Canada Plans $1.7 Billion in Five-Year Clean Technology Spending

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By Peter Menyasz

Canada will accelerate efforts to shift its economy to lower carbon growth with more than C$2.2 billion ($1.7 billion) in proposed clean energy investments over the next five years, an agenda the country’s biggest business group called “very worrisome” for companies trying to compete in the Donald Trump era.

The funding was part of a budget plan announced March 22 for the fiscal year that begins April 1. The government also indicated that it will start phasing out some federal subsidies for fossil fuel exploration and development.

“By investing in clean technology and responsible resource development, we will preserve our environment for future generations, create great jobs and re-stake our claim as a leading supplier of energy to the world for the next 150 years,” Finance Minister Bill Morneau told the House of Commons.

Measures proposed in the budget require the passage of enabling legislation in the Canadian Parliament, but the majority held by Prime Minister Justin Trudeau’s government in the House of Commons assures that the measures will be adopted as proposed.

The plan also includes more funding for a range of climate change initiatives.

‘Really Important Signal’

The Canadian Chamber of Commerce questioned the plan at a time when President Donald Trump is promising to roll back environmental regulations, such as vehicle energy efficiency standards, across the border.

“I think the government may have missed the news that there has been an election in the United States,” said Perrin Beatty, president of the chamber. “This creates a competitive picture that is very worrisome for Canada.”

But environmental groups welcomed the plan.

“The budget confirmed that the government still sees clean growth and climate action as a big opportunity for Canada, and that’s a really important signal,” Clare Demerse, federal policy adviser with Clean Energy Canada, told Bloomberg BNA.

Canada should ignore what the Trump administration is doing and keep moving ahead with its climate actions, as the longer Canada waits to act, the more it will cost, Dale Marshall, national program manager with Environmental Defence, said March 23.

“In four or eight years, the U.S. will unfortunately have to play catch-up,” Marshall told Bloomberg BNA in an email. “There’s no reason Canada should shoot itself in the foot by following President Trump’s ill-advised pullback on climate change and environmental protection.”

Clean Technology

The proposed C$2.2 billion ($1.7 billion) in clean technology funding includes C$1.4 billion ($1.1 billion) in financing through the federal Business Development Bank of Canada and Export Development Canada to support the growth of clean technology firms.

The funding would allow those agencies to offer an additional C$380 million ($284 million) over three years in equity financing for clean technology firms looking to scale their operations, C$570 million ($426 million) for them to provide increased working capital to clean technology firms to meet domestic or international contract commitments and C$450 million ($337 million) in project financing for high-capital-intensive clean technology investments.

The government also proposed providing Sustainable Development Technology Canada C$400 million ($299 million) to recapitalize its Sustainable Development Tech Fund. The funding would support projects to develop and demonstrate new clean technologies that promote sustainable development by addressing climate change, air quality, clean water and clean soil, it said.

It also proposed more tax deductions for geothermal projects.

Infrastructure Spending

The government also provided in the budget additional details of its announcement last fall of C$21.9 billion ($16.4 billion) in investments over 11 years on green infrastructure, including creation of a new Canada Infrastructure Bank.

It said the funding includes C$9.2 billion ($6.9 billion) to provinces and territories to support projects to reduce greenhouse gas emissions, boost water quality, manage wastewater and build better-connected electricity systems and at least C$5 billion ($3.7 billion) for green infrastructure projects.

Support for Climate Change Framework

The government also proposed specific followup measures to the Pan-Canadian Framework on Clean Growth and Climate Change, adopted by the federal and provincial governments in December. Starting in 2018, funding would include:

  •  C$67.5 million ($50.5 million) over four years to continue existing federal energy efficiency programs;
  •  C$56.9 million ($42.6 million) over four years to develop greenhouse gas emissions regulations for the marine, rail, aviation and vehicle sectors;
  •  C$39.8 million ($29.8 million) over four years to support increased use of wood as a greener substitute material in infrastructure projects, such as mid-rise commercial and industrial buildings;
  •  C$21.4 million ($16 million) over four years to reduce reliance on diesel fuel for electricity and heat generation in indigenous and northern communities.

Cut in Oil Exploration Subsidies

The budget proposed reducing the favorable tax treatment for drilling or completing a “discovery” well—one that discovers a previously unknown petroleum or natural gas reservoir—and for exploration expenses of small companies. Less favorable tax treatment would apply when a company uses so-called flow-through share agreements to transfer the tax benefits to investors.

To contact the reporter on this story: Peter Menyasz in Ottawa at correspondents@bna.com

To contact the editor responsible for this story: Greg Henderson at ghenderson@bna.com

For More Information

The budget plan is available at http://bit.ly/2nbLdn0.

Details on tax measures are available at http://bit.ly/2nbRb7y.

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