We Need to Get Out of Our Own Way: Seizing the Clean Tech Opportunity Before We Lose It

While we’re talking about nation-building, streamlining the way we support our Homegrown ENVIRONMENT tech companies should be the first priority.

The research for this article was undertaken with the initial thought that the collapse of Biden initiatives and the cannibalistic endeavours of the Trump administration might provide a moment for Canada to lure American companies, investors, and “brains” to support our industry in a more welcoming environment.

What we soon discovered is that, first, not all the Biden incentives have gone away, and for some, remain more attractive that what they can get in Canada–and with faster turn around times and less uncertainty. And second, for clean tech companies, Canada can be just as uncertain as the USA.

As part of an effort to support Canada’s Cleantech industry, Delta Management Group through the Clean50 initiative is convening a group of clean tech industry leaders: CEOs from manufacturers, investors from VC funds, provincial industry associations and others “in the know” to identify the biggest obstacles to growth and biggest opportunities for growth that government can support, and submit our list to the Ministry of Finance as part of their pre-budget consultation. IF you might have ideas to contribute, please reach Gavin ASAP–the first meeting is in 4 days – Tuesday, 5 PM EDT. 40 contributors are already signed up.What follows flows from research and interviews conducted with various parties, both credited and uncredited, by Clean50 Analyst Nell Sykes and Gavin Pitchford.

The Article is written primarily by Nell.

When the U.S. Moved, Canada Stalled

In 2022, the U.S. rewrote the rules for the clean tech industry. The Inflation Reduction Act (IRA–sometimes pronounced “eye rah”) offered nearly $400 billion in subsidies for renewable energy, electric vehicles, and green manufacturing. The IRA was arguably the biggest government investment in the clean tech industry in the world, ever, outside of China’s state sponsorship. Canadian companies took note, and many expanded south. Some shifted operations and /or opened U.S. subsidiaries to tap into that support. A few went further.

There wasn’t a wholesale exodus by any means, but it was a serious adjustment. As OCTIA (Ontario Clean Tech Industry Alliance) board chair and Fort Capital Advisor Peter McArthur described, many companies adopted a dual-track model, retaining their Canadian roots, while organizing their commercial strategy around the American market. The reality cited by many industry insiders is that the market for clean tech within Canada is not nearly sufficient to support the industry; and to thrive–or even survive, Canadian clean tech companies must succeed in world markets, and the IRA made the USA suddenly even more attractive as a place to build / expand.

In some cases, that meant incorporating a subsidiary in the United States as essential a sales arm, and in others, it meant chasing capital and subsidies with their full-on pursuit including major manufacturing plants. The customer base, the investors, the policy signals were all there. It just made sense. Who wouldn’t want to be close to the action.

But now the playing field has shifted again.

With the Trump legislation now working to dismantle key elements of the IRA, the U.S. policy environment is far from a sure bet. Regulatory volatility, wavering political commitments, and growing uncertainty around federal support have all contributed to what e-Zinc CEO James Larsen described as “a moment of deep uncertainty”. That very uncertainty, he suggests, “creates an opening for Canada, if we’re prepared to take advantage of it”.

The Inflation Reduction Act authorized nearly $400 billion USD in climate and energy funding. It offered multi-year tax credits, including production and investment incentives of up to 50%,along with direct subsidies, federal loans, and strategic procurement for sectors like batteries, hydrogen, and solar manufacturing. It was a clear signal to investors, and an even clearer one to global clean tech firms: build in the U.S.A.

While the IRA offered sweeping support, it also pursued other policy goals and so its complexity created new hurdles. Unfortunately, when Canada acted to adopt a number of the features of the IRA into its own programs, some of those hurdles–not necessarily useful in a Canadian context–crossed the border at the same time.

For example, James Larsen and Bryan Watson both flagged U.S. labor requirements (the USA as always, concerned about undocumented immigrants taking jobs away from Americans) as especially burdensome, particularly for small or mid-sized firms trying to comply across subcontractors and essentially unnecessary here.

That compliance risk in the USA, Larsen noted, may make Canadian projects comparatively more attractive, if the policy environment is clarified and promoted effectively.

Watson also pointed out that Canadian programs had been poorly promoted by the government, the rules were onerous, and both hindered adoption–and stopped the programs from delivering the results it might otherwise do.

Good Ideas, Poor Execution

Canada’s response to US investment expansion has also struggled with delivery. Budget 2023 outlined five major clean energy tax credits worth up to $93 billion CAD over a decade, including the Clean Technology Investment Tax Credit (ITC), Clean Hydrogen ITC, Clean Electricity ITC, and Clean Manufacturing ITC. The Strategic Innovation Fund (SIF) and the Net-Zero Accelerator support these policies. All fabulous in principle.

But Canada’s clean tech incentives, while ambitious in scale, have yet to deliver at speed. Few firms have received support to date, and key details remain unfinished. Bryan Watson noted that delays in implementation, not just in legislation but in operational rollout, are leaving companies in limbo. He pointed out that Canada’s definition of ‘clean tech’ has also been too narrow, often excluding adjacent but critical sectors like water treatment, or conservation technologies that contribute meaningfully to sustainability goals.

To sharpen Canada’s competitive edge, Watson proposed rethinking the structure of the incentives themselves. Rather than offering larger blanket supports, Canada could layer in bonus credits for projects that meet strategic objectives, like building with Canadian inputs (steel etc.), siting the plants in underrepresented regions, or serving critical domestic needs. This wouldn’t just improve uptake. It would help anchor jobs, scale-up activity, and long-term economic value at home.

Larsen also referenced this option, pointing out how the IRA, with its “made in America” add-on incentive layer would enable him to build a new facility at least 10% more cheaply in the USA–whilst also serving to place him closer to his largest market–and so noted that add-on layers can be a compelling incentive.

And we would add a question: Canadian taxpayers have offered significant incentives to foreign companies to build battery plants and other evolving tech manufacturing facilities – So why on earth would we not do the same for home-grown companies, whose decisions to maintain a Canadian presence are far less likely to be blown away by a tariff?

Virtually everyone we spoke to, with no one being prepared to go on the record, was highly critical of the clear gap between what legislators and program developers intended programs to deliver in the way of supports – and how things are then interpreted by CRA auditors. As well as how the audits themselves are conducted. Both of which lead to major uncertainty for entrepreneurs and their investors. One of our sources, not quoted anywhere in this story, shared she had nearly given up a number of times–collecting tax credits was so much work and so uncertain her perception i was it was barely worth the added effort. For the record, her company not only has substantial opportunity being realized already in Canada–but their largest market right now is Europe and particularly the Netherlands. Clearly proof they are exactly the kind of organization we want in Canada–not drifting elsewhere where life is easier. Meanwhile, Peter McArthur emphasized the importance of speeding up the legislative pipeline.Every delay increases uncertainty. And in clean tech, certainty is currency.

The Window Is Open — But Not for Long

The United States is entering a state of strategic hesitation. James Larsen described a broad slowdown in clean tech investment. Investors don’t deal well with uncertainty, and right now, they’re sitting on their wallets. Even bad policy can be managed, when outcomes prove certain. Without defined rules on tariffs or tax credits, companies are turning to bridge capital and internal rounds to survive. Not all firms have that resilience built in.

For Canadian companies, this creates an opening.

Firms may not be rushing north just yet, but they’re calculating their options. They’re deciding where to put their next factory, start their next pilot, find their next customer. Canada won’t win by default, but we can benefit if we insert ourselves into the narrative.

This hesitation is already becoming visible numerically. U.S. clean tech job growth, which surged in 2023, slowed significantly in early 2025. According to a Global News report, industry stakeholders estimate only a fraction of IRA dollars will be available to renewables moving forward, as the Republican-led rollback prioritizes oil, gas, and coal over clean manufacturing.

Canadian companies like Hydrostor, Morgan Solar, and Carbon Upcycling Technologies have all expressed renewed interest in Canadian projects. Not necessarily in lieu of U.S. expansion, but as a hedge against instability south of the border. Firms, like e-Zinc, are quietly assessing where to place their next big bet.

Canada will never match the domestic scale of the U.S. clean tech market. That’s not a design flaw; it’s a fact of size. With a smaller domestic market, however, Canadian companies are responding by increasingly positioning themselves as specialized contributors to global supply chains. Rather than replicating entire clean tech ecosystems, the opportunity lies in owning key technologies, components, or capabilities that plug into broader international efforts. This approach allows Canadian innovators to excel in specific niches, such as long-duration storage, carbon capture, or fuel cell design, where global demand intersects with domestic expertise.

