November 29, 2023
On November 21, the federal government released its Fall Economic Statement (FES), providing an overview of the fiscal outlook and priority policies ahead of the upcoming spring Budget. FES 2023 provided a slimmed-down fiscal update that centered around the high cost of living and ultimately included very little new spending.
While FES showed a growing government awareness of the Canadian biogas & RNG industry through the inclusion of potential pathways, the document ultimately falls short of providing the support needed for the sector to reach its full potential and regain competitiveness with the United States. Without strong, immediate signals in response to American Inflation Reduction Act (IRA) measures, Canada will lose capital investment and domestic biogas & RNG supply.
This is a significant missed opportunity for Canada to unlock biogas & RNG potential following a summer of fulsome government consultations with the biofuels industry. Modeling shows that by making biogas & RNG eligible for an Investment Tax Credit (ITC) of 40%, the sector could reduce GHG emissions by 1 MT CO2e annually, spur $1.5 billion in new investment, and unlock 4.4 PJ of annual clean energy generation.
FES 2023 included several narrow measures which will likely have a limited impact on biogas & RNG development in Canada and do not leverage the full industry’s potential. For example, RNG was recognized as a pathway to lower the carbon intensity of hydrogen projects. While this callout may stimulate RNG demand in support of clean hydrogen development, without accompanying book and claim mechanisms or incentives for investments in RNG production projects, its overall impact is just a fraction of its potential.
A further miss is the focus on electricity-generating project. The FES proposes that systems that produce integrated heat or exclusively electricity (with or without the cogeneration of heat) from waste biomass be eligible for the Clean Electricity ITC and Clean Technology ITC. While some biogas projects may opt to produce electricity, markets have been focused on RNG-producing projects, which notably received no support.
An urgent signal for Canada’s biogas & RNG industry is still needed in order to meaningfully respond to and compete with the IRA, and the CBA is already pushing forward in its discussions with key decision makers to reiterate the need for explicit support for the broader biogas & RNG sector. “Our stakeholders are disappointed and frustrated with the omission of support mechanisms for biogas & RNG in FES 2023,” says Jennifer Green, CBA Executive Director, “Canada must expeditiously provide competitive solutions to drive real investment in this proven low-carbon gaseous fuel, or it risks losing the potential at its doorstep.”
