After announcing $63 billion in new climate-related spending in Budget 2023, the federal government’s climate ambitions dropped off significantly in Budget 2024.
The Canadian Centre for Policy Alternatives’ initial analysis finds that the latest federal budget includes about $14 billion in net new climate-related spending, but that money is spread out over 11 years and is heavily backloaded. This budget announces only $2 billion in net new climate spending over the next five years.
That’s a pittance in the context of Canada’s $100 billion per year clean economy investment gap—the additional amount we need to be spending to put the economy on a path to net-zero greenhouse gas emissions by mid-century.
And while housing affordability was deservedly front and centre in this budget, we can’t afford to lose sight of the climate crisis and the urgency of transitioning away from the production and consumption of fossil fuels in the Canadian economy.
Via Rail headlines new climate spending
The largest chunk of new climate-related spending in this budget is for the expansion of the clean electricity investment tax credit at an anticipated additional cost of around $6 billion. Ironically, however, the program is “reprofiled” such that it will cost the government $1.5 billion less over the next five years than initially expected. The lion’s share of the tax credit won’t kick in until at least 2029.
The second biggest new announcement—$3.1 billion over 11 years—is for nuclear science research and environmental remediation. It’s not immediately clear how this funding will help with emissions reductions since the money is not intended for new generating capacity.
More promising are the announcements related to transportation and buildings.
Via Rail receives $462 million over five years for sorely needed operational funding. That money will be put to work immediately to deliver better rail service across the country.
The feds are also allocating $372 million over six years to a crown corporation—the confusingly named VIA HFR-VIA TGF Inc.—to continue development of high-frequency rail (HFR) in the Toronto-Quebec corridor. This is the first time we’ve seen the government commit to delivering the HFR project through a publicly owned corporation after initially entertaining the idea of selling it off to a private consortium. That’s a big win for advocates who have fought to defend the integrity of public passenger rail.
On the buildings side, the budget introduces a new Canada Greener Homes Affordability Program at a cost of $800 million over five years. The program will help lower-income households in particular—who have the most to gain from reduced energy bills—to improve the energy efficiency of their homes through retrofits.
The new program does represent a funding cut. The recently expired Greener Homes Grant, which this new program replaces, disbursed $2.6 billion over the past three years. However, the targeted design of the new program means it may have a bigger impact.
Other new climate-related spending in Budget 2024 includes an electric vehicle supply chain investment tax credit, an extension of the Clean Fuels Fund for biofuels, an extension of the carbon pricing rebate to small businesses, and some miscellaneous funding for research, administration and minor tax incentives.
The budget also includes new details about projects funded through the Canada Infrastructure Bank and Canada Growth Fund, although all of that money was accounted for in previous budgets.
Climate movement earns some policy wins
In a recent co-publication with Climate Action Network – Réseau action climat (CAN-Rac) Canada, the CCPA made three specific recommendations for Budget 2024. Did it deliver?
First, our call for energy efficiency retrofits for low-income housing was realized in part through the Greener Homes Affordability Program. The actual funding on offer is about a third of what we said was necessary, but it’s a step in the right direction for addressing climate and affordability concerns in tandem.
Second, our call for a Youth Climate Corps was specifically acknowledged in the budget. The federal government “intends to launch consultations” on the potential program, which is another step in the right direction and a big win for climate advocates. But with no specific budget or timeline it will be hard to hold the government to account.
Third, our call for an excess profits tax on the oil and gas sector did not come through. Indeed, the oil and gas sector escapes any scrutiny whatsoever in this budget. Increasing the capital gains inclusion rate is a monumental and progressive tax measure in general—another big win for advocates, this time for the tax fairness movement—but it does not specifically address the egregious profitability of the fossil fuel industry.
Of the longer list of climate-related asks included in the CCPA’s latest Alternative Federal Budget, the federal budget’s new funding for passenger rail comes closest to meeting expectations. Even on that front, however, the less than $200 million per year on offer pales in comparison to the $2 billion per year we argue is needed.
Budget 2024 also comes up empty-handed in crucial areas such as increasing international climate finance, eliminating outstanding fossil fuel subsidies and delivering a just transition for fossil fuel workers and communities.
All eyes on 2025
Despite the limited new climate spending announced in Budget 2024, backloaded funding from previous budgets means the federal government is still expected to spend about $19 billion on climate action in the current fiscal year. That number is slated to rise to $22 billion by 2027/28, which is equivalent to about 0.7 per cent of GDP.
It’s a positive trajectory, but it’s still well short of the two per cent of GDP we need to be spending on decarbonization. In other words, it is too soon for the federal government to rest on its climate laurels.
Things may change in 2025 in the lead-up to a crucial federal election. The climate crisis remains a top concern for voters, and it will no doubt be front of mind after yet another summer wracked by extreme weather events.
But every year we wait to act is a year we don’t have. This budget was a small step forward when a bold stride was needed.
