The background: Since Prime Minister Justin Trudeau came to power in 2015, he has emphasized the government’s commitment to tackling climate change. As Canada’s economy slowly recovers from the effects of Covid-19 amid a renewed global interest in climate issues, the government’s first budget in two years seeks to use its environmental policy recovery.
‘[The federal budget is] a plan that embraces this moment of global transformation into a green, clean economy, ‘Freeland said in her budget speech. “In 2021, job growth means green growth.”
Another senior official summed up the thinking of the government: “Climate change is now an innovation and a job opportunity.”
Here’s how the Trudeau government plans to achieve its climate goals.
Direct spending: As part of the government’s stated goal of reducing Canada’s carbon dioxide emissions to zero by 2050, while also pursuing a more activist role in leading the economy, Ottawa is pumping C $ 5 billion over seven years into the Net Zero Accelerator.
The program, announced in December with initial funding of C $ 3 billion, aims to abandon Canadian companies in traditional sectors to reduce their carbon footprint, either by encouraging large issuers such as oil and steel producers to reducing carbon dioxide, or encouraging car and aviation manufacturers to adopt clean technologies.
In the same vein as the management of private companies to pursue actions worthy of the Liberal government, Ottawa will also make C $ 1 billion available over five years “to help attract investment in the private sector” for Canada’s clean technology. -sector.
One of the latest new items under the budget environmental initiatives is aimed at fulfilling a liberal election promise in October 2019 to conserve 25 percent of Canada’s oceans and countries by 2025. The federal government plans to spend C $ 2.3 billion over five years to preserve it. up to one million square kilometers of land and inland waterways. The government also promises to create ‘thousands of jobs’ through ‘historic investments in Canada’s natural heritage’, but does not provide any details.
Tax cuts: In a budget that maximizes tax revenue, one group will see at least a smaller tax bill at least temporarily – manufacturers of exempt technologies. It is a wide umbrella that includes manufacturers of wind turbines, solar panels, electric vehicles, batteries and fuel cells, as well as producers of biofuels and green hydrogen.
Companies that earn at least 10 percent of their total gross income in Canada from eligible zero-exemption efforts could get 50 percent on their corporate and small business tax rates, though the tax break in 2029 will begin to be phased out and eliminated. by 2032.
Home is where the green is: Based on a program announced in the 2020 fall economic statement to encourage homeowners and landlords to carry out energy-efficient upgrades, Ottawa plans to spend C $ 4.4 billion on interest-free loans of up to 40,000 C distribute each to homeowners to carry out “deep redevelopment”. such as oil furnace replacement, draft windows and poor insulation.
Other measures: As expected, Canada plans to capitalize on the growing demand among global investors for fixed-income securities financing green infrastructure projects and other sustainability initiatives. Canada hopes to raise C $ 5 billion by issuing green bonds in fiscal 2021-22, which according to the budget will be ‘the first of many green bond issues’.
With the federal carbon tax passing its last legal stumbling block on the Supreme Court last month, rebate payments to consumers will become more visible next year. At present, Canadians receive payments as a repayable credit if they file taxes, but from 2022, the money goes out every quarter as ordinary benefits.
To be determined: Some key components of Ottawa’s climate-related budget measures that have an extraordinary impact on Canada’s ability to meet its climate goals have yet to be nailed down.
There have been many calls from industry, particularly in the oil and gas sector, asking Ottawa to introduce a tax credit to encourage carbon capture, utilization and storage (CCUS). Ottawa says a tax credit for capital investment invested in CCUS projects is imminent and that the measure could reduce CO2 emissions by at least 15 megatons annually.
However, there is no dollar figure attached to the budget, which says that the final cost is a consultation period of 90 days, with no official start date.
Finally, with countries around the world applying different types of carbon prices, and some countries not applying any pollution at all to their local industries, the government wants to level the playing field for Canadian businesses. It is in the process of exploring a carbon adaptation frontier system that will apply appropriate levies on imports and exports, although the government says it will also require a consultation process. ‘