Canada's Clean Energy Push: Key Tax Credits Expanding in FES 2024
Key Ideas
  • FES 2024 in Canada expands Clean Electricity and Electric Vehicle Investment Tax Credits, with proposed further guidance for Clean Hydrogen ITC.
  • The Clean Electricity Investment Tax Credit aims to reduce upfront costs for clean energy infrastructure investments in Canada.
  • Provincial and territorial Crown corporations must meet specific conditions to claim the CE ITC, including commitments to net-zero emissions and passing benefits to ratepayers.
  • Designation as an 'eligible jurisdiction' under the CE ITC requires provinces to submit a request to the Federal Minister of Finance with supporting documentation.
The Government of Canada has taken significant steps in advancing its clean energy agenda through the 2024 Fall Economic Statement (FES 2024). The statement outlines the expansion and further guidance on key clean economy investment tax credits aimed at accelerating the country's transition to a low-carbon economy. The Clean Electricity Investment Tax Credit (CE ITC) and the Electric Vehicle (EV) Supply Chain Investment Tax Credit (EV ITC) are detailed in FES 2024, with a proposed new pathway for the Clean Hydrogen Investment Tax Credit. The CE ITC, a 15 percent refundable credit, targets the capital costs of equipment related to clean electricity generation, storage solutions, and interprovincial electricity transmission. To claim the CE ITC, entities like Canadian corporations, Crown corporations, corporations owned by municipalities or Indigenous communities, and pension investment corporations must meet specific criteria. The tax credit's goal is to support businesses in investing in infrastructure that reduces Canada's power generation carbon footprint. Moreover, the Canada Infrastructure Bank (CIB) is now included as a qualifying entity for the CE ITC, with exceptions ensuring CIB financing doesn't reduce the tax credit's benefits. Provinces and territories must adhere to conditions for inclusion, including commitments to publish energy roadmaps for achieving net-zero emissions by 2050 and passing on CE ITC benefits to electricity ratepayers. The designation process for provinces seeking eligibility under the CE ITC involves submitting a request to the Federal Minister of Finance with necessary documentation. Overall, these measures aim to foster clean energy investments, support sustainability, and drive economic growth in Canada's effort to combat climate change.
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