By Paula McGarrigle, President & CEO, Solas Energy

Canada’s 2025 federal budget is not a national energy strategy, nor is it a comprehensive climate roadmap. Rather, it is a finance-oriented policy document that reflects how the federal government currently understands its role in Canada’s energy transition, particularly in a context where electricity systems are constitutionally within provincial jurisdiction.

For energy developers, utilities, Indigenous partners, and infrastructure investors, the budget’s importance lies less in headline announcements and more in its tone, structure, and emphasis. It clarifies where federal policy is focused on enabling investment, where it is deliberately restrained, and how this approach differs from Budget 2024.

This distinction matters. Because when Ottawa addresses clean electricity, transmission, storage, or interties, it is doing so through spending power and financial incentives, not through system planning or market design. Budget 2025 is written with that reality clearly in mind.

A finance-first budget within a provincially governed electricity system

Electricity generation, transmission, and market design are matters of provincial jurisdiction. Provinces determine resource mixes, approve infrastructure, and set market rules. Federal influence therefore operates indirectly, through tax policy, financing mechanisms, Indigenous partnership tools, and national economic strategy.

Budget 2025 reflects this division of responsibility. It does not attempt to set national electricity outcomes or impose uniform approaches. Instead, it focuses on:

investment tax credits,
loan guarantees and financing tools,
industrial policy alignment,
and risk reduction for long-lived infrastructure.

The result is a budget that emphasizes investability and stability, rather than structural reform.

Clean electricity: continuity and implementation focus

The most consistent element of federal energy policy remains the Clean Electricity Investment Tax Credit (ITC).

Budget 2025 confirms that the ITC continues to apply to:

low-emitting electricity generation, including wind and solar,
electricity storage, including battery energy storage systems (BESS),
interprovincial and territorial transmission infrastructure.

A notable adjustment is the removal of certain eligibility constraints for Crown corporations. Given that many Canadian utilities and transmission owners are Crown or Crown-adjacent entities, this change reduces administrative friction and may increase uptake of the credit, particularly for utility-led projects and Indigenous–utility partnerships.

What Budget 2025 does not do is introduce new clean electricity programs or expand federal ambition beyond existing tools. There are no new national targets or procurement mechanisms.

The signal is one of continuity and implementation: clean electricity remains a federal priority, but the focus is on making existing tools easier to use rather than introducing new ones.

Transmission and interties: financial enablement, provincial responsibility

Transmission infrastructure appears in Budget 2025 primarily as an enabling asset.

Transmission is eligible under the Clean Electricity ITC and is referenced indirectly through broader discussions of system modernization, interprovincial connectivity, and critical minerals development. These references reinforce the importance of transmission in supporting electrification and clean generation.

However, the budget does not introduce:

a national transmission strategy,
a dedicated intertie program,
or federal permitting or siting reforms.

This reflects the reality that transmission planning, cost allocation, and approval processes remain firmly provincial. The federal role is limited to financial support and investment facilitation, rather than coordination or oversight.

For project proponents, this reinforces an existing reality: while federal tools can improve financing feasibility, transmission development remains shaped by provincial policy, regulatory frameworks, and market design.

Storage (BESS): recognized as infrastructure

Battery energy storage systems are treated as integral components of a modern electricity system, rather than as a standalone policy category.

Storage is eligible for clean electricity support and is discussed in the context of reliability, demand growth, and system flexibility. The absence of a dedicated storage program is consistent with the budget’s broader approach: storage economics and revenue certainty are expected to be resolved primarily through provincial markets and procurement processes.

Federal policy signals that storage is investable but leaves market integration to provinces and system operators.

Clean fuels and hydrogen: targeted regulatory refinement

Budget 2025 addresses clean fuels through a lens of incremental adjustment rather than expansion.

The budget signals targeted updates to the Clean Fuel Regulations, framed around strengthening domestic supply chains, reducing reliance on imported fuels, and supporting sectors such as agriculture, forestry, and waste. This suggests refinement of existing frameworks rather than the introduction of new mandates.

Hydrogen policy similarly emphasizes investment certainty. Continued support through tax measures, including expanded pathway eligibility, reflects a focus on improving project economics rather than launching new programs.

The emphasis is on stability and competitiveness, not scale-up through new spending.

Indigenous energy projects: scaling ownership capacity

One of the most consequential shifts in Budget 2025 is the expansion of Indigenous financing capacity.

The Indigenous Loan Guarantee Program is doubled, increasing available support for Indigenous equity participation in major infrastructure projects. This has direct implications for:

project capital structures,
governance arrangements,
and long-term ownership outcomes.

In the electricity sector, where projects are often capital-intensive and provincially regulated, this financing capacity is a significant federal lever. Budget 2025 frames Indigenous participation primarily through ownership and investment, rather than consultation alone.

This approach aligns with long-term asset development and intergenerational economic participation.

Remote and northern communities: infrastructure and connectivity

Budget 2025 references remote and northern communities largely through the lens of:

transportation and logistics corridors,
economic connectivity,
and national infrastructure priorities.

Energy transition in remote communities is not emphasized as a distinct program area. While this does not eliminate support for such projects, it indicates that they are not a central budget focus.

The framing suggests that energy outcomes in remote regions are increasingly expected to flow from broader infrastructure and economic development initiatives.

Offshore wind: limited visibility

Despite growing interest in offshore wind, particularly in Atlantic Canada, Budget 2025 does not prominently identify offshore wind as a distinct policy priority.

While wind resources are referenced more generally, there is no dedicated offshore wind program or regulatory signal in the budget. Leadership in this area remains primarily provincial and regional.

Carbon pricing: rebalancing the policy mix

Budget 2025 marks a clear rebalancing of federal carbon pricing policy.

The consumer fuel charge is ended, and associated rebate mechanisms are wound down. At the same time, the budget reaffirms the continuation of industrial carbon pricing, including the Output-Based Pricing System, with a focus on longer-term trajectories and investment certainty tools such as carbon contracts for difference.

This reflects a shift toward industrial decarbonization as the primary federal climate lever, while reducing household-facing cost signals.

Climate risk and adaptation: embedded, not elevated

Climate risk and adaptation appear in Budget 2025 primarily as considerations in infrastructure planning and asset protection.

There are no new national adaptation programs or major funding expansions. Instead, climate risk is framed as an input to investment decisions, long-term asset performance, and fiscal management.

This approach is consistent with the budget’s overall emphasis on infrastructure resilience and financial discipline.

How Budget 2025 differs from Budget 2024

The contrast between Budget 2024 and Budget 2025 is primarily one of purpose.

Budget 2024 focused on:

establishing and designing major clean economy policy tools,
introducing new financing mechanisms,
and reinforcing existing climate policy frameworks.

It was largely about architecture and launch.

Budget 2025, by contrast, is about:

simplifying access to existing tools,
scaling mechanisms that are already in place (notably Indigenous financing),
reducing administrative and political risk,
and improving investment certainty.

In short:

Budget 2024 built the framework.
Budget 2025 focuses on implementation, stability, and uptake.

Final reflection

Budget 2025 is not a transformational document. It is a stabilizing one.

It reinforces clean electricity and enabling infrastructure as investable sectors, expands Indigenous ownership capacity, maintains industrial decarbonization tools, and adopts a more cautious posture on politically sensitive demand-side measures.

For project proponents, utilities, and Indigenous partners, the message is clear:

Federal policy is focused on reducing risk and improving financing conditions, while expecting provinces and market participants to lead system design and delivery. That reality places a premium on careful planning, robust project economics, and well-structured partnerships, exactly where thoughtful, planning-grade analysis adds the most value.