The budget tabled by Federal Finance Minister Jim Flaherty March 29 includes accelerated Capital Cost Allowances for District Energy equipment.
Specifically, budget 2012 proposes to further expand Class 43.2 with respect to waste-fuelled thermal energy equipment, and equipment of a district energy system that uses thermal energy provided primarily by eligible waste-fuelled thermal energy equipment. Budget 2012 also proposes to expand Class 43.2 to include equipment that uses plant residue – generally produced by the agricultural sector – to generate electricity and heat.
As stated in the Budget document (page 403): “These measures will encourage investment in technologies that can contribute to a reduction in emissions of greenhouse gases and air pollutants, in support of Canada’s targets set out in the Federal Sustainable Development Strategy. These measures could also contribute to the diversification of Canada’s energy supply.”
The budget document goes on to provide further detail:
• Waste-fuelled thermal energy equipment
Waste-fuelled thermal energy equipment produces heat using wastes (for example, wood waste) and fuels from waste (for example, biogas and bio-oil). Currently, Class 43.2 includes waste-fuelled thermal energy equipment, subject to the requirement that the heat energy generated from the equipment is used in an industrial process or a greenhouse.
Budget 2012 proposes to expand Class 43.2 by removing this requirement. The change will allow waste-fuelled thermal energy equipment to be used in a broad range of applications, including space and water heating. For example, wood waste could be used as an alternative to heating oil for space and water heating in a shopping centre.
This measure will apply to assets acquired on or after Budget Day that have not been used or acquired for use before that date.
• Tax Measures – Supplementary Information
Building on the proposed expansion of Class 43.2 to include waste-fuelled thermal energy equipment used for a broader range of applications, Budget 2012 also proposes to expand Class 43.2 by adding equipment that is part of a district energy system that distributes thermal energy primarily generated by waste-fuelled thermal energy equipment (that is itself eligible for inclusion in Class 43.2). For example, in a remote community a district energy system that uses heat generated by waste-fuelled thermal energy equipment could provide an alternative to equipment that uses only fossil fuels.
This measure will apply to assets acquired on or after Budget Day that have not been used or acquired for use before that date.
• Energy generation from plant residue
Plant residue (for example, straw, corn cobs, leaves and similar organic waste produced by the agricultural sector) can be used in a number of ways, including the production of heat, electricity, biofuels and other bioproducts. Subject to certain requirements, equipment that uses these residues to produce biogas or bio-oil is currently eligible for inclusion in Class 43.2.
Budget 2012 proposes to add the residue of plants to the list of eligible waste fuels (i.e., biogas, bio-oil, digester gas, landfill gas, municipal waste, pulp and paper waste, and wood waste) that can be used in waste-fuelled thermal energy equipment included in Class 43.2 or a cogeneration system included in Class 43.1 or Class 43.2. For example, a greenhouse could produce heat for its operations using a heating system fuelled by the residue of plants.
This measure will apply to assets acquired on or after Budget Day that have not been used or acquired for use before that date.
• Environmental Compliance
If equipment using fuels from waste does not comply with environmental regulations, there could, in some instances, be an increased risk of the release of pollutants. To ensure that taxpayers who benefit from Class 43.1 or 43.2 do so in an environmentally responsible manner, Budget 2012 proposes that equipment using eligible waste fuels not be eligible under Class 43.1 or Class 43.2 if the applicable environmental laws and regulations of Canada or of a province, territory, municipality, or a public or regulatory body are not complied with at the time the equipment first becomes available for use.
This measure will apply to assets acquired on or after Budget Day that have not been used or acquired for use before that date.
— Source: CDEA