Canada Jumps to Second Place for Green Energy Projects After Tax Credit

Source: Robert Tuttle | · BLOOMBERG NEWS · | April 23, 2023

Tax credit raises value of some projects more than 50% over their lifetime

Source: Canada is behind only the U.S. in support offered for renewable energy. PHOTO BY SUPPLIED/CALGARY HERALD FILES

Canada has become the second-most favourable place to invest in green energy projects after Prime Minister Justin Trudeau’s government rolled out a tax credit in last month’s budget, according to Rystad Energy.

The renewable energy investment tax credit raises the value of some projects more than 50 per cent over their lifetime, placing Canada behind only the U.S. in support offered for renewable energy, according to the research firm.

The offering of a 30 per cent tax write off for renewable technology deployed before 2034 pushes the country ahead of six others, including Turkey, Portugal, Vietnam, the United Kingdom, Sweden and Germany in the support offered for green energy, Rystad said in a report on Tuesday.

Under the program, 250-megawatt clean-power projects built in Canada will have a life cycle net present value of US$202 million after tax versus US$131 million before the tax credit was announced, Rystad said.

Canada’s federal budget contained almost $83 billion over the next decade in investment tax credits directed toward clean manufacturing, electricity generation and carbon capture. The subsidies, along with increased health spending, are poised to swell the country’s deficit but were touted as necessary to achieve the country’s goal of net zero emissions by 2050.