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Photo attribution: Province of British Columbia
Photo attribution: Province of British Columbia

Budget 2019 fiddles while climate crisis looms

March 20, 2019

4-minute read

Climate action under the current federal government has followed a now-familiar pattern: identify the need for real change, commit to taking ambitious action, and then propose modest policies that only tinker around the edges of our fossil fuel-based economy.

Budget 2019, as in past years, does many things right on the climate file, especially when it comes to a just transition for coal workers and communities. But the budget comes up short in the face of a looming climate crisis that the world has only eleven years to escape. Much more ambitious and comprehensive measures will be necessary to put Canada on a path to a zero-carbon economy.

Electric vehicles and building retrofits headline climate policy measures

The budget’s headline climate measure is a set of policies for encouraging the adoption of zero-emission vehicles (ZEVs). Consumers will be able to receive a $5,000 subsidy for the purchase of an eligible ZEV while businesses will be able to fully write off the cost of adding ZEVs to their fleets. In addition, the government has promised to fund new electric vehicle charging infrastructure. The government hopes that 100% of new vehicle sales will be ZEVs by 2040.

Altogether, these policies will encourage a faster transition to a cleaner transportation sector, which currently accounts for a quarter of Canada’s greenhouse gas emissions. However, funding commitments for these budget items are very modest. There are tens of millions of gasoline and diesel-powered vehicles on the road today, but the $300 million allocated to ZEV subsidies in this budget amounts to only 60,000 new ZEVs on the road in the next three years. The $130 million allocated for charging infrastructure will only build a few thousand new charging stations across the country.

Yet more money for ZEVs is not necessarily the answer. Direct subsidies for ZEVs disproportionately benefit higher-income families and are more expensive than many comparable climate policies, such as investments in public transit. Encouraging consumers to shift away from gas and diesel vehicles is necessary for Canada to reduce emissions, but simply replacing them with ZEVs doesn’t address more fundamental transportation challenges such as those posed by rampant suburbanization.

Elsewhere, Budget 2019 promises $1 billion in new funding to municipalities to improve the energy efficiency of public, private and residential buildings. Reducing the amount of energy we consume is one of the best ways for Canada to fight climate change and, as a side benefit, creates a huge number of jobs in the process. But once again, the budget comes up short given the scale of the challenge. Investments in the tens of billions of dollars will be necessary to retrofit Canada’s existing building stock.

Other climate-related budget items include $150 million for natural disaster management and an additional $250 million specifically for on-reserve climate resiliency and emergency response. The budget endorses climate-related financial disclosure but does not require it from the public or private sector. Some additional details are provided on the carbon pricing dividend that households in Ontario, Manitoba, New Brunswick and Saskatchewan will start receiving this spring.

Just transition plan for coal communities takes shape

As expected following the final report of the Just Transition Task Force, the budget promises to support the workers affected by the national phase-out of coal-fired electricity generation. There is no new money earmarked for worker supports, but last year’s budget included $35 million over five years for this purpose. The government says it will continue to consult with workers on next steps. It did not mention a renewed mandate for the task force.

Importantly, Budget 2019 allocates $150 million in new money specifically toward infrastructure investments in coal communities, which is essential for replacing the economic productivity lost by the closure of coal plants and coal mines. Diversification in these typically small and rural communities is a key challenge moving forward, so government support here is both welcome and necessary.

Indeed, the government’s approach to supporting coal workers and communities through this transition offers a useful model for future industrial transitions, especially the inevitable phase out of oil and gas production.

Speaking of oil and gas...

The greatest disappointment in Budget 2019—like every federal budget of the past several years—is the government’s continued support for the expansion of the fossil fuel industry, which is fundamentally incompatible with our national and international climate goals.

While acknowledging Canada’s commitment to ending “inefficient fossil fuel subsidies,” the budget makes no new moves in that direction. In fact, the budget offers $100 million in new money to oil and gas companies to support “innovation.” And how can we forget that the government spent $4.5 billion last year to purchase the Trans Mountain pipeline.

Responding to Budget 2017, I wrote that “all the clean technology in the world won’t save the planet if we keep extracting and burning coal, oil, and natural gas.” Two years later we’re burning a little less coal, but the situation remains largely unchanged.

Despite positive gestures and modest policy momentum, Budget 2019 fails to put Canada on the necessary path to a zero-carbon economy. As a result, Canada finds itself facing another year of slow progress at this critical time of transition.

Hadrian Mertins-Kirkwood is a researcher on international trade and climate policy for the Canadian Centre for Policy Alternatives. Follow Hadrian on Twitter: @hadrianmk.

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