Clean electricity grid, new tax credits will be among highlights of federal budget
Canada's push for a zero-emission electricity grid will get a significant funding boost in the federal budget on March 28, including with new tax credits expected to encourage the development of renewable power sources like wind and solar.
Finance Minister Chrystia Freeland has expressed an intention to limit new spending in this budget, amid the inflationary worries and affordability pressures on most Canadians.
But she also has made clear Canada can't hold back too much on clean technology investments because the competition is fierce.
The United States Inflation Reduction Act, with more than US$370 billion promised for clean-tech investments, is chief among her concerns.
During a visit to an electric-vehicle charging manufacturer in Quebec City on Wednesday, Freeland said if Canada does not keep pace, it will lose out on major investments and the chance to create thousands of good jobs.
"Today, and in the years to come, Canada will either capitalize on this historic moment, on this historic opportunity before us, or we will be left behind as the world’s democracies build the clean economy of the 21st century," she said.
And she said the government's role in the budget is going to be "to help the people who are currently in the process of creating this clean economy."
November's fall economic statement made a number of promises on that front that were to be fleshed out in the spring budget. Here's a rundown of what to look for on Tuesday.
1. CLEAN ELECTRICITY
Electrifying things like cars and home heating will require Canada to double, or even triple, how much power it makes.
Canada has also promised to have zero-emission electricity production by 2035. Regulations to get there were initially expected in December but have yet to materialize, in part because the promise is extremely complex.
"People should not underestimate the challenge we are facing," Natural Resources Minister Jonathan Wilkinson said last fall.
Canada already generates 87 per cent of its electricity from clean sources, including hydro (61 per cent), nuclear (19 per cent), wind (six per cent).
Getting to 100 per cent will require a bigger share from renewables and mean any continued fossil fuel-based electricity is abated with carbon capture systems. It will also require a significant investment in battery storage systems so power is there as demand rises and falls.
Provinces also control electricity generation, and their grids aren't well connected. Most can send power to the United States but not to each other.
Wilkinson said Wednesday the government is very aware that a clean power grid is "critically important" to its climate plans and people should expect the budget to reflect that.
"I would say that the grid, a clean electricity grid, underpins our ability to meet our emissions reduction targets and to achieve the kind of economy, a clean growth economy that we want to see going forward," he said.
2. INVESTMENT TAX CREDITS AND BEYOND
Budget day is the deadline Freeland set to begin offering new investment tax credits for clean energy. That includes a refundable credit for 30 per cent of the capital cost of investments in electricity generation including from solar, small nuclear reactors, and wind, as well as battery storage systems, heat pumps, and industrial zero-emission vehicles.
Another investment tax credit, of up to 40 per cent of the capital cost, is coming for the production of low-emission hydrogen. The lower the emissions the higher the credit will be, Freeland promised.
The amount available under both credits was also going to, for the first time in Canada, be tied to the wages paid to workers and whether apprenticeships are created by the company.
There are signals the budget will introduce even more than just those two credits, with the possibility Canada is going to move to some production tax credits for clean electricity, or tax credits earned for every kilogram, or kilowatt hour of energy produced.
The Inflation Reduction Act last year amped up existing production tax credits for companies that make green power in the U.S. It is an expensive policy but one that makes the U.S. more attractive for investing in things such as hydrogen, sustainable aviation fuel, or battery cells.
The Ottawa-based environmental think tank Clean Prosperity recently produced an analysis that said for every kilowatt hour of battery capacity made, a Tennessee battery production plant would get $45.68 from the production tax credit offered by the Inflation Reduction Act, plus $2.73 from state grants. In Ontario, the total of both provincial and federal investment incentives would be $2.36.
A green hydrogen project in Quebec can get about $2.04 per every kilogram of hydrogen produced. In New York, that amount is almost double, at $4.02.
Michael Bernstein, the executive director at Clean Prosperity, said he expects the budget will be selective in the areas where it offers credits. Canada is not as big as the United States and may not be able to match it dollar for dollar, but it can find the most effective places to invest.
