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Sustainability Incentives in Canada: Tax Credits, Rebates, and More

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In the fight against climate change, everyone is being asked to consider their environmental impact, from business owners to homeowners, students to retirees. However, with increases in the cost of living, for many Canadians, being more sustainable might feel out of reach.

We have collected different incentives offered by federal, provincial, or municipal governments that work towards sustainability, from tax breaks to sustainability rebates. While this list may not be exhaustive, it may illuminate certain strategies our governments are undertaking, or incentives applicable to you that you can make the most of.

1

See the full article at the Government of Canada’s site

For Canadian businesses with the goal to improve their sustainability, as well as that of the country, the government has instituted five new types of tax credit, available over the next ten years, targeting the energy and manufacturing industries.

Clean Electricity Investment Credit

For large-scale clean electricity projects, including generation projects, electricity storage, and inter-provincial transmission, Canadian businesses can apply for the Clean Electricity Investment Tax Credit.

This refundable tax credit up to 15% of investments in projects that generate clean electricity, transmit electricity between provinces, and store electricity without the use of fossil fuels.

This tax credit is available as of the day the 2023 federal budget was announced for projects that did not begin construction before March 28, 2023. No tax credit will be available after 2034.

Clean Technology Manufacturing Tax Credit

For Canadian industries of manufacturing and resource extraction, the Clean Technology Manufacturing Tax Credit can help companies improve their processes to be more sustainable.

Canada is fortunate to be a resource-rich nation, with lots of tapped and untapped mineral potential. This tax credits covers 30 percent of costs of new machinery and equipment used to manufacture or process clean technologies and extract, process or recycle critical minerals. Specifically, minerals applicable for this credit include lithium, cobalt, nickel, copper, and rare earth elements, and activities supported with this tax credit include extraction, processing, recycling and processes applicable to graphite, such as spheronization or synthesis.

The Clean Technology Manufacturing Tax Credit has been available since 2023, and be available in its current state until 2032, where the tax credit will start to decrease gradually until the end of 2034.

The Clean Hydrogen Investment Tax Credit

Announced in 2022 as part of the Fall Economic Statement, the Federal government has recently expanded on the Clean Hydrogen Investment Tax Credit, which seeks to support the production of clean hydrogen.

This tax credit is designed to support between 15 and 40% of eligible Hydrogen projects, with the goal to get Hydrogen projects up and running and establish a strong hydrogen industry in Canada.

Carbon Capture, Utilization, and Storage Investment Tax Credit

While decarbonizing our grid is essential on our way to become net zero, in many places phasing out carbon-emitting energy sources is not feasible. Part of the recent announcements pertain the expansion of the Carbon Capture, Utilization, and Storage Investment Tax Credit, now including more equipment that can be used to capture emissions. This tax credit is applicable for expenditures incurred between the dates of January 1st, 2020 and December 31, 2030. The ITC will be refundable up to:

  • 60% of Qualified Carbon Capture Expenditures incurred to capture carbon from ambient air;
  • 50% of Qualified Carbon Capture Expenditures incurred to capture carbon other than directly from ambient air; and
  • 5% of Qualified Carbon Transportation Expenditures, Qualified Carbon Storage Expenditures and Qualified Carbon Use Expenditures.
  • For the period between January 1, 2031 to December 31, 2040, the tax credit will be reduced by one-half and no tax credit will be available after 2040.

Clean Technology Investment Tax Credit

Part of the (Canadian Green Budget 2023) included expanding eligibility for the refundable Clean Technology Investment Tax Credit to include geothermal energy systems, further supporting the growth of Canada’s clean technology sector.

An investment tax credits available for companies on the cutting edge of clean technology, the Clean Technology investment tax credit may refundable up to 30% of investments in eligible property acquired and available for use on or after March 28, 2023, up to 15% for property available until the end of 2034, and will end at the conclusion of the 2034 year.

