Low Carbon Economy Challenge

The Challenge Fund will invest approximately $450 million over 5 years starting in 2024-25.

Federal cost share

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)

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)

Self-screening tool: Complete this tool to understand how your project aligns with program eligibility and its competitiveness. To access the tool, please send an email to lcef-fefec@ec.gc.ca.

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

Ineligible projects or those eligible but not selected for funding may consider other funding opportunities through:

• Our environment portal
• Clean Growth Hub
• Innovation Canada page

What makes a competitive proposal?

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. Because of the time and effort it takes to apply, it is important that applicants take the time to understand the merit of their project before deciding to apply.

Find more details on the merit criteria in the Applicant Guide.

Cost-effectiveness

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

Application period

We will be accepting applications from October 3, 2023 to January 12, 2024.

Key dates

• September 2023: Self-screening tool and Applicant Guide are available
• October 3, 2023: Application period open
• Summer 2024: Final funding decisions
• Project completion: March 31, 2028

Environment and Climate Change Canada (ECCC) will provide applicants with updates on the status of their application during the evaluation stage. If needed, program officers may request clarifications to confirm project eligibility or to accurately assess merit. Applicants will be informed of final funding decisions in summer 2024.

How to apply

• Applicants are encouraged to complete the self-screening tool prior to accessing the application portal. To access the tool, please send an email to lcef-fefec@ec.gc.ca.
• October 3, 2023: all application materials and guidance are available on the portal Program Information Management System (PIMS)
• To access PIMS: create a Single Window Information Manager (SWIM) profile
• Instructions for creating a profile: how to complete a user profile including a written step-by-step walkthrough and accompanying tutorial videos

Applicant guide

 Available here.