With the Inflation Reduction Act, the US Congress passed major climate legislation last week. The $369-billion bill directs significant funding toward extending and expanding tax credits for the deployment and manufacturing of a long list of clean technologies, including wind and solar power, batteries, nuclear power, hydrogen production, electric vehicles, heat pumps and other emissions-reduction systems. According to The New York Times, energy experts say this measure would help the United States cut GHG emissions about 40% below 2005 levels by the end of this decade. The act sets a new precedent for how countries can spend public funds effectively to meet global carbon reduction commitments while creating well-paying jobs and boosting the economy.
In Canada, we will need a similarly ambitious approach, including investment tax credits for a broad range of clean technologies. Canada Cleantech Alliance has been advocating for a 30% refundable tax credit and other tax incentives for years and we are optimistic that we have been heard. Canada would also benefit from incentives in the tax credit system tied to the use of domestic resources and to project deployment in remote and/or indigenous communities. One of the challenges with the Canadian content requirement however are the timelines for the development of critical mineral mines and the lack of key minerals produced here for the EV supply chain that would have to be addressed.
In order to stay competitive in the global market place, Canada also needs to adopt a strategic approach to identifying and growing the value chains of the future, as highlighted by Canada Cleantech Alliance member Smart Prosperity in a recent National Observer opinion piece. Canada is on the right track and has all it needs to become a frontrunner in the global clean economy.
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