Canada's clean economy investment tax credits (ITCs) represent the largest expansion of federal business incentives in decades. Collectively worth an estimated $80 billion through 2035, these credits are designed to accelerate Canada's transition to net-zero — and they're available to a much wider range of businesses than many owners realize.
This guide covers the four main clean economy ITCs available in 2026: what they cover, who qualifies, how much you can claim, and how to access them.
Overview: Canada's Clean Economy ITC Stack
The clean economy ITCs were introduced in federal Budgets 2022–2024. Unlike SR&ED, which rewards R&D expenditures, clean economy ITCs reward capital investment in qualifying assets — equipment, systems, and infrastructure that reduce emissions or support a clean economy.
| ITC Name | Rate | Key Target |
|---|---|---|
| Clean Technology ITC | 30% | Clean energy equipment, ZEVs, storage |
| Clean Technology Manufacturing ITC | 30% | EV/battery/critical minerals manufacturing |
| Clean Hydrogen ITC | 15%–40% | Clean hydrogen production |
| CCUS ITC | 37.5%–60% | Carbon capture, utilization and storage |
These ITCs are in addition to, not instead of, SR&ED credits or other federal incentives. In some cases they can be stacked — consult your tax advisor about interaction rules.
1. Clean Technology Investment Tax Credit
The Clean Technology ITC covers 30% of the capital cost of qualifying clean technology property acquired and available for use on or after March 28, 2023. It is a refundable credit, meaning businesses receive cash back even if they owe no tax.
Qualifying property includes:
- Solar, wind, water, and geothermal energy equipment
- Stationary electricity storage (batteries, pumped hydro, compressed air)
- Zero-emission vehicles (ZEVs) used in the course of business
- ZEV charging infrastructure for commercial use
- Small modular reactor (SMR) equipment
- Heat pumps for space and water heating
To receive the full 30% rate, the installation of qualifying property must meet prevailing wage and apprenticeship requirements. Businesses that don't meet these requirements receive a reduced 20% rate. The labour requirements apply to installation, not manufacturing.
2. Clean Technology Manufacturing ITC
The Clean Technology Manufacturing ITC covers 30% of capital costs for machinery and equipment used in manufacturing specified clean technology products or extracting/processing critical minerals. This credit is non-refundable but can be carried back 3 years or forward 20 years.
Qualifying activities:
- Manufacturing of zero-emission vehicles or vehicle components
- Manufacturing of batteries and battery components for EVs
- Manufacturing of EV charging or refuelling equipment
- Manufacturing of wind turbines, solar equipment, nuclear components
- Manufacturing of hydrogen production or storage equipment
- Extraction and primary processing of critical minerals (lithium, cobalt, nickel, copper, rare earth elements, etc.)
3. Clean Hydrogen ITC
The Clean Hydrogen ITC provides a refundable credit on the capital cost of eligible clean hydrogen projects. The credit rate depends on the carbon intensity of the hydrogen produced: lower carbon intensity earns a higher credit rate.
| Carbon Intensity (kg CO2e per kg H2) | ITC Rate |
|---|---|
| Below 0.75 | 40% |
| 0.75 to below 2.0 | 25% |
| 2.0 to 4.0 | 15% |
Projects producing hydrogen with carbon intensity above 4 kg CO2e/kg do not qualify. Eligible costs include equipment for electrolysis, natural gas reforming with CCUS, and biomass conversion.
4. Carbon Capture, Utilization and Storage (CCUS) ITC
The CCUS ITC provides substantial credits for eligible carbon capture, transportation, storage, and utilization projects. This credit is aimed at large industrial emitters and is among the most generous in the clean economy stack.
Credit rates by eligible use:
- Capture equipment: 60% of capital cost
- Storage and utilization equipment: 37.5% of capital cost
- Dual-use equipment: blended rate based on use allocation
The credit is refundable at 50% for the first 10 years and non-refundable thereafter. Projects must be validated by NRCan and meet annual storage verification requirements.
How to Access Clean Economy ITCs
Clean Technology ITC and Manufacturing ITC
These credits do not require pre-approval. You claim them on your annual T2 corporate tax return when you file. Keep purchase invoices, asset descriptions, and documentation demonstrating that qualifying property meets the eligibility criteria. CRA may review claims in the normal course of assessment.
Clean Hydrogen ITC and CCUS ITC
These credits require project validation by Natural Resources Canada (NRCan) before or shortly after filing. Projects are assessed for carbon intensity (hydrogen) or storage integrity (CCUS). Engage with NRCan early in the project planning process, not after construction begins.
Can You Combine Clean Economy ITCs with Other Programs?
In some cases, yes. Clean economy ITCs generally cannot be combined with other federal ITCs on the same property, but they can co-exist with provincial incentives, SR&ED credits on associated R&D work, and programs like IRAP or CanExport that support different expenditure categories. The interaction rules are specific — work with a tax advisor to model your combined incentive position.
What to Watch in 2026
Federal clean economy ITC rules have been evolving since their introduction. In 2026, watch for:
- Updated labour requirement guidance from CRA (prevailing wage and apprenticeship rules)
- Final regulations on CCUS annual verification requirements
- Potential expansion of qualifying property categories under the Clean Technology ITC
- Provincial programs (particularly in Alberta, BC, and Ontario) that may stack with federal ITCs
For a complete picture of all incentive programs your business may qualify for, run the IncentivIQ assessment.
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