According to analysis done by Norton Rose Fullbright, the types of clean technology that will be defined as eligible include:

  • Zero-emission electricity generation technologies, such as solar, wind, small hydro, concentrated solar energy and small modular nuclear reactors;
  • Electricity storage systems that do not use fossil fuels in their operations, like batteries, flywheels, compressed air energy storage, pumped hydroelectric energy storage, gravity energy storage and thermal energy storage;
  • Certain active solar heating equipment, air-source heat pumps and ground-source heat pumps;
  • Equipment used exclusively for generating electrical energy or heat (or a combination) solely from geothermal energy, but excluding any equipment that is part of a system that extracts both heat from geothermal fluid and fossil fuel for sale or use;
  • Non-road zero-emission vehicles that are fully electric or powered by hydrogen, and charging or refueling equipment primarily used to support such vehicles.

Canada’s Accelerate Capital Cost Allowance

See the full article on the Government of Canada’s site.

Another federal incentive that Canadian businesses can use is the accelerated investment incentive, which introduces measures to incentivize investment into capital assets, including green technologies towards investments of many different eligible properties, including sustainability measures.

The three “measures that are available to certain eligible property” that the Accelerated investment incentive are as the following:

  • Offers a first-year allowance for “eligible property”, that sees net additions are multiplied by 1.5 the CCA rate for the class of assets, and waiving the half-year rule in the first year of acquisition.
  • “Providing an enhanced first-year allowance for certain eligible property that is subject to the capital cost allowance (CCA) rules. In general,
  • Full expensing for manufacturers and processors – Allowing businesses to immediately write off the full cost of machinery and equipment used for the manufacturing or processing of goods (Class 53).
  • Including expensing for clean energy investments (Classes 43.1 and 43.2), as well as other types of “eligible properties”

This incentive applies to eligible property, which was built after November 2018, and must be operational or available for use by 2028. It is important to note that this incentive is in the later stages, and eligible property that becomes available for use may be subject to a reduced rate.

Pollution Pricing Rebate

See the full article at the Government of Canada’s site

On January 15, 2024, people living in applicable provinces received their first pollution pricing rebate of the year. This rebate is funded with the direct proceeds from the Federal Pollution pricing, a fuel charge that applies to the purchases of 21 carbon emitting fuels.

Since 2018, when this pricing plan was introduced within the Greenhouse Gas Pollution Pricing Act, the fuel charge and rebate increase incrementally each year. While the price increase can be felt indirectly on the purchases of goods, the rebate of this pricing plan is estimated to exceed the costs for 80% of Canadians.

Another side to this is the “outpost-based pricing system,” which applies to businesses that have larger bigger carbon footprints, where they pay a charge on a portion of the emissions they produce. Companies that produce 50,000 tonnes or more annually of Carbon Dioxide, or equivalent measures of other greenhouse gases like methane or nitrous oxide, will automatically be affected by this “output-based pricing system”.

Like the fuel charge, the system is designed to increase incrementally each year, further incentivizing the move away from carbon-emitting sources. 

How are the provinces handling this strategy?

The different provinces can choose to accept the federal government’s climate action plan or figure out their own plan (with approval from Ottawa). While many governments have opposed this strategy of late, as of right now, these are how the provinces have responded to the carbon pricing initiative.

  • Manitoba, PEI, Yukon, and Nunavut use the federal fuel charge and the output-based pricing system.
  • British Columbia, Quebec, and the Northwest Territories have started their own carbon price system, in lieu of taking on the Federal’s plan for both the federal fuel charge.
  • Alberta, Saskatchewan, Ontario, New Brunswick, Nova Scotia and Newfoundland and Labrador have accepted the federal fuel charge and instituted their own strategy for industry.

In 2023, the price was $65 per tonne, and the rate after April 1st, 2024 will be $80 per tonne.

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Other Clean Energy Incentives

Alberta

Solar

Banff Solar Production Incentive – The Town of Banff currently offers a $0.75 per watt rebate on solar energy systems, up to a maximum of 20kW. However, applications are limited each year.

