UNPACKING THE BARRIERS TO FIRST-OF-KIND CLEAN FUEL PROJECTS IN CANADA

The report examines the investment landscape for first-of-kind clean fuel projects in Canada, distinguishing between standard market risks and systemic market or policy failures. Through financial modelling of five project archetypes, the study finds that most are currently uneconomic and require targeted government intervention to become bankable. Key barriers include policy uncertainty, infrastructure deficits, skilled labour shortages, and the complexities of establishing equitable Indigenous partnerships.

• Financial modelling of five first-of-kind clean fuel project archetypes reveals that four are likely to be unprofitable without additional public financial support, with these four showing a negative net present value in over 70 per cent of simulations.
• The only financially viable archetype among those modelled is a blue ammonia project based in Alberta, which maintained a positive net present value in more than two-thirds of simulations.
• Future market prices for clean fuels are the most significant factor impacting the financial viability of all five modelled archetypes, representing a primary uncertainty for project proponents.
• Canada faces a severe shortage of skilled tradespeople and green skills, with a projected shortfall of 60,000 registered apprentices by 2025 and a potential net zero jobs deficit of 27,000 by the same year.
• Policy uncertainty in Canada, including the lack of detailed investment tax credits and the potential for carbon credit oversupply, harms project bankability, especially when compared to the certainty provided by the U.S. Inflation Reduction Act.
• Deficiencies in public infrastructure, such as electricity transmission and road access, increase costs and uncertainty; Canada ranks 21st globally in physical infrastructure according to the World Bank’s Logistics Performance Index.
• First-of-kind projects face a market failure where proponents are not compensated for the risks and costs of 'learning-by-doing' and scaling nascent technologies, despite the broad public benefits of such innovation.
• Permitting processes in Canada are described as sluggish and repetitive, with general construction permits taking an average of 250 days—three times longer than in the United States.
• Indigenous Peoples face systemic barriers to project ownership and equity due to the Indian Act, which restricts land ownership and the use of assets as collateral, leading them to be classified as 'high-risk' borrowers.

APA

Forman, J. (2023). UNPACKING THE BARRIERS TO FIRST-OF-KIND CLEAN FUEL PROJECTS IN CANADA. Canadian Climate Institute. https://climateinstitute.ca/wp-content/uploads/2023/03/unpacking-barriers-first-kind-clean-fuel-projects-canada.pdf

Chicago

Forman, Jared. UNPACKING THE BARRIERS TO FIRST-OF-KIND CLEAN FUEL PROJECTS IN CANADA. Canadian Climate Institute, 2023. https://climateinstitute.ca/wp-content/uploads/2023/03/unpacking-barriers-first-kind-clean-fuel-projects-canada.pdf.

Wikipedia

{{cite report |last1=Forman |first1=Jared |title=UNPACKING THE BARRIERS TO FIRST-OF-KIND CLEAN FUEL PROJECTS IN CANADA |publisher=Canadian Climate Institute |date=March 2023 |url=https://climateinstitute.ca/wp-content/uploads/2023/03/unpacking-barriers-first-kind-clean-fuel-projects-canada.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{forman2023unpacking, author = {Forman, Jared}, title = {{UNPACKING THE BARRIERS TO FIRST-OF-KIND CLEAN FUEL PROJECTS IN CANADA}}, institution = {Canadian Climate Institute}, year = {2023}, month = mar, url = {https://climateinstitute.ca/wp-content/uploads/2023/03/unpacking-barriers-first-kind-clean-fuel-projects-canada.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }