Diving into an interview with Tom Rand about the Canadian Federal Budget and clean energy.
Historical federal budgets echoed initiatives and sentiments to boost Canada’s transition to net zero. But CPA Canada comments that the 2023 budget connects that transition to “innovation, productivity, and investment,” unlike recent years.
Canada wants to measure up to the US’s recent Inflation Reduction Act on the clean energy front. Here’s how they’re doing it with the 2023 budget:
- 15% refundable ITC for clean electricity
- Additional eligible activities that quality for reduced tax rates for zero-emission
- 30% refundable ITC for clean tech manufacturing for property past January 1, 2024
- Eligibility expansion for clean hydrogen, carbon storage and capture, and geothermal energy systems
CPA Canada’s chief economist David-Alexandre Brassard describes these measures as ways to “position Canada competitively versus the United States.”
But clean energy venture capitalist Tom Rand casts doubt on whether Canada’s actions are truly “competitive.” Here are some highlights from his interview with Bloomberg:
- “The question for Canada is can we carve out a niche where we’re competitive, or is it enough to just match the US?”
- “We see for example ITCs for green energy machinery, which is in line with mining equipment…the notion that we can mine minerals and turn them into value-added products is probably pretty smart. However, money doesn’t solve that…the cutting of red tape solves that.”
- “I think the growth fund is going to be aimed at bringing critical stability to the carbon price. One of the things that’s different about Canada is that we have a carbon price and the US does not. So as an investor, it’s hard to compare apples to apples.
- “Putting political certainty around a price on carbon in case the govt comes in and reduces it (contract for differences is what it’s called) and that’s what a lot of money in the Canada growth fund is being geared towards.”
Watch the full interview on Bloomberg.
