Climate Change Initiatives: Selected Recent Changes and the Application of Existing Tax Principles to Clean Energy—Part 2

Greg Johnson, Wesley Novotny and Brendan Sigalet write for the Resource Sector Taxation journal on federal tax policies aimed at reducing greenhouse gas emissions by incentivizing clean energy technologies. The article reviews various proposed initiatives and existing incentives, emphasizing their integration with current legislation and the importance of providing certainty to businesses making long-term investment decisions.

Part II of their article, Climate Change Initiatives: Selected Recent Changes and the Application of Existing Tax Principles to Clean Energy, focuses on the practical application of the Clean Technology, Clean Hydrogen, Clean Technology Manufacturing and Clean Electricity ITCs, many of which were enacted in 2024 through Bill C-59 and Bill C-69. The authors also examine the soon-to-be-legislated EV supply chain ITC and the growing complexity of compliance, recapture and carbon intensity testing requirements.

Together these initiatives represent a growing effort by the federal government to close the competitive gap with U.S. policies under the Inflation Reduction Act and provide businesses with certainty in their clean energy investments.

The authors explain how existing tax concepts are being adapted to support the build-out of everything from clean hydrogen to battery manufacturing and highlight the need for legislative clarity, particularly around recapture rules and project qualification standards.

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