Canada’s Clean Economy ITCs: Five Credits, All Refundable

The Five Credits

A sixth — the 10 percent EV Supply Chain ITC — remains a proposal with no implementing legislation as of August 2026. All five live credits are claimed through the T2 return on prescribed schedules, and all five are fully refundable.

The Labour Rules: 10 Points on the Table

Four credits — Clean Technology, CCUS, Clean Hydrogen and Clean Electricity — carry prevailing wage and apprenticeship requirements. Electing and complying holds the full rate; not electing costs ten percentage points. The Manufacturing ITC carries no labour conditions at all.

• Prevailing wage — covered workers at designated sites paid per the applicable eligible collective agreement, with the claimant responsible for contractors and subcontractors, and required to communicate the standard to workers.
• Apprenticeship — reasonable efforts toward Red Seal apprentices working at least 10 percent of Red Seal trade hours, with a four-monthly advertising and union-contact deeming rule.
• Penalties — $22 per worker per day (2025) on wage failures plus top-ups with interest, $54 per shortfall hour on apprenticeship, and gross negligence stripping the elevated rate entirely.

The economics are rarely close: on a $100 million project the election is worth $10 million against compliance costs that are a fraction of that. The failure mode is not electing and missing paperwork — it is not building the attestation and records process before construction starts.

Stacking and the One-Credit Rule

One property, one clean economy ITC: the same capital cost cannot earn two of the five credits. But a single project routinely contains property eligible for different credits — a hydrogen plant with capture equipment can see Clean Hydrogen on production assets and CCUS on capture assets — and the clean economy ITCs stack with the regular section 127 investment credits, including the Atlantic ITC, and with accelerated capital cost allowance.

They also sit alongside the operating-revenue programs, and this is where the money compounds: a renewable natural gas plant can hold a capital ITC while creating CFR Compliance Category 2 credits on every cubic metre; a hydrogen producer can pair the Clean Hydrogen ITC with CFR and BC LCFS pathway credits; an electrolyser or charging network can sit under the Clean Technology ITC while its throughput earns CC3 credits. The capital credit pays once, the fuel programmes pay for years — and programme sequencing, which attributes are claimed where, is the design work.

What Changed in 2025–2026

• Bill C-15 (Royal Assent March 26, 2026) — enacted the Clean Electricity ITC, extended full CCUS rates by five years to 2035, added waste biomass and refurbishment property to Clean Technology, expanded critical minerals from six to eleven, and extended filing deadlines to December 31, 2026.
• Spring Economic Update (April 2026) — proposed extending CCUS to enhanced oil recovery at half rates, reversing Budget 2025’s exclusion; draft legislation pending.
• Domestic content consultation (Feb–Mar 2026) — Ottawa consulted on Buy-Canada content conditions for the Clean Technology and Clean Electricity ITCs; no decision announced. The single biggest open design question.
• Administration — CRA pre-audits claims before payment, with delays exceeding a year in some cases; advance income tax rulings are being prioritised for clean economy ITC certainty.