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Capital equipment is not becoming less expensive; Alberta manufacturers know this. Over the last two years, both the price of steel and machinery and that of industrial technology have increased, just at a time when buyers worldwide are paying more for cleaner production methods.
This combination is putting increasing pressure on plant managers and finance leaders. They face a clear choice: invest and modernize to remain competitive, or risk falling behind on costs, efficiency, and access to key markets.
Ottawa has developed a series of incentives to help with that decision. The Clean Economy Investment Tax Credits can pay a substantial portion of the eligible capital costs directly back to the manufacturer’s bottom line, in cash, even if the business has minimal tax liability for the year.
If you are a manufacturer wanting to make a large purchase in 2027, you can’t afford not to know these credits. It’s within the context of good capital planning.
What Are Clean Economy Investment Tax Credits?
Clean Economy Investment Tax Credits (ITECs) are a set of federal refundable tax credits designed to speed up Canada’s transition to cleaner industrial production. They are delivered by both the Canada Revenue Agency and Natural Resources Canada.
Refundable credit is not a standard deduction because it provides a credit regardless of the amount of taxable income that a corporation has. This is particularly useful to manufacturers when they are spending a large volume of money on new equipment at a stage of growth or modernization.
On March 26, 2026, Bill C-15 was given Royal Assent, which would bring the Clean Electricity ITC into effect and renew several other credits. The Clean Economy ITC framework now includes five federal investment tax credits: the Clean Technology ITC, Clean Technology Manufacturing ITC, Carbon Capture, Utilization and Storage ITC, Clean Hydrogen ITC, and Clean Electricity ITC. Why These Credits Matter for Alberta Manufacturers
From food processing equipment to metal fabrication tools, Alberta’s manufacturing base is capital intensive. With each big purchase, there is a real financing charge and real risk.
Investment tax credits can help change that equation. When a business invests in eligible equipment or upgrades that improve energy efficiency or reduce emissions, it may be able to recover a portion of the investment through available tax incentives.
These incentives can also help Alberta manufacturers remain competitive when bidding for supply contracts, as customers and procurement processes increasingly prioritize energy efficiency and emissions reductions. This is not just a trend for the future. It is already influencing procurement requirements today. The Credits Alberta Manufacturers Should Know
Clean Technology ITC: A 30 percent refundable credit for equipment used for clean energy generation and storage that is purchased between March 28, 2023, and December 31, 2034.
Clean Technology Manufacturing ITC: This is typically the most applicable credit for manufacturers. Offers up to 30% on the capital cost of machinery and equipment to make clean technology products or to process critical minerals. The rate holds at 30 percent through 2031, then steps down to 20 percent in 2032, 10 percent in 2033, and 5 percent in 2034.
Carbon Capture, Utilization and Storage ITC: Applicable to energy-intensive manufacturers, providing rates as high as 60 percent, depending on the types of equipment and the capture of carbon that can be used.
The Clean Hydrogen and the Clean Electricity ITCs: These are relevant to fewer manufacturers, usually hydrogen producers or self-generated power generation systems, and are worth further consideration for energy-intensive companies.
Which Manufacturers May Qualify?
More business owners are eligible than they realize. Manufacturers in industries such as food processing, metal fabrication, chemical manufacturing, plastics, wood products and industrial equipment have all had cause for review of these credits.
These opportunities may be particularly relevant for energy-intensive and advanced manufacturers that are investing in automation, electrification, or other technologies that improve energy efficiency or reduce emissions. The common thread is investment in equipment and technology that can support more efficient, lower-emission, or cleaner production processes. Eligible Investments
Usual expenditures to qualify include energy-efficient machinery, electrification projects, heat recovery systems and renewable energy installations associated with plant operations. Also, investments in energy-saving manufacturing technology are considered.
Not all capital purchases will qualify as eligible property. This decision will be made on a case-by-case basis based on the type of equipment, its purpose of use and the manner in which the cost is being accounted for.
Key Eligibility Requirements
A business is normally a taxable Canadian corporation (other than a partner) to be eligible for these tax credits. Qualifying property must be new, used in Canada and used in service during the appropriate time period for that credit.
Occasionally, some credits have labour requirements. If you’re willing to accept prevailing wages and apprenticeship conditions, you’ll get the maximum rate. If they do not opt in, they are likely to get a lower rate on some credits.
Documentation is as important as eligibility. Businesses should maintain clear records identifying the qualifying property, the associated expenditures, and the purpose for which the property is used.
Common Mistakes Businesses Make
The most common error is making the assumption that all new equipment is qualified. It does not. There are certain technical criteria for each credit that must be met for the credit to be earned.
Substandard documentation is another common problem, as is the failure to file on time, and the failure to properly allocate costs to eligible versus ineligible property. There are also situations where manufacturers do not take advantage of piling multiple incentives on the same project or where they don’t align the ITC claim with other corporate tax planning.
Strategic Tax Planning Opportunities
Pre-purchase planning is where much of the value of these credits can be identified, rather than waiting until after a purchase order has been issued. The Clean Technology Manufacturing ITC offers the manufacturer the opportunity to coordinate its capital budgeting with its corporate tax planning by timing its acquisition to make the best use of the tax rates available, particularly the step-down schedule of the Clean Technology Manufacturing ITC after 2031.
There is also an opportunity to integrate ITC Claim with SR&ED credits, capital cost allowance planning and other federal and provincial incentives. A single capital project may utilize more than one program when properly structured.
How Faber LLP Can Help
It’s not enough to read a government web page to claim these credits. It requires an advisor who is able to understand what projects are eligible, understand technical documentation (with engineering assistance if required), and guide the CRA claim process from start to finish.
We support Alberta manufacturers in determining eligibility, consulting with engineers on design elements and developing claims that are defensible against CRA review. That’s also considering how a clean tech investment will work into the tax planning strategy and, in applicable cases, SR&ED claims.