Systems using waste biomass to produce electricity, heat or combined heat and power (CHP) will now qualify for the federal tax credits already extended to other designated clean technologies. This new eligibility for the 30 per cent clean technology investment tax credit, or 15 per cent clean electricity investment credit for larger systems capable of inter-provincial/territorial transmission, was announced in the Canadian government’s fall economic statement, released November 21.
“Turning waste biomass into electricity and heat is, on a life cycle basis, a carbon-neutral energy solution, with potential to be carbon-negative when combined with carbon capture, utilization and storage, while providing new opportunities for major Canadian industries,” it states.
To qualify, electricity generating or CHP systems must rely solely on specified waste biomass fuel sources, including: wood waste; plant residue; municipal waste; sludge from an eligible sewage treatment facility; spent pulping liquor; food and animal waste; manure; pulp and paper by-product; or separated organics. The same criteria applies to heat generation systems, with the exception of spent pulping liquor, which contains chemicals used in pulp processing. Additionally, all eligible systems must have a heat rate threshold no greater than 11,000 British thermal units (Btu) per kilowatt-hour.
The tax credit applies on capital costs of: electricity, heat and CHP generating equipment; heat recovery equipment; equipment such as gasifiers used to enhance the combustibility of waste biomass fuel sources; and devices or systems associated with the operation of the other eligible equipment. Cooling towers, fuel storage and handling equipment and equipment related to district energy or carbon capture, utilization and storage do not qualify.
Investors acquiring generating systems fuelled with waste biomass will qualify for the 30 per cent clean technology investment credit as of November 21, 2023. For larger electricity generating systems, the 15 per cent clean electricity investment credit will apply for generating facilities that commenced construction as of March 28, 2023.
