydrogen and clean electricity, in order to access the highest tax credit rates, businesses would need to pay workers prevailing wages and ensure that apprenticeship opportunities were being created.

I’ll conclude my remarks with a brief update on the development of these investment tax credits. It’s important to note that enacting legislation must receive royal assent before any of the investment tax credits can be administered by the Canada Revenue Agency. Development of the credits is proceeding along different timelines, partly reflecting staggered coming-into-force dates.

In August, the government released draft legislative proposals for the CCUS and clean technology investment tax credits, as well as the associated labour requirements for public consultation. These consultations concluded on September 8.

The government is working to release further details on the clean hydrogen investment tax credit, recognizing the importance of finalizing design details and introducing legislation as quickly as possible. This is also the case for the clean technology manufacturing tax credit.

With respect to the clean electricity investment tax credit, a number of policy issues still need to be established. The Department of Finance will be engaging with provinces, territories and other relevant parties to develop the design and implementation details.

Thank you.