A Government reveals its priorities by how it builds a budget. With the 2021 budget, what priority did the Trudeau government give to its energy and climate promises?
The Federal budget presents 5 major themes. One of those themes was “Climate Action and a Green Economy”. To transition Canada’s economy to net-zero carbon pollution by 2050, the government is betting big – $8Billion big – on innovation.
Key initiatives include:
- A 50% tax reduction for businesses that manufacture zero-emission technologies. Examples include wind turbines, geothermal systems, electric vehicle charging, and green hydrogen.
- Businesses will have a limited-time opportunity to immediately write off the full cost of investments in certain clean energy technologies.
- Research and Development funds will support carbon capture, utilization, and storage (CCUS) projects. The goal of CCUS projects will be to reduce emissions by at least 15 Mega Tonnes (MT) of CO2 annually. Canada currently captures 4 MT of carbon every year.
- An investment tax credit for capital invested in CCUS projects is proposed for direct air capture projects, and not for enhanced oil recovery projects.
- $1B will support large-scale clean technology projects that require investment at a scale and time horizon outside of the scope of traditional project financing.
- Money is earmarked to strengthen clean technology policy development and a “Clean Growth Hub” where producers and adopters can more easily find federal programs and services to advance clean technology projects.
- Natural Resources Canada will receive funding for battery and mineral research.
- Measurement Canada will develop a set of codes and standards for retail Zero Emission Vehicle (ZEV) charging and fueling stations.
- Public Services and Procurement Canada will purchase renewable energy certificates for all federal government buildings.
The Canadian government also intends to issue its first ever Green Bonds with an issuance target of $5B. These bonds will fund clean tech innovation, nature conservation, green infrastructure, and other projects that reduce carbon pollution.
It’s clear that 2021 Federal Budget is betting big on technology. Governments have all too often relied on technology to drive energy efficiency. This bias remains strong in the current budget priorities.
Do we think this all-in bet on technology will get Canada to net zero?
Managing Canada’s energy transition to reduce carbon pollution must encompass more than technology. It must also address behaviour change and energy costs – fundamental issues in managing energy. Canada’s political and business leaders must master these fundamental skills in their organizations. Until then, Canada will never know how to effectively deploy and use technology.
Unfortunately, the budget reveals this ongoing vulnerability and weakness.