Clean economy ITCs at a crossroads: Canada seeks input on domestic content requirement for clean technology and clean electricity investment tax credits

On February 13, 2026, the Government of Canada launched a public consultation on the possible introduction of domestic content requirements under two clean economy tax incentives:

1. The Clean Technology Investment Tax Credit (Clean Technology ITC)
2. The Clean Electricity Investment Tax Credit (Clean Electricity ITC)

This consultation signals a potential policy shift that could materially impact project economics, procurement strategies and supply-chain planning for businesses investing in clean electricity and clean technology projects across Canada.

Background: Clean energy ITCs and Budget 2025 commitments

The Clean Technology ITC and the Clean Electricity ITC are federal tax credits designed to accelerate Canada’s transition to a net-zero economy by supporting investments in low-emitting and non-emitting energy systems. As confirmed in Budget 2025, the Government of Canada committed to exploring whether the eligibility criteria for these tax credits should include domestic content requirements. As the ITCs currently operate:

• The Clean Technology ITC provides a refundable tax credit of up to 30% of eligible capital costs of property relating to clean electricity generation, energy storage, low-carbon heating and certain zero-emission equipment
• After the enabling legislation receives Royal Asset, the Clean Electricity ITC is intended to provide a refundable tax credit of up to 15% of eligible capital costs of property relating to non-emitting electricity generation, storage and transmission infrastructure

Neither tax credit currently includes a domestic content requirement as a part of its eligibility criteria.

What is currently being consulted on?

The federal Department of Finance is seeking input from members of the public on the potential introduction and design of a domestic content requirement to be included in the respective eligibility criteria for the Clean Technology ITC and Clean Electricity ITC. The request for consultation explicitly references international and domestic precedents, including:

• United States clean electricity tax credits, which include domestic content rules to encourage the use of domestically produced materials and equipment
• Canada’s recently announced Buy Canadian Policy, which prioritizes Canadian steel, aluminum, wood products and suppliers in federal procurement processes

The Government of Canada has not proposed a specific model. Instead, it is asking stakeholders to assist in the design of domestic content requirements for ITC eligibility.

Key questions for businesses and investors

The Government of Canada’s consultation poses several questions that are highly relevant to various stakeholders (including project developers, manufacturers, distributors, suppliers, utilities and investors), including:

1.     Should Canada introduce a domestic content requirement?

Stakeholders are asked whether a domestic content requirement should be adopted at all and if it was, whether it would meaningfully encourage the use of Canadian-made products without undermining investment certainty.

2.     Which products should be covered?

The Government of Canada is considering whether domestic content rules should apply to:

• Structural materials (e.g. load-bearing steel)
• Advanced manufactured products (e.g. wind turbines, photovoltaic modules and battery systems)
• Other components used in clean technology and electricity projects

3.     Should there be exemptions to the domestic content requirements?

The consultation asks whether exemptions should be permitted in certain circumstances to a domestic content requirement, such as where Canadian supply is unavailable, and what evidence should be required to be substantiate an exemption.

4.     What should be the consequence of non-compliance?

The Government of Canada is seeking views on the appropriate consequence if a domestic content requirement is introduced but not met, such as reductions to or denial of the ITCs.

5.     How could a domestic content requirement be administered?

Finally, the consultation asks for views on whether existing country-of-origin documentation mechanisms, such as customs origin rules or certifications under the Canada-US-Mexico Agreement (CUSMA), could be used to administer a domestic content requirement and reliably identify the origin of products used in clean energy projects. Where those mechanisms may be insufficient, stakeholders are also invited to comment on what alternative approaches could be used to identify domestic content in a manner that is both credible and administratively workable.

Why this matters

If implemented, a domestic content requirement for the Clean Technology ITC and Clean Electricity ITC could have far-reaching implications, including:

• Increased compliance and documentation obligations
• Potential impacts on project timelines and procurement costs
• New opportunities for Canadian manufacturers and suppliers
• Strategic considerations for cross-border supply chains and project financing

Consultation timeline and next steps

The consultation is open to all interested parties, including project developers, manufacturers, utilities, Indigenous-led entities, investors and advisors. Submissions must be provided to the Department of Finance by March 13, 2026. To learn more about the request for consultations, please visit the Government of Canada webpage on the topic.

Given the potential impact on investment structures and long-term project planning, affected businesses may wish to consider making a submission or engaging advisors to assess how a domestic content requirement could affect their current or planned projects. MLT Aikins LLP regularly advises clients on clean energy investments, tax-driven project structuring, procurement risk and regulatory change. If you have questions regarding how these consultations may affect your business or would like assistance preparing a submission, please contact the corporate and commercial team at MLT Aikins.

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