ICYMI: Canada Passes Landmark Clean Investment Tax Credits

Last week, Canada passed new Clean Economy Investment Tax Credits (ITCs) proposed in the 2023 Fall Economic Statement, a pivotal move to drive investment in clean technologies and promote economic growth while achieving net-zero emissions by 2050. These ITCs, totaling $93 billion in federal incentives by 2034–35, aim to attract investment, support innovation, and create sustainable jobs.

“Clean technology innovation and projects will be a key driver of how we decarbonize, create jobs and bring investment to Canada as we build a prosperous net-zero economy in 2050. Canada’s Investment Tax Credits will reduce emissions and create hundreds of sustainable jobs for Canadians, exemplifying how climate action and economic growth go hand in hand. We are bringing benefits for Canadians today and into the future, and ensuring Canada is a global economic leader of the future.”

— The Honourable Jonathan Wilkinson, Minister of Energy and Natural Resources

Here are the key details to know about these tax credits and how they might impact you as a member of our Grow with Cleantech program, as well as general knowledge for others on how Canada is tackling some big issues around the net-zero economy:

Key Tax Credits Introduced

Passed Into Law

1. Clean Technology ITC: Supports investments in clean electricity generation (e.g., wind turbines, solar panels), energy storage, low-carbon heating systems, and zero-emission vehicles. Administered by the CRA and NRCan, this credit helps businesses offset costs associated with clean tech adoption.
2. Carbon Capture, Utilization, and Storage (CCUS) ITC: Offers financial support for projects that capture and store carbon emissions. This credit is essential for industries aiming to reduce their carbon footprint.
3. Clean Technology Manufacturing ITC: Provides a 30% credit for investments in new machinery and equipment used to manufacture clean technologies. This incentive targets companies involved in the production and processing of clean tech and critical minerals.
4. Clean Hydrogen ITC: Offers a refundable tax credit of 15-40% for investments in hydrogen production projects, with the highest support levels for the cleanest hydrogen. This credit also covers equipment for converting hydrogen into ammonia for easier transport.

Additional tax credits focused on Clean Electricity, Critical Mineral Exploration, Zero-Emission Technology Manufacturing, and Clean Energy are pending introduction, further expanding the scope of Canada's clean technology incentives.

Implications for the Cleantech Industry

The introduction of these ITCs is a significant step towards supporting the cleantech sector with the capital needed to grow in Canada. By reducing the financial burden on companies investing in clean technologies, these credits will accelerate the adoption of innovative solutions and enhance Canada's competitiveness in the global green economy.

For professionals working in cleantech, these tax incentives mean increased job opportunities and the potential for career growth in various sectors, from renewable energy to clean manufacturing. Companies are likely to ramp up hiring to meet the demands of new projects and technologies spurred by these tax credits.

These tax credits also play a crucial role in helping companies bridge the gap to commercialization. By providing financial support during the critical phases of development and scaling, these incentives enable businesses to bring their innovations to market more efficiently. This reduces the risks associated with commercialization and helps ensure that promising technologies can achieve commercial success, ultimately driving the growth and sustainability of the cleantech sector in Canada.

The Road Ahead

Canada's Clean Economy Investment Tax Credits represent a bold commitment to a sustainable future, providing substantial financial incentives to drive clean technology adoption and innovation. These credits not only support the nation's climate goals but also promise to create thousands of sustainable jobs, ensuring that Canada's workforce is well-equipped to lead in the global clean economy. For those in the cleantech industry, this is a time of significant opportunity and growth, paving the way for a prosperous, green future.

While financial support is crucial, it must be complemented by robust skills development to fully realize the potential of these new job openings in the cleantech industry. Our Grow with Cleantech program exemplifies this approach by combining cleantech framing with essential workforce skills, addressing what 77% of cleantech employers want to see. By providing the necessary training and education, we can ensure that the workforce is prepared to meet the demands of this rapidly growing sector.

For more detailed information on the Clean Economy Investment Tax Credits and how to claim them, visit the Government of Canada's official page.