The Energy Sector Deserves Technology-Neutral Tax Credits.

Shannon Stubbs, Shadow Minister for Natural Resources, wrote to the following letter to the Minister of Natural Resources, the Minister of Environment, and the Minister of Finance:

Hon. Jonathan Wilkinson, P.C., M.P.
Minister of Natural Resources
580 Booth Street, 21st Floor, Room: C7-1
Ottawa, Ontario K1A 0E4
Canada

Hon. Steven Guilbeault, P.C., M.P.
Minister of Environment and Climate Change
200, boul. Sacré-Coeur
Gatineau, Quebec K1A0H3
Canada

Hon. Chrystia Freeland
Deputy Prime Minister and Minister of Finance
80 Wellington Street
Ottawa, ON K1A 0A2
Canada

March 23, 2023

Dear Ministers,

Over the past months, private-sector proponents have raised numerous concerns around your
government’s exclusionary approach to the proposed Clean Technology Investment Tax Credit,
the Clean Hydrogen Investment Tax Credit, and the CCUS Tax Credit.

The current models leave out many key sectors, or aspects of key sectors, that must be a part of
Canada’s energy future.

In the proposed Clean Technology Investment Tax Credit, geothermal energy is completely
disregarded, while reliable electricity generators like nuclear and hydro are ineligible for
technological innovations and refurbishments that would allow for more power to be generated
from the same sites. For nuclear, only SMRs are eligible for this tax credit. With Canada’s
electricity demand growth measured in the hundreds of terawatts, and the need to double or triple
generation capacity to meet your public policy aspirations by 2050, Canada’s electricity grid will
need more than 50-megawatt SMRs to help address that need.

Additionally, the ITC labour requirements will indirectly penalize non-union-affiliated workers,
Indigenous workers, and unskilled workers. The requirement to meet “certain labour conditions”
for an additional 10% tax credit is discriminatory, and may have unintended consequences for
wind and solar projects, which rely heavily on Indigenous and unskilled workers. It may also
infringe on negotiated union agreements by mandating certain training and apprenticeship
requirements.

The proposed CCUS tax credit’s most glaring omission is an allowance for the credit to be used
for enhanced oil recovery. This omission puts Canada at a competitive disadvantage, as the
United States’ tax credit allows for EOR, which drives more projects south. You should consider
expanding the CCUS tax credit to all sources of carbon capture and utilization/storage, regardless
of the source.

You should consider the expansion of the Clean Hydrogen Investment Tax Credit to all sources
and types of hydrogen, if their lifecycle emissions, from generation through transportation to
consumption, meet the required thresholds.

In order to promote all aspects of Canadian technology and to encourage the continued growth of
major sectors, like hydro and nuclear, and emerging technology sectors, like geothermal, tax
credits should be technology neutral and applied equally, not exclusively, to all technological
innovations. I urge your government to take a technology-neutral approach to these tax credits in
budget 2023.

I look forward to your response.

Sincerely,

Shannon Stubbs, M.P., Lakeland
Shadow Minister for Natural Resources