Canada: Proposed investment tax credit for carbon capture, use, storage

Plans for a new investment tax credit for carbon capture, utilization, and storage projects

Plans for a new investment tax credit for carbon capture, utilization, storage projects

The Department of Finance has requested comments regarding plans for a new investment tax credit that would be available with respect to carbon capture, utilization, and storage projects.

The new investment tax credit for “carbon capture utilization and storage” (CCUS) projects would be effective in 2022.

Finance has requested comments about the proposal, and specifically concerning:

  • The types of projects that would be eligible for the investment tax credit
  • The types of CCUS capital investments that would be eligible
  • The rate of the incentive
  • Potential CCUS projects from various industries that would be eligible for the credit

Finance announced that it intends for the new investment tax credit to be available for a broad range of CCUS applications across different industrial subsectors (concrete, plastics, fuels)—including blue hydrogen projects and direct air capture projects—but it would not be available for enhanced oil recovery projects.

Comments are due by 7 September 2021.
 

Read a June 2021 report prepared by the KPMG member firm in Canada

 

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