Frequently asked questions: Low Carbon Economy Challenge

The Low Carbon Economy Fund is an up to $2 billion fund to support energy-efficient projects to reduce Canada’s greenhouse gas emissions (GHG) and generate clean growth. Projects are funded through two separate envelopes:

• the Leadership Fund provides up to $1.4 billion to provinces and territories that have adopted the Pan-Canadian Framework on Clean Growth and Climate Change, and
• the Challenge provides approximately $500 million to a wide range of recipients, including provinces and territories, businesses, municipalities, not-for-profits, and Indigenous communities and organizations.

Questions below are related to the Champions stream 2022 intake under the Challenge Fund. The Expression of Interest process for this intake closed on March 25, 2022.

 

Process to apply

Q 1. Are any intakes of the Low Carbon Economy Fund currently open, and who is eligible to apply?

Yes. The Champions stream is currently accepting applications from provinces and territories, municipalities, Indigenous communities and organizations, businesses, and not-for-profit organizations through a new Expression of Interest process. Projects will be evaluated using a competitive process. Please review the Expression of Interest Guide for more information.  

The Partnerships stream is currently closed to applications.

Q 2. Are provinces that did not adopt the Pan-Canadian Framework eligible to apply for funding from the Low Carbon Economy Challenge?

Yes. The Champions stream will consider applications from all provinces and territories, as well as regional/local/municipal governments, First Nations, Métis and Inuit government, communities or organizations, public sector bodies or boards, not-for-profit organizations, private sector for-profit small, medium and large businesses.

Q 3. How will projects be selected for funding under the 2022 Champions stream?

Applicants are first required to submit an Expression of Interest to determine their eligibility for funding by March 25, 2022. Submitting an Expression of Interest is a mandatory step for funding consideration.

Applicants with eligible projects will be invited to submit a Formal Proposal.

The projects to be selected for funding will result in measurable GHG emissions reductions toward Canada’s 2030 target and demonstrate clearly how they meet the requirements of the Low Carbon Economy Fund, including materiality, incrementality, contribution toward Canada’s targets, cost-effectiveness and other merit-based criteria.  

Q 4. What are the merit-based criteria used to assess Formal Proposals?

Formal Proposals will be assessed for eligibility, completeness, accuracy, and overall merit.

The primary merit criteria is a project’s ability to achieve low-cost GHG emissions reductions, assessed using the following:

• annual reductions achieved in the year 2030 per federal dollar invested
• cumulative reductions over the lifetime (to 2050) of the project per federal dollar invested

To contribute to the merit of your project, GHG emissions reductions must be:

• material (measurable and verifiable)
• incremental (in addition to existing actions)
• contributing to Canada’s 2030 climate target
• cost-effective

Additional benefits that contribute to clean growth and a clean environment will also be considered as part of the merit of a project, such as:

• other environmental benefits, such as reductions in air pollution or improving resiliency and adaptation to climate change
• the creation of positive impacts for First Nation, Métis or Inuit communities or organizations
• clean growth benefits such as best-in-class practices and technologies and potential for replicability

Finally, projects will be assessed for the applicant’s ability to complete the project, the project’s feasibility, and related risks.

Formal Proposals will require applicants to follow methodological guidelines that will be provided with the Formal Proposal Applicant Guide on which emissions reductions are eligible and how to estimate annual GHG reductions for projects, based on standards such as the Greenhouse Gas Protocol for Projects. Templates and tools will be provided to enable applicants to provide this information clearly and consistently.

For more information or definitions of these criteria, please see the Champions stream Expression of Interest Guide.

Q 5. How much funding can the Government of Canada contribute to individual projects?

The Government of Canada will contribute a minimum of $1 million to a maximum of $25 million per project under the Challenge Fund. Every project must meet the minimum funding request and not exceed the maximum.

Additionally, the maximum percentage of total project costs the federal government can contribute toward a project varies depending on the ultimate recipient of the funding. The maximum share from the Challenge Fund for specific ultimate recipients is as follows:

• 25% for businesses
• 40% for municipalities
• 40% for not-for-profit organizations
• 50% for provincial governments
• 75% for territorial governments, and
• 75% for Indigenous communities and organizations

Q 6. Once my project has been approved for funding and a funding agreement has been entered into, how are the funds disbursed?

Funding recipients (i.e. successful applicants) will be required to submit claims for reimbursement, including receipts, invoices and/or any other relevant documentation to Environment and Climate Change Canada for eligible expenditures incurred and paid during the timeframe of their project.

Eligible expenditures will only be reimbursed by the Government of Canada subject to signing of the funding agreement and meeting its conditions. More information on claims reimbursement will be provided to recipients in due course.

Ongoing or multiple projects

Q 7. Can previous applicants of the Challenge Fund apply to the 2022 Champions stream?

Yes. Applicants that received funding through previous Champions or Partnerships intakes of the Challenge Fund can submit a new Expression of Interest to the 2022 Champions intake with new and distinct projects, with no overlap of eligible costs.

Other previous applicants that did not receive funding may apply to the current Champions intake with the same or new project.