McArthur pushed for a broader frame, arguing that we should be positioning clean tech not just as an emissions play, but as a core part of other priorities such as housing and military readiness. For examples, he offered battery plants that support defense procurement priorities. Expanded retrofit programs that reduce energy bills. A domestic heat pump manufacturer building in a rural community. These are not just climate wins, they’re Canadian wins.

Compared to the U.S., China, and the EU, Canada lacks a unified clean tech narrative.

The U.S. told a bold economic story: re-shore green industry, win the 21st century economy, and cut emissions in the process. China aims for industrial dominance: own the clean energy supply chain, from critical minerals to solar panels. The EU is leveraging regulation, carbon pricing, and border adjustments to force alignment between emissions and competitiveness.

Canada talks about potential.

In our discussion with Tyler Hamilton, leader of the MaRS clean tech accelerator initiative, he argued that that Canada has long possessed all the key components to be a global clean tech leader, including strong academic institutions, abundant natural resources, and highly skilled talent, but has struggled to integrate those assets into a coherent, internationally recognized industrial strategy. While other jurisdictions have advanced bold narratives about why companies should build there, framing clean tech as core to economic, environmental, and security goals, Canada has yet to present a similarly compelling case. We love to talk about potential but have not effectively marshalled that potential into a message that resonates with global investors or strategic partners.

Watson echoed this concern, saying that too few companies even know the supports exist. “We have to promote what we already have. Better outreach and pressure on civil service delays can further unlock capital that’s sitting idle” he offered.

Beyond better promotion, Canada’s risk-averse culture presents a deeper obstacle. Unlike the U.S., where private capital often pours into early-stage technologies, Canadian investors and procurement bodies tend to shy away from novel approaches until they’ve been de-risked. While this caution has its benefits, it limits our ability to seize first-mover advantages. Transforming this risk aversion into a strength, by creating robust early-stage support systems and de-risking pathways, could enable more firms to reach scale at home.  It’s important to note that the US government is often the first buyer of evolving technology from brand new companies.  All three levels of our governments are far more risk averse, and often insist a company be two or three years old to even bid in a procurement process. 

Another area where Canada can differentiate itself is by aligning clean tech with social and regional priorities. For instance, targeting battery manufacturing in economically challenged regions, or scaling heat pump deployment in remote and Indigenous communities, could build broader coalitions of support. These are not just clean tech strategies, they’re strategies for shared national prosperity.

Finally, nearly everyone we spoke with decried the narrow definition of “clean tech”.  Improved efficiencies in processing water, eliminating wasted water, or processing sewage or water waste streams obviously support our climate and environmental goals, and save money – but are not considered “clean tech” in many instances.  Ditto for “nature tech” – and environment tech (think tree-planting drones able to be deployed in remote fire-impacted areas desperate for reforestation – or satellites measuring methane emissions) All of these emerging technologies support both GHG reductions directly or indirectly – protection of the environment – or support conservation efforts. All have the ability to benefit our nation’s economy if supported and nurtured now. 

What Needs to Happen?

My research pointed to three areas that must move immediately:

1. Procurement: Canada needs to buy what it builds. Government procurement can provide essential offtake for early-stage firms. Our tech isn’t always unproven, sometimes, it’s just waiting for a customer.
2. Permitting: Delays at the federal and provincial levels are holding back projects. This is where we lose time we can’t afford to.
3. Execution of Announced Credits: The policy signals are strong, but until they’re legislated, they don’t move capital. People are watching. If we can’t deliver, they’ll go elsewhere.

This opportunity isn’t inevitable, but it is actionable.

Canada won’t lead by mimicking the U.S. or China. We will lead by being dependable, focused, and smart about the bets we make. That means choosing niches, moving fast, and building trust with investors, with companies, and with the public.

The political winds in the U.S. have shifted. The global race to decarbonize is tightening. And climate impacts keep on accelerating.

This isn’t just a policy question. It’s a credibility test.

Canada’s opportunity is real.

But the outcome is not prewritten.

It has to be earned.