Green Manufacturing and Decarbonization Grants in Ontario for 2025

What is green manufacturing and decarbonization funding in Ontario?

Green manufacturing and decarbonization funding in Ontario refers to grants, incentives, and tax credits that support emissions reduction, energy efficiency, fuel switching, and cleaner production across industrial facilities. Programs target low-carbon manufacturing projects that modernize plants, electrify processes, implement industrial heat pumps, deploy energy storage, and adopt clean fuels and carbon capture, utilization and storage (CCUS). In 2025, organizations can pursue Ontario decarbonization funding, industrial electrification incentives, manufacturing energy efficiency grants in Ontario, clean technology grants, and clean manufacturing tax credits to achieve net-zero manufacturing targets while improving competitiveness.

Why this matters for Ontario industry

Ontario’s manufacturing base spans steel, cement, chemicals, automotive and EV supply chains, battery manufacturing, food processing, plastics, pulp and paper, and advanced metal fabrication. Reducing Scope 1 and Scope 2 emissions is now interlinked with plant reliability, energy cost control, and ESG reporting. Industrial GHG reduction programs, productivity and decarbonization grants in Ontario, and SME sustainability grants help companies meet Ontario Emissions Performance Standards (EPS), prepare for federal Clean Fuel Regulations compliance, and capture export opportunities in low-carbon markets.

Types of support available to manufacturers

Funding mechanisms include:

- Non-repayable contributions and capital grants for equipment retrofits and process changes.

- Utility incentives and industrial retrofit rebates (e.g., IESO Save on Energy incentives, Enbridge Gas industrial incentives).

- Clean manufacturing tax credits and federal clean technology tax credits (including refundable credits).

- R&D-to-commercialization support (e.g., IRAP funding for cleantech manufacturing, Ontario Centre of Innovation programs).

- Pilot and demonstration funding for TRL advancement, measurement and verification (M&V), and digital twins for energy optimization.

- Regional development supports for Northern Ontario industrial energy funding and cluster/consortium grants.

Common eligible cost categories

- Process electrification (electrified boilers, induction heating, infrared curing).

- Industrial heat pumps and high-temperature heat pumps.

- Waste heat recovery and heat integration (heat recovery steam generator, thermal storage).

- Compressed air system upgrades, variable frequency drives, high-efficiency motors, power factor correction.

- Industrial refrigeration upgrades (including ammonia systems) and HVAC optimization.

- Energy management systems (ISO 50001), energy audits for manufacturers, retro-commissioning, smart metering, and AI-driven optimization.

- Carbon capture pilots, CCUS feasibility studies, and carbon utilization.

- Clean hydrogen production, hydrogen-ready equipment, and clean fuels (bioenergy, biogas, renewable natural gas).

- Energy storage incentives (behind-the-meter battery systems), demand response, peak shaving, and load shifting.

Program landscape in Ontario (provincial, federal, and utility)

Ontario companies can combine several program streams to accelerate decarbonization and manage cash flow.

Provincial and regional programs

- Ontario Made Manufacturing Investment Tax Credit (OMMITC) for capital investment that supports productivity and modernization within the province.

- Ontario manufacturing innovation funding through provincial agencies and the Ontario Centre of Innovation (OCI) for clean technology pilots and scale-up.

- Regional development funds and Northern Ontario industrial energy incentives for projects in Sudbury, Sault Ste. Marie, Thunder Bay, and other northern communities.

Utility and system operator incentives

- IESO Save on Energy incentives (industrial) support retrofits, energy performance, and demand-side management, suitable for factories in the Toronto region, Hamilton, Windsor, Kitchener-Waterloo, Niagara, Ottawa, and beyond. Manufacturers frequently ask who qualifies for IESO Save on Energy industrial programs and how to submit an IESO retrofit application for manufacturing.

- Enbridge Gas industrial incentives Ontario provide custom and prescriptive incentives for process improvements, boiler replacement, waste heat recovery, and fuel efficiency. Applicants often seek Enbridge Gas industrial custom incentive application steps and guidance on combining Enbridge and Save on Energy incentives.

Federal programs and tax credits

- Federal clean technology tax credit Ontario (refundable/transferable concepts are relevant to cash flow), stacking with provincial incentives where permitted.

- Strategic Innovation Fund (SIF) Net Zero Accelerator funding in Ontario for large-scale decarbonization, battery and EV supply chain investments, and clean technology manufacturing.

- Low Carbon Economy Fund (LCEF) Ontario projects for industrial retrofits and fuel switching.

- Sustainable manufacturing grants Canada that accept Ontario-based plants, including support for CCUS funding Ontario, clean fuels funding, and hydrogen funding for industry.

- Accelerated capital cost allowance for eligible clean tech equipment to support capex decisions.

Technology pathways commonly funded

Manufacturers can structure projects around high-impact decarbonization levers.

Process electrification and heat

Electrification reduces onsite fossil fuel consumption and enables net-zero manufacturing with cleaner electricity. Priority measures include:

- Electrified boilers and process heating electrification grants in Ontario for ovens, kilns, dryers, and curing lines.

