Budget 2025 takes clear steps to strengthen Canada’s local weather competitiveness

OTTAWA — Rick Smith, President of the Canadian Climate Institute, made the next assertion in response to the federal authorities’s Climate Competitiveness Strategy outlined in Budget 2025:

“The international financial exercise generated by decarbonization is likely one of the biggest alternatives of this century. Canada’s Climate Competitiveness Strategy, introduced by the federal authorities right now, is an efficient first step towards making certain Canada can succeed on this context. If Canada goals to double non-U.S. exports over the following decade, it is going to be crucial to extend commerce with Europe, Asia, and the Americas—all of which proceed to take sturdy motion to speed up the shift to renewables, electrical autos, and different low-carbon electrical applied sciences.

“The price range proposes actions and supply timelines to bolster Canada’s local weather competitiveness—particularly on core insurance policies comparable to industrial carbon pricing, stronger methane rules, sustainable funding pointers, and tax credit for increasing clear electrical energy. We look ahead to working with the federal authorities to make sure these important insurance policies end in extra considerable and inexpensive power, appeal to new funding to Canadian industries, assist extra well-paying jobs and financial progress throughout the nation, and assist make communities safer and resilient.

“Swift implementation of climate competitiveness priorities will define how Canada succeeds or fails. In the absence of some remaining details, policy uncertainty persists, undermining Canadian firms’ ability to attract investment.”

KEY POLICY DETAILS

For the final six months, the Climate Institute has emphasised the significance of a number of local weather and competitiveness priorities. This price range addresses every of them, with various ranges of element: 

Industrial carbon pricing:

Modernizing industrial carbon pricing stays one of many most important things the federal authorities can do to scale back emissions whereas conserving prices low for companies and having virtually no impact on the price of residing. Doing so requires fixing issues with provincial carbon credit score markets, and creating certainty round carbon markets past 2030 so that companies could make massive investments in low-carbon initiatives. 

Critically, Budget 2025 makes a transparent dedication to deliver extra certainty to industrial carbon pricing. It commits to fixing the federal benchmark (which defines minimal requirements for provincial programs), enhancing the federal backstop (which can be decisively utilized in jurisdictions that don’t meet the benchmark), and creating a long-term worth trajectory. The particulars and specifics of those adjustments will make or break this coverage’s effectiveness, each for the local weather and competitiveness. We look ahead to contributing to the federal government’s efforts to enhance this crucial coverage software.

Methane rules for oil and fuel:

We assist the federal government’s dedication to finalize enhanced guidelines to scale back methane emissions for the oil and fuel sector. Oil and fuel emissions stay a barrier to Canada’s total local weather progress and make up practically a 3rd of the nation’s greenhouse gases. Stronger guidelines to scale back methane air pollution would construct on a powerful record of success in provinces like B.C., Alberta and Saskatchewan, and create new alternatives for Canadian firms which have been leaders in commercializing applied sciences to handle methane. And methane represents among the lowest-cost emissions reductions out there. 

Clean Electricity Investment Tax Credit:

Budget 2025 explicitly acknowledges the significance of dramatically rising funding into Canada’s electrical energy system, and commits to introduce laws quickly implementing the Clean Electricity Investment Tax Credit to assist provinces in upgrading and increasing their electrical energy grids, in addition to enhancements to present tax credit. We additionally assist the choice to keep up the federal Clean Electricity Regulations, which can assist speed up the transition to scrub, dependable energy. Low-carbon electrical energy is already a serious Canadian aggressive benefit, and ensuring electrical energy stays considerable and inexpensive can be important for future competitiveness as demand continues to develop.

Climate Investment Taxonomy:

Importantly, the Budget recommits Canada to finalizing a nationwide local weather funding taxonomy (known as “Made-in Canada Sustainable Investment Guidelines”) for the monetary sector by the tip of 2026. The voluntary pointers will present much-needed standards to assist buyers consider materials dangers and alternatives from transition. Budget 2025 additionally notes the federal government’s intention to discover a Sustainable Bond Framework in assist of issuing each inexperienced and transition bonds to be aligned with a Canadian taxonomy, additional mobilizing funding to assist the transition.

Electric Vehicle Availability Standard:

While Budget 2025 notes that the nationwide Electric Vehicle Availability Standard is at present underneath evaluation, we urge the federal authorities to keep up the core components of the coverage, to assist improve Canadians’ entry to high-quality, lower-cost electrical autos. The federal authorities ought to comply with by means of on its dedication to deliver readability and transparency to any change to the coverage throughout the following weeks. 

Resilient communities and infrastructure:

Budget 2025 makes little point out of how the federal authorities will assist provinces and communities in making infrastructure extra resilient to climate-fueled excessive climate. Investing in adaptation shouldn’t be a ‘nice to have’—upgrading infrastructure for present and future excessive climate can be essential to saving billions of {dollars} in prices from disrupted commerce and different financial impacts, and must be a key part of any local weather competitiveness technique. 

In specific, the announcement of $51 billion for a brand new Build Communities Strong Fund must be fastidiously designed to make sure that initiatives funded by means of this program don’t make Canada extra susceptible to local weather change. Funded initiatives ought to each strengthen resilience by constructing infrastructure that may stand up to a harsher and extra unstable local weather, and keep away from encouraging new improvement in areas which can be—or will change into—unsafe from threats comparable to flooding and wildfire. 

Critical minerals:

Budget 2025 explicitly tackles among the considerations the Climate Institute raised in our report, Critical Path, which referred to as for coverage to de-risk funding in Canadian crucial minerals initiatives. The Budget responds to this concern by committing $2 billion {dollars} in a brand new Critical Minerals Sovereign Wealth Fund to make strategic investments in crucial mineral initiatives and firms. This strategy, if well-implemented, will unlock personal funding in Canadian initiatives to assist seize a rising alternative within the international power transition, whereas additionally defending the financial safety of Canadian electrification provide chains. 

Indigenous housing:

Budget 2025 commits to addressing the distinctive and chronic housing and infrastructure challenges dealing with Indigenous communities. It commits to work with Indigenous management in creating Build Canada Homes to make sure it meets First Nations, Inuit, and Métis recognized wants and priorities. It additionally confirms $2.8 billion for city, rural, and northern Indigenous housing in addition to a rise within the Canada Infrastructure Bank’s goal for investments in Indigenous infrastructure from not less than $1 billion to not less than $3 billion. As it implements these adjustments, the federal authorities ought to work to hyperlink these actions with each reconciliation and local weather goals.  

RESOURCES

CONTACTS

Claudine Brulé (Eastern Time)
Lead, Communications and External Affairs
Canadian Climate Institute
(226) 212-9883

About the Canadian Climate Institute

The Canadian Climate Institute is Canada’s main local weather change coverage analysis group. The Institute produces rigorous evaluation, financial modelling, and in-depth analysis centered on incentivizing clear financial progress and low-carbon competitiveness, decreasing emissions and accelerating Canada’s internet zero power transition, and making our financial system and infrastructure extra resilient to a warming local weather. climateinstitute.ca