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Canadian businesses eagerly await Canada’s proposed cleantech ITCs

KPMG report explores business sentiment around cleantech investment tax credits (ITCs)

Photo by Getty Images on Unsplash
Photo by Getty Images on Unsplash

About two-thirds of Canadian businesses have at least one clean or green initiative — usually it’s waste reduction, but energy reduction is also popular. 

But it’s not popular enough. 

Over 40% of energy is wasted in industrial businesses, and 30% is wasted in commercial businesses. EMC recently confirmed that a lack of government support was a top barrier to adopting cleantech, with risks, high costs, and talent shortages identified as other top barriers. 

As for the businesses that make clean energy innovation their focus? Apparently, they’re flocking to the U.S

As a result, the Canadian government sought to offer a solution and proposed five investment tax credits (ITC) in last year’s budget to incentivize investments in cleantech, including: 

  • Clean Electricity ITC (up to 15%)
  • Clean Hydrogen ITC (up to 40%)
  • Clean Technology ITC (up to 30%)
  • Clean Technology Manufacturing ITC (up to 30%)
  • Carbon Capture, Utilization, and Storage ITC (up to 37.5% to 60%)

These are only drafts at this time and haven’t been implemented yet, much to Canadian business owners’ dismay. How do we know that? KPMG recently surveyed 534 small and medium-sized Canadian businesses that share the same lament: the cleantech ITCs can’t come fast enough. 

Here are some highlights from the report: 

Most businesses welcome (and hurry) the cleantech ITCs

A majority of the businesses surveyed expressed approval for Canada’s ITCs and plan to use them. 

  • 90% want the clean ITCs to be fast-tracked
  • 86% prefer to see government policies that support businesses and innovation over individual taxpayer benefits
  • 93% have plans to apply for and/or use the ITCs

“The federal government needs to make it fast and easy for companies to access the clean energy investment tax credits or they risk falling further behind the U.S. and other major economies.”

Lucy Iacovelli, Canadian managing partner, tax and legal, KPMG in Canada.

Canadian businesses believe in cleantech investments

Businesses see the value in cleantech. EMC shows benefits like energy cost savings, improved productivity, reduced carbon footprint, and water efficiency as motivators for businesses that currently invest in cleantech. 

  • 80% of businesses support government green incentives to attract foreign companies to Canada
  • 78% see decarbonization as a contributor to more jobs and growth in Canadian manufacturing
  • 83% think Canada should do more to catch up with the US in cleantech investment

…but they can’t afford to invest in it

Believing in a cause isn’t enough to make it happen. Most businesses surveyed by KPMG face exorbitant costs as a barrier to investing in cleantech: 

  • 46% rely on federal and provincial government funding and incentives to reduce emissions
  • 83% say they require more incentives to decarbonize
  • 75% of manufacturers who aren’t using cleantech say high costs is a top barrier (EMC)

So, what should be done in the meantime?

Get ready. 

EMC says that, while many Canadian manufacturers haven’t started their net-zero journey, senior manufacturing leaders need to get started.

Their report suggests unpacking what sustainable manufacturing means and learning how to develop sustainable initiatives. After that, identifying where improvements can be made and finding a path forward with employee alignment can get the ball rolling.

“Transitioning to a low-carbon production ecosystem — while at the same time increasing their capacity, quality and speed to market all requires investment in people, plant, and process,” Jean-Pierre (JP) Giroux, president of EMC, said in their release.

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Chrissy Kapralos is a Toronto-based writer who loves exploring finance, tech, marketing, and travel topics in her work. She runs a small writing agency named No Worries Writing. Co.

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