OTTAWA – The Canadian federal government has announced its intention to link substantial tax credits and grants for provincial electricity initiatives to advancements towards Ottawa’s objective of achieving an emissions-free electricity grid by 2035.
Energy and Natural Resources Minister Jonathan Wilkinson stated that accessing the new refundable 15 percent clean electricity investment tax credit will necessitate a move towards a non-emitting grid. The federal budget already indicated that this requirement would apply to investments in non-emitting electricity production, storage, and interprovincial transmission.
In addition to the tax credit, there are several other investment tax credits for hydrogen production, clean technology, carbon capture and storage systems, amounting to tens of billions over the next 12 years. Furthermore, over $3 billion in grants have been allocated for renewable electricity projects and technology enhancements to increase grid efficiency. The federal government has also considered the possibility of assisting in funding transmission lines within provinces under certain circumstances.
Wilkinson acknowledged the diversity of net-zero grids across the country, acknowledging that provinces and territories have differing starting points. The regulations accompanying the plan will provide details on achieving flexibility while accounting for scenarios like backup plans and emergencies.
Minister of Environment and Climate Change Steven Guilbeault is expected to unveil the first draft of these regulations shortly. The rules will outline timelines for the closure or retrofitting of natural gas power plants with carbon-capturing systems.
For six provinces, committing to an emissions-free electricity grid is relatively straightforward, as they are already over 90 percent of the way there. However, four provinces, including Alberta, Saskatchewan, Nova Scotia, and New Brunswick, still rely significantly on coal and natural gas for power generation.
While provinces like Alberta and Saskatchewan have expressed their inability to achieve a clean grid by 2035, they aim for a non-emitting grid by 2050, the same year Canada targets net-zero emissions.
Wilkinson emphasized that the disagreement centers around the timeline for achieving a non-emitting grid and commended Alberta for its efforts in expanding solar power production. Despite differing perspectives, Wilkinson is optimistic about the potential for agreements between the federal government and provinces, focusing on a collaborative approach to reach common goals.