Question Period Note: Clean Technology

What is the Government of Canada doing to support advances in clean technology and the adoption and commercialization of cleantech?

• The Government of Canada is growing a sustainable and competitive economy while helping to meet Canada’s climate goals by focusing on innovation, investing in clean technology and creating green jobs.

• To accelerate the transition to clean growth, the government is investing in cleantech research and development, commercialization and scale-up, and introducing measures to encourage the adoption of cleantech across other sectors.

• The 2023 Fall Economic Statement expands the scope of eligibility for investment tax credits announced in Budget 2023 and will further accelerate investments in clean technology.

Canada Growth Fund

Budget 2023 announced that the Canada Growth Fund (CGF) will use carbon contracts for difference (CCfDs) to support clean growth projects by providing a backstop to the future price of, for example, carbon or hydrogen, providing predictability that helps de-risk major projects that cut emissions. The budget stated that the government will consult on the development of a broad-based approach to CCfDs, complementing CCfDs offered by the CGF.

The 2023 Fall Economic Statement announced that the CGF will be the principal federal entity issuing CCfDs. The CGF will allocate, on a priority basis, up to $7 billion of its current $15 billion in capital to issue all forms of CCfDs and offtake agreements.

In summer 2023, the CGF began operations and is using a variety of financial tools to de-risk and bolster private investment in low-carbon projects, technologies, businesses and supply chains..

The CGF announced its first investment on October 25, 2023, with a $90 million investment in Calgary-based Eavor Technologies. This investment will enable Eavor to scale-up its emissions-reducing technology, ensure the company's headquarters and the majority of its workforce remain in Canada, and create new jobs at its Calgary headquarters.

Expanding eligibility for Clean Technology and Clean Electricity investment tax credits to include biomass

The 2023 Fall Economic Statement (FES) expands the 30% Clean Technology Investment Tax Credit (ITC) and the 15% Clean Electricity ITC to include systems that produce electricity, heat or both electricity and heat from waste biomass.

The expansion to the Clean Technology ITC would be available to businesses investing in eligible property available for use on or after the date of the 2023 FES. The Clean Electricity ITC would be available as of Budget 2024 for projects that did not begin construction before March 28, 2023.

Budget 2023

Budget 2023 delivers the Government’s plan to further build Canada’s green economy through financial incentives designed to stimulate economic growth in Canada’s green economy, including investment tax credits, strategic financing and targeted programming.

Specific budget measures that supports the cleantech sector include:

• A new Clean Electricity Investment Tax Credit to support and accelerate clean electricity investment in Canada by providing a 15% refundable tax credit for eligible investments.
• A new Clean Technology Manufacturing Investment Tax Credit worth 30% of capital investment costs in manufacturing equipment for cleantech and for the extraction, processing or recycling of key critical minerals. This will be available from January 1, 2024.
• Modifications to the previously announced Clean Hydrogen Investment Tax Credit (available from March 28, 2023), CCUS Investment Tax Credit (available from January 1, 2022), and Clean Technology Investment Tax Credit (available from March 28, 2023).
• A reduced corporate tax rate for zero emission technology manufacturers.
• An additional $500 million to the Strategic Innovation Fund for cleantech and the re-alignment of $1.5 billion of its existing resources toward projects in cleantech, critical minerals and industrial transformation.
Budget 2023 announced the government’s intention to introduce legislative amendments to enable the Public Sector Pension Investment Board to manage the assets of the Canada Growth Fund to deliver on the fund's mandate of attracting private capital to invest in Canada's clean economy.

The Canada Infrastructure Bank will invest at least $10 billion through its Clean Power priority area and at least $10 billion through its Green Infrastructure priority area.

Budget 2023 also provides $3 billion over 13 years to NRCan to recapitalize the Smart Renewables and Electrification Pathways Program to support critical regional priorities and Indigenous-led projects, and add transmission projects to the program’s eligibility, as well as renew the Smart Grid Program to continue to support electricity grid innovation and to create new investments in off-shore wind.

Budget 2022

Specific cleantech budget measures included:

• $15 billion for the Canada Growth Fund to accelerate the investment of private capital into decarbonization and cleantech projects; help promote the diversification of Canada’s economy; help meet climate targets; and strengthen economic resilience and capacity.
• $1 billion over six years for the Strategic Innovation Fund, combined with $500 million drawn from existing program funding, to support critical minerals projects.
• New tax measures to accelerate cleantech adoption, including a refundable ITC of up to 60% for eligible CCUS equipment expenses and expanding existing accelerated tax deductions for business investments in clean energy equipment to include air-source heat pumps. The government also announced a plan to engage with experts to establish an investment tax credit of up to 30% for net-zero technologies, battery storage solutions and clean hydrogen.

• Together, the 2023 Fall Economic Statement and Budget 2023 include a range of investment tax credits, low-cost strategic financing and targeted investments and programming, to ensure a clean Canadian economy can deliver prosperity and good jobs.

• Canadian companies are global leaders in areas such as hydrogen, battery technology, small modular reactors, biofuels and carbon capture, utilization and storage.

• In 2021 alone, the cleantech sector employed more than 188,000 people.

• Clean technology businesses contributed more than $28.2 billion to the Canadian economy in 2021 and exported $9.2 billion in goods and services.

• Employees in cleantech are better paid than the average Canadian worker, and women account for 41% of all jobs employed in the cleantech sector.