Budget 2025: Climate competition

TECH

Carney’s climate competitiveness budget

What happened: The Carney government released its first budget last week, promising a “generational” investment strategy that integrates economic, national, and energy security.

The new “climate competitiveness” strategy is a cornerstone of the budget, aiming to lower Canada’s emissions in order to secure access to global markets that prioritize sustainability. It combines stronger industrial carbon pricing with investments in critical mineral supply chains and abundant clean energy to power and attract industry.

The details: The Budget focused critical minerals, previously-announced tax credits and carbon pricing. Key climate line items include:

• Strengthening industrial carbon pricing: Fix and apply the federal backstop where it’s not being met. Explore improvements to and linkages between credit markets across Canada. Develop a multi-decade price trajectory to 2050 for investment certainty.

• Clean electricity: Advance the Trudeau-era Clean Electricity Regulations. Funding to promote nuclear energy exports.

• Emissions: The oil and gas cap will “no longer be needed” if other provisions go forward, but no further details. Enhanced methane regulations for oil and gas and landfills. Targeted updates to Clean Fuel Regulations.

• Critical minerals: A $2B Critical Minerals Sovereign Fund at NRCan to support projects and companies with equity, loans, and offtakes. $371M First and Last Mile Fund to develop critical mineral projects and supply chains. Expand exploration tax credits to more minerals. $443M to support critical minerals processing technologies, stockpiling, and joint investments with Allies.

• Clean economy tax credits: Implement the Clean Electricity credits and removes conditions for utilities. Extend CCUS rates to 2035, expand eligible inputs for Clean Technology Manufacturing, and consult on domestic content requirements.

• Sustainable finance taxonomy: An arms-length group will define green and transition investments, a potential reset from past work by the Sustainable Finance Action Council. Exploring Sustainable Bond frameworks for industry and agriculture and improve climate disclosures across the economy with provinces.

• Greenwashing: Remove the requirement for companies to back up claims with internationally recognized standards, and the ability of third parties to bring cases.

• Innovation: Increased SR&ED credit limits to $6M, expanded eligibility to some public companies, and inclusion of capital expenses. $1B for a Venture and Growth Capital Catalyst Initiative to incentivize institutional investor participation, and $750M strategy to close early growth-stage funding gaps in 2026.

Taken together, the budget offers some significant boosts for Canada’s clean economy and brings climate policy firmly into an economic competitiveness frame.

It also underpins Carney’s “grand bargain” with the provinces: supporting oil and gas project development in exchange for driving down emissions. The most notable example is the oil and gas emissions cap, which “would no longer be required” if the provinces tighten their industrial carbon price.

Yes, but: Despite the positive movement on climate and integrating it into industrial policy, Budget 2025 left a few key opportunities on the table.

• NRCan will wind down the Greener Homes program, creating a headwind for home electrification and heat pump adoption. The Carney government may not have seen the economic impact they’d want from this program despite its emissions potential.

• Finance gaps remain, from missing guarantee mechanisms for the ITCs and no update on the EV Supply Chain credit

• Major supports for liquified natural gas risk locking in higher-emitting infrastructure.

• Early-stage innovation support remains thin. The Canada Cleantech Alliance called out the need for a dedicated first-of-a-kind financing facility, and uncertainty around SDTC’s IRAP replacement. There’s a risk that incumbents get incumbent-ier while startups building next-gen tech can’t cross the commercial valley of death.

Why it matters: The budget shifts the centre of gravity in Canadian climate policy, positioning climate action as industrial economic strategy rather than an environmental goal to reduce emissions. Few measures were framed around specific emissions reductions.

That also means a shift from government-led project delivery (e.g. the 2 billion trees initiative or Greener Homes Program) to government catalyzing private capital.

The bottom line: Carney’s budget ushers in a new phase in Canada’s climate strategy, one that trades concrete emissions targets for long-term economic positioning. The success of this shift will hinge on whether Canada can back home-grown solutions and build domestic capacity - without losing sight of the bigger climate picture.