- Industrial heat pump incentives in Ontario for low-to-high temperature needs; high-temperature heat pump grants enable fuel switching for hot water and low-pressure steam.

- Induction heating funding for metal processing and infrared curing energy grants for paint and coatings lines.

- Thermal storage funding and waste heat recovery to stabilize loads and improve energy resilience.

Energy efficiency and energy management

Manufacturing energy efficiency grants in Ontario help deliver immediate savings and robust paybacks:

- Compressed air leak detection and repairs, VFDs on motors, and high-efficiency motors rebates.

- Industrial refrigeration upgrades incentives and HVAC optimization for temperature-controlled environments.

- Process optimization grants, smart factory energy management funding, and ISO 50001 funding for continuous improvement.

- Digital twin for energy optimization grants and AI for energy efficiency funding to identify peak demand reduction opportunities and M&V-ready baselines.

Clean fuels, hydrogen, and RNG

Clean fuels funding in Ontario supports projects deploying renewable natural gas, bioenergy boilers, and hydrogen-ready equipment:

- Clean hydrogen production Ontario funding for pilot-scale electrolysis tied to industrial uses.

- Hydrogen funding for furnaces and process burners, including hydrogen-ready retrofits.

- Bioenergy and biogas for industry Ontario projects that reduce lifecycle emissions and support Clean Fuel Regulations compliance.

Carbon capture, utilization, and storage (CCUS)

Ontario manufacturers—especially in cement, lime, steel, and chemicals—are exploring CCUS:

- CCUS feasibility study grants in Ontario to assess capture technologies and CO2 transport options.

- Carbon capture for cement/steel Ontario and carbon utilization pilot funding for mineralization, chemicals, or fuels.

- Pipeline and CO2 transport studies Ontario for future sequestration and hub development.

Energy storage, demand response, and grid-side opportunities

- Energy storage incentives Ontario (industrial) for behind-the-meter batteries that enable peak shaving and load shifting programs.

- Demand response incentives Ontario industry provide payments for flexible load; manufacturers seek demand response payments for manufacturers Ontario and peak demand reduction incentives Ontario plants.

- Integration with onsite solar for factories and power quality improvements, including power factor correction incentives.

Sector-specific opportunities across Ontario regions

Targeted decarbonization funding aligns with local industry clusters.

Steel, cement, and heavy industry

- Hamilton steel decarbonization funding focuses on fuel switching, DR-electric arc furnaces, waste heat recovery, and CCUS pilots.

- Cement decarbonization grants Ontario prioritize kiln electrification studies, alternative fuels, and carbon capture feasibility.

- Chemical industry emissions reduction grants Ontario support process intensification, heat integration, and pollution prevention funding.

Automotive, EV, and battery supply chain

- Windsor EV manufacturing incentives and battery manufacturing grants Ontario assist with electrified process lines, thermal management, and energy storage integration.

- EV supply chain funding Ontario helps tooling firms and component suppliers deploy efficient ovens, induction heating, and smart controls while meeting export ESG requirements.

Food and beverage, agrifood processing

- London Ontario food processing grants (energy) fund refrigeration upgrades, heat recovery, and high-efficiency steam generation.

- Niagara food processing energy efficiency funding targets cold storage optimization, ammonia refrigeration upgrades, and CHP/cogen optimization incentives.

Advanced manufacturing hubs

- Kitchener-Waterloo advanced manufacturing funding supports automation, digital twins, and AI-driven energy optimization.

- Ottawa cleantech manufacturing funding advances pilot and demonstration projects with university-industry collaboration grants.

- Northern Ontario industrial energy funding addresses mining and mineral processing in Sudbury, Sault Ste. Marie, and Thunder Bay.

Eligibility, application steps, and success factors

Eligibility varies by program but often includes:

- Ontario-based manufacturers with a valid business number and facility address; Indigenous-owned manufacturing funding and women-led and diverse-owned SME green grants may have dedicated streams.

- Evidence of measurable GHG reductions, energy savings (kWh, m3), or peak demand impacts; projects must be additional and meet M&V requirements.

- Technical documentation: energy audits for manufacturers in Ontario, feasibility studies, vendor quotes, engineering drawings, load data, and emissions baselines.

- Financial information: project budgets, matching funds for pilots, attestations, and reporting commitments under program rules.

Step-by-step application guide (typical)

1. Define objectives: Scope 1 or Scope 2 emissions reduction, EPS compliance, productivity plus decarbonization outcomes.

2. Conduct audit or feasibility: identify measures such as electrified boilers, high-temperature heat pumps, waste heat recovery, and compressed air optimization.

3. Build the business case: include baseline, savings estimates, demand response potential, and lifecycle benefits; some seek a sample business case for industrial decarbonization grant Ontario.

4. Confirm eligibility and stacking: review IESO Save on Energy incentives, Enbridge Gas industrial incentives, federal clean technology tax credits, SIF Net Zero Accelerator opportunities, and Low Carbon Economy Fund Ontario streams.

