Canadian Manufacturing

Federal budget released, manufacturing investments missing, cleantech well represented

Cleantech investments related to manufacturing include funding for ZEV charging infrastructure and an extension of the 50% reduction of corporate and business income taxes for zero-emission technology manufacturers.

April 8, 2022   by Sadi Muktadir

Canadian Finance Minister Chrystia Freeland announced the federal budget on Apr. 7 (Facebook/freelandchrystia)

On Apr. 7, Deputy Prime Minister Chrystia Freeland released the federal budget, called Budget 2022: A Plan to Grow Our Economy and Make Life More Affordable (Budget 2022) which provides the basis for a total new spending of $31.2B. Investments were announced in a variety of sectors, including housing, healthcare, cleantech and supply chain investments.

However, one of the key areas that were missing any announcements of new funding was the manufacturing sector which is currently experiencing a labour shortage a record-high 81,000 job vacancies according to CME.

Some of the announcements the government did announce that were related to manufacturing include in the areas of supply chain and cleantech.

Clean Energy Growth and Emissions Reduction Plan

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  • The creation of the new Canada Growth Fund (an initial investment of $15B over five years), targeted at enabling the flow of private capital into reducing emissions and growing low-carbon industries and new technologies across a series of Canadian sectors, including manufacturing.
  • $2.2B has been announced over seven years, starting in 2022-23, to expand and extend the Low Carbon Economy Fund.
  • Funding of $250M over four years to support pre-development activities of clean electricity projects of national significance, such as inter-provincial electricity transmission projects and Small Modular Reactors (SMRs).
  • Additional funding of $69.9M for Natural Resources Canada to undertake research to minimize waste generated from SMRs, support the creation of a fuel supply chain, strengthen international nuclear cooperation agreements, and enhance domestic safety and security policies and practices.

ZEVs & ZEV Infrastructure

  • Extension of consumer incentives for Zero-Emission Vehicles ($1.7B over five years).
  • New purchase incentive program for medium- and heavy-duty ZEVs to help businesses upgrade their fleets ($547.5M over four years).
  • $500M investment from the Canadian Infrastructure Bank in large-scale urban and commercial ZEV charging and refuelling infrastructure.
  • Funding of $400M over five years, starting in 2022-23, for the deployment of ZEV charging infrastructure in sub-urban and remote communities through the Zero-Emission Vehicle Infrastructure Program.

Clean Grid Transformation

  • Funding of $600M over seven years for the Smart Renewables and Electrification Pathways Program to support additional renewable electricity and grid modernization projects
  • $25M provision to establish Regional Strategic Initiatives to work with provinces, territories, and relevant stakeholders to develop net-zero energy plans.

Tax Incentives  

  • Expansion of the accelerated tax deductions for business investments in clean energy equipment to include air-source heat pumps.
  • Extension of the 50 % reduction of the general corporate and small business income tax rates for zero- emission technology manufacturers to include manufacturers of air-source heat pumps.

General Innovation Provisions impacting cleantech 

  • The SuperClusters are now called Global Innovation Clusters and they will receive $750 million in extended funding over six years.
  • New Canada Innovation and Investment Agency: The federal government has yet to provide new details on the Canadian Innovation and Investment agency announced in the budget and endowed with an initial funding envelope of $1 billion over five years. The agency will be operationally independent from the federal government and is not conceptualized as the Canadian version of DARPA that was promised in the last federal election according to CCI.