The federal government’s Fall Economic Statement delivered by Finance Minister Bill Morneau last week included some significant climate actions through new tax reforms. First, the cost of specified clean energy equipment will be eligible for immediate and full write-off. Secondly, investment in other types of equipment, including efficiency-related technology, is eligible for accelerated write-offs. The whole package represents an injection of $14.4 billion to stimulate investment across Canada.
What does this mean for urban climate action?
Allowing businesses to immediately or more quickly write off their capital expenses will significantly improve the business case for investment in climate action. The full write-off would include investments like solar photovoltaic or thermal projects on commercial buildings, ground-source heat pumps, biogas projects, district energy systems, and EV charging stations. More broadly, investment including energy efficiency retrofits would qualify for the accelerated tax treatment, improving their financial returns. An overall increase in low-carbon investment is to be expected, which should bolster local green job growth and support progress in carbon emission reduction.
TAF and a range of our colleagues have advocated this approach for many years; it was a key recommendation of the Generation Energy Council, of which TAF’s CEO Julia Langer was a member. In addition to these measures, complementary programs are needed to ensure Canadian businesses are aware of and fully taking advantage of these time-limited tax incentives to invest in low-carbon solutions, with particular attention to maximizing participation from and benefits to small to medium sized businesses.
Another noteworthy announcement in the FES is a $755 million Social Finance Fund. Although details are still to come, the aim of the fund is to provide charitable, non-profit and other social purpose organizations with access to financing and help connect them with private investors looking to invest in projects that will drive positive social change – likely including issues related to climate change.
Minister Morneau stated in his speech that the government will launch an Advisory Council on Climate Action to increase ambition on climate in the building and transportation sectors. The details are not in the official document, so we look forward to more on this to come.