Clean Technology Funding in Ontario: Top Grants and Programs for Businesses

Federal Clean Tech Funding for Ontario Companies

Ontario businesses can take advantage of all the major federal clean technology funding programs that operate Canada-wide. In fact, many federal initiatives have a significant footprint in Ontario due to the province’s large concentration of industries and cleantech firms. Notable federal programs include:

• Strategic Innovation Fund (SIF) – Net Zero Accelerator: The SIF’s Net Zero Accelerator stream finances large-scale projects that boost innovation and cut emissions. Ontario companies – from automotive manufacturers to steel producers – have tapped SIF for major clean tech investments. For example, SIF is co-funding the retooling of auto assembly plants in Oakville and Windsor to produce electric vehicles, and it supported the installation of new emission control technology at a Hamilton steel mill. SIF often covers a substantial portion of project costs (30% or more for transformative projects) through repayable contributions. Large manufacturers or consortia in Ontario pursuing ambitious decarbonization or clean technology deployment projects should view SIF as a primary funding source.

• Sustainable Development Technology Canada (SDTC): Many of Ontario’s cleantech startups and scale-ups have grown with the help of SDTC grants. SDTC provides non-repayable funding to develop and demonstrate new clean technologies. Whether it’s a Waterloo-based water tech company, a Toronto renewable energy startup, or an Ottawa firm working on a next-gen battery, SDTC can fund a significant portion of project costs (often ~33%). Ontario companies frequently secure $1–4 million SDTC contributions to pilot their innovations. If you’re an Ontario business with a pre-commercial clean technology that needs funding to prove itself (e.g. a prototype or field demo), SDTC is a crucial federal program to explore.

• Industrial Research Assistance Program (IRAP): IRAP is a federal program that supports R&D and innovation in small and medium-sized businesses. Ontario companies can leverage IRAP grants for clean tech research projects – for instance, designing a more efficient manufacturing process, developing a cleantech software solution, or testing a new sustainable material. IRAP can cover a portion of salaries, contractor fees, and other R&D costs (often 40–80% of labor costs for approved projects). Ontario has a large network of IRAP industrial technology advisors who help local companies shape projects and access funding. IRAP’s support (ranging from tens of thousands up to potentially a few hundred thousand dollars) can be a difference-maker for SMEs working on early-stage clean innovations.

• Federal Clean Tech Investment Tax Credits: Ontario firms are eligible for the new federal tax credits that incentivize clean investments. These include the 30% Clean Technology Investment Tax Credit (for equipment like solar panels, battery storage, wind turbines, etc.), the 15–40% Clean Hydrogen Tax Credit (for projects producing or using clean hydrogen), and the 50% Carbon Capture, Utilization and Storage (CCUS) Tax Credit (for installing carbon capture equipment). For an Ontario business, these credits significantly reduce the net cost of major green capital expenditures. For example, a Toronto manufacturer installing $1 million in solar and battery systems on its facility could get $300k back from the federal Clean Tech ITC. Or an industrial site in Sarnia adding carbon capture could see half the capture equipment paid for via the CCUS credit. These tax incentives stack with other programs – an Ontario company might use a grant to offset part of a project’s cost and then claim a tax credit on the remainder, maximizing the financial support.

• FedDev Ontario Funding: FedDev Ontario (the federal economic development agency for Southern Ontario) provides interest-free loans and other support to growing businesses, including those undertaking clean tech projects. Through programs like the Business Scale-up and Productivity (BSP) initiative, FedDev offers no-interest, repayable contributions that have helped Ontario clean tech companies scale production or adopt new technologies. For example, a clean tech manufacturing firm in London or a biotech company in Guelph might receive a FedDev loan covering up to 35% of an expansion project – with no interest and flexible repayment terms. While not a grant, this type of funding can greatly aid cash flow for Ontario firms expanding in areas like renewable energy components, electric vehicle parts, recycling technologies, and more.

In summary, Ontario firms should capitalize on federal clean tech programs wherever possible. The province’s businesses have successfully secured federal support for everything from cleantech R&D to full commercial plant upgrades. By combining federal funds (grants, loans, tax credits) with Ontario’s own programs, companies can significantly reduce the costs of their green initiatives.

