Finance Minister Chrystia Freeland plans to expand Canada’s investment subsidies for the oil and hydrogen sectors and allocate $2 billion (US$1.5 billion) to a fund for cutting emissions from heavy industry.
The money is part of a plan by one of the world’s largest oil producers to accelerate the growth of clean technology. Freeland’s budget, to be unveiled Tuesday in Ottawa, will include a mix of tax credits and cash incentives for business, according to people familiar with the document who spoke on condition of anonymity.
Rising interest rates and an anemic short-term outlook for economic growth have left Freeland with limited room to ramp up spending, if the government wants to keep its pledge to continue whittling away at its ratio of debt to gross domestic product. The government is expected to spend about $500 billion, including debt charges, in the fiscal year that begins April 1.
The incentive is designed to compete with advanced manufacturing tax credits in the U.S., and can be used for equipment in producing electric vehicle batteries, processing critical minerals or generating clean power. News of the manufacturing tax credit was first reported by Reuters. But any additional fiscal support risks stoking demand amid still-elevated consumer price pressures. The finance minister is cognizant of these concerns and has repeatedly vowed to exercise restraint.
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