Canada is continuing to advance its efforts in addressing climate change while developing a vision for diversifying and growing its economy. The climate-forward budgets being rolled out and funds being allocated to climate mitigation and adaptation efforts across various levels of government re-affirm Canada’s commitment to transition to a low-carbon and resilient economy. Below is a roundup tracking select budgets, funds and financial flows that support climate action.
Federal Budget 2018
While the Federal 2018 Budget did not feature climate change as prominently as last year’s budget, it still allocates significant amounts to supporting climate mitigation and adaptation efforts. It also commits over $1.3 billion across five years to protect land, water and biodiversity—natural assets that both impact and are impacted by climate change in important ways. The following are highlights from 2018 Budget.
Climate Mitigation and Adaptation
- Pricing Carbon Pollution and Supporting Clean Growth ($109 million over 5 years) – to implement, administer and enforce the federal carbon pollution pricing system, plus $20 million over five years to fulfill the Pan-Canadian Framework on Clean Growth and Climate Change (PCF) commitment to engage external experts to assess the effectiveness of its measures and identify best practices.
- Adapting Canada’s Weather and Water Services to Climate Change ($120 million over 5 years) – to help protect people and communities from the devastating impacts of extreme weather events through initiatives such as weather and climate monitoring and forecasting, weather warning systems, supporting emergency management and water station upgrades and services.
- Extending Tax Support for Clean Energy ($123 million over 5 years) – to encourage investment in clean energy generation and promote the use of energy-efficient equipment, including tax support that allows accelerated deductions of the cost of eligible capital assets, property acquired before 2025.
Conservation and General Environmental Funding
- Protecting Canada’s Nature, Parks and Wild Spaces ($1.3 billion over 5 years) – will focus on protecting Canada’s ecosystems, landscapes and biodiversity, including species at risk.
- Establishing Better Rules to Protect the Environment and Grow the Economy ($1 billion over 5 years) – will include support for the proposed new impact assessment system and Canadian Energy Regulator, as well as increase scientific capacity in federal departments and agencies.
- Protecting Marine Life ($167.4 million over 5 years) – to advance efforts to better protect, preserve and recover endangered marine life in Canada.
Federal Low Carbon Economy Funding Under the PCF
The PCF includes a $2 billion Low Carbon Economy Fund that is broken down into two parts – the Low Carbon Economy Leadership Fund and the Low Carbon Economy Challenge.
The Low Carbon Economy Leadership Fund was announced late last year. The fund aims to advance the greenhouse gas (GHG) emission reduction efforts of PCF signatories. The first round of funding supported Ontario ($420 million), BC ($162 million), Alberta ($150 million) and Quebec ($260 million), among other provinces. After signing onto the PCF on February 23, 2018, Manitoba is now also eligible for $67 million under the Low Carbon Economy Leadership Fund.
The Low Carbon Economy Challenge, meanwhile, consists of two streams. The Champion stream ($450 million) is open for application until mid-May and is available for provinces and territories, municipalities, Indigenous communities and organizations, businesses and not-for-profit organizations. The Partnerships stream ($50 million) is limited to smaller stakeholders such as Indigenous communities and organizations, small and medium-sized businesses, not-for-profit organizations and small municipalities.
Alberta 2018 Budget
Alberta’s new NDP government presented its 2018 budget plans in the second part of March and its strategy is drawing attention. As a province highly dependent on the fossil fuel industry and recovering from a recession, it recognizes the need to transition and integrate climate change into its future economic vision to build resilience and avoid high costs in the future.
The central strategy of the province in the fiscal year ahead is to build “a more resilient, diversified and stable economy that is less vulnerable to oil price shocks.” The implementation of the plan includes spending allocated in three main buckets: diversifying the economy, supporting public services and returning to balance.
Figure 1: Alberta Budget 2018 – A recovery built to last
Alberta has committed $5.3 billion over the next 3 years as part of its continuous efforts to implement the Climate Leadership Plan (CLP) that pledges to reduce GHG emission while growing its economy. Significant spending has been allocated to:
- Carbon levy rebates for low- and middle-income households ($1.5 billion)
- Low-carbon and energy efficient infrastructure and transit ($1.3 billion)
- Support to transition away from the coal industry ($0.680 billion)
- Energy efficiency projects ($0.662 billion)
- Tax relief to businesses ($0.632 billion)
- Innovation and technology ($0.521 billion)
- Climate initiatives and program delivery ($0.531 billion)
In addition, Alberta’s capital plan includes $2.1 billion over the next 5 years for climate change and environmental sustainability (7% of Total Capital Plan). The biggest investments are in flood recovery projects ($0.611 billion), carbon capture and storage initiative ($0.519 billion) and regional water and wastewater projects ($0.263 billion).
Figure 2: Alberta Budget 2018 – A recovery built to last
Ontario Cap and Trade Revenues
As planned, Ontario held its first joint auction with Quebec and California as part of the Western Climate Initiative (WCI), North America’s largest carbon market. The joint auction, held on February 21, 2018, generated $477 million CAD for the province of Ontario, $193 million CAD for Quebec and just over $1 billion USD for California. Notably, the amount of proceeds generated by Ontario in this joint auction is consistent with the amounts generated in Ontario’s four province-specific auctions (which averaged about $481 million per auction). These results indicate that the benefits of linking cap and trade markets (i.e. access to a bigger and more competitive market that allows for lower costs of compliance for those seeking to purchase the credits) can be enjoyed without necessarily driving revenues away from the province.
To date, the Ontario cap and trade program has held five auctions that have generated just over $2.4 billion CAD in proceeds. Proceeds are required to be reinvested in initiatives that further reduce GHGs. Past projects that have been supported include:
- Programs and rebates to help homeowners and businesses save money and fight climate change
- Public school energy improvements
- Support to municipalities in fighting climate change through projects such as renewable energy and energy efficiency improvements
- Cycling upgrades
- Low Carbon Innovation Fund to help create and commercialize new low-carbon technologies
Canadian governments are allocating funds to what they deem to be strategic initiatives in pursuit of meeting national and international climate change goals. Important next steps include working with investors to leverage and/or supplement these financial flows and helping to educate organizations that could benefit from these initiatives on how to navigate and access the support they need.
