Budget 2017 Outlines Plan for Clean Growth Economy

On March 22, the Government of Canada unveiled the 2017 Federal Budget, which includes various commitments for the creation of a "clean growth economy."

What You Need To Know

• Budget 2017 outlines further details of the Government's plan to invest $21.9 billion over 11 years in green infrastructure, which was originally announced in the 2016 Fall Economic Statement. These investments will include:
• $9.2 billion for provinces and territories to support certain priority projects;
• at least $5 billion to be made available for targeted investments in green infrastructure projects through the Canada Infrastructure Bank (CIB); and
• $2.8 billion for national programs (including $2 billion for a Disaster Mitigation and Adaptation Fund).
• Budget 2017 also includes a number of funding commitments and complementary actions intended to support the implementation of the Pan-Canadian Framework on Clean Growth and Climate Change (Pan-Canadian Framework) (as discussed in a previous Torys bulletin). Key measures include investments in clean technology innovation and funding for government agencies responsible for various clean energy and climate change initiatives. In addition, under Budget 2017, the $2 billion Low Carbon Economy Fund will span five years starting in 2017-2018, rather than two years as originally proposed in Budget 2016.

Highlights of Clean Growth and Climate Change Measures

Investment in Green Infrastructure

In its 2016 Fall Economic Statement, the Government committed to invest $21.9 billion over 11 years in green infrastructure. The 2017 Budget outlines further details regarding the allocation of these investments, which will flow through three main streams:

• Bilateral Agreements.  To support priority projects, $9.2 billion will be allocated to provinces and territories on a base plus per capita allocation basis. Priority projects will include those that tackle challenges such as emissions reduction, delivery of clean water, wastewater management, climate change adaptation, and modernization of power grids.
• Canada Infrastructure Bank.  At least $5 billion will be made available through the CIB for targeted investment in green infrastructure projects. As described in the Fall Economic Statement, the CIB is intended to allow the Government to leverage its investments in infrastructure by attracting private capital for certain revenue-generating projects. Legislation to establish the CIB is expected to be proposed soon, with the bank expected to become operational by late 2017.
• National Programs.  Budget 2017 allocates $2.8 billion for a series of national programs, including $2 billion for a Disaster Mitigation and Adaptation Fund; $200 million to support emerging renewable technologies nearing commercialization; and other funding to support the implementation of new building codes, the popularization of electrical vehicles and the deployment of smart grid, storage and clean electricity technology initiatives.

Supporting the Pan-Canadian Framework

Announced in December 2016, the Pan-Canadian Framework is intended to facilitate Canada’s transition to a low-carbon economy while combatting climate change. An essential feature of the Framework is a federal benchmark for pricing carbon pollution (see further details in a previous Torys bulletin).

Budget 2017 highlights several funding commitments and complementary actions that are intended to support the implementation of the Framework. Key measures include:

• investments in clean technology innovation (including $1.4 billion in new financing for clean-tech firms and $400 million to recapitalize Sustainable Development Technology Canada);
• the establishment of a new Canadian Centre for Climate Services;
• investment of $400 million in the Arctic Energy Fund to address energy security for northern remote communities; and
• implementation of a coordinated, whole-of-government approach to climate change, including funding to enhance action to address short-lived climate pollutants, decarbonize the transportation system, and develop a legislative framework for offshore renewable energy projects.

Additional resources will also be allocated to government agencies responsible for various clean energy and climate change initiatives, such as accelerated coal generation phase-out by 2030, development of emissions regulations and fuel standards, climate change and health adaptation programs, and energy efficiency programs in the federal government and building and industrial sectors.

Notably, the Government has adjusted the timeline relating to the $2 billion Low Carbon Economy Fund, which is designed to fund certain eligible emission reduction projects. Originally proposed in Budget 2016 to span two years, starting in 2017-2018, the Fund will instead span five years starting in 2017-2018. Further details on the allocation of the $2 billion fund are expected to be released in the near future.

For further details on Budget 2017, please consult the Government of Canada's website.

To discuss these issues, please contact the author(s).

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