Low Carbon Economy Challenge

Latest news

  • The Challenge Fund 2023 intake closed for applications on February 8, 2024.
  • The Challenge Fund’s application assessment process is underway.

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.

What’s next?

The Challenge Fund: assessment process

The assessment process of submitted applications involves two primary steps: an eligibility screening step, followed by a full evaluation of project merit. Depending on the volume of projects received and assessment capacity, projects may be screened prior to either eligibility screening or merit evaluation based on their unassessed (i.e., as submitted) 2030 cost-per-tonne.

Environment and Climate Change Canada (ECCC) intends to provide applicants with updates on the status of their application in late March and April. Some applicants may be contacted by ECCC requesting clarification of certain aspects of their application. Applicants will have 5 business days to respond and provide the requested information.

Anticipated timeline of the assessment process

Applicant guide

For more information about our assessment process, please visit the Low Carbon Economy Challenge Applicant Guide.

Available funding

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)

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:

Assessment criteria

What makes a competitive application?

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 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
Key dates

Key dates

  • February 8, 2024, 8:00 pm Eastern Standard Time (EST): Application period closed
  • February 9, 2024: Assessment process started
  • By late March: Update on the status of application is sent*
  • By early May: Update on the status of application is sent*
  • By August 2024: applicants are notified of the final funding decision
  • March 31, 2028: Project completion

*Applicants will be notified whether or not their application will be assessed further.

Related links


If you are unable to find the information you are looking for, or if you encounter any technical issues related to website functionality and access, please contact the program advisors at lcef-fefec@ec.gc.ca.

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