"I would expect some meaningful but also targeted responses to a range of areas of the clean energy industry where Canada has reason to believe we can compete effectively," said Bernstein.
"I am hopeful there may be additional strategic tax measures, production tax credits, that support areas where Canada has an outsized economic opportunity in the low-carbon economy."
3. CONTRACTS FOR DIFFERENCE
The fall fiscal update outlined the beginning of the new Canada Growth Fund, to help spur private investment in low-carbon technology. Among the ways it might do that is with "contracts for difference," which lower the risk of making investments by guaranteeing a certain return.
Canada's industrial carbon-price system includes the ability of companies to generate credits for reducing their emissions more than a minimum required amount, and then sell those credits to other companies that don't reduce their emissions enough.
The credits are supposed to be cheaper than paying the carbon price on those emissions, but because the price of those credits is driven by the supply-and-demand force of the market, it's difficult for companies to know for sure what they could earn from them.
The contract for difference would ensure those credits are worth a minimum amount or the company would be paid the difference. If the credits come in for more than that amount, the company pays the government — or in this case, likely the Canada Growth Fund — back the difference.
Bernstein said the U.S., which has some carbon pricing at the state level but not at the national level, is using direct subsidies as its main incentive. But he said for Canada, which has its national price on carbon, contracts for difference are more cost effective than direct subsidies, because they provide predictability without always having to pay as much for it.
"What will really make this response work effectively and help us compete across a wide range of technologies would be to put in place a carbon contracts for difference program that gives firms across the economy the confidence to spend a large amount of capital to decarbonize," he said.
4. SUSTAINABLE JOBS
The fall economic statement promised a five-year, $250-million investment for several new programs to invest in the workers and the training they need to take on jobs in the growing clean technology sector.
The programs would include a new training centre to identify the skills needed, and train up to 15,000 workers on-site, as well as support for union-based apprenticeships and government secretariat to help workers find and be matched to training programs they need.
The budget should include some more details on how these programs will roll out.
This report by The Canadian Press was first published March 23, 2023.
IN DEPTH
Jagmeet Singh pulls NDP out of deal with Trudeau Liberals, takes aim at Poilievre Conservatives
NDP Leader Jagmeet Singh has pulled his party out of the supply-and-confidence agreement that had been helping keep Prime Minister Justin Trudeau's minority Liberals in power.
'Not the result we wanted': Trudeau responds after surprise Conservative byelection win in Liberal stronghold
Conservative candidate Don Stewart winning the closely-watched Toronto-St. Paul's federal byelection, and delivering a stunning upset to Justin Trudeau's candidate Leslie Church in the long-time Liberal riding, has sent political shockwaves through both parties.
'We will go with the majority': Liberals slammed by opposition over proposal to delay next election
The federal Liberal government learned Friday it might have to retreat on a proposal within its electoral reform legislation to delay the next vote by one week, after all opposition parties came out to say they can't support it.
Budget 2024 prioritizes housing while taxing highest earners, deficit projected at $39.8B
In an effort to level the playing field for young people, in the 2024 federal budget, the government is targeting Canada's highest earners with new taxes in order to help offset billions in new spending to enhance the country's housing supply and social supports.
'One of the greatest': Former prime minister Brian Mulroney commemorated at state funeral
Prominent Canadians, political leaders, and family members remembered former prime minister and Progressive Conservative titan Brian Mulroney as an ambitious and compassionate nation-builder at his state funeral on Saturday.
Opinion
opinion Don Martin: Gusher of Liberal spending won't put out the fire in this dumpster
A Hail Mary rehash of the greatest hits from the Trudeau government’s three-week travelling pony-show, the 2024 federal budget takes aim at reversing the party’s popularity plunge in the under-40 set, writes political columnist Don Martin. But will it work before the next election?
opinion Don Martin: The doctor Trudeau dumped has a prescription for better health care
Political columnist Don Martin sat down with former federal health minister Jane Philpott, who's on a crusade to help fix Canada's broken health care system, and who declined to take any shots at the prime minister who dumped her from caucus.
