Canada stands at a pivotal moment in its energy and economic evolution. The global race for renewable energy technologies, critical minerals, and AI/data-centre infrastructure is intensifying, and Canada has a unique opportunity to position itself as a leader in the low-carbon economy. With the release of Budget 2025: Canada Strong and the launch of the Major Projects Office (MPO) to accelerate nation-building infrastructure, the federal government has laid out a strategy that combines targeted fiscal incentives, regulatory certainty, and strategic project acceleration to catalyze a clean-energy transformation.

Together, these measures signal a meaningful shift in how Canada intends to compete in a rapidly decarbonizing global economy. But while the scale of ambition is clear, the practical implications for developers, investors, utilities, and communities requires careful consideration. 

The interplay between tax incentives, expedited permitting pathways, emerging demand centres, and long-term infrastructure planning will determine whether this moment becomes a true inflection point. In this article, we’ll break down these dynamics, highlighting the opportunities, risks, and structural enablers that could shape Canada’s energy landscape over the next decade.

Key Budget 2025 measures benefitting clean-energy development

Budget 2025 is a sweeping economic roadmap that touches nearly every facet of national policy ranging from housing affordability and healthcare investments to defense modernization, Indigenous reconciliation, and innovation strategy. Spanning over 300 pages, the document outlines a multi-year fiscal framework aimed at strengthening Canada’s competitiveness, resilience, and social equity in a rapidly changing global landscape.

But beneath its wide-ranging scope, a closer read reveals a distinct and deliberate emphasis on renewables and energy infrastructure expansion. Embedded throughout the budget are targeted measures designed to accelerate the shift to an electrified economy.

Clean-Economy and Clean Electricity Investment Tax Credits (ITCs)

One of the centerpiece tools in Budget 2025 is the Clean Electricity Investment Tax Credit (CE ITC), a refundable 15% credit on capital expenditures for low-emission electricity generation, energy storage, and inter-jurisdictional transmission. Unlike traditional incentives, the CE ITC is designed for wide accessibility. Taxable Canadian corporations, provincial and territorial Crown corporations, municipal and Indigenous-owned entities, pension funds, and the Canada Growth Fund can all participate.

The CE ITC is complemented by several other targeted ITCs:

• Clean Technology ITC (CT ITC) – accelerates clean-tech deployment across sectors.

• Clean Technology Manufacturing ITC (CTM ITC) – strengthens domestic production of batteries, components, and clean-tech equipment.

• Clean Hydrogen ITC (CH ITC) – supports low-carbon hydrogen production for industrial and transport applications.

A notable innovation is the explicit inclusion of battery energy storage systems (BESS) and transmission assets. By making storage and interties eligible, Budget 2025 directly enables the combination of intermittent renewables with grid reliability solutions, unlocking economic viability for large-scale wind and solar deployment.

Furthermore, the inclusion of Indigenous and municipal Crown corporations emphasizes equity and community participation, opening doors for localized renewable projects that generate both clean power and social value.

By lowering the cost of capital through refundable ITCs, Budget 2025 makes projects in renewables, hydro, nuclear, storage, and inter-jurisdictional transmission financially attractive, forming the backbone for Canada’s electrified future.

Immediate Expensing / Productivity Super-Deduction

Budget 2025 reintroduces a “productivity super-deduction” approach, which includes immediate expensing for manufacturing or processing machinery and equipment, clean energy generation and energy conservation equipment, zero-emission vehicles, and even manufacturing/ processing buildings (temporarily at 100% first-year write-off).

Specific to energy, immediate expensing applies to “clean energy generation and energy conservation equipment” and zero-emission vehicles. This enhances the return on investment and increases the present-value (PV) of tax savings, thus improving project economics.

Accelerated capital cost allowance (CCA) rates are also reinstated for liquefied natural gas (LNG) equipment and related non-residential buildings for low-carbon LNG facilities. While the LNG CCA clause is not strictly clean energy in the renewables sense, it supports the broader low-carbon energy transition (in particular for low-emission LNG which may act as a bridging fuel).

Together, these incentives help align Canada’s tax regimes with global peers, making Canada more competitive for investment in large-scale clean infrastructure.

