Investment Tax Credit for Carbon Capture, Utilization and Storage (CCUS)

Country / jurisdiction: Canada · Year: 2022 · Status: In force · Level: National · Type: Voluntary

The Canadian government announced an investment tax credit for Carbon Capture Utilisation and Storage (CCUS) projects in 2021, with details released in 2022. The incentive applies to CCUS projects that permanently stored captured CO2 via dedicated geological storage, or storage of CO2 in concrete.

From 2022 through 2035, the tax credit rates will be set at:

60% for investment in equipment to capture CO2 in direct air capture projects,

50% for investment in equipment to capture CO2 in all other CCUS projects,

37.5% for investment in equipment for transportation, storage and use.

To encourage the industry to move quickly to lower emissions, these rates will be reduced by 50% for the period from 2036 through 2040.

The 2026 Spring Economic Statement proposed to expand the credit to enhanced oil recovery (EOR) projects that permanently store 95% of the CO2 used in the project, pending enactment through legislative amendments. The rates available for EOR would be half of the regular credit rates.

30% for direct air capture equipment,

25% on other capture equipment,

18.75% on transportation and storage/use equipment

Labour requirements also apply to projects in order to receive the maximum credit rates.

Official source: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/business-tax-credits/clean-economy-itc/carbon-capture-itc.html