Canadian Federal Budget 2021: “Climate Change is Real”

The Canadian Federal Budget was released today last week so I am jumping in head-first. Updates will come sporadically so follow along here, on Twitter, The Newsletter, or our newly launched Medium page to make sure you don’t miss a post. Ready? Set? Let’s go!

I took a few days off from digging into the 2021 budget, but I’d like to polish these initial posts with a quick summary of Chapter 5: A Healthy Environment for a Healthy Economy. There’s a lot in here so I’m going to try and focus on the science-y and research-y stuff. If you want to go deeper, the full chapter can be found here.

At the heart of the climate section is investing in green technology in order get ahead of the global market, to stimulate middle-class job growth, and eventually reach a net-zero greenhouse gas emissions by 2050. To do this we’re looking at a $17.6 B investment in 2021 toward “green recovery and green jobs”.

I believe I mentioned in a previous post, but the Net Zero Accelerator program is getting $5 B over seven years. This is a fund particularly pointed at getting industry to adopt cleaner, greener practices. This does include a lot of work on Canada’s ” end-to-end battery ecosystem”. One of Canada’s big leaders in battery research works from Dalhousie University (Dr. Jeff Dahn) so checking his output could be a good place to start if you are hungry for battery news.

Apparently Canada punches above its weight when it comes to clean tech innovation, but we suffer with industry scale-up. The budget claims we are second in the world for number of companies listed on the 2021 Global CleanTech 100 list (I started reading the report but stopped at the Forward, which claimed “It’s Truly Squeaky Bum Time Now” – I don’t know what that means and hope to keep it that way). Either way, $1 B of the green recovery is going to stimulating private investment in these projects. To be honest, the language is vague enough that I’m unclear if it means the projects listed on the CleanTech 100, or projects like those listed on the report. I think I will have to push past the Squeaky Bum Time and dig into the CleanTech report later.

The budget also proposes to give some pretty nice tax breaks to businesses that manufacture or adopt clean tech. Notably: “Budget 2021 proposes to reduce—by 50 per cent—the general corporate and small business income tax rates for businesses that manufacture zero-emission technologies. The reductions would go into effect on January 1, 2022, and would be gradually phased out starting January 1, 2029 and eliminated by January 1, 2032.” This is projected to cut federal revenue by $45 M over five years.

Another loss of revenue, the budget predicts, will happen as a response to widening the list of technologies that will be able to be partially or fully written off by businesses. This will now include, “pumped hydroelectric energy storage, renewable fuel production, hydrogen production by electrolysis of water, and hydrogen refueling. Certain existing restrictions related to investments in water-current, wave and tidal energy, active solar heating, and geothermal energy technologies would also be removed.” The estimated loss is about $142 M.

I’m going to skip over some of the tax and industry-based things now. I will attached the summary sheet from the budget at the bottom of this article if you’d like a Cliff’s Notes of the business-y stuff.

For example, there are a bunch of details about tax credits and incentives for businesses to incorporate carbon capture, utilization, and storage tech, but here I’ll just tell you that $319 M over seven years will go to Natural Resources Canada to support research, development, and demonstrations that would improve the commercial viability of carbon capture, utilization, and storage technologies.

Oh, here is something I found particularly interesting: “The government will publish a green bond framework in the coming months in advance of issuing its inaugural federal green bond in 2021-22, with an issuance target of $5 billion, subject to market conditions. This would be the first of many green bond issuances.” This is interesting because, as Glen Hodgson in the Globe and Mail explains, “In a perfect world, the price system, using efficient market-based policies such as carbon taxes, would address negative effects, such as greenhouse gas emissions. There would be no need for separate green bonds. But in the real world, where the public policy response is so far inadequate, issuing governments and businesses, and investors, are making use of green bonds to address the GHG problem.” This is a take on “socially responsible investing” that I personally would like to dig into a bit more.

The next two bits we’ll touch on is Integrating Climate into Federal Decisions and Strengthening Public Climate-related Disclosures. The former is getting $36.2 M over five years (to Environment and Climate Change Canada) to develop and apply a climate lens that ensures climate considerations are integrated throughout federal government decision-making. The latter aims to open up better climate dialogue by implementing Climate-related Financial Disclosures standards rather than voluntary climate-based disclosures. Canadian policy makers can’t make policy without good science, and you can’t do good science and analysis without good data. I’m interested to see how this system shakes out, but the premise is a good one.

