What to Expect from the Canada Growth Fund in 2023
As 2023 gets underway, we look toward what government funding programs the 2023 calendar year may have in store for Canadian businesses. Although there is much uncertainty in Canada at the moment, such as skyrocketing inflation, struggling housing markets, and energy resource challenges, there are some initiatives set to launch in the new year that may provide support for many obstacles facing Canadian businesses today. One of these initiatives seems to be the Canada Growth Fund (CGF).
The CGF is perhaps the most significant government funding program for Canadian businesses in 2023 that was discussed in Canada’s 2022 Fall Economic Statement (FES). It was first announced in the 2022 Canadian Federal Budget, where minimal information was shared about program details, when and how it would work, and what businesses would be eligible.
Despite the lack of transparent information regarding this program’s eligibility criteria, funding amounts, and specific program timelines, there are some hints about what Canadian businesses can expect.
As part of its mandate to invest in Canadian businesses and projects, the Canada Growth Fund (CGF) aims to invest in a net-zero economy as part of its mandate. To accomplish this, the organization hopes to attract substantial private capital investments from an industry it believes holds trillions of dollars in potential profits.
The CGF aims to achieve the following important national economic policy objectives:
- Bringing Canada closer to its climate targets and reducing its emissions in the process;
- Incorporate key technologies such as carbon capture, utilization, and storage (CCUS) and low-carbon hydrogen at a rapid pace;
- Ensure that the intellectual property in Canadian businesses is retained and that jobs are created in Canadian businesses; and
- Maximizing the use of natural resources and strengthening supply chains to increase Canada’s economic prosperity and environmental sustainability.
Interestingly, the FES mentions that funding is likely to be allocated on a concessionary basis, such as loans and contracts.
The Canada Development Investment Corporation (CDEV) is planning to launch the Growth Fund by the end of 2022 so that it can begin investing immediately to help Canada achieve its climate and economic goals. A permanent, independent Growth Fund structure will be established by the government during the first half of 2023.
Understanding the Canada Growth Fund
In many ways, the Canada Growth Fund (CGF) is a response to the Inflation Reduction Act (IRA) that was passed in the United States which intends to allocate up to $369 billion in funding for climate and energy projects. The IRA initiative, while very promising for the U.S and a sign of climate progress for the broader world, means that Canada will be suffering the withdraw of skilled talent, capital for projects, resources, and more if it does not respond in kind with its own program. That is the inspiration for the Canada Growth Fund.
The implementation of the CGF will be guided by five principal criteria:
The Canadian government is placing an emphasis on rolling out the CGF in a timely manner. To achieve Canada’s ambitious 2030 emissions reduction targets, the CGF must be set up as soon as possible to keep pace with other countries.
Independence and market credibility
In order to maintain its market credibility and gain the trust of other investors, the CGF must be able to make timely and independent investment decisions.
Source of funding
For the CGF to have a long-term stable capital base, it needs a secure funding mechanism.
In order to responsibly manage a large investment fund of such significance for Canada, the CGF must have a governance structure and executive team in place quickly.
For the CGF to be fully accountable to Canadians, it must provide transparent public reports on its operations, investments, and performance.
Is the Canada Growth Fund a Grant?
It is currently unclear how the Canada Growth Fund will be allocating funds for successful applicants. However, the CGF technical document outlines that there will be four distinct investment offerings:
- Concessional equity or debt;
- Contracts for difference;
- Anchor equity; and
- Offtake contracts.
When Will the Canada Growth Fund Launch?
The Canadian federal government has yet to provide a launch date for the CGF. However, the program timelines provided in the 2022 Federal Budget and Federal Fall Economic Statement suggest an early 2023 launch date for the program.
Sign up for our government funding newsletter to be notified when the Canada Growth Fund launches with a summary of funding amounts, eligibility criteria, program timelines, and more.