Edmonton Change Homes For Climate Solar Program – The City of Edmonton currently offers a $0.40 per watt rebate for residential homes and $0.30 per watt rebate for new home construction. (NO NEW APPLICATIONS)

Medicine Hat HAT Smart Program – The City of Medicine Hat is currently offering $0.20 per watt rebate for solar energy systems up to a maximum of $1,000.

EQUS Solar Incentive – EQUS has partnered with ReWatt Power to offer its customers a $0.10 per watt rebate for solar energy systems to a maximum of $500.

Clean Energy Improvement Program (CEIP) – CEIP is a low-interest solar energy financing program that is paid back through an assessment on your property tax bill. The program is currently available in Canmore, Edmonton, Rocky Mountain House, Devon, and others. You can read more on the PACEAlberta website.

EQUS – EQUS currently offers its customers up to $15,000 per service to finance the cost of a solar photovoltaic system (PV).

British Columbia

Solar

PST Tax Exemption (Bulletin PST 203) – There is currently a 7% PST exemption for solar photovoltaic equipment (including inverters, wiring, etc.).

RDN Renewable Energy System Program – The districts of Nanaimo and Lantzville are currently offering incentives up to $250 for in installation of a solar photovoltaic system.

Vancity Planet-Wise Renovation Solutions Loan – Vancity Bank currently offers a prime + 0.75% loan up to $50,000 with an amortization period of up to 15 years that can be used for solar systems. 

Manitoba

Solar

Efficiency Manitoba Solar Rebate Program – Efficiency Manitoba offers a rebate of up to $0.50 per watt, up to maximum of 10 kilowatts or $5,000 per home for residential solar systems.

Manitoba Hydro Home Energy Efficiency Loan – Manitoba Hydro offers a loan of up to $20,000 for solar projects and is repaid through your hydro bill with a maximum term of 15-years. The full amount becomes due if you sell your home before the loan is fully repaid.

Wind / Other

Net Billing Program – Applicable to solar, wind, biomass, small scale hydro and battery storage, Manitobans with their own form of personal energy generation can see excess energy back to the grid.

New Brunswick

Solar

Total Home Energy Savings Program – NB Power currently offers a $0.20 per watt rebate on solar photovoltaic systems (only available through the Total Home Energy Savings Program). Total Home Energy Saving Program (THESP) is run by Energue NB Power, offers a rebate for solar energy installed.

Greener Home Loans – The NBTA Credit Union is currently offering a prime + 1% loan for home projects including solar installations.

Northwest Territories

Solar

AEA Renewable Energy Program – The Arctic Energy Alliance offers a 50% rebate on the total cost of renewable generation projects (solar, wind, wood pellet heating, etc) for property owners in non-hydro communities.

Antarctic Energy Improvement Rebates – can provide a business rebate of $50,000, potentially covering 50% of your project cost.

Antarctic Energy Renewable Residential Rebates – can earn residential homes up to $20,000 rebates for becoming more sustainable.

Nova Scotia

Solar

SolarHomes Program – Efficiency Nova Scotia is currently offering a $0.30 per watt rebate on the purchase of solar photovoltaic systems up to a maximum rebate of $3,000.

Clean Energy Financing Program – The Clean Foundation in Nova Scotia offers “PACE” loans currently available in Bridgewater, Lunenburg, Digby, Barrington, Yarmouth, Amherst, Cumberland, Iverness, Cumberland, New Glasgow, Victoria, East Hants, and Chester. This loan can be used to fund your solar energy projects for a financing period of up to 10 years. The loan is attached to your property (not you) and is automatically transferred to the new owners if you move.

Solar City – The City of Halifax has its own version of the PACE loan called Solar City. The 10-year, 4.75% fixed interest loan is attached to the property (not you) and is automatically transferred to the new owners if you move.

Nunavut

Solar

Renewable Energy Home Improvements Program – The Nunavut Housing Corporation provides a program offering 50% rebates up to a maximum of $30,000 to homeowners installing renewable energy home improvements including solar.