An aside: there is a subchapter on tax breaks and incentives for building green homes. This reminds me of a blog article I wrote a few years ago about how the heck humans could survive without air conditioning. There are so many examples of eco-friendly and geography-informed architecture practices that seem to have been ditched when air conditioning became ubiquitous. Could you imagine combining classic (sometimes ancient) techniques with modern technology?

There is a subchapter on natural disaster preparedness, though the details were kind of vague (scroll down to the summary table if you’re interested). But if you read through the subchapter, you’ll find this little gem:

“The wrecks of HMS Erebus and HMS Terror, from the legendary and ill-fated Franklin Expedition of 1845, were discovered near Gjoa Haven, Nunavut, in 2014 and 2016, respectively. Inuit co-manage the wrecks with Parks Canada. They are some of the best-preserved wooden wrecks in the world. They contain clues that can help us unravel one of the world’s greatest maritime mysteries. But reduced ice cover and increased sea swells caused by climate change are accelerating the deterioration of the HMS Erebus. To conserve and protect these historical treasure: Budget 2021 proposes to provide $15 million over three years, starting in 2021-22, to accelerate archeological and conservation work of these artifacts of international importance.” I suppose this counts as an environmental disaster too…

The last section we’ll hit is devoted explicitly to Protecting Nature. The budget allots $2.3 B over five years to Environment and Climate Change Canada, Parks Canada, and the Department of Fisheries and Oceans. Big chunks of this fund are going to protecting wild Pacific Salmon ($647.1 M over five years) and $20 million over two years to Fisheries and Oceans Canada to expand engagement with the Province of British Columbia, Indigenous communities, industry, scientists, and other stakeholders regarding sustainable aquaculture.

An interesting initiative that’s been included is an Environmental Census program: $25.6 million over five years, starting in 2021-22, and $5.8 million per year ongoing to Statistics Canada, and $1.9 million over five years, starting in 2021-22, and $0.3 million per year ongoing to Environment and Climate Change Canada to create a Census of the Environment to help monitor environmental trends and better inform decision making.

The Polar Continental Shelf Program (via Natural Resources Canada) is getting $25.4 million over three years, starting in 2021-22 to support pan-Arctic scientific research through the Polar Continental Shelf Program. The program provides support to research projects of various types and details can be found here. The program gives special consideration to project that involve Traditional Knowledge and Arctic-Antarctic collaborations. I wonder if the Arctic and the Antarctic researchers have some sort of rivalry going. That might make a good comic book.

There’s more, but I will save it for the summary table at the end of the article.

Ok, we made it. There are a lot more details in the budget, but I think this is a good start. Again, you can follow along here, on Twitter, The Newsletter, or our newly launched Medium page.

Just a reminder, this has been taken directly from the budget. To see it in the context of the budget, go here.

