Almost half of the Canada Growth Fund for clean technology investments will be allocated to special contracts intended to give companies the confidence they need to make major investments to lower their greenhouse-gas emissions.
Finance Minister Chrystia Freeland used her fall economic update on Nov. 21 to confirm that the fund—which she launched a year ago in the 2022 fall economic statement—would be the principal vehicle to deliver carbon contracts for difference.
She said up to $7 billion of the $15-billion fund will be set aside for contracts for difference, some of which are already being negotiated.
The contracts acknowledge that companies are making decisions to invest in things that lower their carbon emissions based on how much they expect to pay for the carbon price over several years. Those investments are only sound if they would cost less than what the company would pay in carbon pricing without the technology.
If the carbon pricing system changes in the future, the investments companies make to avoid paying it could become far less lucrative. Contracts for difference are an insurance policy of sorts against the carbon price going down or being eliminated, making the clean-tech investments less risky.
Ms. Freeland has been floating the idea of carbon contracts for difference for more than a year, as major energy companies, in particular, look for additional support to stay competitive in the face of the massive subsidies on offer under the U.S. Inflation Reduction Act.
She said on Nov. 21 that she wants Canadians to know no other country is competing harder with the United States for clean-tech transition investments.
“We are in a race, and we are committed to owning the podium. And that is what we saw in the budget in the spring, and that is what we see in this economic update,” she said in a news conference just before tabling the fall update in the House of Commons.
“This is a plan to attract investment. It is a plan for the economic transformation, for the industrial transformation. Most of all, it is a plan for good jobs for Canadians today and tomorrow.”