Ontario’s Provincial Grants and Incentives for Clean Tech

Ontario’s provincial government complements federal support with its own suite of programs to drive clean technology adoption and low-carbon business practices. These initiatives range from large investment funds for major projects to targeted tax credits and regional grants. Key Ontario programs include:

• Invest Ontario Fund (Strategic Investments): Invest Ontario is an agency set up to attract and support business investments in key sectors, including clean technology and advanced manufacturing. Through the Invest Ontario Fund (with ~$400 million committed over several years), the province can offer significant financial packages to companies launching or expanding facilities in Ontario. This often comes in the form of a loan or conditional grant, negotiated per project. For instance, in 2024 the province announced support for a European company’s $200 million investment to expand a sustainable materials plant in Sarnia – providing funding to secure that project for Ontario. Ontario has also co-invested alongside the federal government in huge decarbonization projects, such as contributing provincial funds to help Algoma Steel and Dofasco shift to electric arc furnace steelmaking (drastically cutting emissions). While Invest Ontario deals typically target large projects (often creating hundreds of jobs), any company planning a major cleantech-related investment (be it a factory, R&D centre, or equipment installation) should engage with Invest Ontario early. They can advise on available incentives and potentially customize a support package if the project aligns with Ontario’s economic development goals.

• Ontario Innovation Programs (OCI and Others): Ontario supports technology development and commercialization through the Ontario Centre of Innovation (OCI) and related programs. These can be very relevant for cleantech companies and collaborations. For example, OCI’s Collaborate 2 Commercialize (C2C) and Voucher for Innovation and Productivity (VIP) programs provide matching grants when companies partner with Ontario academic or research institutions to solve technical challenges or develop prototypes. A cleantech firm in Ontario could team with a university lab to test a new clean coating or improve a bioproduct, with OCI covering a portion of the research costs. Ontario also offers support for startups through Market Readiness grants and seed funding – cleantech startups often qualify given the sector’s priority status. Additionally, sector-focused initiatives like the Ontario Vehicle Innovation Network (OVIN) fund projects in the automotive and mobility space (such as EV technology, battery development, smart grid integration for vehicles, etc.), which indirectly fosters clean tech. Ontario’s innovation ecosystem is rich with incubators and programs, so cleantech companies should tap into these: whether it’s a grant to hire an intern, to run a pilot with a local college, or to bring a product to market faster, provincial innovation funding can provide critical early-stage support.

• Ontario Clean Technology Investment Tax Credit: In 2023, Ontario introduced a new 10% Clean Technology Investment Tax Credit to encourage businesses to invest in clean tech assets. It applies to corporations that acquire eligible equipment for use in Ontario for things like renewable energy generation, energy storage, low-carbon heating, and certain manufacturing of cleantech. The provincial credit works similar to the federal one but at a 10% rate (and is non-refundable, meaning it offsets Ontario tax payable). Notably, businesses can stack this with the 30% federal Clean Tech ITC – potentially getting a combined 40% credit on the same expenditure. For example, an Ontario company that spends $500,000 on solar panels and battery storage for its facility could see $150k back from Ottawa and another $50k off its Ontario taxes, totaling $200k saved. This credit is a strong signal from Ontario that it wants companies to green their operations. Any planned capital purchase of clean energy or efficiency equipment in Ontario should be evaluated for this credit, on top of federal incentives.

• Ontario Innovation & R&D Tax Credits: Ontario continues to offer general R&D tax incentives which many cleantech firms utilize. The Ontario Innovation Tax Credit (OITC) provides an 8% refundable credit on eligible R&D expenditures for small-to-mid-sized companies, while the Ontario Research and Development Tax Credit (ORDTC) provides a 3.5% non-refundable credit for larger companies. If an Ontario business is developing new clean technology or conducting research to improve processes (for example, experimenting with a new bio-based material or developing software to optimize energy use), these credits effectively put cash back in your pocket at tax time. When combined with federal SR&ED credits (which can be up to 35% for CCPCs on qualifying R&D expenses), the overall support is substantial. Cleantech companies should absolutely leverage these – essentially, the government is sharing the cost of your innovation. Proper tracking of R&D costs and expert filing can maximize the refund you get under these programs.

• Energy Efficiency and Retrofit Incentives (Save on Energy): Ontario businesses have access to a variety of incentives for improving energy efficiency through the province’s Save on Energy programs (administered by the IESO). These are practical, quick-win programs that provide rebates for equipment upgrades and process improvements that reduce electricity consumption. For example, the Save on Energy Retrofit Program offers rebates for projects such as: upgrading to LED lighting and smart controls, installing high-efficiency HVAC systems or heat pumps, adding VFDs (variable frequency drives) to motors and pumps, improving insulation and building automation, and more. Incentives can cover up to half the project cost, depending on the energy savings achieved. There are also targeted programs for industries – like incentives for installing energy management systems, or hiring a dedicated energy manager with partial salary funding. On the natural gas side, Enbridge Gas provides similar rebates for gas-saving measures (e.g. high-efficiency boilers, heat recovery units). By taking advantage of these, an Ontario manufacturer can lower the cost of an efficiency overhaul by tens or hundreds of thousands of dollars, and permanently cut utility bills. These utility programs often work well in tandem with federal programs: for instance, a plant might get a utility rebate for a high-efficiency compressor, and then claim the federal Clean Tech ITC on the remainder of the cost, achieving deeper savings.