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CLIMATE CAPITAL

🔋 Moment Energy (Vancouver, BC) secured a strategic investment from Copec WIND Ventures. The partnership will see Moment Energy deploy up to 300 MWh of battery storage projects across Latin America and Europe using repurposed batteries from Chile’s electric bus fleet.

☀️ Soflium (Montreal, QC and Mexico) raised a $10 million Series A led by Accion and ALIVE Ventures to scale its solar platform, which integrates financing, installation and maintenance.

⚡️ AlumaPower (Sarnia, ON) closed an additional $7.5 million in Series A funding led by Strabridge Venture Capital and Martinrea, bringing the total round to $14.5 million for its zero-emissions galvanic generator.

🌊 Aslan Renewables (Toronto, ON) raised a $1.25 million pre-seed led by Antares Ventures for its modular, small scale hydro systems.

💧 Ecofilter Tek (Sherbrooke, QC) secured $950K in pre-seed funding led by Cycle H2O and Cycle Momentum for its self-cleaning water treatment membranes.

IN THE FIELD

♻️ Varme Energy partnered with Carbon Direct to deliver 130,000 tonnes of biogenic carbon removal credits annually by 2030 from its Alberta Industrial Heartland waste-to-energy project.

🧱 CURA emerged from stealth to cut emissions from cement production by using electricity to remove CO2 from limestone, tackling the 8% of global emissions from cement production.

🔌 Relion partnered with Greenlane, a joint venture between Daimler, NextEra, and BlackRock, to deploy its charging reliability platform across Greenlane’s charging network.

🔋 Volkswagen's PowerCo battery plant will require $400 million in water system upgrades, requiring about half of the current.

🏅 Foresight Canada named 50 startups to its Foresight 50 list of “most investible” startups, including Carbonova, SenseNet, and Xatoms.

NEWS

📡 Signals & Currents

COP 30 kicks off this week in Brazil. The agenda aims to address the ambition and implementation gap for national climate goals, but will kick harder topics like climate finance down the road. [The Guardian]

• Emissions will drop 12% by 2035 under current plans, a far cry from the 60% drop needed to limit warming to 1.5C.

• Brazil’s COP30 presidency launched a climate finance roadmap to flesh out ways to scale up climate finance to $1.3 trillion and is aiming to raise an initial $24B for its Tropical Forests fund.

• China is joining an effort to link carbon markets across major economies and forming the backbone of future global credit markets.

Ontario plans to drop its emissions targets after missing its goals and facing legal challenges from youth. [CBC]

Canada’s Clean Economy investment tax credits aren’t drawing as much interest as expected, hitting about 25% of the expected uptake. [G&M]

Heat pump adoption rose to 9% in 2023, driven by rebates and higher oil prices. Maritime provinces and rural areas saw the greatest bump in adoption. [Energy Mix]

Democrats rode concerns about rising energy prices to wins in Virginia and New Jersey, as data centres and policy attacks on renewables threaten higher prices. [E&E News]

Bill Gates donated $1.4 billion to help farmers adapt to climate change days after arguing the world is too focused on climate and should focus on alleviating human suffering. [FP & CBC]

Modelling from Rystad shows emissions could peak by 2035 as renewables take off. [Rystad]

Lowercarbon Capital will raise its second fusion investment fund, signaling confidence in recent advancements. [TechCrunch]

Singapore introduced the world’s first sustainable aviation fuel (SAF) levy to fund bulk procurement of SAFs. [Bloomberg]

COMMUNITY

🗓️ Climate Builders & Coffee: Come hang out with us in person before Converge kicks off in Vancouver!

➡️ Find more climate events near you.

🧑🏻‍💻 Eavor is hiring a Senior Control Systems Engineer to architect the control system design for a next-generation geothermal drilling system.

➡️ Find more open roles.