Department of Finance launches consultations on investment tax credit for carbon capture, utilization, and storage
June 7, 2021 - Ottawa, Ontario - Department of Finance Canada
Today, the Department of Finance is launching consultations with stakeholders on the recent federal budget’s proposal to introduce a new investment tax credit for capital invested in carbon capture, utilization, and storage (CCUS) projects. Canadian innovators and engineers have developed some of the leading global technologies for CCUS, which are in demand as more countries take action to fight climate change. Investing in these technologies today is a significant step towards achieving Canada’s climate targets—and a greener, more resilient future for all Canadians.
CCUS is an important tool for reducing emissions in high-emitting sectors. It uses advanced technologies to capture carbon dioxide emissions from fuel combustion, industrial processes, or directly from the air. The captured carbon can then be used to create new and innovative products or stored deep underground.
The federal government intends for the new investment tax credit to be available for a broad range of CCUS applications across different industrial subsectors (e.g. concrete, plastics, fuels), including blue hydrogen projects and direct air capture projects, but not enhanced oil recovery projects. The government is seeking input from all industrial subsectors, recognizing that various subsectors face different challenges in adopting CCUS. The consultation will include key provincial governments, as part of efforts to encourage complementary measures for CCUS projects in their respective jurisdictions.
The CCUS investment tax credit will be available starting in 2022. On the same timeline, the government will also determine how comparable tax support could be provided to producers of green hydrogen.
Stakeholders are invited to provide comments on the government’s proposed approach by September 7, 2021. Details regarding how to participate are found in the related link below.
The proposed new investment tax credit will support and accelerate the adoption of CCUS technologies, with the goal of reducing emissions by at least 15 megatonnes of CO2 annually. Investment is needed to support research and development that will help to advance the technology, lower its costs, and make sure Canada stays ahead of the curve in the global market for CCUS.
In addition to the proposed investment tax credit for CCUS, the recent federal budget also proposed to provide $319 million to Natural Resources Canada over seven years, starting in 2021‑22, with $1.5 million in remaining amortization, to support research, development, and demonstrations that would improve the commercial viability of CCUS technologies.
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Department of Finance Canada
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