Liberals admit tax incentives for manufacturers could cause increase in emissions

OTTAWA – Finance Minister Bill Morneau says big greenhouse-gas emitters can take advantage of new tax incentives for manufacturers even as the government acknowledges that the resulting investment could increase emissions.

Morneau’s fall fiscal update will allow manufacturing and processing companies, including heavy emitters like oil producers and refiners, to write off the full cost of buying new equipment and machinery as soon as they put the purchases into use.

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The change is intended to encourage capital investment in manufacturing and processing sectors that are exposed to international competition — including oil producers and refineries, and big chemical companies.

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However, on the very last page of the fall fiscal update the government admits that these investments could result in an increase in greenhouse gas emissions, as well as create more air, water and soil pollution.

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The government is hopeful that extending the same tax incentives to clean energy equipment purchases will reduce emissions enough to offset any increases to emissions from other companies, but it admits right now it can’t say if that will happen.

Canada’s international climate change commitments already require a reduction in existing emissions by nearly 200 million tonnes a year, which is the equivalent to taking 44 million cars off the road by 2030.