Regulatory Certainty & Clean Electricity Regulations

Investment flows follow predictability. Recognizing this, Budget 2025 aims to strengthen the regulatory foundation for Canada’s energy expansion. Central to this is a proposed amendment to the Canadian Environmental Protection Act, which would enable longer-term equivalency agreements between the federal government and provinces or territories. These agreements, which are aligned with the net-zero by 2050 goals of the Clean Electricity Regulations, could now extend beyond the current five-year limit, offering a more durable and predictable policy framework.

This is an excellent move as regulatory certainty is one of the critical factors influencing investment in large-scale infrastructure. When rules shift or expire too quickly, investors face “regime risk” or the possibility that a project’s economics could be upended by policy changes. By extending equivalency agreements, Budget 2025 helps de-risk long-horizon investments such as:

• Grid interties connecting provinces and territories

• Small modular reactors (SMRs) and advanced nuclear projects

• Hydroelectric dams and remote renewable generation

• Large-scale wind farms and battery storage assets

A more stable regulatory landscape empowers provinces, utilities, and developers to plan with confidence, which leads to streamlined permitting, lower cost of capital, and acceleration of deployment timelines.Budget 2025 also acknowledges the massive investment required to modernize Canada’s electricity system, and commits to supporting that transformation. As noted by the Canadian Climate Institute, this unlocks the capital and coordination needed to build the infrastructure backbone of a net-zero economy.

Critical Minerals & Clean Technology Supply Chain Measures

Critical minerals are one of the most strategic enablers of energy transition. These essential inputs, which are used in everything from battery storage and electric vehicles to grid infrastructure and renewable technologies, form the backbone of a resilient clean-tech supply chain. Recognizing this, the federal government has introduced a suite of measures spanning exploration, processing, and domestic manufacturing:

• Critical Minerals Exploration Tax Credit (CMETC): Expanded coverage to bismuth, cesium, chromium, fluorspar, germanium, indium, manganese, molybdenum, niobium, tantalum, tin, and tungsten.

• Mineral Exploration Tax Credit (METC): Extended to March 2027, providing incentives for early-stage exploration.

• Scientific Research & Experimental Development (SR&ED) enhancements: Expanded thresholds, capital expenditure eligibility, and AI-driven processing to accelerate clean-tech R&D and commercialization.

By linking mineral exploration with manufacturing and processing incentives, Canada begins moving up the value chain from raw materials to refined components, batteries, and deployed clean energy systems. Projects in battery storage, EVs, grid infrastructure, and renewables all benefit, creating a self-reinforcing ecosystem that improves competitiveness and energy sovereignty.

Building “Canada Strong”

Beyond its detailed tax and incentive measures, Budget 2025 introduces a strategic shift in fiscal philosophy: “spending less to invest more.” This framing distinguishes between short-term operational costs and long-term capital investments, signaling a clear tilt toward nation-building infrastructure and economic competitiveness.

For the energy sector, this shift carries weight. It suggests that the federal government is prepared to back large, capital-intensive projects, either directly or through incentives, such as:

• Transmission system expansion

• Grid modernization and upgrades

• Long-distance interconnections between provinces

• Energy storage hubs and distributed storage networks

These types of projects often require large upfront capital and extended payback periods, making federal incentives and tax credits essential to unlocking private-sector investment. 

By focusing on competitiveness and productivity, Budget 2025 positions clean energy as a strategic economic driver that anchors future growth, enhances exports, and supports industrial efficiency.

Nation-Building Projects & the Major Projects Office

To ground Budget 2025’s ambitions in real-world impact, the federal government has launched the Major Projects Office (MPO), a new initiative designed to accelerate “nation-building” infrastructure projects deemed critical to Canada’s long-term prosperity. These projects span energy, transmission, critical minerals, and advanced manufacturing, and serve as tangible expressions of the budget’s strategic priorities.

First Tranche of MPO Projects – September 2025

In September, the MPO announced its first wave of referred projects for further assessment, representing over C$60 billion in potential investment. Highlights include:

• LNG Canada Phase 2 (Kitimat, BC) – Doubling LNG production with an expected C$33 billion in private-sector capital, delivering low-carbon intensity LNG to global markets.

• Darlington New Nuclear Project (Ontario) – Deploying small modular reactors (SMRs) to power ~300,000 homes, positioning Canada as a global leader in advanced nuclear.

• Red Chris Mine Expansion (Northwest BC) – A critical-minerals project aligned with the Northwest Critical Conservation Corridor, linking clean-power transmission and mining.