opinion Don Martin: Trudeau's seeking shelter from the housing storm he helped create
While Justin Trudeau's recent housing announcements are generally drawing praise from experts, political columnist Don Martin argues there shouldn’t be any standing ovations for a prime minister who helped caused the problem in the first place.
opinion Don Martin: Poilievre has the field to himself as he races across the country to big crowds
It came to pass on Thursday evening that the confidentially predictable failure of the Official Opposition non-confidence motion went down with 204 Liberal, BQ and NDP nays to 116 Conservative yeas. But forcing Canada into a federal election campaign was never the point.
opinion Don Martin: How a beer break may have doomed the carbon tax hike
When the Liberal government chopped a planned beer excise tax hike to two per cent from 4.5 per cent and froze future increases until after the next election, says political columnist Don Martin, it almost guaranteed a similar carbon tax move in the offing.
CTVNews.ca ÐÇ¿Õ´«Ã½
BREAKING Batteries of Lebanon walkie-talkies contained PETN explosive: Reuters source
The batteries of the walkie-talkies used by Lebanese armed group Hezbollah that blew up this week were laced with a highly explosive compound known as PETN, a Lebanese source familiar with the device's components told Reuters.
New Federal firearm buyback program has cost $67M, still not collecting guns after 4 years
The federal firearm buyback program has cost taxpayers nearly $67.2 million since it was announced in 2020, but it still hasn't collected a single gun.
No, these viral purple apples don't exist in Saskatchewan
If something looks too good to be true, it might be. That's the message from Saskatchewan horticulturists after customers have come into their stores hoping to buy purple apple trees this month.
The province's public security minister said he was "shocked" Thursday amid reports that a body believed to be that of a 14-year-old boy was found this week near a Hells Angels hideout near Quebec City.
The Royal Canadian Mounted Police has lost 205 firearms since 2020, including machine-guns
The Royal Canadian Mounted Police has lost 205 firearms since 2020, including more than 120 handguns and at least five fully automatic weapons like machine-guns.
Cognitive decline reduced by MIND diet, especially for women and Black people, study finds
Following the MIND diet for 10 years produced a small but significant decrease in the risk of developing thinking, concentration and memory problems, a new study found.
Influencer couple denies leaving kids alone on cruise
For most people, dinner on a cruise ship is a time to relax. But when influencer couple Abby and Matt Howard decided to kick back with a dinner à deux, they ended up kicking up a storm.
Thousands of exploding devices in Lebanon trigger a nation that has been on edge for years
Chris Knayzeh was in a town overlooking Lebanon's capital when he heard the rumbling aftershock of the 2020 Beirut port blast. Hundreds of tons of haphazardly stored ammonium nitrates had exploded, killing and injuring thousands of people.
B.C.'s police watchdog is investigating the death of a woman who was shot by the RCMP after allegedly barricading herself in a room with a toddler early Thursday morning.
Local Spotlight
They say a dog is a man’s best friend. In the case of Darren Cropper, from Bonfield, Ont., his three-year-old Siberian husky and golden retriever mix named Bear literally saved his life.
Paleontologists from the Royal B.C. Museum have uncovered "a trove of extraordinary fossils" high in the mountains of northern B.C., the museum announced Thursday.
The search for a missing ancient 28-year-old chocolate donkey ended with a tragic discovery Wednesday.
The Royal Canadian Mounted Police is celebrating an important milestone in the organization's history: 50 years since the first women joined the force.
It's been a whirlwind of joyful events for a northern Ontario couple who just welcomed a baby into their family and won the $70 million Lotto Max jackpot last month.
A Good Samaritan in New Brunswick has replaced a man's stolen bottle cart so he can continue to collect cans and bottles in his Moncton neighbourhood.
David Krumholtz, known for roles like Bernard the Elf in The Santa Clause and physicist Isidor Rabi in Oppenheimer, has spent the latter part of his summer filming horror flick Altar in Winnipeg. He says Winnipeg is the most movie-savvy town he's ever been in.
Edmontonians can count themselves lucky to ever see one tiger salamander, let alone the thousands one local woman says recently descended on her childhood home.
A daytrip to the backcountry turned into a frightening experience for a Vancouver couple this weekend.