Breaking News
Investing Pro 0
💎 Access the Market Tools Trusted by Thousands of Investors Get Started

Exclusive-Canada budget sees contracts for difference for large clean-tech projects -source

Published Mar 27, 2023 11:09AM ET Updated Mar 27, 2023 05:41PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. Canada's Deputy Prime Minister and Minister of Finance Chrystia Freeland delivers the fall economic statement in the House of Commons on Parliament Hill in Ottawa, Ontario, Canada November 3, 2022. REUTERS/Blair Gable

By Steve Scherer

OTTAWA (Reuters) - Canada's budget will introduce a system to lock in future carbon credit prices, a move meant to boost investments by giving businesses certainty to develop low-carbon technologies, a senior government source with knowledge of the document told Reuters on Monday.

So-called contracts for difference set a price on tradable carbon credits, which heavy emitters can get if they reduce pollution. If the market price for the credit falls below the minimum in the contract, the government would make up the difference.

Canada's system will be run through a growth fund announced in last year's budget, which will be operational "in the coming months" and will be "particularly focused on large projects," said the source, who was not authorized to speak on the record.

The Ministry of Finance declined to comment on the contents of the budget. The government is also looking at how it could "potentially" offer contracts for difference "at a slightly smaller scale", the source said without providing details.

Some heavy emitters such as oil sands producers say lack of pricing certainty has held them back from making significant investments in emission reduction projects like carbon capture and storage. They are also concerned that costly projects could be a waste of money if carbon pricing is scrapped in future.

Finance Minister Chrystia Freeland, who followed a decades-long tradition of buying a pair of new shoes to deliver the budget, will present the 2023-2024 budget bill to parliament on Tuesday. She picked up a pair of simple, black high-heels.

Contracts for differences could be used by companies investing in carbon capture or hydrogen projects, the source said.   

"People are talking about large capital investments in this net-zero transition. This is just giving businesses some certainty, particularly over the longer term," the source said.

Under Canada's carbon pricing rules, large industrial polluters pay per tonne of carbon emitted above a certain sector-specific threshold. Polluters can also generate credits by cutting emissions and then sell the credits, which has raised concerns that cheap credits will flood carbon markets in coming years as more large emissions-reduction projects start operating.

"Contracts for difference that provide confidence in credit values is a key missing ingredient to unlock large investments in a range of clean technologies," said Michael Bernstein, executive director at Clean Prosperity Executive, a clean-tech advocate.

"It's also a smart way for Canada to keep pace with the United States in attracting new clean energy projects and jobs, without breaking the bank," Bernstein said.

Freeland has said there will be major investments in this year's budget because Canada is at a "crucial crossroads". But she has also said she does not want to fuel inflation and that now is a time for fiscal responsibility.

"Composition of spending matters," the source said, saying investments to boost economic capacity would not be inflationary. Clean-tech investments "are also about enhancing the long-term productive capacity of the Canadian economy" and are "interpreted differently".


Countries across the globe want to take advantage of a rapid shift to low-carbon energy, and Canada is seeking to level the playing field with the United States, which passed massive incentives in its Inflation Reduction Act (IRA) last year.

Alongside contracts for differences, Canada plans a 30% investment tax credit to boost clean-tech manufacturing, especially in the electric vehicle (EV) supply chain, two sources told Reuters last week.

Canada has limited financial firepower compared with what the United States put forward in the IRA, which many experts say will lead to more than $1 trillion in investment.

Other budget investments will be focused on increasing the capacity of the electricity grid, on battery manufacturing and on mass timber construction, a source told Reuters earlier this month.

Canada will spend more than C$2 billion ($1.5 billion) on a rebate aimed at helping low-income families bear the brunt of high inflation, the Canadian Broadcasting Corp reported on Monday citing a source.

A similar measure was introduced in the fall in the form of a sales-tax rebate. It will benefit 11 million households, the source told CBC, who called the measure a "grocery rebate".

CBC also confirmed an earlier Canadian Press story saying the budget would include a crackdown on hidden or unexpected charges - so-called junk fees - that could affect telephone or internet providers or ticket sellers.

($1 = 1.3688 Canadian dollars)

Exclusive-Canada budget sees contracts for difference for large clean-tech projects -source

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Roger Miller
Roger Miller Mar 27, 2023 7:51PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
People don’t seem to realize how goverments spending money to reduce inflation is counter productive. It shows how gullible and economically illiterate their supporters are.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email