Q 8. Can projects receive funding from both the Leadership Fund and the Challenge Fund?

No. Projects that were funded through the Leadership Fund or programs supported through the Leadership Fund cannot receive funding through the Challenge Fund.

Q 9. Can I combine funding from the Challenge Fund with different federal, provincial, territorial or other funding (e.g., academic, from foundations, etc.)?

Yes. Funding from the Challenge Fund may be combined with other federal funding, with the exception of the Leadership Fund or programs it supports. Applicants should note that some provincial or territorial climate change programs may have received funding from the Leadership Fund, making such programs not eligible for combining with the Challenge Fund.

The Challenge Fund does not have limitations on the use of non-federal funding. When considering other funding sources, applicants are responsible for consulting the guidance for each program to determine whether stacking of government funding sources is permitted.

Applicants should declare all sources of government funding (federal, provincial/territorial and municipal) for their projects in their applications, so Environment and Climate Change Canada can verify if those sources are permissible under the Challenge Fund.

Q 10. Can I combine funding from the Challenge Fund with funding from the Canada Infrastructure Bank?

Yes. Funding from the Canada Instructure Bank (CIB) is federal funding and can be combined with Champions funding. This would be subject to the federal stacking limits shown in section 4 of the Champions 2022 Expression of Interest Guide. Stacking limits are the maximum level of assistance from all federal sources of funding for a project, as a percentage of total eligible expenditures.

Applicants should declare all sources of government funding (federal, provincial/territorial and municipal) for their projects in their applications so that Environment and Climate Change Canada can verify if those sources are permissible under the Challenge Fund.

Q 11. What other funding opportunities are available if my project is not selected for funding under the Challenge Fund?

If your project is not selected for funding under the Challenge Fund, other opportunities may apply, including:

• Provincial and territorial programs funded by the Low Carbon Economy Leadership Fund: Provinces and territories that have announced programs funded in part by the Low Carbon Economy Leadership Fund are listed in the News releases section. Provincial and territorial climate change websites may have information about their programs.
• The Our environment portal: This ECCC page connects you to hundreds of online resources that can help you take action to fight climate change and protect the environment, including many funding programs. Select the type of organization for which funding is needed from the “Audience category” and select “Apply filter” to view other options offered by the Government of Canada.
• The Clean Growth Hub: The Clean Growth Hub is a concierge service for proponents looking for federal assistance at all stages of the innovation spectrum. This website includes a comprehensive list of federal funding programs.
• Innovation Canada: Innovation Canada operates a helpful platform that assists proponents in finding solutions to a variety of funding and capacity-related needs.

Benefits to Canadians

Q 12. How will projects funded through the Low Carbon Economy Fund benefit Canadians?

Canadians will benefit in multiple ways. For example, the Low Carbon Economy Fund supports energy-efficiency projects in provinces and territories across Canada. Energy-efficiency projects will help Canadians and businesses save money by lowering energy bills. Additionally, support is available to industries to implement clean technologies that will help them be more efficient and reduce their GHG emissions, creating good jobs and increasing savings across Canada.

Q 13. How can Indigenous Peoples benefit from the Low Carbon Economy Challenge?

Indigenous communities and organizations are eligible to apply directly for funding through the Champions stream of the Low Carbon Economy Challenge.

Benefits to Indigenous communities will also be considered when assessing Formal Proposals, and will contribute toward project selection through the 2022 Champions stream. Example of eligible projects are those that reduce reliance on diesel and deploy energy efficient technologies in homes and businesses.

Technical explanations

Q 14. Can you define "materiality" of GHG emissions reductions?

We consider GHG emissions reductions as material when they are tangible, measurable, achievable, and sizeable enough to contribute toward Canada's GHG reduction targets relative to project size and scope.

These reductions must be directly and immediately the result of activities funded by the program. As such, project types that explore possible methods of reducing GHG emissions but do not implement them are not eligible, including:

• research, development, and demonstration projects
• educational or capacity-building projects
• feasibility or other pre-engineering studies.

Q 15. Can you define "incurred costs"? Would deposits made prior to the signing of a funding agreement qualify as eligible expenditures?

An incurred cost refers to an expense that is owing and for which an invoice has been issued.

Eligible project expenditures must be incurred and paid between the date on which your funding agreement with Environment and Climate Change Canada is fully signed and the end date of your project, which cannot be later than March 31, 2025.

As evidence of costs incurred and paid, funding recipients may be asked to provide copies of invoices, payment receipts (such as cash receipts), and/or copies of cashed cheques.

Q 16. How can a project meet the incrementality criteria?

There are two aspects to incrementality:

First, the Low Carbon Economy Fund proposed project must be incremental or in addition to any existing or already planned projects, meaning it is not expected to go forward without this funding. Projects that are already committed to are not eligible for funding.

Second, the project’s GHG emissions reductions must be incremental to reductions related to existing federal, provincial or territorial regulations and climate change mitigation policies. In other words, the reductions would not have occurred without Low Carbon Economy Fund support. Applicants need to demonstrate this second type of incrementality in their estimate of GHG emissions reductions, particularly at the Formal Proposal stage.

