Thank you.
Good afternoon, Chair, and thank you for inviting me to testify on behalf of the Canadian Renewable Energy Association as part of this committee's study.
I would like to start by acknowledging that I am joining you today from the traditional and unceded territory of the Algonquin Anishinabe people.
CanREA is the voice for the wind energy, solar energy and energy storage solutions that will power Canada's energy future. Our 350-plus members are uniquely positioned to deliver clean, low-cost, reliable, flexible and scalable solutions for Canada's energy needs.
This committee's study is timely, as Finance Canada is wrapping up consultations on one of its key policy responses to the U.S. Inflation Reduction Act: the clean technology investment tax credit. CanREA and its members are very optimistic about the opportunities this investment tax credit will create. This measure will allow companies, investing in a variety of low-carbon technologies, to recoup between 20% to 30% of their project capital costs as a refundable tax credit.
When the enabling legislation for this ITC is passed, it will rapidly accelerate the deployment of technologies like battery energy storage systems, wind and solar across Canada by strengthening the economics of these renewable energy projects.
These ITCs will not only accelerate the deployment of new renewable energy projects but they will provide real benefits for Canadian communities. This refundable tax credit will reduce deployment costs, allowing developers to pass along their savings, which should lower the price of electricity. The prevailing wage provision will also support the creation of good, well-paying jobs as turbines and panels are deployed in each and every province.
Perhaps the only thing these investment tax credits do not do well is support indigenous communities' efforts to develop renewable energy projects. We would encourage the Canadian government to remedy this. CanREA and its members have made reconciliation with indigenous peoples a priority, developing clean energy projects in partnership with first nations, Métis, and Inuit communities across Canada.
Utilities and system operators are also on board, requiring indigenous partnership and project ownership to participate in upcoming tenders. This is why Canada must include indigenous entities in the clean technology investment tax credit at the same rate as taxable entities. This is a simple legislative change that needs to be made.
We recognize that the federal government has stated it will include indigenous entities in the forthcoming clean electricity investment tax credit, which is valued at 10% to 15% of capital costs, but simply put, this is not equal treatment for our indigenous partners. It means indigenous communities cannot claim an ITC of equal value to that claimed by their taxable partners. This inability has created a serious concern that the ITCs will reduce indigenous opportunities to finance project participation with favourable terms. Unequal access to the ITCs for indigenous partners must be remedied if economic reconciliation and projects are to move forward.
Secondly, CanREA wants to stress the importance of investing in electricity transmission. The building of new projects, funded partially by this proposed ITC, will help to supply the increased demand for electricity associated with the electrification of more and more aspects of Canadian lives. Some studies suggest that electrification will result in electricity demand growing anywhere from two to three times by 2050. This new generation will need to be connected to the grid with new transmission lines, a potentially massive undertaking that could prove costly to the ratepayer.
While renewable generation is a low-cost option that may in many cases reduce the cost of electricity, long-term capital-intensive investments in transmission infrastructure may not have a similar downward pressure on electricity rates.
Given that the need for new transmission is likely to be accelerated by the demands of reaching net zero, we believe there is a role for the federal government to play in supporting these investments. We note that, in the U.S., the Inflation Reduction Act provides close to $4 billion U.S. in programs that support electricity transmission. Here in Canada, it is important that incentives, supporting the deployment of both interprovincial and intraprovincial transmission lines, are put in place so that more clean power can be connected to the grid.
It is for these reasons that CanREA recommends two modifications to the planned ITCs. First is to allow indigenous communities to access the clean technology investment tax credits, and the second is to provide incentives supporting the development of transmission lines across Canada.
Thank you for your time. I look forward to your questions.