Market Watch: Political turmoil and future-proofing Canadian cleantech

General Market Commentary

The Bank of Canada reduced its rate to 3 per cent on January 29, 2025, the sixth consecutive decrease since June. Projections in the Bank’s latest report on monetary policy are subject to more-than-usual uncertainty because of the rapidly evolving policy landscape, particularly the looming trade tariffs by the new administration in the United States.

U.S. President Donald Trump has said his government would impose tariffs of 25 per cent on goods from Canada and Mexico. He has also threatened tariffs on goods imported from other countries. This could lead to countermeasures by US trading partners, including retaliatory tariffs. There has been a rapid-fire flurry of activity.

On February 3, 2025, Canada and the U.S. agreed to a delay on certain tariffs. On February 9, the International Energy Agency  warned that growing geopolitical tensions pose a serious risk to critical mineral supply chains and threaten the global energy transition.

On February 10, U.S. administration announced tariffs on steel and aluminium imports, putting global clean tech supply chains at risk and likely driving up prices. The U.S. is the world’s largest steel importer, with neighbouring Canada and Mexico its top two trading partners. Many politicians and market analysts criticized the U.S. administration’s decision – even the American Chamber of Commerce condemned the move, saying the tariffs will have a “wide-reaching and overwhelmingly negative impact on jobs, prosperity and security on both sides of the Atlantic. The damage will extend beyond the steel and aluminium sectors, impacting all businesses that rely on these materials throughout the supply chain.”

Hot Sector News

Despite the unpredictability of the market, we choose to keep calm and stay confident about the potential for cleantech to provide economic prosperity and environmental solutions. Here are some funding and support opportunities available to Canadian cleantech businesses:

Accelerated Capital Cost Allowance for Clean Energy Equipment – Federal tax deduction for clean energy equipment and equipment for manufacturing processing goods. Enhanced allowance permitting full (100 per cent) expensing of the capital costs of specified clean energy generation and conservation equipment in the year they become available for use. The enhanced rate will progressively decrease after 2023 until it is phased out in 2028. For further information, click here.

Business Development Bank of Canada Climate Tech Venture Fund II – This is a $400 million fund offering an advisory team providing advice and industry connections. The focus is on firms that develop technology that mitigates GHG emissions by: electrification and mobility; built environment; carbon capture, utilization, conversion and sequestration; low-carbon fuels and energy; farms, forest and food. The intake is ongoing. For further information, click here.

Business Development Bank of Canada Sustainability Venture Fund – Dedicated to investing in businesses developing technologies that support meeting sustainability and climate targets. This fund is focused on four key United Nations Sustainable Development Goals (SDGs) leveraging Canada’s strengths: sustainable communities and cities, responsible production and consumption, climate action, clean and affordable energy. The intake is ongoing. For further information, click here.

Carbon Capture, Utilization, and Storage (CCUS) Investment Tax Credit (ITC) – A refundable tax credit that applies to eligible expenditures incurred for a qualified CCUS project. This is a project intended to support a CCUS process through any of the following: capturing carbon dioxide that would otherwise be released into the atmosphere; capturing carbon dioxide directly from ambient air; transporting captured carbon; and, storing or using captured carbon. Currently accepting project plans. For further information, click here.

Clean Fuels Fund – Domestic Production Capacity, Indigenous-led Proposals – Cost-shared, conditionally repayable funding, to build new, or retrofit or expand existing, clean fuel production facilities in Canada. Funding the build-out of Indigenous-led production capacity projects will grow the domestic production capacity for clean fuels including clean hydrogen, advanced biofuels renewable natural gas, and sustainable aviation fuel, among other benefits. Projects must be completed and facilities commissioned by March 31, 2026. For further information, click here.

 Additionally, funding and other opportunities may also be available through the following clean tech organizations:

Écotech Québec brings together key decision makers in Quebec’s clean tech sector. It mobilizes participants in the green economy to create the most favourable conditions for business growth and development. It also encourages end users to adopt more clean technologies. For further information, click here.

Foresight Canada is one of Canada’s foremost cleantech innovation accelerators. The organization brings the industry together to accelerate the growth and adoption of competitive clean tech solutions that address the world’s most pressing environmental challenges. Foresight offers regional support and resources to businesses across Canada. For further information, click here.

MaRS Cleantech supports startups and other organizations that push the boundaries of clean technology. It also helps entrepreneurs bring their products to market quickly, while making organizations and businesses more sustainable and cost effective. MaRS provides expert advice and connections to talent, capital and global markets. For further information, click here.

Ontario Clean Technology Industry Association (OCTIA) exists to promote, foster and grow Ontario’s clean technology sector. For further information, click here.

Stocks to Watch  

Here is a list of Canadian cleantech stocks that we are monitoring for this column. This list of public companies is by no means complete, and we are open to suggestions from our advisors and readers.

*The authors of this column own equity. It is not meant to be an endorsement, but simply a statement of this fact.

James Sbrolla is a veteran of the financial and environmental industries.

Connie Vitello is editor of Environment Journal.

Featured image: Wind farm in Alberta. Credit: Getty Images