The 2022 Federal Budget tabled today offers some significant new policies and investments to help achieve the government’s climate targets, as laid out in the new Emissions Reduction Plan.
“If the Emissions Reduction Plan was the blueprint,“ said Clean Prosperity Executive Director Michael Bernstein, “then this budget lays down the first few floors of the building.”
One of the most important emissions-reduction measures introduced in Budget 2022 is the investment tax credit (ITC) for carbon capture, utilization and storage. The ITC will be a critical driver of new investment in carbon capture projects, including atmospheric carbon removal. These technologies will be essential for helping Canada achieve its climate goals, as well as creating good jobs and clean economic growth.
Clean Prosperity strongly supports the government’s decision to offer a higher credit rate for carbon dioxide removal (CDR) projects in the ITC. These projects promise massive decarbonization and economic benefits in the long term, but have high up-front capital costs. Canadian firms have already established themselves as global leaders in CDR, and the financial support offered in today’s budget promises to deliver a much-needed boost to this important industry.
“If the Emissions Reduction Plan was the blueprint then this budget lays down the first few floors of the building.”Clean Prosperity Executive Director Michael Bernstein
Another smart choice in the design of the new ITC is the inclusion of credits for carbon dioxide transport projects, which will support the building of pipelines to move captured carbon to points where it can be permanently sequestered underground.
In addition, Clean Prosperity welcomes changes to Canada’s carbon pricing system announced in this budget that will make the policy fairer for small businesses. Carbon pricing needs to incentivize emissions reductions in a way that is fair and affordable for all Canadians. It is also critical that the government take steps to guarantee the future price of carbon, so businesses have the confidence to make low-carbon investments.
We’re notably encouraged by the new $15 billion Canada Growth Fund, an arms-length investment agency that will focus on unlocking billions in private capital for decarbonization.
Today’s budget and last week’s Emissions Reduction Plan include a long list of measures, spending, and new government agencies. While each measure may have individual merit, we encourage the federal government to prioritize among these policies and programs, focusing on the measures that will unlock private capital, while helping Canadian businesses effectively navigate these new programs. To achieve our climate goals, it’s critical that we move from plans to action as quickly as possible.