The federal government’s Budget 2025 delivers a significant boost to Canada’s clean-energy sector through an expanded framework of investment tax credits (ITCs) that target clean electricity generation and broader clean-economy investments.
Key among these are the Clean Electricity Investment Tax Credit (CE ITC) and the Clean Economy Investment Tax Credits (Clean Economy ITC), both of which aim to mobilize private capital and stimulate project development across renewable energy, storage and decarbonisation technologies.
How the 2025 Federal Budget Impacts These Clean Energy Investment Tax Credits
- The Clean Economy ITC—which encompasses investments in clean-technology property, carbon capture, hydrogen, manufacturing of low-emission equipment, and critical-minerals processing—is reaffirmed in the 2025 Federal Budget as a core tax incentive for Canada’s clean-energy transition.
- The Clean Electricity ITC, designed to support capital invested in renewable electricity, battery/storage systems and inter-provincial transmission, is given renewed priority through Budget 2025. Under draft legislation, this credit may offer up to 15% of qualifying expenditures for property placed in service before 2035.
- The budget emphasises the need for legislative implementation, signalling that Parliament will soon table and enact the statutory framework needed to make the Clean Electricity ITC broadly available (including to municipalities, Indigenous-owned corporations and non-taxable entities) once the Budget Implementation Act is passed.
- A stronger linkage between tax credits and labour/apprenticeship requirements is maintained — full credit rates are contingent upon meeting prevailing-wage and registered apprenticeship criteria. This ensures that the investment incentives also generate high-quality jobs within Canada’s clean-energy sector.
What to Watch Next
With the 2025 Federal Budget now announced, here’s what Canadians should look out for as implementation begins.
- Legislative passage: The CE ITC still requires final legislation; stakeholders should monitor the Budget Implementation Act and related tax-amendment bills.
- Eligibility details: Investors should watch for final definitions of “clean electricity property”, the construction-commencement dates, and deadlines for the CE ITC.
- Application timing & compliance: Planning project start dates, documenting labour/apprentice compliance and satisfying regulatory thresholds will be key to maximising ITC claims.
- Coordination with provinces/territories: While the federal tax incentives create federal level stimulus, effective deployment will depend on provincial regulation, grid-access policy and local permitting.
The tax-credit framework is poised to unlock major investment—provided the legislative and regulatory details align and are implemented with urgency.
The updates for these ITCs, along with the stable continuation of the Clean Technology Investment Tax Credit, represents an important foundation for Canada’s effort to scale up its clean energy economy.
We help businesses explore and qualify for investment tax credits for solar and battery installations with Canada. If you’d like to look into your eligibility, please take our quick survey to be connected with a clean energy specialist.
