In late March as part of a communication on 2023 budget priorities, the Canadian federal government detailed several measures to support investment in infrastructure and green energy. As the world's eighth largest economy, Canada is not to be outdone by the massive plans announced for the United States (Infrastructure bill, IRA) and Europe (Green Deal, RepowerEU, Net Zero Industry Act), and has been deploying its transition strategy for green growth since 2016 through the "Investing in Canada" plan, endowed with $180 billion over 12 years.
A DESIRE TO ACCELERATE AN ALREADY WELL-ESTABLISHED GREEN TRANSITION PROCESS
The "Investing in Canada" plan, launched in 2016 after Justin Trudeau's election as head of the federal government, has three objectives: to foster long-term growth, support the transition to a low-carbon economy, and promote social inclusion. To accompany the deployment of this plan and support public/private partnerships, particularly in the area of green infrastructure and clean energy financing, the federal government created the Canadian Infrastructure Bank (CIB) in 2017. By 2022, the CIB had deployed $8.6 billion in 37 different projects. The 2023 federal budget marks a clear commitment to accelerate by allocating $20 billion to the green transition: $10 billion earmarked for clean energy and $10 billion for green infrastructure.
The Canadian government is also announcing a new tax incentive to encourage investment in green technologies. While a consumption tax credit has already existed for several years for equipment that reduces energy consumption and CO2 emissions, the 2023 budget introduces a production tax credit of 15% eligible for investments in renewable and/or decarbonized energy capacity (wind, solar, hydro, tidal, nuclear) and non-fossil fuel electrical energy storage (batteries, hydro storage, compressed air). This production tax credit will come into effect in 2024 and will be activated until 2034.
OUR EXPOSURE TO GREEN ENERGY AND INFRASTRUCTURE IN CANADA
We are currently present in two engineering companies directly exposed to the acceleration of the green transition in Canada:
- Stantec, a Canadian company capitalizing approximately $6.5B, offers engineering services across the entire project life cycle (architecture, construction, environmental management). Present in North America, the United Kingdom and Oceania (Australia, New Zealand), Canada represents 24% of its revenues and the group is experiencing double-digit growth in its Environmental Services and Energy &Resources segments.
- Aecom, an American group with a capitalization of $11.7 billion, operates in the same segments as Stantec, with its domestic market, the United States, accounting for 53% of its sales, ahead of Europe & the Middle East (22%), Asia-Pacific (19%) and Canada (6%). The group should also benefit from major support plans for green infrastructure as well as the structural movement of reindustrialization and relocation within mature markets.
