Canada will offer a substantial incentive to companies that invest in carbon-capture technologies and will set aside as much as C$3.8 billion ($3 billion) over eight years to accelerate critical mineral exploration, extraction and processing as it seeks to cut carbon emissions.
In this year's budget presented on Thursday, Canada is introducing a 60% tax credit for equipment used to capture carbon from the air, and 50% for all other capture equipment, plus a 37.5% credit for transportation and storage equipment.
The tax credit is projected to cost the government C$2.6 billion over five years. The incentive is below the 75% level the Canadian Association of Petroleum Producers requested last year, and one industry group said it would look for additional funding from programs like the Canada Infrastructure Bank and Emissions Reduction Alberta."This in and of itself probably isn't enough for a final investment decision, but it's a very important step.
Canada needs to spend between C$125 billion and C$140 billion every year to reach net-zero goals by 2050, compared with the current annual investment of between C$15 billion and C$25 billion, according to the budget document.Canada is seeking to attract electric vehicle and battery makers in order to underpin the future of its manufacturing industry, which is still dependent on the production of internal-combustion cars.
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