Canada backs clean energy future with new incentives in 2023 budget

The Canadian government has unveiled a set of measures to transform to a clean economy and address climate change, proposing several incentive schemes to support the transition to a cleaner energy mix.

The measures are part of the government’s 2023 Budget, which was released earlier this week. They contain a list of “transformative investments” that is headed by the creation of Clean Technology Investment Tax Credit to allow a 30% tax credit refund on the capital costs needed for the installation of wind, solar and energy storage capacity. Developers will be able to apply for project spending made from March 28, 2023 through to 2034.

A new refundable tax credit of 15% will be available to back investments made by non-taxable entities such as Indigenous communities and municipally owned utilities under the Clean Electricity Investment Tax Credit.

An Investment Tax Credit will also be introduced for renewable energy and storage manufacturing and investment in machinery and equipment, with an available 30% refund of investments. For hydrogen, the plan is for a 40% investment tax credit.

In addition, the budget also includes CAD 20 billion (USD 14.8bn/EUR 13.6bn) in support for clean electricity investments, to be distributed in two even portions for projects within designated clean power and green infrastructure priority areas.

The government’s plan was strongly applauded by the Canadian Renewable Energy Association (CanREA) and corporate players in the clean energy industry. Innergex Renewable Energy Inc (TSE:INE), one of the major power producers in the country, said: “These financial initiatives should become key drivers for renewable energy projects in the country, as provinces are expected to see the demand for affordable electricity and a clean grid rising sharply."

(CAD 1.0 = USD 0.739/EUR 0.678)

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