Budget 2022 – urban climate action highlights

Minister Chrystia Freeland yesterday tabled the 2022 budget, which includes funding and investment dollars for key urban climate solutions to help drive down emissions by 2030 and beyond. As always, their impact will depend on effective roll-out, which cities, local utilities and businesses, home and building owners, citizens and organizations like TAF are eager to provide. This budget comes days after the IPCC’s latest report provided a “now or never” update for the planet. Their predominant message is: We have the technology, let’s get on with implementation.  

Of the newly announced spending, $9 billion is allocated to climate initiatives including those described in the government’s 2030 Emissions Reduction Plan tabled last week. Others are dovetailed with the government’s focus on boosting affordable housing supply, technology innovation and commercialization, and Indigenous reconciliation.  

Here are highlights of proposed spending on urban climate action in Budget 2022:  

Low-carbon Buildings

Buildings represent over half of the urban emissions in Canada. A focus on buildings is the cheapest, fastest way to achieve emission reductions needed to meet 2030 targets. Coordinated funding and market development for building retrofits would represent an estimated $48 billion in economic activity each year.  

• $200 million for a retrofit accelerator fund, called for by TAF and others.  The funding will support developing the teams, skills, and projects to ramp up the scale of retrofits across Canada. TAF is thrilled to see this investment, which will help us take on the retrofit mission: to decarbonize buildings, improve their livability and ensure more affordable, safe and healthy homes for people across Canada.   

• $33 million for establishing a Greener Neighbourhood Pilot Program based on the Dutch Energiesprong model. This program will support neighbourhood scale retrofit initiatives in up to to six communities and follows the Net-Zero Advisory Body’s recommendation to decarbonize multiple buildings simultaneously. Testing this approach will help build industry confidence and expertise in the Energiesprong model.  

• $150 million to develop a national net zero by 2050 buildings strategy. We would prefer that money be allocated to immediate actions over more strategies and plans that take time and delay action. Given the budget envelope, we hope and expect significant share of the funds will be available for quick-start actions under the strategy.   

• $183 million is being invested in supporting the development of national building codes and the establishment of a Centre of Excellence for R&D. Establishing strong building codes and standards is one of the most effective ways to reduce emissions from buildings.  

• Expanded and accelerated tax deductions for businesses to invest in clean energy equipment including air-source heat pumps and supports for air-source heat pump manufacturers.  

• $485 million to the Canada Mortgage and Housing Corporation (CMHC) to provide low interest grants and loans to low-income housing providers 

Zero Emission Transportation

Transportation represents about a third of the urban emissions in Canada, and one of the most rapidly increasing sources of emissions. Electrifying cars and trucks has been identified as the most effective pathway to immediately reducing emissions in the transportation sector. Several barriers to zero emissions vehicle (ZEV) adoption are addressed in this budget:  

• The federal government committed to developing a light duty vehicles (LDV) ZEV sales mandate with mandatory interim targets and a requirement to achieve 100% LDV ZEV sales by 2035. The target will ensure 100% of medium and heavy-duty vehicle sales are ZEVs by 2040, although this is only for a subset of vehicle types.  

• $1.7 billion to extend the ZEV sales rebates for three years. We are eager to see the specifics from Transport Canada on this program. Supporting consumers and choices for electrification is vital to adoption. 

• $400 million for 50,000 new ZEV chargers across Canada. This investment is sorely needed to enable the pan-Canadian charging network and accelerate adoption. TAF is dispersing funds from the initial round of this successful program through our EV Station Fund. 

• $500 million from Canada Infrastructure Bank in large-scale ZEV charging infrastructure. 

• $547.5 million for purchasing incentives for zero emission medium and heavy-duty vehicles, which represent the fastest-growing area of carbon emission increases for transportation vehicles. This is a critical step for reducing emissions and air pollution.  

• $199.6 million over 5 years to retrofit large trucks currently on the road through the Green Freight Program. This funding will help decarbonize vehicles that are already on the road during the interim until all medium and heavy-duty vehicles are zero emission.  

Decarbonizing Electricity

Electrification is only as clean as the supply of electricity, and emissions in this sector are forecast to dramatically increase in Ontario. Decarbonizing the electricity supply will take innovation and investment from the provinces, utilities, system operators, the financial sector, and more, but the federal government has the authority to set the pace and direction of these efforts.  

• $2.2 billion reinvestment in the Low Carbon Economy Fund to support decarbonization projects. We are particularly glad to see the mention of the expansion of the program and the inclusion of municipalities and Indigenous communities. 

• $600 million additional investment in the Smart Renewables and Electrification Pathways Program to support electrification and grid modernization projects 
• $2.4 million to establish a Pan-Canadian Grid Council, which would enable external experts to advise on national and regional electricity planning. We hope to see municipal representatives on this Council. 

• $25 million to establish Regional Strategic Initiatives to work with provinces, territories, and relevant stakeholders to develop net-zero energy plans. Again, we hope to see municipalities included in these consultations.  

• $250 million over four years to support pre-development activities of clean electricity projects, such as inter-provincial electricity transmission projects and small modular reactors.  

Low-Carbon Technologies

Achieving urban carbon reductions relies on everything from efficient motors and lighting, heat pumps to replace gas-fired heating, solar panels and storage systems, exterior insulation, and software.   Innovation, domestic production in the face of supply chain challenges, and export potential will improve the business case and Canada’s competitiveness.  

• $15 billion investment over five years to the Canada Growth Fund, a legislated fund aimed at investing in innovative projects in a manner that unlocks private capital. The fund will be targeted for emissions reduction and enabling the transition to a low-carbon economy. These funds are re-allocated from previous funds and do not represent new spending.

 

Great long list of climate-related budget items, Minister Freeland!  We especially appreciate that the government has incorporated some of TAF’s recommendations including funding for accelerating deep retrofits. This spending, while welcome, does fall short of what we and others have estimated is needed to get on track to our climate targets. For example, this budget represents $1 billion in new spending for building decarbonization, compared to the $10 billion recommended by the Green Budget Coalition.  

It’s also hard to miss that these investments come on the heels of a new offshore oil project approval, when the IPCC has been clear that no new fossil fuel infrastructure is compatible with keeping global temperatures below 1.5 degrees of warming and safe future. Since the international climate treaty has not been able to set enforceable targets, and the federal government has not (yet?) followed through on capping emissions, local players will have to work even harder put a brake on the fossil fuel demand. Given the current momentum from local governments, and with the help of enabling policies and investment from the federal government, we can do this.