Canada has the opportunity to become a cleantech IP leader through strong policies and an offensive IP approach.

For too long, Canada has played goalie in the global innovation game—blocking shots from foreign firms looking to score our intellectual property (IP). This defensive stance has failed to stop brain drain and IP leakage. With the US cleantech sector cooling and a new “Canada Strong” mandate, it is time for Canadian industry to stop being the target and start being the acquirer.

A shift is underway in Canada. Driven by market volatility and a rising patriotic sentiment, there is growing resistance to the loss of Canadian IP to foreign buyers and an increasing interest in supporting Canadian-grown companies.

At the same time, federal headwinds have hit the US cleantech market, weakening US cleantech ventures and creating a buying opportunity for those with the foresight to take advantage of it. It is important to note that globally the market for cleantech continues to grow, it is only in the US that it has been hampered by politics.

By moving from protecting what we have to acquiring foreign assets, Canada has the opportunity to harvest global innovation. This would bring investment, talent, and global revenue back to Canadian soil to scale here. Other countries have taken advantage of Canada in this same way—how can we turn the tables?

A strong policy landscape can be a catalyst. We can use federal levers to ensure our homegrown firms aren’t just targets for acquisition, but are the ones doing the acquiring.

To lead cross-border mergers and acquisitions (M&A), Canadian firms need more than just a good balance sheet—they need a regulatory environment that lowers the risk of international expansion. Innovative tax credits and M&A funding can support this: 

• M&A Tax Credits: An “International Acquisition Credit” (similar to SR&ED) would allow firms to write off due diligence, legal, and integration costs associated with acquiring foreign IP.
• Strategic Growth Funds: Expanding the Canada Growth Fund to provide low-interest “acquisition loans” would allow domestic firms to outbid global rivals for strategic assets.
• Regulatory Harmonization: Reducing friction for “sovereign compute” transfers via CUSMA ensures Canadian firms can integrate foreign data assets without red tape.

Global Precedents: China utilizes its “Going Out” strategy to provide a 200% “super-deduction” for R&D costs associated with acquired foreign IP. Similarly, Singapore’s M&A Scheme provides a 25% acquisition allowance and a 200% tax deduction on transaction costs, while Ireland uses their Section 291A to provide tax relief on the capital expenditure of acquiring foreign patents.

By lowering these domestic barriers to entry, Canada can transform its leading innovators from acquisition targets into global consolidators capable of competing on the world stage. But scaling these acquisitions to a global level requires the mobilization of Canada’s largest pools of domestic capital.

Canada’s “Maple Model” pension funds (CPPIB, CDPQ, Ontario Teachers’) are global giants, but they often invest in foreign infrastructure rather than domestic tech scaling—47% of the CPP’s $780B in assets are held in the US. The federal government recently launched quarterly meetings with these fund managers to encourage more domestic allocation without compromising their fiduciary duty. 

The government should implement structural incentives that align long-term pension stability with the high-growth needs of our tech ecosystem:

• The Offensive Mandate: Creating a policy framework—or a government-backed co-investment shield—that encourages pension funds to back Canadian mid-market firms in offensive acquisitions. Instead of a pension fund buying a foreign utility, they provide the capital for a Canadian cleantech firm to buy a foreign rival.
• Risk Mitigation: The federal government could take a “first-loss” position in a dedicated National Scaling Fund. This would lower the risk profile for pension funds, making it fiduciary-responsible for them to invest in high-growth, high-stakes tech M&A.
• Domestic Ownership Requirements: Implementing sovereign interest criteria to ensure IP bought with public capital remains headquartered and tax-resident in Canada.

Global Precedents: France’s Bpifrance uses its Lac1 Fund as a co-investment shield to help pension funds back mid-market firms in offensive foreign takeovers. Similarly, Germany’s KfW Capital utilizes a “first-loss” position to de-risk high-stakes tech M&A for institutional players.

By transforming our financial giants into engines of industrial growth, Canada can anchor both capital and IP on home ice, ensuring our most valuable innovations remain sovereign assets.