Canada’s Green Energy ITC Is Undermined by Bad Labour Rules

Canada has made a major bet on tax incentives to drive investment in clean electricity, clean technology, hydrogen, carbon capture, and related infrastructure. That basic instinct is understandable. If governments want more private capital flowing into big, nation-building projects, tax policy is one of the strongest tools they have.

That is what Ottawa is trying to do through its clean-economy investment tax credits: offer companies significant tax relief if they invest in major clean-energy and industrial projects in Canada. But, even a good incentive can be weakened by a bad design.

The problem isn’t the credit — it’s the labour rules.

PCA’s concern is not that Ottawa wants to encourage investment. The concern is that the federal government has attached labour rules that tilt the playing field toward one part of the construction industry while imposing heavier compliance burdens on others. This is bad for fair competition, bad for efficiency, and bad for Canada’s ability to build.

PCA has raised this concern repeatedly with the federal government, both publicly and directly. We have supported the goal of getting more projects built. What we have opposed is the way these labour requirements were designed. From our point of view, the regime does not treat our labour partner, CLAC, on equal terms. Credible bidders can still pursue this work, but some must work much harder to satisfy a policy framework designed around a different labour model.

Ottawa’s model is too narrow.

Ottawa has framed these rules as a way to support wages and apprenticeships. Fair enough - those are legitimate goals. But, in practice, the framework points heavily toward a single traditional labour model and fits awkwardly with other - equally legitimate - models. That does not reflect the real construction industry in Canada.

PCA’s particular concern is that the program, as designed, places the labour model that has helped build much of modern Canada’s energy and public infrastructure – CLAC and progressively unionized labour - at a structural disadvantage. This model is not some fringe corner of the market. It is one of the ways this country has actually been built.

When Ottawa designs a major investment incentive in a way that makes compliance more difficult and less natural for that model, it is not creating a neutral framework. It is favouring one approach over another.

Canada says it needs to build — then adds unnecessary friction.

This is the contradiction at the heart of the policy. Governments say Canada needs to build faster. They talk about labour shortages, weak productivity, project delays, and the need to attract more investment. Then, they turn around and structure policy in ways that add complexity and compliance burdens for legitimate parts of the industry that are already helping to build the country.

That makes no sense. You cannot complain about labour shortages while designing policy that makes labour deployment harder. You cannot say you want more investment certainty while writing rules that distort competition. And you cannot say that you are removing barriers to growth while Simultaneously building new ones into the tax code.

This is not smart policy. It is a tilted playing field - plain and simple.

When policy adds friction, projects pay the price.

This is not just a fairness issue – it’s a practical one. When policy adds uneven compliance burdens, projects feel it. Administration gets harder. Flexibility is reduced. Costs can rise. Delays become more likely.

People in construction understand how this works. The issue is not that credible bidders vanish. The issue is that the rules create avoidable friction and favour some labour arrangements over others. In a country that already struggles to get major projects built on time and on budget, that is the wrong instinct.

If Ottawa is serious about getting more projects moving, it should be reducing unnecessary friction, not layering it onto legitimate parts of the construction industry for policy reasons.

There is a better way.

Ottawa can uphold fair wages and support apprenticeship without building the system around one preferred labour model. It can set fair standards without putting certain proven models at a structural disadvantage. It can recognize equivalent training and compensation systems. And, it can design incentives to maximize Canada’s construction capacity instead of assuming that one labour template should fit everyone.

That is the fix. Keep the credits. Keep the objective. Just fix the design.

If Canada is serious about building, it needs fair competition.

Canada needs investment. It needs power, infrastructure, and major projects that actually get built. But it will not get there by layering unnecessary friction onto legitimate parts of the construction industry and pretending that one labour model is the natural template for everyone else.

Keep the ITC. Fix the labour rules. And let the full capacity of Canada’s construction industry get on with the job.