A Healthy Environment for a Healthy Economy (in millions)2020-
5.1. Growing our Net-zero Economy080171147136146678
Propelling Clean Tech Projects01958585858250
Growing Zero-emission Technology Manufacturing011010101546
Accelerating Investment in Clean Energy Technologies01422303442142
Enhancing Canada’s Supply of Critical Minerals01119170046
Charging and Fueling Zero-emission Vehicles041214131356
Federal Clean Electricity Fund00155515
Reducing Transportation and Landfill Emissions01922212221105
Less: Funds Sourced From Existing Departmental Resources0-7-7-7-7-7-37
Investing in the Forest-based Bio-economy0203500055
5.2. Investing in our Clean Energy Future01334524704634251,943
Advancing Carbon Capture, Utilization, and Storage Technologies02050505050220
Tax Incentive for Carbon Capture, Utilization, and StorageFinal costing pending consultation
Cleaner Fuels for a Cleaner Environment0101010101048
Less: Funds Sourced From Existing Departmental Resources0-4-4-4-3-3-20
Supporting the Production and Use of Clean Fuels10823723783763381,546
Low-Carbon Fuel Procurement Program00011313173
Supporting the CleanBC Centre for Innovation and Clean Energy016911935
Less: Funds Sourced From Existing Departmental Resources0-1-6-9-11-9-35
Investing in Clean Energy in Northern and Indigenous Communities02525250076
5.3. Advancing Canada’s Climate Plan0115119202020295
Steering Canada’s Strengthened Climate Plan0191919191994
Less: Funds Sourced From Existing Departmental Resources0-7-7-7-7-7-34
Agricultural Climate Solutions0100100000200
Integrating Climate into Federal Decisions05788836
Less: Funds Sourced From Existing Departmental Resources0-20000-2
5.4. Building Green Homes and Communities090131221163174779
Lowering Home Energy Bills through Interest-free Loans for Retrofits090131221163174779
5.5. Adapting to Climate Change for a More Resilient Future06277145186303774
Strengthening Climate Resiliency0533100169287593
Keeping Canadians Safer from Floods01624240064
Improving Wildfire Resilience and Preparedness02226272727129
Less: Funds Sourced From Existing Departmental Resources0-11-11-11-11-11-53
Supporting Provincial and Territorial Disaster Response and Recovery0000000
Addressing Climate Change in Yukon025000025
HMS Erebus and HMS Terror05550015
5.6. Protecting Nature06058689858698074,133
Historic Investments in Canada’s Natural Legacy04575425444804732,497
Less: Funds Sourced From Existing Departmental Resources0-153-224-3-3-3-386
Conserving Canada’s Oceans01582901962431991,086
Less: Funds Sourced From Existing Departmental Resources0-32-30-16-16-16-109
Reducing Ocean Plastics that Threaten Marine Life010000010
Preserving Wild Pacific Salmon035158149158147647
Sustainable Aquaculture Management0121200023
Developing the Canada Water Agency09800017
Better Understanding Our Environment04566627
Support for the Polar Continental Shelf Program07990025
Continuing Canada’s Chemicals Management Regime015915915900477
Less: Funds Sourced From Existing Departmental Resources0-61-61-6100-182
Additional Investments – A Healthy Environment for a Healthy Economy09047911149
Replacing Lost Revenue at Parks Canada due to COVID-19072000072
Funding proposed for the Parks Canada Agency to continue to replace future lost visitor revenues due to closures and restrictions at national parks, national marine conservation areas, and national historic sites as a result of COVID-19 restrictions.
Continuing to Protect Canada’s Oceans0200002
Funding proposed for Fisheries and Oceans Canada to support the Canadian Coast Guard Auxiliary Chapter in the Arctic and the Indigenous Community Boat Volunteer Pilot Program, which helps Indigenous coastal communities in the Arctic purchase boats and water safety equipment. These programs improve the safety of oceans and waterways by ensuring communities can effectively respond to marine emergencies.
Lake of the Woods0200002
Funding proposed for Environment and Climate Change Canada to maintain research and monitoring activities and to develop phosphorus pollution reduction targets in Lake of the Woods, located between Ontario and Manitoba. This will allow the federal government to continue its efforts to address toxic algae in the Lake.
Renewing the Clean Growth Hub and Clean Technology Data Strategy08880024
Funding proposed for Innovation, Science and Economic Development and Natural Resources Canada to renew Canada’s single source window to streamline client services and improve federal program coordination and reporting on clean technology results across government. Funding proposed to also enable continued generation and dissemination of data necessary to understanding how the Canadian clean technology sector is being affected by the cumulative impact of clean growth initiatives and global circumstances.
Interim Capital Asset Program Capacity Funding for Parks Canada003500035
Funding proposed for the Parks Canada Agency to maintain its internal capacity to manage its capital assets.
Learning to Camp03333313
Less: Funds Sourced From Existing Departmental Resources0-1-1-1-1-1-7
Funding proposed for the Parks Canada Agency to continue an expanded Learn to Camp program to provide Canadians with the skills and experience needed to fully enjoy the great Canadian outdoors.
Continuing Ballast Water Management0220005
Funding proposed for Transport Canada to continue the Canadian Ballast Water Program, which is responsible for administering and enforcing ballast water regulations. The program helps protect Canada’s marine environments from potentially invasive aquatic species. Funding will also support the introduction of new ballast water regulations.
Continuing Tanker Safety Inspections0300003
Funding proposed for Transport Canada to continue the Tanker Safety Inspection Program, which inspects every foreign tanker vessel on its first arrival at a Canadian port and annually thereafter. The program helps protect Canadian marine environments against hazardous material spills or leaks.
Chapter 5 – Net Fiscal Impact01,1751,8651,9971,8371,8778,750
Note: Numbers may not add due to rounding
1 *Announced in December 2020.
Just a reminder, this has been taken directly from the budget. To see it in the context of the budget, go here.

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