CleanTech Canada: Key Measures for the Canadian Cleantech Sector in the 2019 Budget

Source: Budget 2019, Government of Canada, March 19, 2019

Here are the highlights of the Canadian Federal Budget 2019-2020 that could have a direct impact on the development, financing and commercialization of Canadian clean technologies.  Good reading!

“And to help protect the health of our planet, we put a price on pollution—and to make a cleaner economy more affordable for Canadians, we’re giving back all the money we collect directly from the price on pollution. Every cent.”

–Honourable Bill Morneau, Minister of Finance, Canada

Reducing Energy Costs Through Greater Energy Efficiency

To help reduce Canadians’ electricity bills—whether they are homeowners, renters or building operators—Budget 2019 proposes to invest $1.01 billion in 2018–19 to increase energy efficiency in residential, commercial and multi-unit buildings. Budget 2019 proposes to allocate the resources to three initiatives, to be delivered by the Federation of Canadian Municipalities (FCM) through the Green Municipal Fund, that would provide financing to municipalities as follows:

  • Collaboration on Community Climate Action ($350 million): to provide municipalities and non-profit community organizations with financing and grants to retrofit and improve the energy efficiency of large community buildings as well as community pilot and demonstration projects in Canadian municipalities, both large and small. FCM and the Low Carbon Cities Canada Initiatives will create a network across Canada that will support local community actions to reduce GHG emissions.
  • Community EcoEfficiency Acceleration ($300 million) to provide financing for municipal initiatives to support home energy efficiency retrofits. Homeowners could qualify for assistance in replacing furnaces and installing renewable energy technologies. The FCM will use innovative approaches like the Property Assessed Clean Energy (PACE) model that allows homeowners to repay retrofit costs through their property tax bills.
  • Sustainable Affordable Housing Innovation ($300 million) to provide financing and support to affordable housing developments to improve energy efficiency in new and existing housing and support on-site energy generation.

Making Zero-Emission Vehicles More Affordable

Budget 2019 proposes strategic investments that will make it easier and more affordable for Canadians to choose zero-emission vehicles—helping people to get from place to place, improving air quality and cutting greenhouse gas emissions at the same time.

  • To expand the network of zero-emission vehicle charging and refueling stations, to deploy new recharging and refuelling stations in workplaces, public parking spots, commercial and multi-unit residential buildings, and remote locations.
  • To work with auto manufacturers to secure voluntary zero-emission vehicle sales targets to ensure that vehicle supply meets increased demand.
  • To encourage more Canadians to buy zero-emission vehicles, Budget 2019 proposes to provide $300 million over three years, starting in 2019–20, to Transport Canada to introduce a new federal purchase incentive of up to $5,000 for electric battery or hydrogen fuel cell vehicles with a manufacturer’s suggested retail price of less than $45,000.

To further support businesses’ adoption of zero-emission vehicles, Budget 2019 proposes that these vehicles be eligible for a full tax write-off in the year they are put in use. Immediate expensing will apply to eligible vehicles purchased on or after March 19, 2019 and before January 1, 2024. Capital costs for eligible zero-emission passenger vehicles will be deductible up to a limit of $55,000 plus sales tax.

Bringing Innovation to Regulations

Budget 2019 introduces the first three “Regulatory Roadmaps” to specifically address stakeholder issues and irritants in these sectors, informed by over 140 responses from businesses and Canadians across the country, as well as recommendations from the Economic Strategy Tables, including the one on Clean Technologies.

These Roadmaps lay out the Government’s plans to modernize regulatory frameworks, without compromising our strong health, safety, and environmental protections. They contain proposals for legislative and regulatory amendments as well as novel regulatory approaches to accommodate emerging technologies, including the use of regulatory sandboxes and pilot projects— better aligning our regulatory frameworks with industry realities.

The Roadmaps propose greater exploration, innovation, and the use of sandboxes and pilot programs for new and innovative products. This will allow these products to be approved for use in a risk-based and flexible way—encouraging ongoing innovation while continuing to protect Canadians’ health and safety, and the environment.

Transport Canada will support provinces and territories in working towards improved alignment of these requirements, including for the use of autonomous and connected vehicles. Funding would be made available to other stakeholders, such as academia and industry associations, to identify innovative road safety options, including for emerging technologies.

Scientific Research and Experimental Development (SR&ED) Tax Incentive

The SR&ED Tax Incentive Program provides a 35-per-cent refundable tax credit to eligible small and medium-sized businesses and a 15-per-cent tax credit to all businesses performing SR&ED in Canada. Access to the 35-per-cent rate is determined by a business’ level of income and capital.

To better support growing innovative businesses as they are scaling up, the Government proposes to eliminate the income threshold for accessing the enhanced credit. This will ensure continued enhanced support for small and medium-sized innovative businesses that are experiencing rapid growth in income or may have variable income from year to year. The capital threshold will continue to apply to ensure that the enhanced rate remains targeted toward small and medium-sized businesses.

Introducing the Canada Training Benefit

To help working Canadians get the skills they need to succeed in a changing world, Budget 2019 proposes to establish a new Canada Training Benefit—a personalized, portable training benefit to help people plan for and get the training they need. To deliver this new program, Budget 2019 proposes to invest more than $1.7 billion over five years, and $586.5 million per year ongoing.

By cutting the direct costs of training by up to 50 per cent, workers can more easily save for—and benefit from—new training and new skills.

  • This new, non-taxable credit would help Canadians pay for training fees. Every year, eligible workers between the ages of 25 and 64 would accumulate a credit balance of $250 per year, up to a lifetime limit of $5,000. With this credit, a Canadian worker would accumulate $1,000 every four years, to be used for training fees.
  • This new benefit—expected to be launched in late 2020—would be available through the EI program and would provide up to four weeks of income support, every four years.

Other measures

  • To support Genome Canada’s operations, Budget 2019 proposes to provide Genome Canada with $100.5 million over five years, starting in 2020–21. This investment will also enable Genome Canada to launch new large-scale research competitions and projects, in collaboration with external partners, ensuring that Canada’s research community continues to have access to the resources needed to make transformative scientific breakthroughs and translate these discoveries into real-world applications.
  • To help Canada’s forest sector continue to innovate and grow, Budget 2019 proposes to invest up to $251.3 million over three years, starting in 2020–21, to Natural Resources Canada to extend existing innovation and diversification programs.
  • Budget 2019 proposes to provide a further $100 million over four years, starting in 2019–20, to the Strategic Innovation Fund, leveraging private sector co-investments, in order to support the activities of the Clean Resource Innovation Network.

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