The Alberta manufacturing sector is a key driver of economic growth, producing everything from machinery to chemicals, while providing employment to thousands of Albertans. Alberta has historically been well-known for its oil sands and conventional energy extraction. Much of the province’s recent innovations are aimed at improving the sector’s sustainability, efficiency, and competitiveness in a world that is increasingly prioritizing environmental responsibility and clean technology.
Recently, the CRA began offering a range of Clean Technology Tax Credit programs as part of a broader effort to support clean energy adoption and help Canada transition toward a net-zero economy by 2050. These programs are very attractive for Alberta manufacturing companies that have been shifting towards developing new technologies or adapting existing processes in an effort to reduce emissions associated with energy production, transportation, and refining.
In addition to the existingSR&EDand Innovation Employment Grant (IEG) programs which have greatly benefited many businesses in Alberta, the new Clean Technology creditscan provide significant opportunities for the province’s manufacturing sector to innovate, reduce operational costs, and become more sustainable.
How will the Clean Technology Tax Credit programs impact Alberta manufacturing companies?
This tax credit offers businesses a refundable credit of up to 30% of eligible capital investments in clean energy technologies. It applies to investments in areas such as renewable energy generation (i.e., solar, wind, hydro), energy storage systems, and equipment for reducing carbon emissions in industrial processes.
For Alberta’s manufacturing sector, this means that businesses can reduce the cost of upgrading their facilities with energy-efficient or renewable energy systems. By investing in renewable energy technologies like solar panels or energy storage solutions, manufacturers can claim this credit and move towards more sustainable practices.
This credit is targeted at businesses investing in carbon capture, utilization, and storage technologies, providing refundable tax credits of:
Up to 60% for investments in equipment used for direct air capture.
Up to 50% for investments in equipment for carbon capture.
Up to 37.5% for transportation, storage, and use of captured CO2.
Alberta’s industrial sectors, especially in manufacturing, can benefit by implementing CCUS technologies to capture and store carbon emissions from their operations. Manufacturers in energy-intensive industries such as petrochemicals, cement, and steel can offset their emissions and move towards greener production processes to better position themselves for long-term sustainability.
This credit ranges from 15% to 40%, depending on the carbon intensity of the hydrogen being produced. The cleaner the hydrogen (i.e., lower emissions), the higher the tax credit rate. It applies to investments in equipment and technology related to the production of clean hydrogen.
For manufacturing companies in Alberta that are looking to produce or use clean hydrogen in their processes – particularly in heavy industries or manufacturing processes – which require significant energy inputs and could transition to hydrogen as a clean energy source, this credit can help companies achieve lower-carbon energy solutions.
This credit provides up to 30% refundable tax credits for investments in equipment and technology related to manufacturing and processing.
Manufacturing companies in Alberta can take advantage of this credit by investing in manufacturing or processing equipment that produces clean technologies such as renewable energy systems, electric vehicle components, batteries, and hydrogen technologies.
By tapping into these credits, manufacturers can optimize their environmental performance as well as position themselves for success in an increasingly green economy.