Renewable Energy Cabin Improvements Program – The Nunavut Climate Change Secretariat offers rebates up to $5,000 for renewable energy improvements on cabins specifically, including PV systems.

Ontario

Solar

Durham Greener Homes Deep Retrofit Rebate – The city of Durham has rebates available, up to $10,000, based on the emissions reductions that your solar system brings. However, you’ll need to participate in the Canada Greener Homes Initiative (see Canada-wide section below).

Home Energy Loan Program (HELP) – Toronto residents have access to a “PACE” loan of up to $125,000 which can be used for rooftop solar panels. The loan is attached to your property (not you) and is paid back through your property tax bill, at different rates based on the repayment term. This means that if you move, the loan will be transferred to the new property owners.

Better Homes Ottawa Loan Program – Ottawa residents offer a loan of up to $120,000 for solar projects with a maximum term of 20-years.

Municipalities: Durham Greener Homes Deep Retrofit Rebate, Better Homes Ottawa Loan Program.

Prince Edward Island

Solar

Solar Electric Rebate Program – EfficiencyPEI offers a $1.00 per watt incentive on solar photovoltaic systems, up to 40% of the installed costs, and up to a maximum rebate amount of $10,000.

Energy Efficiency Loan Program – The province of Prince Edward Island currently offers a loan program to any resident that qualifies for the Solar Electric Rebate Program (above). This is a 7-year loan of up to $10,000 at a fixed interest rate of 5%.

PACE Atlantic – PEI residents in Colchester, Stratford, Wolfville, and Charlottetown also have access to “PACE” financing for solar installations. The loan has a 0% interest rate over 15-year terms and can be up to a maximum of $40,000 or 15% of the property value. The loan has a 0% interest rate over 15-year terms and can be up to a maximum of $40,000 or 15% of the property value.

Québec

We are currently looking for Quebec based incentives. Please check our article on previously available energy efficiency programs and rebates in Quebec.

Saskatchewan

Solar

Home Energy Loan Program (HELP) – The city of Saskatoon currently offers the HELP program, to their homeowners, allowing them to improve their energy efficiency of their homes by offering low-interest loans that will be repaid through property taxes. These loans can be used to install renewable energy, or other retrofits like improving insulation or replacing doors and windows with better insulation values.

Yukon Territory

Solar

Good Energy Renewable Energy Rebate – The Government of Yukon is currently offering a rebate of $0.80 per watt up to $5,000 for residential solar systems.

Rural Electrification and Telecommunications Program (RETP) – Yukon has a “PACE” loan that can be used to fund a solar installations. However, it’s only available for property owners outside of any municipality. Funding is limited to 25% of the assessed value of the property and has a maximum of $50,000.

Rural Electrification and Telecommunications Program (RETP) – Yukon has a “PACE” loan that can be used to fund a solar installation. However, it’s only available for property owners outside of any municipality. Funding is limited to 25% of the assessed value of the property and has a maximum of $50,000.

Energy Innovation Program –

Managed by the Office of Energy Research and Development (OERD), the Energy Innovation program has a budget, which offers grants, and other financial contributions for strategic collaborations to encourage the development and demonstration of clean energy technologies. While many of the EIP’s initiatives have expired, there are two current initiatives still applicable: they are the Battery Industry Acceleration Call, and the Methane Measurement and Mitigation initiative.

Canada Wide

Since the Greener Homes Grant ended earlier in 2024, there are less ways that Canadian home owners are able to improve the sustainability of their homes

Zero-Emission Vehicle Incentive – $5,000 rebate for applied automatically at point of sale for electric vehicles.

Federal GST/HST New Housing Rebate – For purchasing or renovating your primary place of residence, Canadians can apply for this rebate of a portion of the GST/HST paid on the home back.

Federal Tax Incentive for Clean Energy Equipment – For businesses to expense clean energy generation, as well as equipment used in the process of production of clean energy.

Oil to Heat Pump Affordability Program – This program offers up to $10,000 for lower income households to retrofit their homes with heat pumps, improving the efficiency of heating their home.

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