Budget 2023 offers a range of new funds and investment opportunities to support sustainable energy and a growing green economy, including the Canada Growth Fund—a new $15 billion arm’s-length, public investment vehicle—that will help attract private capital to build Canada’s clean economy. However, there is mixed reaction to the fed’s fiscal focus from environmental sector stakeholders across the country.
Yesterday, Chrystia Freeland, Deputy Prime Minister and Minister of Finance, released Budget 2023—A Made-in-Canada Plan: Strong Middle Class, Affordable Economy, Healthy Future.
The indicators are good, according to Freeland. Canada has made a remarkable recovery from the COVID recession. Our economic growth was the strongest in the G7 over the last year, and today 830,000 more Canadians are employed than before the pandemic. Inflation in Canada has fallen for eight months in a row, the unemployment rate is near its record low, and, supported by a Canada-wide system of affordable early learning and child care, the labour force participation rate for women aged 25 to 54 reached a record high of 85.7 per cent in February.
Budget 2023 aims to build on this progress and makes transformative investments to build Canada’s clean economy, fight climate change, and create new opportunities for Canadian businesses and Canadian workers. This includes significant measures that will deliver cleaner and more affordable energy, support investment in our communities and the creation of good-paying jobs, and ensure that Canadian workers are able to produce and provide the goods and resources that Canadians and allies need.
With a responsible fiscal plan that will see Canada maintain the lowest deficit and the lowest net debt-to-GDP ratio in the G7, Budget 2023 will help to build a Canada that is more secure, more sustainable, and more affordable for people from coast to coast to coast.
“I have never been more optimistic about the future of our country than I am today. Budget 2023 will deliver new, targeted inflation relief for the Canadians who need it most; stronger public health care, including dental care for millions of Canadians; and significant investments to build Canada’s clean economy. At a challenging time in a challenging world, there is no better place to be than Canada,” said Freeland.
A Made-In-Canada Plan: Affordable Energy, Good Jobs, and a Growing Clean Economy
Canada has the potential to become a clean electricity superpower with a cross-Canada electricity grid that is more sustainable, more secure, and more affordable. The measures proposed in this Budget are important steps toward that goal.
From the resource workers that mine critical minerals or provide clean energy to the world, to the engineers designing next generation batteries, to the autoworkers assembling the electric vehicles people want to buy, this federal government seems keen to ensure that Canadians produce the goods and resources that Canada and our allies will need for generations to come.
The 2023 Budget includes the following measures to ensure Canada can accelerate the deployment of wind, solar, energy storage and other clean-energy technologies:
- Clean Technology Investment Tax Credit: A refundable 30% tax credit on capital cost of investments made by taxable entities in wind, solar PV and energy-storage technologies. This Credit will be available to all project spending starting today, March 28, 2023, though to 2034.
- Clean Electricity Investment Tax Credit: A newly announced, refundable 15% tax credit on the capital costs of investments made by non-taxable entities, such as Indigenous communities, municipally owned utilities and Crown corporations that make investments in renewable energy, energy storage and inter-provincial transmission and other non-emitting electricity infrastructure.
- Clean Manufacturing Investment Tax Credit: Budget 2023 also introduces a 30% refundable ITC for investment in machinery and equipment used to manufacture clean technology and extract relevant critical minerals. This tax credit is available for the manufacturing of renewable energy and energy-storage equipment, and the recycling of critical minerals.
- Clean Hydrogen Investment Tax Credit: A refundable 40% investment tax credit on green hydrogen, starting in Budget 2023.
- Net-zero Transmission Project Support: There will be an upcoming consultation on the “best means” to support intra-provincial transmission that support Canada’s net-zero grid objectives.
- Canadian Infrastructure Bank: Budget 2023 also includes $20 billion in support for Clean Electricity investments, including at least $10 billion through the Clean Power priority area and at least $10 billion through the Green Infrastructure priority area.
- Recapitalization of SREPs: The Smart Renewables and Electrification Pathways (SREPs) program will receive a total of $3 billion to support regional priorities and Indigenous-led projects.
- Canada Growth Fund: The Budget provides an enhanced commitment to carbon-price stability via new tools in the Canada Growth Fund, which will be managed by the Public Sector Pension Investment Board.
The budget received mixed reviews.
