Federal Budget 2025: The Energy View

The overwhelming message from this year's federal budget was clear, reduce operational spending and increase capital spending. Rely upon our own nation's national resources to become the superpower we are capable of being. It's got big dreams for Canada, and a lot of them are bolstered on the back of our natural resources and energy potential.

Below is a breakdown of some of the takeaways for the energy industry.

Clean Electricity Signals Investment and Awaits Execution

The budget reiterated support for Canada’s Clean Electricity Regulations (we wrote about these regulations on our blog just last month) and promises finalization of the Clean Electricity Investment Tax Credit. This credit is expected to support wind, solar, hydro, nuclear, and storage projects, but the rollout has been slow. For utilities and developers, the lack of clarity on eligibility and timelines continues to stall planning.

The budget also referenced the new Major Projects Office (MPO), designed to fast-track nation-building infrastructure. To date, the MPO has identified it's first projects as:

• LNG Canada Phase 2 in British Columbia

• Darlington Nuclear SMR in Ontario

• Foran Mining copper zinc project in Saskatchewan

• Imperial Metals Red Chris Mine (copper) project in British Columbia

While the MPO has established criteria for project referral, it remains unclear how this office will execute on their goals.

Critical Minerals are Canada's Superpower

Critical minerals have been at the forefront of investment decisions and articulated priorities since the Critical Minerals Production Alliance was announced at this year's G7 Summit in Kananaskis.

This year's budget proposes to expand the list eligible for the Critical Mineral Exploration Tax Credit to include an additional twelve minerals: bismuth, cesium, chromium, fluorspar, germanium, indium, manganese, molybdenum, niobium, tantalum, tin, and tungsten. Key uses across these added minerals also include semi-conductors, batteries, alloys and fuel-cells.

Also expanded, eligibility for the Clean Technology Manufacturing Investment Tax Credit to include antimony, indium, gallium, germanium and scanium. Key uses across these added minerals are semi-conductors, batteries, solar cells, alloys, fibre-optics and fuel cells.

The move of the critical minerals strategy to go beyond just mining, and expand to the full value chain of processing and manufacturing is a strong step from the government to make Canada more energy secure, and reliant upon it's own resources.

What remains to be seen is how well regional coordination serves this. Together, can we alleviate some of the bottlenecks seen in the industry? Only time will tell.

Carbon Pricing for Large Emitters Remains

The budget maintained Canada's Industrial Carbon Pricing framework, applicable to large emitters only. The deeply contentious nature of carbon pricing was a significant debate issue between political parties, and the removal of carbon pricing to end-use consumers was eliminated earlier this year.

What is slated to change, is the federal government's application of the benchmark, the tool that ensures industrial pricing systems applied within provinces and territories are harmonized. Provinces that have challenged federal carbon pricing in the past and developed their own criteria may feel the impact of this change more than others, with federal intervention possible.

LNG and Carbon Capture

The budget introduced a new (and reinstated a previous) capital cost allowance for LNG and carbon capture equipment and related buildings, but it comes with a catch. To be eligible for the accelerated rates, facilities would need to be in the top 25% of emissions performance.

How this is measured and benchmarked remains to be seen. Plus there is a question about whether the cost of measuring proves to be worth the savings of the accelerated rate.

Affordability and Energy Poverty: Still Under-addressed

As someone who often works at the intersection of energy strategy and customer affordability, I was hoping for more here. The budget talks about affordability in broad strokes, citing the increasing pressures on many Canadians, but doesn’t offer new tools to address energy poverty, including residential efficiency retrofits.

Removing the GST on Canadians' energy bills would be a clear sign of lessening the pressure, but this wasn't included in this year's budget.

Federal Budget 2025: Our Final Thoughts

This budget sets the stage for a climate-competitive Canada—but it doesn’t yet deliver the full performance. The signals are there: clean electricity, carbon pricing, retrofits. But the execution will depend on how quickly and equitably these policies roll out, especially in instances that call for cross-region collaboration.