Budget 2017 maintains the federal government’s modest momentum on climate action. The latest plan builds on the investments made in Budget 2016 with new spending on clean technology, green infrastructure and other climate change initiatives. Budget 2017 also affirms the commitments made in the Pan-Canadian Framework on Clean Growth and Climate Change, such as a national carbon price and accelerated coal phase-out.
Unfortunately, despite important progress, the budget falls short of the ambition necessary to meet Canada’s international climate commitments. New spending on climate change initiatives amounts to less than 1% of total government spending in the next five years. Moreover, the budget does little to address Canada’s deep dependence on fossil fuels. All the clean technology in the world won’t save the planet if we keep extracting and burning coal, oil, and natural gas—a reality that Budget 2017 fails to confront.
Let’s take a closer look at what is and isn’t in this year’s budget from a climate policy perspective.
Reducing greenhouse gas emissions
Last year’s budget created the Low Carbon Economy Fund, which was supposed to provide $2 billion over two years to emission reduction projects. Budget 2017 takes that initial $2 billion and spreads it out over five years, significantly reducing the amount of money available in the short term. More details about how the fund will be allocated will be announced later in the spring.
Budget 2017 provides $650 million over five years in new funding to support the pan-Canadian framework. Much of that money is allocated to government departments to build climate policy capacity and to develop new regulations, especially related to energy efficiency in the transportation and buildings sectors. The budget claims these measures will help to reduce Canada’s greenhouse gas emissions, although the budget contains no analysis of its net emissions impact.
Green infrastructure and public transit
The budget outlines the government’s plan to spend $2.8 billion directly on new green infrastructure over the next 11 years. The largest portion is for a new $2 billion Disaster Mitigation and Adaptation Fund, which is an acknowledgement that the risk of Fort McMurray-style catastrophes will continue to grow as climate change accelerates. Other national projects announced in the budget include investments in smart grids, renewable energy commercialization, and programs to reduce diesel use in rural and remote communities.
Much more money for green infrastructure projects will be made available indirectly. The federal government will transfer $9.2 billion over 11 years to the provinces for green infrastructure and a further $20.1 billion over 11 years for public transit infrastructure. The new Canada Infrastructure Bank will invest at least $35 billion of federal money over 11 years, of which $5 billion is allocated to green infrastructure and an additional $5 billion is allocated specifically to public transit infrastructure.
Clean technology
Budget 2017 includes a raft of measures to support the clean technology sector worth roughly $1 billion over five years. Initiatives include funding for clean tech research, development and demonstration projects as well as expanded financing for clean tech start-ups. Technological innovation does not directly reduce emissions, but it enables cheaper and more effective emission reduction possibilities in the future.
Carbon pricing
The federal government announced a national floor price on carbon last year, which is due to come into effect in 2018. Budget 2017 affirms this commitment but includes no details. A consultation paper will be released in the spring with a technical outline of the government’s carbon pricing proposal.
Fossil fuel subsidies
Budget 2017 acknowledges Canada’s international commitment to phase out “inefficient” fossil fuel subsidies. Preferential tax treatment for fossil fuel projects promotes environmentally-destructive resource extraction and thwarts the government’s own emission reduction efforts. Nevertheless, Budget 2017 extends the Mineral Exploration Tax Credit for another year. Although the cost is only $30 million, this tax break directly subsidizes the expansion of the tar sands and other fossil fuel projects.
A related fossil fuel subsidy—the Canadian Exploration Expense—is rejigged so that fewer projects will be able to claim a full tax deduction in the year exploration expenses are incurred. However, those projects are still eligible for the Canadian Development Expense, which provides a similar deduction over a longer timeline. Budget 2017 claims this change “indirectly supports” its climate goals, but in practice the impact is unlikely to be significant.
Just transition
A perennial oversight in Canadian climate policy is the need for a robust social safety net to support the workers and communities put at risk by emission reduction policies. Budget 2017 does not directly address this issue, but the budget’s emphasis on skills training will help to bridge the gap. Modest changes to employment insurance will provide more flexibility for unemployed workers to seek training. Investments in workforce development, which will help displaced workers find new jobs, are also welcome.
Environmental monitoring and protection
Previously-announced funding to monitor the controversial Trans Mountain and Line 3 oil pipelines is affirmed in Budget 2017. An additional $17.4 million over three years is allocated to the National Energy Board to enhance pipeline oversight. The budget does not acknowledge the greenhouse gas emissions associated with its ongoing support for new fossil fuel infrastructure.
Gender analysis
Budget 2017 includes a much-anticipated gender statement, which provides an overview of the differential impacts of certain budget measures on men and women. The chapter notes that women are generally more vulnerable to the effects of climate change than men, but does not go on to specify how the budget addresses that difference. The government promises to apply a gender lens to climate policy in the future.
Conclusion
The federal government has their climate rhetoric well in hand—the phrase “climate change” appears 50 times in the budget—but when it comes to putting Canada on a pathway to deep decarbonization, Budget 2017 comes up short. Significant investments in key areas, such as public transit and clean technology, should not be dismissed out of hand, but the funds are heavily backloaded and too small given the scale and urgency of the climate challenge.
Fighting climate change requires a war-scale effort, but the climate measures announced today—including indirect spending like the Canada Infrastructure Bank—account for just 0.7% of total federal expenditures over the next five years. That’s equivalent to 0.1% of the Canadian economy.
Furthermore, the budget largely sidesteps the issue of fossil fuel extraction, which is the root cause of the global climate crisis. Not only does Budget 2017 downplay the role of oil and gas production in driving Canadian greenhouse gas emissions, but it also continues the destructive practice of directly subsidizing the fossil fuel industry.
Budget 2017 is a baby step in the right direction when a leap is needed. Overall, it will disappoint Canadians hoping for bold climate action commensurate with the scope of the climate crisis and the government’s own climate ambitions.
Hadrian Mertins-Kirkwood is an international trade and climate policy researcher at the CCPA. Follow Hadrian on Twitter @hadrianmk.
