Canada Cleantech’s 2022 Budget Assessment
| Budget 2022|
Key items for cleantech Thursday April 7th, Minister of Finance Chrystia Freeland released Budget 2022: A Plan to Grow Our Economy and Make Life More Affordable (Budget 2022) which provides the basis for a total new spending of $31.2B.
These are the key items that are relevant for cleantech:
Clean Growth & Emission Reductions Establishment of the Canada Growth Fund (initial investment of $15B over five years), targeted at enabling the flow of private capital into reducing emissions and growing low-carbon industries and new technologies across new and traditional sectors of Canada’s industrial base. The fund will operate at arm’s length from the government. $2.2B over seven years, starting in 2022-23, to expand and extend the Low Carbon Economy Fund. Funding of $250M over four years to support pre-development activities of clean electricity projects of national significance, such as inter-provincial electricity transmission projects and Small Modular Reactors (SMRs). Additional funding of $69.9M for Natural Resources Canada to undertake research to minimize waste generated from SMRs, support the creation of a fuel supply chain, strengthen international nuclear cooperation agreements, and enhance domestic safety and security policies and practices.
Clean Energy & Grid Modernization Funding of $600M over seven years for the Smart Renewables and Electrification Pathways Program to support additional renewable electricity and grid modernization projects/ $25M provision to establish Regional Strategic Initiatives to work with provinces, territories, and relevant stakeholders to develop net-zero energy plans.
ZEVs & ZEV Infrastructure Extension of consumer incentives for Zero-Emission Vehicles ($1.7B over five years). New purchase incentive program for medium- and heavy-duty ZEVs to help businesses upgrade their fleets ($547.5M over four years). $500M investment from the Canadian Infrastructure Bank in large-scale urban and commercial ZEV charging and refuelling infrastructure. Funding of $400M over five years, starting in 2022-23, for the deployment of ZEV charging infrastructure in sub-urban and remote communities through the Zero-Emission Vehicle Infrastructure Program.
Tax Incentives Plans to engage with experts on establishing an investment tax credit of up to 30 per cent, focused on net-zero technologies, battery storage solutions, and clean hydrogen – an incentive Canada Cleantech Alliance has been advocating for. Confirmation of the government’s intention to establish a refundable investment tax credit for carbon capture, utilization and storage (CCUS) projects, similar to the 45Q tax credit in the United States, for businesses that incur eligible CCUS expenses, starting in 2022. The investment tax credit would be available to CCUS projects to the extent that they permanently store captured CO2 through an eligible use which includes dedicated geological storage and storage of CO2 in concrete, but does not include enhanced oil recovery.
From 2022 through 2030, the investment tax credit rates would be set at 60 % for investment in equipment to capture CO2 in direct air capture projects, 50 % for investment in equipment to capture CO2 in all other CCUS projects and 37.5 % for investment in equipment for transportation, storage and use. Other CO2 uses could be made eligible in the future, if permanence of storage can be demonstrated and no incremental CO2 emissions result from the use of the product that is produced. Expansion of the accelerated tax deductions for business investments in clean energy equipment to include air-source heat pumps (Canada Cleantech Alliance had been advocating for an extension to include other clean technologies in the past). Extension of the 50 % reduction of the general corporate and small business income tax rates for zero- emission technology manufacturers to include manufacturers of air-source heat pumps. Review of the Scientific Research and Experimental Development (SR&ED) tax credit. In particular, the budget said the review will look at ensuring the tax credit provides the best economic benefits to Canada, and consider whether this tax credit can play a role in encouraging the development and retention of intellectual property. Commitment to consulting on the suitability of patent box regimes to keep IP in Canada.
Climate Risk Reporting Commitment to moving towards mandatory reporting of climate-related financial risks across a broad spectrum of the Canadian economy, based on the international Task Force on Climate-related Financial Disclosures (TCFD) framework. Climate and environmental, social, and governance (ESG) disclosure will be supported by the following: The Office of the Superintendent of Financial Institutions (OSFI) will consult federally regulated financial institutions on climate disclosure guidelines in 2022 and will require financial institutions to publish climate disclosures—aligned with the TCFD framework—using a phased approach, starting in 2024; Requirements for disclosure of ESG considerations, including climate-related risks, for federally regulated pension plans.
Ag-tech provisions Expansion of Agricultural Clean Technology Program $329.4M over six years, starting in 2022-23. Expansion of the Agricultural Climate Solutions program’s On-Farm Climate Action Fund with $469.5M over six years. Funding of $150M for a resilient agricultural landscape program to support carbon sequestration, adaptation, and address other environmental benefits. Funding of $100M over six years, starting in 2022-23, to the federal granting councils to support post-secondary research in developing technologies and crop varieties that will allow for net-zero emission agriculture.
Sustainable Construction & Retrofits National Research Council funding of $183.2M over seven years, starting in 2022-23, with $8.5M in remaining amortization, and $7.1M ongoing to conduct research and development on innovative construction materials and to revitalize national housing and building standards to encourage low-carbon construction solutions. Additional $458.5M funding to the Canada Mortgage and Housing Corporation over the program duration, starting in 2022-23, to the to provide low-interest loans and grants to low-income housing providers as part of the low-income stream of the Canada Greener Homes Loan program. Reform of the Rental Construction Financing Initiative by strengthening its affordability and energy efficiency requirements. Funding of $150M over five years, starting 2022-23, to develop the Canada Green Buildings Strategy. Funding of $200M over five years, starting in 2022-23, to create the
Deep Retrofit Accelerator Initiative. Funding of $33.2M over five years, starting 2022-23, including $6M from the Green Infrastructure – Energy Efficient Buildings Program to implement a Greener Neighbourhoods Pilot Program in up to six community housing neighbourhoods to pilot the “Energiesprong” model for net zero retrofits in Canada.
General Innovation Provisions impacting cleantech The SuperClusters are now called Global Innovation Clusters and they will receive $750 million in extended funding over six years. New Canada Innovation and Investment Agency: There are still a lot of details to be filled in around the new Canadian Innovation and Investment agency announced in the budget and endowed with an initial funding envelope of $1 billion over five years. The agency will be operationally independent from the federal government and is not conceptualized as the Canadian version of DARPA that was promised in the last federal election according to CCI.
Plans to develop new tools and guidelines to encourage the adoption of green procurement across the government.
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