The Federation of Canadian Municipalities (FCM), on behalf of its more than 2,100 members, previously put forward efficient, cost-effective recommendations for much-needed investment in Canadian communities; including in disaster mitigation and adaptation, infrastructure renewal, affordable housing and community well-being.
Taneen Rudyk, president of FCM, issued this statement following the tabling of the 2023 federal budget: “FCM notes that the 2023 federal budget represents progress on some priority issues for Canadian municipalities, and leaves significant gaps on other critical challenges facing communities and cities.
“From forest fires to destructive storms to floods: local communities across Canada are on the front lines of extreme weather events. FCM is leading the charge for action and investment to protect against the damage caused to local economies, infrastructure, and homes. The draft National Adaptation Strategy, released in November 2022, was an important step, and signaled the government’s intention to increase funding for climate resilient municipal infrastructure,” said Rudyk. “FCM is disappointed that Budget 2023 did not follow through on this commitment, and we continue to call for predictable, long-term funding through the Disaster Mitigation and Adaptation Fund—critical investments that will protect communities for the next fire, storm, or flood.”
However, Rudyk was pleased with Budget 2023’s strong investments to support Canada’s progress towards a net-zero GHG emission future. “New funding and tax incentives, including for hydrogen production and carbon capture, utilization and storage (CCUS), will help to enable Canada’s world-leading energy sector to reduce GHG emissions and remain competitive, while new investments in clean electricity will assist municipalities as they continue to implement policies and programs to reduce emissions from transportation, buildings and waste on a pathway to net zero communities.”
The Canadian Renewable Energy Association (CanREA) had advocated for refundable investment tax credits for renewable energy and green hydrogen investments. So CanREA is excited to see their recommendations strongly reflected in Budget 2023.
“The choice to pursue investment tax credits for clean technology, like wind, solar, storage and green hydrogen, will allow Canada to take a competitive lead in accelerating the decarbonization of the energy sector,” said Evan Wilson, senior director of Policy and Government Affairs at CanREA, who was on site for the introduction of the Budget.
As noted in CanREA’s 2050 Vision, Canada needs to expand wind and solar energy capacity almost ten-fold in order to meet the national commitment to achieving net-zero GHG emissions by 2050.
But the budget left others wanting more. Environmental Defence is a leading Canadian environmental advocacy organization that works with government, industry and individuals to defend clean water, a safe climate and healthy communities.
“We welcome the historic addition of labour conditions to tax incentives and the reserved seats for unions on the board of the Canada Growth Fund. However, the government still needs to detail how it will support workers and communities directly impacted by the transition as we phase out fossil fuels and other high-carbon sectors,” said Aliénor Rougeot, program manager for Climate and Energy for Environmental Defence.
“Canada needs dedicated funding for communities and Indigenous nations to diversify their economy and prepare for a global energy transition – and ensure income support and retraining programs are accessible to those who have been historically excluded from economic opportunities. Regrettably, today’s budget still embraces a polluter-gets-paid principle. While Indigenous communities downstream from the tar sands are currently grappling with massive toxic leaks, the government is handing our taxpayer dollars to the companies causing the damage.”
Similarly, there was mixed reception and criticism from the climate experts at Climate Action Network – Réseau action climat Canada (CAN-Rac):
“When it comes to the transformation of the Canadian economy in the face of the climate crisis, Budget 2023 phases in the good and fails to phase out the bad. Groundbreaking investments in clean electricity will build the grid of the future and provide Canadians with safer, cleaner, and more affordable energy – if underpinned by solid regulations and respect for Indigenous rights and sovereignty. It’s also encouraging to see the investment tax credits come with solid strings attached for good labour conditions,” Caroline Brouillette, acting executive director of CAN-Rac.
“At the same time, this budget doesn’t show any progress towards fulfilling Canada’s promise to end fossil fuel subsidies this year. The absence of an honest examination of the future of the oil and gas industry in this rapidly shifting global economy, which could have been illustrated through new and transformational investments for a Just Transition, is also glaring.”
Environment Journal is working on additional coverage related to the cleantech incentives and Canada Growth Fund opportunities ahead. Stay tuned.
Featured image: Chrystia Freeland, Deputy Prime Minister and Minister of Finance. (YouTube/Screen Capture)
