Amount: 25-75% of eligible project expenditures up to $25 million in funding.

Goal of the Challenge

The Low Carbon Economy Challenge (the Challenge Fund) leverages Canadian ingenuity to reduce greenhouse gas (GHG) emissions and generate clean growth.

The Challenge Fund continues to support a wide range of Canadian recipients to implement projects that deploy proven, low-carbon technologies resulting in material GHG emissions reductions across sectors, focusing on its cost-effectiveness objective to maximize GHG emissions reductions.

Eligibility Requirements

Eligible Projects

To be eligible, projects must result in reductions in GHG emissions in 2030 and align with Canada’s goals for net-zero emissions by 2050. These reductions must be:

  • sources of GHG emissions controlled by the applicant or project partner (direct) and/or grid electricity emissions (acquired)
  • beyond what is required by existing regulations, standards, or codes and ongoing work by project proponents (incremental)
  • directly and immediately the result of activities funded by the program

Projects must also meet other eligibility criteria, such as:

  • capacity to make use of commercially available technology
  • confirmation of project location
  • production of electricity or fuel must be primarily for own use, within the applicant’s or identified partner’s operations (except for projects located in rural or remote communities or for district energy or industrial combined heat-and-power)

Ineligible projects

Any project that explores or encourages methods of reducing GHG emissions without implementing these methods is not eligible.

Examples of ineligible projects:

  • research, development, and demonstration projects
  • educational or capacity-building projects
  • projects that primarily incent behavioural change
  • feasibility or other pre-engineering studies

Program’s Budget

The Challenge Fund will invest up to $170 million.

Amount of the Government Grant

Applicants may request from $1 million up to $25 million in funding for eligible project expenditures.

Federal cost share will range from 25% to 75% of total eligible project expenditures that an applicant can receive from the Challenge Fund, depending on the applicant type.

Example: A for-profit business is eligible for a 25% federal cost share. The federal contribution will be no less than $1 million. Therefore, a for-profit business, eligible for up to 25% of eligible project expenditures, would need to have a project that will incur eligible expenditures of at least $4 million overall.

The maximum federal cost share for specific recipients is as follows:

  • 25% for for-profit businesses
  • 50% for not-for-profit organizations
  • 50% for public sector body or board
  • 50% for provinces and provincial entities
  • 50% for research, academic and educational institutions
  • 50% for regional/local/municipal governments or their entities located in a province
  • 75% for regional/local/municipal governments or their entities located in a territory
  • 75% for territories and/or territorial entities
  • 75% for Indigenous recipients (including Indigenous for-profit organizations).

Eligibility Timeline

The Challenge Fund 2023 intake opened on November 7, 2023.

Key dates

  • September 2023: Self-screening tool and Applicant Guide are available
  • November 7, 2023: Application period open
  • Summer 2024: Final funding decisions
  • Project completion: March 31, 2028

Selection Criteria

The Challenge Fund is a competitive program. Projects submitted in different industry sectors, technologies and by different applicant types are evaluated and selected based on merit. Only the most competitive projects submitted are selected for funding.

Cost-effectiveness is defined as the ratio of federal funding requested per tonne of carbon dioxide equivalent (CO2 eq) reduced in 2030. Under past intakes, the project types that have been most cost-effective include:

  • Waste diversion
  • Biomass retrofits
  • Industrial retrofits
  • Anaerobic digesters
  • Waste heat recovery
  • HVAC system retrofits
  • Carbon capture and utilization
  • District energy system upgrades

How to Start My Application

Start by verifying your eligibility through our eligibility check form.