Canadian ITCs: Opportunity Amid Uncertainty

As the last weeks have shown, the current political and economic landscape is marked by uncertainty. From Trump’s tariff threats (and sudden reversal and sudden rethreat) to the proroguing of Parliament, and the upcoming Ontario and federal elections, the situation remains volatile.

Despite the policy direction under the Trump administration, the IRS is refining its approach to U.S. clean energy incentives. On January 15, 2025, the agency issued final regulations for the Clean Electricity Production Credit (Section 45Y) and the Clean Electricity Investment Credit (Section 48E), clarifying eligibility criteria and how greenhouse gas emissions rates will be calculated for facilities placed in service after 2024. These updates provide further guidance but also introduce additional complexity for U.S.-based projects navigating the evolving regulatory landscape.

On the other hand, Canada is becoming an increasingly attractive destination for renewable energy investment, especially as the U.S. administration takes a less supportive stance on clean energy initiatives, for instance through executive orders  favouring "reliable energy" (oil, natural gas, coal, hydropower, biofuels, and nuclear energy) at the detriment of other renewable sources of energy. Additionally, the current low CAD relative to the USD further enhances Canada’s appeal as an investment destination. For developers and investors, this creates both challenges and opportunities.

One thing remains clear: Canada's Clean Economy ITCs will stay for the foreseeable future. There will be many more chapters to the trade war story; however, what we can control is ensuring that our energy projects meet ITC requirements and can withstand CRA audits. Now more than ever, staying proactive and compliant is key to maximizing and protecting the benefits of these incentives. If you have some questions about your organization's eligibility for any of the Clean Economy ITCs, please don’t hesitate to reach out or book time with us.