The 2023 Budget is a huge win – not only for Canada’s cleantech sector, but for all Canadians. Its strategic spending initiatives for a clean economy could set us on a path for tremendous job growth and other economic benefits, not to mention progress toward our national net-zero goals.
However, now is not the time to stop investing in Canada’s clean economy. The global clean growth race has just begun.
Canada’s future economic growth depends on cleantech
With the Inflation Reduction Act in the US and the European response, there is a clean growth competition between two of the world’s largest economies.
The global clean economy is growing, and there is a huge demand for climate tech solutions and for sustainably sourced critical minerals from friendly economic partners.
Canada’s cleantech sector has huge potential to meet global demand, and to help the critical mineral and mining sector power the green transition. We punch well above our weight: 12-15 Canadian cleantech companies make it onto the annual Global Cleantech 100 list regularly, and our country ranks fourth on the Global Cleantech Innovation Index.
Canada’s 2023 Budget is a reasonable response to the shifting global economy. It will help us leverage our potential to stay competitive, and even lead the way – but we need to keep going.
Canada still at risk of missing out on global market opportunities
The slightly expanded scope of the 30 percent Investment Tax Credit (ITC) and the newly introduced 30 percent Manufacturing Investment Tax Credit (MITC), for which Canada Cleantech Alliance had been advocating, can help us level the playing field with the United States and increase the flow of private capital into the cleantech sector.
However, Canada remains at risk of missing out on global market opportunities. Both mechanisms are heavily focused on clean energy and electrification technologies – the scope of technologies that will be eligible is fairly limited.
The budget also falls short on mechanisms to support pilots for emerging, innovative technologies, as well as their commercialization. Access to capital will remain an issue for clean technology startups (even more so now, since the collapse of Silicon Valley Bank).
Cleantech must be embedded in a wider innovation policy
Cleantech does not exist in isolation – it is technology – and its definition in the budget appears limited to electrification and clean energy solutions.
Canada Cleantech Alliance believes that a more inclusive national innovation policy would identify the many technology areas, such as water-focused solutions, artificial intelligence software, agricultural clean technologies, smart circular economy solutions, and open banking, that are necessary for building a resilient and clean economy.
With Budget 2023, Canada just took a huge step toward securing global competitiveness, future economic growth, and our climate targets. To continue moving ahead, we must be flexible and strategic, improving and adjusting the policy landscape as we go.
Feature image courtesy Unsplash. Photo by Hendrik Cornelissen.
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