OTTAWA — The federal government’s tax credits for clean energy and technology — underscored in this week’s budget as key to the Liberal administration’s emerging climate plan — have barely been used so far, falling more than $9 billion short of the money officials expected they would cost by the end of this year, Canada’s environment commissioner has found.
“Largely up to now, the industry is not buying what the government has been selling,” commissioner Jerry DeMarco told the Star.
The conclusion is part of a new report that raises concerns about the effectiveness of $100 billion worth of federal climate measures. It also comes ahead of this month’s global climate summit, as Prime Minister Mark Carney’s government shifts its focus from Canada’s emissions targets under the international Paris Agreement to the longer-term goal of “net zero” by 2050.
In the report, Environment Commissioner Jerry DeMarco found “low initial uptake” for four clean technology tax credits created in 2024 and available for businesses to claim for investments beginning in 2022 or 2023. A fifth tax credit for investments in clean electricity has not yet been created, despite initial expectations it would have been ready in the fall of 2024, DeMarco’s report said.
But even those that are available have attracted little interest, the commissioner said. As of July 2025, only $22 million had been claimed through a single tax credit, the one for investment in clean technologies, while no costs were associated with any of the others.
It’s a tiny fraction of the almost $9.2 billion the Department of Finance predicted for the tax credits by the end of this year, DeMarco’s report said, noting that a total of $771 million in claims were under review as of July.
In an interview with the Star, DeMarco blamed the low uptake on uncertainty about the broader climate policy picture in Canada, including enduring questions about how industrial carbon pricing will change in the coming years.
“That’s really a key thing — establishing enough certainty in the ecosystem of emission-reduction measures, so that the tax credits then become viable and attractive,” he said.
In his report, DeMarco also raised concerns about how much taxpayer money is going to support carbon capture and storage projects for Canada’s heavy-emitting oil and gas sector.
Such projects are meant to remove emissions that come from extracting the fossil fuels out of the ground. In recent months, Carney has highlighted these projects as an essential part of a “grand bargain” that could see his government support the construction of a new oil pipeline from Alberta to the west coast. Tuesday’s federal budget also confirmed how the adoption of carbon capture technology — along with improved industrial carbon pricing and regulations to curb emissions of methane, a potent greenhouse gas — could prompt the government to cancel its planned cap on oil and gas emissions.
Despite the low uptake of the tax credits, DeMarco’s report showed how the government is still heavily subsidizing carbon capture for the fossil fuel sector. This includes through $1.7 billion of the $2.7 billion Canada Growth Fund. But DeMarco said such investments “may be at higher risk” of failing to pay off, citing the possibility of “stranded” fossil fuel infrastructure that loses value “before the end of their expected economic lives” because of factors like the global shift to clean energy.
“If Canada is absorbing a lot of the risks by investing in assets that may become stranded, then it’s the taxpayers that end up absorbing the risk,” DeMarco told the Star.
The report also raises questions about whether Canada can meet its targets under the Paris Agreement, in light of how DeMarco found in 2023 that measures in the government’s climate plan weren’t enough to hit the 2030 goal of reducing emissions to at least 40 per cent below 2005 levels.
Since then, Carney took over from prime minister Justin Trudeau and cancelled the national consumer carbon price. Though this week’s budget outlined a new strategy to strengthen industrial carbon pricing on heavy emitters, along with changes to make the clean tech tax credits more generous, it was silent on Canada’s 2030 and 2035 climate targets.
DeMarco concluded the removal of the consumer carbon price will make the targets harder to hit.
“They’re not on track to meet the 2030 target, and they never have been on track,” he said. “It so happens that this year, the gap grew larger. So they need to either strengthen or add measures.”
Asked about the government’s commitment to the targets, officials from the environment department — who were briefing journalists ahead of this month’s international climate conference in Brazil — said they “stand by” the targets Canada has proclaimed, but that achieving “net zero” by 2050 is the “overall objective,” while “recognizing we’re in a period of economic uncertainty … and that we need to find that balance.”
DeMarco noted to the Star that it’s “still physically possible” for Canada to hit its targets, and that in response to his report, the environment department agreed to provide details on how it would hit the 2030 target.
“It remains to be seen whether that happens,” he said. “We’ve been reporting on climate for decades now and they’ve never met a target.”
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