Q 17. Is there a threshold for cost-effectiveness, such as a maximum cost-per-tonne, or a minimum of GHG emissions reductions?

No. The program cost-per-tonne (calculated as total federal contribution for both the estimated emissions reductions in annual tonnes in 2030 as well as cumulative tonnes over the lifetime of the project) is a key criterion in assessing final projects. However, no pre-determined thresholds have been set. Cost-per-tonne will be assessed based on the Formal Proposals received for the intake.

Q 18. Can funding recipients of a Low Carbon Economy Fund project sell any of the reductions from the project into an offset market?

No. The funding recipients of a Low Carbon Economy Fund project cannot sell any of the reductions from the project into an offset market.

Similarly, a project registered and/or generating credits under an existing GHG offset system (voluntary or regulatory) is ineligible to receive funding under the Challenge Fund. Applicants must choose either funding from the Low Carbon Economy Fund or offsets, and may not choose both.

Q 19. Can the reductions in GHG emissions for the project be applied when it reduces the need to purchase grid electricity?

Yes. The Champions stream is open to projects that reduce the consumption of purchased electricity where the corresponding provincial, territorial, or regional grid uses fossil fuels. Projects connected to the primary provincial or territorial electricity grids are expected to use provided grid emissions intensities that take into account existing policies and measures.

Projects in remote locations not connected to the provincial or territorial grid should calculate GHG emissions reductions from locally purchased electricity instead (e.g., from diesel generation in a remote community). Electricity savings for grid-purchased electricity in Newfoundland, Quebec, Manitoba and British Columbia are not expected to result in material GHG emissions reductions over the lifetime of the project. 

Q 20. Can I sell excess renewable energy generated by my project back to the grid?

Yes. Applicants who plan to install behind-the-fence electricity generation, such as solar photovoltaic systems, may connect to the grid in order to sell excess power onto the grid, as long as they still comply with the program’s own-use provision. For further information on “own-use”, please consult the Expression of Interest Guide.

Technical difficulties and submission

Q 21. How do I get a SWIM profile?

If you do not already have a Single Window Information Management (SWIM) profile, the SWIM website includes a step-by-step walkthrough to complete a user profile. Below are key links and videos.

First-time users are strongly encouraged to review this guidance, including the videos, to help facilitate setting up an account and accessing the online application form.

Key steps include:

• Log in by choosing a secure Sign-In method by either using your GCKey or via a Sign-In Partner. For more information, please visit the Frequently Asked Questions on cyber authentication page.
• From the Single Window Information Manager (SWIM) home page, use the left-hand navigation pane and select "My profile". First-time users should watch the video: Connecting to Single Window for the first time.
• Ensure you have completed your profile, and save it.
• On the left-hand navigation menu select "Organization".
• Connect your profile to an organization by searching for the organization’s name or business number (see video: Connecting to an organization). If the organization cannot be found, add the organization by filling out the necessary information.
• Manage access for your organization (see video: Managing access to your organization).
• Return to the SWIM home page and select "Climate Change Funding Programs: [sub-header] The Climate Action Incentive Fund (CAIF) and the Low Carbon Economy Fund (LCEF)" to navigate to the Low Carbon Economy Challenge Fund application.

Important note: The SWIM profile must be set up in the lead applicant’s name, and only one designated applicant can fill out the application form, even if a project includes other participating organizations.

Q 22. Can I provide additional information or make changes to my Expression of Interest after I submit my application?

Yes. Before the deadline, you can withdraw your Expression of Interest and resubmit it to make changes. You will not be able to make changes to your Expression of Interest after the deadline for submission has passed.

Please consult the Expression of Interest Guide to ensure you have provided all the necessary information related to your proposed project. Incomplete applications will be ineligible.

Audits and reports

Q 23. Will the Government of Canada be undertaking audits on successful projects?

Yes. The Government of Canada may audit projects approved for funding under this program for verification of activities, location, or for any other reason related to the agreement between Canada and the funding recipient. Audits will be designed to limit the administrative burden placed on recipients to the extent possible.

Q 24. What are some of my reporting obligations once the project has been approved for funding?

Funding recipients will be required to submit progress reports, outlining progress and results for the duration of the funding agreement. Frequency and reporting requirements will be outlined in the funding agreement.

Q 25. How often will funding recipients need to report on projects that receive funding?

The schedule and frequency for reporting will be finalized with recipients when they are invited to sign funding agreements. The last report is expected to be in the months following the determined project completion date and no later than March 31, 2025.

Q 26. What obligations do I have to the Government of Canada after my project is completed?

Funding recipients will be required to submit final documentation following the end of their project. This includes a final report and an attestation that their project has been completed, and that funds have been spent on eligible expenditures.

Also, recipients may be selected for an audit, which could occur after project completion.

Contact us

Q 27. Who may I contact at Environment and Climate Change Canada for more information?

For more detailed information, you may refer to the Expression of Interest Guide.

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 and include your name, contact information, and the organization you are representing.