This article was published by Pembina Institute on April 12, 2023.
This year’s Federal Budget was the most significant for Canada’s low-carbon economy. It sends a clear message that we are committed as a country to building a cleaner future for Canada, but more funding will be required in successive budgets to ensure Canada is globally competitive in a world that is moving away from fossil fuels and can meet its net-zero commitments.
At a time when the U.S. and Europe are investing heavily in climate, this budget maintains Canada’s competitiveness when it comes to vying for the economic opportunities presented in the low-carbon economy.
The investments in clean electricity, clean technology manufacturing and adoption, carbon capture, utilization and storage, and infrastructure will act as a calling card for low-carbon industrial investment in Canada.
They will provide the funding, infrastructure and capacity needed to begin to decarbonize everything from buildings to transportation to energy production, while increasing affordability for Canadians by reducing our reliance on volatile fossil fuels, and increasing the efficiency of our electrical grid.
But while this budget does a significant amount to incentivize the production of clean energy, it misses a number of the community-facing recommendations identified by the Green Budget Coalition. A further significant investment will be needed to ensure all Canadians have access to things like energy-efficient, affordable and climate-safe homes and buildings, the national infrastructure needed to power zero-emission vehicles (ZEV), and equal access to benefit from the economic opportunities these investments will create.
Prioritizing sustainable job creation
The numerous investment tax credits included in this budget are benefits for businesses, and while this is important to creating opportunities for investment, they should be tied to the benefits these businesses create for workers.
The addition of prevailing wages and apprenticeship requirements attached to the Clean Technology and Clean Hydrogen Investment Tax Credits in this budget was a big step in the right direction. Especially with unions playing a central role to building this practice. But more is needed.
Worker strings should be attached to all government funding going forward – and all investment tax credits. This includes investments made through the Canada Infrastructure Bank in clean power and green infrastructure, and Canada Growth Fund.
Renovating existing buildings
While we support the investments the federal government has made in new affordable housing supply, 80 per cent of buildings that will exist in 2050 have already been built.
To keep homes affordable, desirable, healthy and reduce emissions, they need retrofits that increase their energy efficiency, comfort, improve indoor air quality, transition them to more sustainable and affordable sources of energy for heating, and ensure they can withstand increasingly extreme weather. Today, energy savings do not return the costs of decarbonizing homes.
The lack of new public sector funding to help low-income households decarbonize their homes and drive supply innovation and growth is a missed opportunity to leverage private sector investment and build a Canadian retrofit economy, while reducing a significant source of our emissions.
We’d like to see Canada continue to create supports for both new and existing housing by strategically allocating funding to drive market phase out of fossil fuel-based heating equipment and accelerate zero carbon new construction and retrofits, and ensure equitable access to homes that are not only resilient to the impacts of climate change but are better homes that also move us down our emissions reductions pathways.
Zero emission vehicles
Budget 2023 included a number of investment tax credits, including ones that will help spur the growth of Canada’s electric vehicle manufacturing industry, and lower the retail cost of ZEVs. But Canada also needs to boost investment in its charging infrastructure to support these new vehicles as they come online.
Research has shown that readily available public charging infrastructure is key to encouraging consumer confidence in ZEVs. ZEV sales are consistently highest where there is extensive public charging infrastructure.
If Canada wants to meet its light-duty vehicle sales targets of 60 per cent ZEV by 2030 and 100 per cent ZEV sales by 2035, investing in infrastructure will be essential.
Centring Indigenous interests
This budget demonstrates encouraging commitments toward Indigenous-owned and led clean energy projects. Greater investments in the form of loans through the Canada Infrastructure Bank and tax incentives through the Clean Electricity Investment Tax Credit are helpful tools that can lower the barriers faced by Indigenous businesses and communities on the transition toward clean energy systems. It is also encouraging to see the recapitalization of the Smart Renewables and Electrification Pathways, and Smart Grid programs that can help Indigenous communities transition to clean energy.
While these efforts demonstrate interest in meeting the demands made by Indigenous groups and advocates, they continue to fall short in other critical areas with some notable deficiencies on housing, health and the infrastructure gap. Without greater investment in these areas, Canada will continue to fall short of fulfilling its responsibility of improving the lives of Indigenous People and ensuring they are in a leadership position through the clean energy transition.
Greater and longer-term investment is needed to meet these challenges, with particular attention paid to adequate and non-fossil fuel dependent housing supply, increased funding for Indigenous-led clean energy projects, especially increased dedicated funding for remote Indigenous communities would get Canada one step closer to ensuring the safety and prosperity of Indigenous communities in addition to meeting its reconciliatory duties and climate goals.
Seizing the moment
This is a pivotal moment for the world’s economies. The opportunities presented by the clean energy economy are significant and Budget 2023 positions Canada to be able to take full advantage by supporting investments that help us build a clean economy that is made-in-Canada.
We look forward to working with the federal government, the provinces, labour organizations and industry to build strategies that take full advantage of the significant investments made in this year’s budget, while pushing to see that the Green Budget Coalition’s outstanding recommendations are addressed in future budgets.