The 2023 Federal Budget was announced on March 28, and it included several measures to reinforce and strengthen Canada’s supply chain, particularly in the sector of clean energy.

Here are the highlights. Note: these measures are only proposals until they receive royal assent and become law.

Support for clean energy and clean technology projects

Budget 23 proposes to provide $3 billion over 13 years to Natural Resources Canada to help fund various projects that support renewable energy, such as electrical Smart Grids and wind power, plus $500 million over 10 years to the Strategic Innovation Fund to support the development and application of clean technologies in Canada.

New tax credit for clean technology manufacturing

Budget 2023 proposes a refundable tax credit equal to 30% of the cost of investing in new machinery and equipment used to manufacture or process clean technologies, including:

  • the extraction, processing, or recycling of minerals that are critical to clean technology supply chains: lithium, cobalt, nickel, graphite, copper, and rare earth elements
  • the processing or recycling of nuclear fuels and heavy water
  • the manufacturing of grid-scale electrical energy storage equipment
  • the manufacturing of zero-emission vehicles
  • the manufacturing or processing of certain upstream materials for the above activities, such as cathode materials and electric vehicle batteries

A new tax credit for clean hydrogen investment

Budget 2023 shares details of the Clean Hydrogen Investment Tax Credit, which would support between 15% and 40% of the eligible costs on clean hydrogen products. It will also include a 15% credit towards the equipment needed to concert hydrogen into ammonia in ode to transport it.

Extending the reduced rates for zero-emission technology manufacturers

Budget 2023 proposes to extend the availability of the pre-existing reduced corporate income tax rates for zero-emission technology manufacturers to 2034, with a phase-out starting in 2032. This is an extension of two years; currently, corporate income tax rates are reduced by half for zero-emission technology manufacturers.

Strengthening trade corridors

Budget 2023 proposes several measures to strengthen Canada’s transportation systems and supply chain infrastructure, which include:

  • $27.2 million to establish a Transportation Supply Chain Office to respond to disruptions ad increase the capacity, efficiency, and reliability of Canada’s transportation supply chain infrastructure
  • $25 million to develop supply chain data that will help reduce congestion and help inform future infrastructure planning
  • Amend the Canada Transportation Act to provide the Ministry of Transport with the authority to compel data sharing by shippers accessing federally regulated transportation services
  • Launch a review of the Shipping Conferences Exemption Act to improve marine shipping competition

Green shipping

Budget 2023 proposes to provide $165.4 million to establish a Green Shipping Corridor Program to reduce the impact of marine shipping on surrounding communities and ecosystems, spur the launch of the next generation of clean ships, invest in shore power technology, and prioritize low-emission and low-noise vessels at port.

Eradicating forced labor from Canadian supply chains

Reflecting concern over the ongoing human rights violations against Uyghurs and Muslim minorities in China, as well as the use of forced labor around the world, Budget 2023 announces the intention to introduce legislation to strengthen the import ban on goods produced using forced labor.

View the full Budget 2023 here.

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