June 25, 2024 – With the passage of Bill C-59, Ottawa passed into law the first four Clean Economy Investment Tax Credits (ITS): Clean Technology; Carbon Capture, Utilization and Storage (CCUS), Clean Technology Manufacturing, and Clean Hydrogen.

“The Clean Technology ITC will drive momentum for the renewable energy and energy storage industries in Canada,” said Vittoria Bellissimo, president & CEO, Canadian Renewable Energy Association. “It will make Canada a more competitive place to invest, creating new opportunities for our members in all provinces and territories.”

Eligible businesses can now apply for the Clean Technology and CCUS ITCs, which are anticipated to provide about $11.4 billion in support through 2027-2028.

Meantime, eligible businesses should be able to apply for ITCs for Clean Technology Manufacturing and Clean Hydrogen projects this fall.

The Clean Technology ITC will provide support to qualifying taxpayers who are investing capital in specified clean technologies in Canada. The Canada Revenue Agency (CRA) is responsible for administering the clean technology ITC, including assessing claims and issuing payments. NRCan is responsible for providing guidance on what qualifies as a clean technology property.

Examples include clean electricity generation equipment, stationary electrical energy storage, low-carbon heating systems, and non-road zero-emission vehicles.

“With the expected doubling to tripling of electricity demand, the Cleantech ITCs will play a vital role in incentivizing accelerated deployment of needed infrastructure investment, such as energy storage systems,” said Energy Storage Canada.

Administered jointly by NRCan and CRA, the CCUS ITC will provide support to taxable Canadian corporations that incur eligible expenditures for qualified CCUS projects.

The Clean Technology Manufacturing ITC will provide support to Canadian companies that are manufacturing or processing clean technologies and their precursors, providing support for 30% of the cost of investments in new machinery and equipment used to manufacture or process key clean technologies, and extract, process, or recycle key critical minerals.

The Clean Hydrogen ITC will provide a 15% to 40% refundable tax credit for investments in projects that produce hydrogen, with the projects that produce the cleanest hydrogen receiving the highest levels of support. (Equipment needed to convert hydrogen into ammonia, in order to transport hydrogen, may also be eligible.)

NRCan and CRA say they have worked to develop a seamless service experience for businesses seeking to claim Clean Economy ITCs, centralized on the Clean Economy Investment Tax Credits webpages.

The full value of the federal ITCs is only accessible to those who meet certain labour requirements, including paying workers prevailing wages and creating apprenticeship opportunities.

The Clean Economy ITCs represent $93 billion in federal incentives by 2034-2035, says Natural Resources Canada, and will play “an essential role in attracting investment, supporting Canadian innovation, creating jobs and driving Canada’s economy toward net-zero by 2050”.