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In October 2023, Export Development Canada (EDC) published its
annual
report on Canadian clean technology (“cleantech”).
The report highlights two major industry trends: (1) a dramatic
increase in investment activity; and (2) a disconnect in conversion
from startups to scaleups.
The global market for cleantech is expected to hit US$26
trillion within the next ten years, signalling an increase in
opportunities for Canadian companies to enter the space. In 2022,
venture capital investment in Canada reached C$1.2 billion across
46 deals, marking a 63 percent
increase from 2021. The investment activity was broken down
into $40 million in seed investment, $452 million in Series A and B
investment, and $621 million in late-stage investment. The first
quarter of 2023 saw C$174 million in investments across 21 deals.
This signals growth in the number of annual deals, but a decline in
the average deal value.
>However, as a result of the more robust incentive programs
in the U.S., many Canadian cleantech companies migrated south. The
EDC report noted a lack of local investors, reporting that a
significant amount of cleantech investment comes from Canadian
government funding, international investors, or pension funds.
In response to these trends, the Government of Canada’s 2023
budget (“Budget 2023”) proposed new cleantech and green
economy tax measures to further incentivize Canadian companies to
plant their roots in home soil. For example, a proposed 15% tax
credit for investments into clean electricity would be available as
of the day of the Government of Canada’s 2024 budget. For more
information on changes to Canadian cleantech investment, see: Budget
2023.
The content of this article does not constitute legal advice
and should not be relied on in that way. Specific advice should be
sought about your specific circumstances.
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