If you’re investing in clean energy, carbon capture, or critical mineral processing, Federal Budget 2025 just made your projects more valuable. The government expanded clean technology tax credits Canada offers, added new eligible materials and extended credit rates through 2040.
Here’s what changed and how it affects your business.
The Bottom Line: What’s Available
Canada offers up to 30% refundable tax credits on specific clean technology investments. That means for every $1 million you invest in qualifying equipment, you get up to $300,000 back, actual cash not just tax deductions.
These credits are available through December 31, 2034. The rate drops to 20% in 2032, 10% in 2033, and 5% in 2034.
Who qualifies: Any taxable Canadian corporation investing in clean technology equipment, including corporations in partnerships.
Clean Electricity: Crown Corporations Can Now Access Credits
Budget 2025 removes conditions that previously blocked provincial and territorial Crown corporations from accessing the Clean Electricity investment tax credit.
What this means: Provincial utilities and territorial energy corporations can now claim federal clean electricity credits without navigating conditional requirements. This streamlines major infrastructure projects and reduces administrative burden.
The Clean Electricity credit is available retroactively from April 16, 2024, for projects that didn’t begin construction before March 28, 2023.
Waste Biomass Systems Now Eligible
Budget 2025 expands eligibility to include systems that produce electricity, heat or both from waste biomass.
Examples that now qualify:
- Combined heat and power systems using waste biomass
- Waste-to-energy facilities
- District heating systems powered by biomass waste
- Industrial facilities generating process heat and electricity from biomass
This expansion is retroactive to November 21, 2023. If you invested in waste biomass energy systems after this date, you can claim credits once legislation passes.
Small Nuclear Energy: Updated Requirements
The budget confirms changed eligibility requirements for small modular reactor (SMR) projects, retroactive to March 28, 2023. Specific requirement details will be available when legislation is introduced.
Carbon Capture Gets Extended Timeline
Budget 2025 extends full CCUS (Carbon Capture, Utilization, and Storage) credit rates by five years.
Original timeline: Full rates applied to eligible CCUS expenditures from 2022 through 2030
Extended timeline: Full rates now through 2035
Credit rates:
- Eligible CCUS expenditures from the start of 2022 to the end of 2035 qualify for full rates (37.5%-60%) depending on the equipment and type of carbon storage.
- Eligible expenditures from the start of 2036 to the end of 20240 remain eligible, but at lower credit rates (18.75%-30%)
Why this matters: Carbon capture projects require years to develop and massive capital investment. The five-year extension gives you certainty when planning facilities that won’t be operational until the early 2030s.
Government review:
- The review of CCUS investment tax credit rates is postponed, now to be undertaken before 2035 (instead of before 2030)
Clean Hydrogen: Methane Pyrolysis Now Qualifies
Budget 2025 adds methane pyrolysis as an eligible pathway for producing clean hydrogen.
Effective date: December 16, 2024
What is methane pyrolysis?
It splits methane into hydrogen and solid carbon without producing CO₂ emissions during the process. The solid carbon can be used industrially or permanently stored.
Other eligible pathways:
- Water electrolysis
- Natural gas reforming with carbon capture
- Methane pyrolysis (new)
Critical Minerals: Five New Materials Added
Budget 2025 expands the Clean Technology Manufacturing credit to include five new critical minerals for property available for use on or after November 4, 2025 (budget day):
- Antimony (batteries, semiconductors, flame retardants)
- Indium (touchscreens, solar cells, flat panels)
- Gallium (LEDs, semiconductors, solar panels)
- Germanium (fiber optics, solar cells, infrared optics)
- Scandium (aluminum alloys, fuel cells)
Why these minerals matter: They’re typically recovered as by-products when processing other minerals. The expansion incentivizes investment in advanced processing that extracts valuable materials from existing mining operations.
What qualifies:
- Extraction equipment
- Processing and refining facilities
- Recycling operations recovering critical minerals from electronic waste
Polymetallic Mining Equipment
Equipment used in polymetallic mining projects (operations extracting multiple minerals from one ore body) qualifies retroactively from January 1, 2024.
Combined with the five new eligible minerals, this creates substantial opportunities for mining operations producing multiple outputs.
Retroactive Protection: You’re Covered
Budget 2025 provides retroactive eligibility for investments made before the announcement. If you invested after these dates, you can claim credits:
- Clean Electricity: April 16, 2024
- Waste biomass systems: November 21, 2023
- Small modular reactor: March 28, 2023
- Polymetallic mining: January 1, 2024
- Methane pyrolysis: December 16, 2024
This protects businesses that committed capital before program expansions became public.
What You Need to Do Now
1. Review Your Investments
Look at clean technology equipment you’ve purchased or plan to purchase. Does it fit newly expanded categories? Many businesses discover they qualify for credits they didn’t know existed.
2. Document Everything
Keep detailed records of:
- Equipment purchase dates and amounts
- Installation dates (when property becomes “available for use”)
- Technical specifications showing equipment meets program criteria
- Invoices and payment records
3. Understand Timing
The “available for use” date matters, not just purchase date. Equipment becomes available for use when it’s capable of performing its intended function, usually when installation is complete and testing is done.
4. Check Provincial Programs
Many provinces offer additional clean technology incentives that stack with federal credits. Don’t leave provincial money unclaimed.
Take Action: Don’t Leave Money Unclaimed
Federal Budget 2025 expanded clean technology tax credits Canada provides, creating opportunities across clean electricity, carbon capture, hydrogen, and critical minerals.
If your business is investing in:
- Clean electricity generation from waste biomass or small nuclear
- Carbon capture, utilization, or storage systems
- Clean hydrogen production including methane pyrolysis
- Critical mineral extraction, processing, or recycling
You likely qualify for substantial refundable tax credits, potentially recovering an important portion of your capital investment.
Ready to maximize your clean technology tax credits?
Contact Leyton today for a complimentary assessment. Our team will review your investments, identify all eligible projects and quantify available credits.
