Budget 2021: Green Economy Canada’s Analysis
On April 19, 2021, Finance Minister Chrystia Freeland unveiled Budget 2021, which included short-term measures to provide COVID-19 recovery support to individuals and businesses, and longer-term measures to create jobs, address climate change, and support inclusive growth.
Green Economy Canada’s overall take is that while there are many significant and laudable investments in this budget, it does not go far enough to help organizations that fall outside of heavy industry, clean tech manufacturing, and agriculture to green their operations.
Below are some key items of note:
- An additional $5 billion investment towards the net-zero Accelerator announced in December 2020 to support heavy industry to decarbonize, and help scale up large clean tech projects. It would have been great to see the purpose of the net-zero Accelerator expanded to support and incentivize other types of businesses in Canada — particularly small and medium-sized enterprises (SMEs) — in setting net-zero goals, and implementing ambitious action plans to achieve them. Achieving Canada’s net-zero by 2050 target will require widespread adoption of existing and emerging technologies by all segments of our economy, as well as behaviour change and rethinking of business models. Given that SMEs make up 99% of organizations in Canada, focusing only on heavy emitters and the development of new technologies is a huge missed leverage point for achieving our climate goals.
- A 50% tax break is included for businesses that manufacture clean technologies, providing a strong incentive for businesses to stay in Canada, and for Canada to grow its overall green manufacturing base. This budget also proposed amendments to the Accelerated Capital Cost Allowance so that businesses can immediately write-off a broader range of clean technology-related investments including equipment used in pumped hydroelectric energy storage, renewable fuel production, hydrogen production by electrolysis of water, and hydrogen refueling. While spurring the development and adoption of new clean technologies is a critical pillar of achieving Canada’s emissions-reductions targets and seizing global economic opportunities, ideally, tax breaks and/or write-offs would have been expanded to a broad suite of energy conservation projects applicable to more businesses.
- The budget announced over $4 billion to support retrofitting of households, which will enable individuals and families to save on energy costs and live in more comfortable homes, while helping Canada cut emissions and spur demand for the retrofitting industry. However, there was nothing analogous in this budget to make energy audits more affordable for businesses, or incentives to support deep building retrofits – a missed opportunity in helping organizations build back better. 10% of carbon pricing revenues in AB, MB, SK, and ON will be returned through programs that help businesses, schools and Indigenous communities decarbonize, so additional programs may be forthcoming. We know the demand for building retrofit programs are high and greater investments are needed; we hear time and time again that many businesses are operating in poorly insulated and leaky buildings, and that small businesses, in particular, need financial supports to reduce the upfront costs of upgrading their facilities and making energy audits more affordable.
- Lastly, we know that time and knowledge are two of the biggest barriers that organizations face in advancing their sustainability work. We had hoped to see funds allocated to help businesses overcome these barriers, either by creating more support programs like Green Economy Hubs or offsetting the financial costs of businesses seeking third-party support and building their internal capacity. In particular, the financial measures for SMEs in this budget largely focused on pandemic relief, digitization, and clean tech manufacturing, but seemed to once again ignore the critical role that SMEs can, want, and need to play in a green recovery and Canada’s net-zero transition.
While Canada has now committed to reducing its emissions by 40-45% below 2005 levels by 2030, the climate plans we currently have in place will be insufficient to meet our objectives. We continue to be active in advocating for additional investments that can support organizations of all sectors and sizes to implement a broad range of GHG reduction projects and build their internal capacity to undertake a deeper transition to a net-zero future. For more highlights from Budget 2021, we recommend reading Smart Prosperity Institute’s blog post.
The commitments made in Budget 2021 are in addition to the $15 billion of investments pledged by the government in the unveiling of the Healthy Environment, Healthy Communities climate plan in December 2020. You can read a breakdown of some of those investment highlights on this blog post from the Toronto Atmospheric Fund. Details of most of these investments are still forthcoming in terms of tangible programs that organizations can access. Sign up for our mailing list to stay connected to updates from Green Economy Canada, including details about these programs as they become announced to help you take advantage of these supports.
Green Economy Canada is a national non-profit accelerating Canada’s transition to a vibrant and inclusive net-zero future. Through our growing network of 7 Green Economy Hubs and 300 Green Economy Leaders, we’re building a better business as usual.