• Sector-Specific and Regional Funding: Ontario runs or participates in various programs targeting specific industries or regions with clean growth objectives. For instance, the Ontario Automotive Modernization Program (OAMP) gives suppliers in the auto sector grants (up to $150,000) to adopt advanced technologies and leaner processes – which can include greener equipment or digital systems that reduce waste. In the forest products sector, Ontario’s Forest Sector Investment and Innovation Program offers funding (up to $3 million or 30% of project costs) to help mills invest in new equipment that boosts efficiency and sustainability, such as bioenergy systems or improved drying technology. For agriculture, Ontario farmers and agri-food businesses can access funding for energy efficiency and emission reduction projects through cost-share programs often delivered in partnership with the federal government’s Agricultural Clean Technology program (e.g., grants for solar panels on barns, biodigesters, or energy-efficient greenhouses). Regionally, the Northern Ontario Heritage Fund and Eastern Ontario Development Fund will support businesses in their regions that undertake productivity and green upgrades – for example, a manufacturer in Sudbury or Kingston could get a grant or low-interest loan from these funds to help purchase cleaner equipment if it also contributes to regional economic development. The upshot is that Ontario’s support for clean tech isn’t one-size-fits-all – it’s layered to address specific needs of different sectors and areas. Businesses should explore if their industry has a dedicated fund or if their region offers additional incentives on top of province-wide programs.

Getting the Most from Ontario’s Clean Tech Funding

To maximize the benefit of these programs, Ontario businesses should adopt a strategic approach:

• Combine Federal and Provincial Support: Ontario companies generally have the advantage of “double-dipping” – using a federal program and a provincial program for the same project. Whenever you plan a clean tech or sustainability project, always consider both levels of government. For example, you could use a federal SDTC grant to develop a prototype and then an Ontario innovation grant to conduct a pilot in the province. Or, use a federal tax credit to buy equipment and an Ontario Save on Energy rebate to install it. Stacking support in this way can drastically lower your out-of-pocket costs. Just be transparent about multiple funding sources in applications and ensure you meet each program’s criteria (some provincial grants require that, even with stacking, the company funds a certain percentage itself).

• Be Ready with Projects and Watch for Intakes: Many grant programs – federal and provincial – open and close intake periods, and some are competitive. Successful Ontario companies keep an eye on funding announcements (for example, Ontario’s budget or new federal funding streams) and have “shovel-ready” project ideas in their back pocket. If you know you need to upgrade your factory’s cooling system in the next couple of years, having a project plan and basic cost-benefit analysis prepared means you can quickly apply when a relevant funding window opens (say, a new industrial retrofit program is announced). Sign up for updates from sources like the Ontario government’s news releases, the federal Clean Growth Hub, and industry associations, so you don’t miss opportunities.

• Leverage Local Expertise and Networks: Ontario has a robust ecosystem of organizations that can help businesses navigate grants. Regional Innovation Centres (like MaRS in Toronto, Invest Ottawa, Communitech in Kitchener-Waterloo, etc.), the Ontario Clean Technology Industry Association (OCTIA), and trade associations often have programming or advisors to guide companies on funding. These groups can alert you to specific Ontario programs (sometimes even partnering on applications). Furthermore, consider engaging a professional grant consultant if you’re pursuing a large funding ask – Ontario has many consultants and consulting firms experienced in federal/provincial funding. They can assist in crafting a compelling business case that aligns with program priorities, which is especially useful if writing lengthy proposals isn’t your team’s forte. Finally, when pursuing provincial funds, it can be helpful to show support from your local community or MPP (Member of Provincial Parliament) – letters of support from municipal governments, indigenous partners, or local business groups can sometimes strengthen an application by demonstrating broader benefits within Ontario.

Ontario’s combination of federal and provincial funding makes it one of the best places in Canada to pursue clean technology projects. From large manufacturers decarbonizing their operations to startups bringing clean innovations to market, there are funding pathways to assist at every step. By proactively seeking out these opportunities and crafting strategic projects, Ontario businesses can significantly reduce the financial barriers to going green. The outcome is a win-win: companies improve their efficiency and competitiveness, and the province accelerates toward a cleaner, more prosperous economy. In the evolving landscape of sustainability, Ontario’s grants and programs are valuable tools to ensure businesses not only keep up, but lead the way.