The finance minister delivered the greenest budget in Canadian history with $3 billion in new spending announced to cut pollution and promote alternative energy.
In addition to the new money earmarked for the environment, approximately $2 billion in spending previously announced will continue. That brings the total in green spending to $5 billion over five years.
About half of the new environmental spending is geared towards incentives that reward consumers and businesses for making their spending habits more eco-friendly, cut power usage and reduce the burning of fossil fuels.
“Canadians don’t want a fiscal mortgage hanging over the futures of their children and they don’t want an environmental mortgage to be the legacy of this generation to the next,” Finance Minister Ralph Goodale said. “Climate change is a multi-dimensional challenge.” The budget introduced new market mechanisms, tax measures, incentives for businesses and consumers, and regulatory and voluntary measures.
The biggest single item is a $1 billion Clean Fund to encourage projects aimed at cutting greenhouse gas emissions. This fund will invest in high-quality environmental projects, provide a market to promote the domestic trading of emission reduction credits, and serve as a catalyst for technology development and application, the budget said.
Contrary to expectation, the budget did not address rebates for fuel-efficient car purchases or extra fees for fuel-inefficient vehicles, but said the government will seek advice on these options.
For the first time, it confirmed that it will introduce a “mandatory emissions reduction regime” to regulate large industrial emitters of GHGs. “In the coming months the government will set out the details of a mandatory emissions reduction regime,” the budget said. But it said it would allow industries to be regulated by the provinces where their facilities are located.
The budget didn’t explain exactly how Ottawa will meet its Kyoto targets for curbing greenhouse gases. Officials said more details will be available in the weeks to come.
Reaction to the budget from the environmental industry has been mixed. “There has been a lot of talk up until now about meeting our Kyoto obligations but this budget contains a serious commitment in terms of dollars and that is very positive,” said Canada Green Building Council president Alex Zimmerman. “Canada can be a world leader in greenhouse gas reduction and a world leader in sustainable development. This is a win for the economy and for the environment.”
“This is a strong commitment to clean technology from the liberal government,” said Vicky Sharpe of Sustainable Development Technology Canada. “This is good news at the strategic level and it increases the acceptability of sustainability. We have been pushing sustainability for years and it is extremely gratifying to see this kind of support.”
“These new federal government incentives and programs will support investments in innovation, economic growth, and a new energy infrastructure for the Canadian economy,” said John Keating, CEO of Canadian Hydro Developers. “It puts Canada on the radar screen for global investors in renewable energy.”
The Canadian Wind Energy Association applauded the government for its announcement that it will support the development of 4,000 MW of wind energy in Canada. This quadruples the federal Wind Power Production Incentive’s original 1,000 MW target.
But the Environmental Defence and the Canadian Law Association said Canada won’t meet its international legal obligation to cut greenhouse gas pollution based solely on the financial incentives announced in the federal budget. “The industry incentives in this budget are not enough to meet Canada’s Kyoto requirements. These types of voluntary programs by themselves don’t produce results,” said Sarah Winterton, program director of Environmental Defence. “This budget isn’t enough to change Canada’s position from an environmental delinquent to an environmental leader.”
Nearly half of the money earmarked for programs to reduce greenhouse gas pollution is previously-announced funding that hasn’t been used yet, leaving open the possibility that much of the Kyoto money announced today will be recycled in future budgets.
Canada’s railways were disappointed the federal budget did not address the industry’s need for capital cost allowances that are competitive between Canada and the U.S., and between modes of transportation. “Rail is the most energy efficient way of moving people and goods and can deliver more benefits to Canada and Canadians, under the Kyoto Accord,” said Christopher Jones, director of Federal Provincial Government Liaison for the Railway Association of Canada. Rail handles 64 per cent of Canada’s revenue tonne kilometres of freight, yet produces only three per cent of transportation’s greenhouse gas emissions, Mr. Jones added.
The budget highlights included:
– $1 billion to establish a “Clean Fund” to encourage the most cost-effective projects to reduce greenhouse gas emissions and stimulate more action to reduce GHGs.
– $225 million to quadruple the number of homes retrofitted under the EnerGuide for Houses Retrofit Incentive program.
– At total of $1.81 billion over the next 15 years to encourage investment in wind other renewable energy sources.
– A recognition that greening the Government of Canada’s buildings is the lowest cost source of emission reductions as part of the Federal House in Order initiative, which seeks to lower direct GHG emissions levels from federal government operations.
– $250-million to create a Partnership Fund for federal-provincial cooperation projects to curb greenhouse gases such as the capture and storage of carbon dioxide or improving east-west transmission links to move more hydro power across Canada.
– $200-million over five years to set up a Sustainable Energy Science and Technology Strategy to help deploy green technology and another $200 million to stimulate the use of wind power. Other types of alternative energy will get $97 million.
– $300-million in more funding for the Green Municipal Funds that invest in eco-friendly infrastructure, half of which will be used to help communities clean up brownfields.
– the $5-billion gas tax transfer to municipalities will support programs with environmental benefits such as public transit.
With files from Jennifer Hollaway.