Investment tax credit for carbon capture, utilisation and storage (CCUS)
Canada's 2021 federal budget included the announcement of a planned investment tax credit for Carbon Capture Utilisation and Storage (CCUS) projects. In the 2022 federal budget, the government outlined details of the tax credit, which will apply to CCUS projects that permanently stored captured CO2 via dedicated geological sotrage or storage of CO2 in concrete. Enhanced oil recovery projects are not eligible for the tax credit.
From 2022 through 2030, 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 2031 through 2040.
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