Clean Prosperity Executive Director Michael Bernstein made the following statement about the release of the federal government’s 2023 Fall Economic Statement:
“In today’s Fall Economic Statement, the government took an important step to unlocking low-carbon investment by announcing that the Canada Growth Fund will offer carbon contracts for difference for industrial decarbonization, using up to $7 billion dollars of its $15 billion capital fund. These contracts have the potential to get some of Canada’s most promising industrial emissions reduction projects off the ground, creating good jobs for Canadians.
“Today’s announcement is an important step for stimulating Canadian low-carbon economic growth, and for climate action.
“To maximize the impact of carbon contracts for difference, the Canada Growth Fund will need to move quickly while ensuring that the process is transparent, efficient, and accessible to the widest possible range of emissions reductions projects.
“The Canada Growth Fund offering should also be a bridge to a broad-based program of standardized carbon contracts for difference that are available right across the economy, both to industrial emitters and new low-carbon projects that Canada hopes to attract. That’s what it will take to unlock the full power of industrial carbon pricing, drive down emissions, and accelerate the growth of Canada’s low-carbon economy.
“Today’s announcement is an important step for stimulating Canadian low-carbon economic growth, and for climate action.”Clean Prosperity Executive Director Michael Bernstein
“Importantly, as long as the federal government maintains the carbon-pricing trajectory for industry and ensures the proper functioning of carbon markets, any funds allocated to contracts for difference, such as the $7 billion announced today, can stay in the bank, and eventually be invested elsewhere.
“Carbon contracts for difference are like an insurance policy against the future value of carbon credits, which low-carbon projects are counting on for revenue. If carbon markets function properly, there won’t be any claims, and there won’t be any payouts.
“Clean Prosperity will release new research next week that shows how broad-based carbon contracts for difference are needed to deliver up to 33 megatonnes of emissions reductions from industry by 2030.
“Those are reductions that the government already expects in its Emissions Reduction Plan. But new modelling we did with Navius Research shows that those 33 megatonnes will be out of reach if firms don’t have confidence in the durability of Canada’s carbon price. Contracts for difference are the key to delivering that needed certainty.
“We also welcome the additional details announced today about low-carbon investment tax credits, including a timeline for the finalization of the carbon capture, utilization and storage tax credit. These tax credits will help Canada compete against the subsidies in the US Inflation Reduction Act. But tax credits can’t close the investment-incentive gap on their own. We also need carbon contracts for difference to make Canada a competitive destination for low-carbon investment.”
Clean Prosperity has long advocated for the implementation of a broad-based carbon contracts for difference program in Canada. Learn more at cleanprosperity.ca/creating-carbon-market-certainty/.