Canada’s Federal Fall Economic Statement 2023: Funding Takeaways
On November 21, 2023, Deputy Prime Minister and federal Minister of Finance Chrystia Freeland presented the 2023 Fall Economic Statement. The economic statement reassured Canadians that our current economic policies are working – inflation is gradually slowing, wages are increasing, Canada received the third-most foreign direct investment compared to other countries and has the lowest net debt-to-GDP ratio compared to all G7 countries.
Minister Freeland also announced major government investments in public transit, EV battery factories, and clean energy projects through a new tax credit program. The Economic Statement acknowledged the current housing crisis and provisions for additional financial stability within the Canadian population. The 2023 economic statement projects a $40 billion deficit this fiscal year.
“With further reductions in public sector spending, this Fall Economic Statement takes further action to ensure Canada’s finances remain sustainable—and that we can continue to responsibly invest in Canadians for years to come.”
– Minister Chrystia Freeland
The Federal Fall Economic Statement provided insight on how the Canadian government is working towards reducing inflation through higher interest rates and new funding programs that will help to stimulate economic growth for Canadian businesses. This article will summarize the Canadian governments efforts in reducing that deficit and how local businesses can take advantage of the new tax credits and grant programs announced in this statement.
Grant Funding Takeaway: Canada Growth Fund
One of the main themes from this year’s Economic Statement beyond housing and supporting the middle class is a clean economy. As the world is moving towards net-zero initiatives, the federal government is pushing businesses and Canadian workers to adapt environmentally friendly policies.
Canada is at the forefront of global efforts to build the clean economy. Our clean tech companies have led the creation of world-leading technologies and clean innovation since 2016.
The Canada Growth Fund is a $15B public investment vehicle led by Canada’s top investment professionals. This fund aims to support Canadian businesses as they create cutting-edge technologies for the clean economy and create more jobs. Currently, the fund has already met with 150+ participants running projects focused on clean economy sector, such as:
- Carbon capture, utilization, and storage;
- Hydrogen;
- Biofuels;
- Critical minerals; and
- Clean tech.
The government expressed their dedication to the Canada Growth Fund with a $90M investment in a geothermal company in Alberta.
Another financial tool supporting clean energy initiatives are carbon contracts for difference. According to the Minister, up to $7B of the $15B will be set aside for carbon contracts for difference (CCfD).
The CCfD functions as insurance against carbon pricing dropping. For example, if a company sells its clean tech product at lower than projected pricing for carbon in the free market, the Canadian government will pay the company at the projected price. This way, the company remains incentivized to follow through with their clean tech projects.
Tax Credit Funding Takeaways: Clean Economy Investment Tax Credits
The government is also focused on implementing new clean economy investment tax credits for carbon capture, utilization, and storage; clean technology adoption; clean hydrogen; clean technology manufacturing; and clean electricity. The government plans to expand their suite of Clean Economy Investment Tax Credits (ITCs) throughout 2024.
To reduce biowaste and support affordable electricity and heat generation initiatives, the government will expand eligibility for:
- The 30% Clean Technology investment tax credit to include systems that produce electricity, heat, or both electricity and heat from waste biomass. This tax credit program has two streams, one focusing on public owned utilities, and another for all other companies; and
- The 15% Clean Electricity investment tax credit to include systems that produce electricity and heat from waste biomass. This tax credit is currently being legislated and is aiming to be included in the Federal 2024 budget for projects that did not begin construction before March 28, 2023.
Clean Hydrogen and Clean Technology Manufacturing ITCs will also launch this Fall with the introduction of legislation in Parliament targeted in early 2024. The Clean Hydrogen ITC would be available from March 28, 2023, and the Clean Technology Manufacturing ITC would be available from January 1, 2024.
Sector Investment Takeaways: EV and Critical Minerals
With the clean economy positioned as the government’s top priority, we also expect major investments for Electric Vehicle supply chains and the Critical Minerals industries. This is done through programs such as the Critical Minerals Sustainability and Circularity Program.
Canada has highly skilled auto workers and the government is leveraging this fact to secure more than $34B in investment in the batteries and automotive supply chain. Canada is also a global mining leader with an abundance of critical minerals that can help support the product of clean energy and electric vehicles.
These sectors not only support clean energy goals but also fuel many jobs within the Canadian economy. Businesses can review our funding directory to find programs to support their clean energy projects. Additionally, our hiring and training directory lists funding opportunities to offset labor costs.
Access More Funding Opportunities and Funding Updates
As we step in to 2024, we can expect major investments across several industries such as residential construction, renewable energy, EV supply chains, and critical minerals. Overall, this is a hopeful time for Canadian business owners as we expect to see major funding opportunities over the next year. To find additional information regarding tax credit programs, please see the Ryan Tax Alert on the Federal Fall Economic Statement 2023.
As more updates appear on specific programs within this industry, Mentor Works, A Ryan Company will publish articles covering these updates, as well as supporting Canadian businesses applying for government grant or tax credit programs to achieve their maximum funding potential. You can find a list of active funding programs your business may be eligible for by exploring our funding directory by region, industry, and business activity.
Check out our free guide on How to Build A Government Funding Plan so your business can be prepared as the latest funding updates drop in 2024. We also deliver the latest funding news and program opportunities right to your inbox every Monday via our newsletter.
