Our federal government brought down its 2023 budget last week and it was very green. Dealing with climate change was front and centre. There were other good things, such as a big boost for dental care, and a few items missing, like pharmacare, but I would give it an A simply for the good stuff it proposes for the overarching challenge of our time.
A big reason for going big on climate change policy was the need to compete with President Joe Biden’s Inflation Reduction Act, legislation couched in terms of affordability but in fact a massive package of subsidies for clean energy and technology. As with the American approach, the Liberals opted for more carrot than stick.
The carrots included:
- $500 million added to the $4.1 billion in support announced last year for carbon capture, utilization and storage.
- $15 billion for the Canada Growth Fund. According to the Department of Finance, the fund will “will make investments that catalyze substantial private sector investment in Canadian businesses and projects to help transform and grow Canada’s economy at speed and scale on the path to net-zero.”
- $16.4 billion in tax credits for clean tech manufacturing, clean electricity and hydrogen over the next five years, added to the $6.7-billion in supports for clean tech investment announced last fall.
- $8 billion for a “net zero accelerator.” This initiative will provide funds “to support large-scale investments in key industrial sectors across the country.”
- $20 billion for the Canada Infrastructure Bank. The bank complements yet is distinct from government programs, partnering with industry to direct investment that delivers “sustainable economic growth, connected communities and climate change action.”
The Canada Growth fund and the Canada Infrastructure Bank will act in effect like “green banks” that spur private investment by offering access to capital at more favourable terms than commercial banks.
Unfortunately, current carrots for the oil and gas industry were not eliminated.
One noteworthy aspect of the investment tax credits is that the level of credits available to companies depends on meeting labour conditions that include fair pay, benefits for workers, and employment of apprentices. (The NDP influence perhaps?) Organized labour liked this bit.
The heart and soul of the package is funding for clean electricity. If we are to go green, we must go electric and that means a greatly improved grid. This budget takes significant steps in that direction.
While business views of the budget blew both hot and cold, Dennis Darby, president of the Canadian Manufacturers & Exporters was ecstatic, effusing “Labour shortages, the U.S. Inflation Reduction Act’s negative impact on manufacturing investment in Canada, and the high costs of transitioning manufacturing production to a net-zero future all needed to be addressed. We were pleased to see the budget respond on all these fronts.”
Biden’s legislation was the most important climate action in U.S. history, and Canada has responded with our most consequential climate budget ever. This is the kind of competition the planet appreciates.