Canada Using The Carrot Instead Of The Stick To Decarbonize In Budget 2023

The Government of Canada continued their drive to decarbonize the economy through the use of the carrot rather than the stick in Budget 2023 by announcing two new investment tax credits:

1. a Clean Electricity Investment Tax Credit (Clean Electricity ITC); and
2. a Clean Technology Manufacturing Tax Credit (Clean Manufacturing ITC).

Additionally, as promised by the Government of Canada in their 2022 Fall Economic Statement, Budget 2023 provided further details with respect to the Clean Hydrogen Investment Tax Credit (Clean Hydrogen ITC).

These incentives are intended to further incentivize the adoption of clean energy technology to assist in Canada's goal of a net-zero economy by 2050 as outlined in the federal government's 2030 Emissions Reduction Plan, and are in keeping with previous tax policy, such as the Carbon Capture, Utilization and Storage Tax Credit (the CCUS Tax Credit) that was established by Budget 2022, and the Clean Technology Investment Tax