Two years after the federal government began announcing what it calls “clean investment tax credits” to jump-start an anticipated net-zero investment bonanza, no company has managed to access the incentives.
The government says it is still finalizing the terms of the investment tax credits, or ITCs. Industry and other climate policy researchers say ITCs are needed to decarbonize Canada’s economy and achieve net-zero emissions by 2050.
The incentives, which could be worth $27 billion over five years, include refundable tax credits for clean electricity generation, hydrogen and carbon capture utilization and storage.
Some of these measures were announced as recently as March, while others, such as the clean technologies and hydrogen credits, were announced a year ago during the 2022 fall economic statement.
The carbon capture utilization and storage credit was announced way back in budget 2021.
Canada risks falling behind in the global race to attract billions of dollars in low-emission investments — especially given the rapid pace of the Biden administration’s efforts to green the U.S. economy — said NDP natural resources critic Charlie Angus.
NDP MP for Timmins-James Bay Charlie Angus says Canada risks being left behind in the race to create a low-carbon economy. (Spencer Colby/The Canadian Press)
“It seems like the Liberals are continuing to dawdle around and talk about it,” Angus told CBC News. “Meanwhile … the Biden administration is driving an economic transformation unlike anything we’ve ever seen.
“And we risk being left at the side of the road if we do not move quickly.”
Angus cited International Energy Agency (IEA) reports that predict a radically different energy market by 2030. The IEA projects thatby then, nearly half of the world’s electricity supply will come from renewable sources and heat pumps, and other electric heating systems will outsell fossil fuel systems.
“This is an industrial revolution that’s happening at an accelerated level. International investors are choosing where to go,” Angus said.
Angus’s comments echo a warning delivered by the Macdonald Laurier Institute policy think-tank this week.
During her testimony before a House of Commons committee, Heather Exner-Pirot, the institute’s director of natural resources, energy and the environment, told MPs the federal government developed the tax credits in response to the Biden administration’s Inflation Reduction Act (IRA).
The IRA is a multi-billion-dollar program that pledges government funding for developing low-carbon energy. The IRA looks to boost the country’s manufacturing sector and takes aim at China’s dominant position in the clean energy technology supply chain. The law is regarded as the most ambitious climate bill ever passed in the U.S.
The Commons standing committee on natural resources is looking at whether Canada’s clean energy plans meet the challenge posed by the IRA.
“As of today, none [of the ITCs] are in force,” Exner-Pirot told the standing committee. “Delays in finalizing the terms and conditions of each ITC through law effectively freezes capital and diminish Canada’s ability to achieve its emissions reductions targets.”
A fast charging station manufactured by Sumitomo Electric at Fully Charged Live, an electric vehicle (EV), renewable and clean energy and urban mobility exhibition, in Vancouver, B.C. on Sept. 8, 2023. (THE CANADIAN PRESS/Darryl Dyck)
While draft legislation has been published for the clean technology and carbon capture and storage tax credits, she said, the tax credits for hydrogen, clean manufacturing and clean electricity “remain conceptual.”
Freeland working to get the ITCs across the line
Finance Minister Chrystia Freeland was in Calgary Wednesday to announce the first investment from the government’s Canada Growth Fund — a $15 billion arm’s-length public investment vehicle to support Canada’s clean economy.
Through the fund, Ottawa will invest $90 million in the Calgary-based geothermal energy company Eavor Technologies.
Freeland suggested the investment tax credits will be finalized soon.
“Our government absolutely shares that sense of urgency, and you will hear more from us soon about getting all of those ITCs across the line and available for companies like this one,” Freeland told reporters.
In follow-up comments, Freeland’s senior communications adviser said tax credits for technology, manufacturing, and carbon capture, utilization and storage tax would be backdated — so some investments being made now could still qualify.
“The tax credits are retroactive, deliberately, as we know Canada cannot afford to miss out on this opportunity to build a thriving, sustainable, clean economy with economic opportunities for Canadians across the country,” said Katherine Cuplinskas in a media statement.
Finance Minister Chrystia Freeland takes part in a press conference in Ottawa on Tuesday, Oct. 17, 2023. (THE CANADIAN PRESS/Sean Kilpatrick)
Although Freeland hinted there could be more news about investment tax credits soon, the tax credits would still need to be tabled in legislation and approved by Parliament.
Meanwhile, companies are postponing investment decisions, said Green Party MP Mike Morrice.
“I am hearing directly from clean tech companies in my community that the decision to purchase and move ahead is being delayed,” said Morrice, the MP for Kitchener Centre.
“And that’s the real concern here and why it is so important for these tax credits to be put in legislation as soon as possible.”
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
