The age-old debate of progress versus sustainability is coming into focus in Canada. And the result does not necessarily lean one way or the other. There is no need to choose between well-paying jobs and clean air or water – this is the mantra that the federal government is rallying around.
Canada’s recent initiative, aptly named A Healthy Environment and a Healthy Economy, is ambitious in its goals and scope. It is built on the premise that fighting climate change is good not only for the environment but also for the economy. The plan outlines detailed steps to create new jobs while ensuring that succeeding generations will continue to have access to clean air and water.
Along with well-established grants like IRAP funding and the Scientific Research and Experimental Development or SR&ED program, this climate plan will lay the groundwork for a strong Canadian economy that does not put the future at risk.
Supporting Sustainable Technologies with SR&ED Refunds Canada
The SR&ED program is a federal tax incentive program that supports research and experimental development activities involving clean tech, sustainable technologies, and other innovative solutions. It offers tax incentives for eligible SR&ED projects in the form of an income tax deduction or an investment tax credit.
Canadian controlled private corporations or CCPCs that qualify for SR&ED can earn up to 35% in refundable SR&ED tax credit for the first $3 million of qualifying expenditures, and 15% non-refundable ITC for the excess amount.
Canadian companies that also meet the criteria of the Canada Revenue Agency or CRA can earn up to 15% ITC for eligible costs over $3 million, 40% of which can be refunded.
Other corporations, partnerships, proprietorships, and trusts are also eligible to claim for SR&ED tax incentives. They can get SR&ED funding of up to 15% ITC for all qualifying expenditures. This can be deducted from the tax payable for the fiscal year that the eligible SR&ED projects are carried out.
The research and development R&D project must be designed to resolve a scientific and technological uncertainty for it to qualify under the SR&ED program. In addition, it must use a systematic investigation that would potentially lead to technological advancements.
Since it was launched in 1986, the SR&ED program has helped thousands of small businesses across Canada pursue R&D activities. Every year, it has over 18,000 claimants from all sectors, including those working on environmental technologies, biofuels, climate change, and other forms of clean tech. The annual SR&ED claim amounts to over $4 billion.
The SR&ED program has been front and center in the fight against climate change. With the government’s new plan, Canada’s trajectory to a sustainable future has become even clearer.
To find out how SR&ED can help your business advance sustainability, talk to our funding specialists here at EVAMAX.
Canada’s New Climate Plan
On December 11, 2020, the Prime Minister of Canada announced the launching of A Healthy Environment and a Healthy Economy. This proclamation came amidst the government’s efforts to navigate the unprecedented COVID-19 situation.
While the pandemic presents an immediate concern, this is no reason for past environmental efforts to be abandoned. Climate change is one of the biggest perils that Canada has been facing and will continue to face. If any form of long-term success is to be achieved, it must be addressed along with the continuing threat of the virus.
The plan commits $15 billion for 64 new measures, creating one million jobs in the process. It will deploy five key measures, each one designed to make Canada’s economy stronger and its communities more liveable.
Reducing Energy Waste in Canadian Homes
A significant part of the climate plan is to help Canadians make their homes more energy-efficient. With less power requirement, comfort will come at a more affordable cost. What is more, it will cut the pollution generated and create employment opportunities during its implementation.
The government has several plans in place towards this goal. They are set to invest $1.5 billion in sustainable and inclusive community buildings over the next three years, while $2.6 billion is earmarked for the next seven years to help make Canadian homes more energy-efficient. Another $2 billion will be invested to retrofit buildings, with the cost to be recovered from the subsequent energy savings.
To ensure a smooth transition, the entire supply chain will be enabled. Collaboration between the construction industry and other stakeholders will be facilitated, ensuring that there are enough locally-sourced materials available.
The government will also implement for the first time infrastructure assessments at a national level, to help identify and address barriers that prevent a net-zero emissions future.
Affordable, Clean Transportation and Power
The government is looking to make clean electricity accessible to more Canadians by investing in renewable energy technology. They will also work towards a zero-emission transportation system, making communities across the country healthier and more active.
The goal is to make Canada net-zero in carbon emissions by 2050, as outlined in the 2015 Paris Agreement.
To make the zero-emission future a reality, the government will invest $287 million for a period of two years in the Incentives for Zero-Emission or iZeV program, while $150 million will be spent on charging and refueling stations all over Canada for the next three years.
To make clean and affordable electricity more accessible, $964 million will be invested in the modernization of energy grids and the advancement of renewable energy in the next four years.
Another $300 million will be invested over the next five years to ensure that clean energy is made available to communities currently dependent on diesel. The objective is for them to make the transition by 2030.
These investments, along with other improvements, will make clean power and transportation more affordable in Canada, reducing carbon emission dramatically.
Ensure that the Price of Pollution Remains High
Putting a high price on pollution and giving the earnings back to homes is an effective measure to achieve both economic and environmental goals. This has been proven in Canada, where the carbon tax is high.
Building on the previous success of this approach, the government is set to raise the price tag of carbon every year by $15 per ton. This will be implemented starting 2022.
From the current cost of $30 per ton, this will grow to $170 per ton in the next ten years. In addition, the rebates from this pollution pricing will be distributed quarterly starting in 2022, instead of the previously practiced annual basis.
Leverage Canadian Industries to Reduce Pollution
The government is helping Canadian businesses in their efforts to provide low-carbon solutions to local and global consumers who want it. Support is also given to industries with a high carbon footprint as part of the Net-Zero Challenge.
An investment of $3 billion will be made to accelerate the implementation of carbon-reduction projects among large emitters. Another $1.5 billion is allocated to boost the production and use of low-carbon fuels.
In the agricultural sector, $165.7 million will be invested over the next seven years for the successful integration of clean technology. The Sustainable Development Technology Canada will also receive an infusion of $750 million in the next five years. This is intended for the commercialization of emerging clean technologies.
Aside from the above investments, the government is also looking to collaborate with Canadian businesses, develop new regulations, and leverage their purchasing power to enable all stakeholders.
Making Healthier Communities by Empowering Nature
Nature seems fragile in the face of climate change. Still, empowering it can be instrumental in the fight for a sustainable future.
As outlined in the climate plan, two billion trees are set to be planted throughout Canada. It will preserve and restore nature, reducing pollution and creating thousands of jobs in the process.
A total of $3.16 billion will be invested over the next ten years to implement this plan down to the grassroots level. An additional $631 million will be invested over the same period for the restoration and improvement of grasslands, wetlands, peatlands, and agricultural lands.
The Natural Climate Solutions for Agriculture Fund will also be established. It will be given funding worth $98.4 million over the next ten years.
The risk from climate change becomes more urgent as the years pass. It is important to act now while the situation can still be managed.
A new plan is already in place, and previous initiatives like the SR&ED program are still going strong. As the government continues to spearhead the battle for our future, businesses and communities must follow suit.