5. Prepare documentation: letters of intent, vendor quotes, M&V plans, GHG inventory, life-cycle assessment (LCA) or product carbon footprint (PCF) where relevant.

6. Submit application: follow grant deadlines Ontario manufacturing, utility application portals, and tax credit claiming rules.

7. Implement and verify: adhere to procurement guidelines, commissioning, measurement and verification (M&V), and reporting timelines.

8. Claim incentives and credits: coordinate milestones to align incentive payments and refundable tax credit claims; consider stackable incentives Ontario where permitted.

Stacking and compliance considerations

- Stacking IESO and federal credits in Ontario can improve ROI; ensure total assistance does not exceed program-specific thresholds.

- Combining Enbridge and Save on Energy incentives Ontario may be possible if measures impact both electricity and gas; clarify interactions to avoid double counting.

- Ontario Emissions Performance Standards (EPS) compliance, carbon pricing cost mitigation programs, and Clean Fuel Regulations can influence project selection and payback.

- Attestation, audit, and reporting requirements in Ontario require clear M&V documentation and third-party verification for large projects.

Budgeting, M&V, and timeline planning

Manufacturers frequently ask about what documents are needed for Ontario industrial grants, timelines for approvals, and average grant amounts for decarbonization in Ontario. Best practice includes:

- Early M&V planning with metering and sub-metering to enable credible savings attribution.

- Technology vendor engagement to validate performance guarantees and integration risks.

- Phase-gating for pilot and demonstration projects, with TRL milestones and go/no-go criteria.

- Scheduling procurement to align with grant deadlines, utility incentive pre-approvals, and construction windows.

- Ensuring cash flow with non-repayable contributions, refundable tax credits for clean tech equipment in Ontario, and accelerated CCA benefits.

Special topics: circular economy, ESG, and workforce

- Circular economy grants Ontario manufacturing support recycled content, industrial waste diversion, and eco-design/eco-innovation for low-carbon products.

- Support for ESG reporting in manufacturing Ontario and funding for LCA and product carbon footprint help suppliers meet buyer requirements.

- Training and upskilling for green jobs funding builds capacity for ISO 50001, energy management, safety, and commissioning of new electrified equipment.

- Indigenous participation funding, diversity-led SME funding, and consortium/cluster funding encourage inclusive growth and regional development.

City and region modifiers for targeted searches

To improve discovery and local relevance, applicants often search for:

- Retrofit funding Toronto region manufacturing; Hamilton steel industry funding; Windsor automotive plant electrification incentives.

- Kitchener-Waterloo advanced manufacturing green grants; Niagara industrial decarbonization grants; Ottawa cleantech manufacturing grants and tax credits.

- Sudbury mining processing emissions reduction funding; Thunder Bay industrial retrofits grants; Northern Ontario manufacturing energy incentives list.

Practical examples of funded measures

- Replacing gas-fired ovens with electric models: funding for IR curing systems in paint lines, induction heating in metal processing, and electrified boilers.

- Waste heat recovery: heat exchangers, heat recovery steam generators, and thermal storage integration for batch processes.

- Compressed air: leak detection and repairs, variable speed compressors, heat-of-compression recovery, and advanced controls.

- Refrigeration: ammonia system upgrades, floating head pressure controls, and high-efficiency condensers.

- Controls and analytics: digital twins, AI optimization, peak shaving, load shifting, and demand response enrollment.

- Power quality: power factor correction incentives and voltage optimization to reduce losses.

Key takeaways for 2025 Ontario projects

- Ontario green manufacturing grants and Ontario decarbonization funding can reduce capex and accelerate time-to-value for industrial retrofits.

- Utility incentives (IESO Save on Energy, Enbridge Gas) remain foundational for manufacturing energy efficiency grants Ontario and custom retrofits.

- Federal clean technology tax credit Ontario and clean manufacturing tax credits Ontario can be stacked with provincial supports, subject to program rules.

- CCUS funding Ontario, hydrogen funding Ontario, and clean fuels funding Ontario are increasingly relevant to steel, cement, chemicals, and large emitters.

- SMEs can access SME sustainability grants Ontario, energy management grants Ontario (ISO 50001), and grant writing support Ontario manufacturing to build capacity.

- Early planning for measurement and verification, LCA/PCF, and ESG reporting helps secure awards and meet attestation requirements.

Conclusion: Building a competitive, low-carbon factory in Ontario

Green equipment rebates Ontario, industrial retrofit rebates Ontario, and non-repayable contributions Ontario can transform payback periods for electrification, heat pumps, CCUS pilots, energy storage, and digital optimization. By aligning projects with EPS compliance, Clean Fuel Regulations, and customer ESG expectations, manufacturers can unlock stackable incentives Ontario while future-proofing operations. Whether pursuing battery manufacturing grants Ontario, EV supply chain funding Ontario, cement decarbonization grants Ontario, or agrifood processing energy efficiency, a structured approach—eligibility confirmation, robust M&V, careful stacking, and timely applications—positions Ontario plants to lead in net-zero manufacturing.