Federal Tax Policies Put Canada’s Clean Energy Projects at Risk

Federal clean energy tax credits aimed at incentivizing companies to speed up the transition to a net zero economy, may do just the opposite, destabilizing the construction industry, and leading to fewer green energy projects at a higher cost, according to the Progressive Contractors Association of Canada (PCA) whose members have built more than half of Alberta’s major industrial and capital projects. 

“If the federal government goes through with its tax policies, it will drive up construction costs and drive away investors,” said Paul de Jong, President & CEO of PCA. “Canadians will wind up paying a lot more for fewer clean energy projects, stalling Canada’s transition to a cleaner economy.”

Last fall’s economic update included tax incentives ranging from 15 to 40 percent for capital investments in low-carbon energy generation and technology. While PCA members support incentives to speed up the clean energy transition, they are not in favour of proposed artificial wage and benefit rates, that businesses must comply with in order to qualify for the full Investment Tax Credit (ITC).

This could amount to hundreds of millions of dollars in additional project costs, making green energy projects planned across Canada, including Alberta, no longer viable. 

“Should these projects not move forward, Albertans and all Canadians will miss out on valuable investment, jobs and economic benefits,” added de Jong. “Today in the midst of an affordability and housing crisis, governments should be looking for ways to build more efficiently, not interfering with the construction market and adding more red tape and cost.”

Cost escalations brought on by the ITC program will inevitably inflate wages across the construction industry to unsustainable levels. 

Right now, at the height of a skilled labour shortage, construction workers are earning more than ever. That’s how a competitive market works. Tying tax credits to artificial wage and benefit rates will set back Canada’s green energy efforts by discouraging investment, and reducing competition as some businesses rethink their project plans.