These projects reflect how energy, clean-tech, and resource development are being woven into a unified national strategy.

Second Tranche of MPO Projects – November 2025

A second tranche, announced in November, adds another C$56 billion in investment potential. Key projects include:

• Ksi Lisims LNG (B.C.) – A floating LNG export facility designed for electrification, aiming to reduce emissions by ~94% below the global average.

• North Coast Transmission Line (B.C.) – A major transmission corridor enabling clean electricity access for remote communities and supporting industrial growth.

• Nouveau Monde Graphite Matawinie Mine (Québec) – An integrated graphite mine and battery-material plant, anchoring a domestic value chain.

• Canada Nickel Crawford Project (Ontario) – A low-carbon nickel mining and refining facility, critical for EVs, batteries, and clean steel.

• Iqaluit Nukkiksautiit Hydroelectric Project (Nunavut) – An Indigenous-owned hydro project replacing diesel generation in remote communities.

Wider economic and strategic impacts

The MPO announcements represent a transformative wave of investment, with projects promising to generate thousands of high-paying jobs while catalyzing economic activity across Canada.

This momentum is reinforced by the federal government’s suite of tax incentives and capital-focused policies introduced in Budget 2025. Together, these measures address both the supply and demand sides of the energy equation and support the build-out of generation, storage, and transmission infrastructure while also stimulating demand through electrification and industrial decarbonization.

Beyond domestic benefits, many MPO-backed projects are explicitly designed to integrate Canada into global energy value chains. Investments in LNG, critical minerals, graphite, and nickel position Canada as a strategic supplier of low-carbon fuels and clean-tech components to international markets. As the country builds out its own renewable and storage capacity, it also gains the ability to export technologies and expertise, moving up the value chain from raw resource exporter to clean energy innovator.

Strategic foresight: Energy in the broader ecosystem

To further illustrate the scale and inter-linkage, consider the following strategic foresight perspectives.

AI/data centres as an anchor demand-pull

Canada is seeing growth in AI/data-centre infrastructure (cloud computing, quantum, sovereign-cloud initiatives). These facilities are highly electricity-intensive and prefer low-carbon grids. Budget 2025’s immediate-expensing for data-network infrastructure supports this build-out, and the CE ITC for generation/storage supports the supply side. As more data centres locate in Canada, they act as anchor loads that justify large-scale generation/build-out, which in turn supports renewables, BESS, and transmission modernization.

Electrified mining and resource value chains

Mining of critical minerals itself is energy-intensive due to extraction, processing, and refining. Canada’s mining projects (graphite, nickel, tungsten) are designed to be low-emission or net-negative. The availability of renewable energy via renewables, hydroelectric, SMRs, and storage enables these mines to operate competitively and responsibly.

Regional-remote integration & northern transition

Large parts of Canada, especially northern communities and Indigenous territories, rely on diesel generation and face high energy costs. Projects like Iqaluit hydro symbolise the transition. With transmission lines and renewables plus storage, remote communities can shift away from fossil fuels, lower costs, enhance sovereignty and become nodes of clean-energy production. Budget incentives plus MPO infrastructure enable this shift.

Risk mitigation & global competition

Globally, countries are vying to become leaders in clean energy, battery manufacturing, EV supply chains, data centres, and grids. Canada’s budget and project agenda signal to global capital that Canada wants to compete. The lower METR, improved expensing and the CE ITC make Canada more competitive vis-à-vis the U.S., Europe, and Asia. This positioning is crucial if Canada is going to attract large-scale investment rather than just rely on existing incumbents.

Conclusion

Budget 2025 and the Major Projects Office together form a cohesive, forward-looking blueprint for Canada’s clean-energy transformation. By combining fiscal incentives, regulatory clarity, and accelerated infrastructure development, the federal government is positioning the country to build resilient, integrated clean-energy systems while strengthening domestic supply chains for batteries and critical minerals. These measures also expand Canada’s industrial competitiveness and export potential, and they embed equity and Indigenous participation into the heart of the clean-energy transition.

Taken together, these initiatives ensure that Canada’s energy ambitions remain aligned with long-term sustainability and climate objectives. The convergence of policy, capital, and project acceleration signals that Canada is prepared for energy expansion. The next decade will determine how quickly these ambitions materialize into real infrastructure, industrial growth, and broad-based prosperity, but with Budget 2025, the stage is firmly set for Canada’s next wave of energy leadership.