AFO · Stack
The federal clean-tech non-dilutive stack, layered.
Canada has built one of the deepest federal funding stacks in the world for clean technology, but the programs don’t self-orchestrate. Each has its own application, eligibility, and matching-capital rule. The skill is layering them coherently so the project carries the lowest blended cost of capital without disqualifying itself from any individual program by stacking-rule conflict. Done well, refundable tax credits and IRAP contributions cover a meaningful share of project cost, with the balance covered by repayable government contributions, senior debt, or strategic equity.
What this stack delivers
- Clean Tech ITC + IRAP + SR&ED + SRF layered, not chosen between.
- Government-assistance rules coordinated so no dollar is claimed twice.
- SDTC has closed; its programming now runs through NRC IRAP.
How this stack works
Clean-tech grant stack, layered correctly.
SDTC (Sustainable Development Technology Canada) has closed. It was wound down after the June 2024 Auditor General report, and its programming moved to NRC IRAP in 2025. IRAP is now the main federal contribution program for clean-tech development work, covering up to 80% of eligible internal technical salaries on approved projects alongside an industrial technology advisor. SR&ED covers the technical-labour side in arrears, the Clean Tech ITC refunds 30% on eligible equipment investments, and senior debt or strategic equity fills the balance.
The Clean Tech ITC is mechanical once the property eligibility is established, 30% refundable (when prevailing-wage and apprenticeship labour requirements are met; 20% otherwise) on eligible clean-tech property, dropping to 15% for property that becomes available for use in 2034 and ending after 2034. Solar, wind, geothermal, electricity storage, low-carbon heat, certain zero-emission vehicles. It’s an investment tax credit, not a project grant, so it layers alongside IRAP and Strategic Response Fund contributions.
The Strategic Response Fund, which replaced the Strategic Innovation Fund, covers the largest industrial clean-tech projects: a minimum $10,000,000 contribution on at least $20,000,000 of eligible costs, repayable by default and non-repayable only by exception. The eligibility narrative (innovation thesis, commercialization plan, supply-chain footprint, economic spillover) needs to be built deliberately rather than fit to a checklist. SR&ED and IRAP cover the technical-labour side as in any R&D-heavy project. Regional development agencies fill the smaller local-project layer with interest-free repayable contributions where the project has local economic impact in an eligible region.
5 layers in the stack
The layers, in order.
Each layer below names the program AND the role it plays inside this specific stack, what it funds, how much of the structure it covers, and how it interacts with the layers above and below.
Family: Grants & refundable tax credits
Role in this stack: Refundable investment tax credit on eligible clean-tech equipment.
Typical size: 30% refundable (20% if labour requirements not met), 15% for property available for use in 2034, ends after 2034
Family: Grants & refundable tax credits
Role in this stack: Federal funding for the largest industrial clean-tech projects ($10,000,000+ contribution on $20,000,000+ of eligible costs).
Typical size: Repayable by default; non-repayable only by exception
Family: Grants & refundable tax credits
Role in this stack: Refundable tax credit on the technical-labour side of the project.
Typical size: 35% refundable on first $6,000,000 CCPC
Family: Grants & refundable tax credits
Role in this stack: Pre-approved contribution on internal technical salaries.
Typical size: Up to 80% of approved technical-labour costs
Role in this stack: Fills the local-economic-impact layer where the project qualifies under the agency’s region and sector priorities.
Typical size: Interest-free repayable; up to 50% (PrairiesCan, PacifiCan) or 35% (FedDev Ontario), varies by agency
When this stack fits
Who this is the right answer for.
Canadian clean-tech businesses building, demonstrating, or commercializing technology with quantifiable environmental benefits, renewables, low-carbon industrial processes, storage, electrified transport, sustainable manufacturing.
Common variations
Pre-revenue clean-tech projects often layer angel introductions or equity crowdfunding on top of the non-dilutive stack to fund the share of the project it doesn't cover. Larger commercialization projects often pull in EDC export financing or conventional senior debt for the working-capital cycle.
Common questions
Questions people ask about this stack.
The answers below are the specific Q&A patterns that come up on this combination. For broader AFO questions, the main module FAQ on the module landing page covers the cross-stack basics.
Other stacks
Different question, different combination.
Each stack solves a distinct capital-structuring question. The ones below cover the other common shapes, non-dilutive R&D, leverage stacks for buyouts, project-grant stacking for clean tech, working-capital cycles for exporters, and the broader owner-operator default.
- 5 layers
Exporter stack
Exporters face two distinct capital gaps simultaneously: the up-front cost of entering a new market (research, travel, trade shows, IP protection, translation) and the working-capital cycle of fulfilling export orders (longer DSO, currency exposure, foreign-buyer credit risk). Different instruments cover each gap; the right structure layers two or three of them together rather than picking one. The CPA designs the financing plan and the FX hedge against the same set of assumptions so the export plan and the capital plan don’t drift apart.
Read the stack
- 8 layers
Manufacturer growth stack
Manufacturers carry hard assets, long working-capital cycles, and a programmatic R&D spend, three traits that open distinct funding pools in the Canadian system. The default growth-stage stack layers equipment finance (the asset side), ABL or senior revolvers (the working-capital cycle), and the non-dilutive R&D layer (SR&ED + IRAP + Clean Tech ITC where applicable). Each piece is independently underwritten but designed against a single business case so the lenders and the grant programs see a coherent overall plan.
Read the stack
- 3 layers
CSBFP + working-capital line
The single most common owner-operator capital stack in Canada layers a CSBFP equipment + leasehold loan with a conventional working-capital revolver. CSBFP covers the asset purchases at the cheapest available rate (Prime + 3%, government-guaranteed); the revolver handles the AR + inventory cycle. The two facilities never compete for the same dollar, they fund different parts of the business, but the package needs to be designed together so the lender sees a coherent overall ask.
Read the stack
Stack design is where the engagement starts.
Twenty-minute call. Bring the business profile and the capital ask; we’ll walk through which layers fit, which programs in each layer to pursue, and the sequencing that keeps lenders and grant programs from tripping on each other.