Toronto adopts its first carbon budget

Today, Toronto City Council officially adopted the City’s 2025 budget. For the first time, the budget development included a new carbon budget process. The process led to 31 new or enhanced climate actions that will generate an estimated 244,615 tonnes of annual carbon emissions reductions once fully implemented. This represents about $2 billion in new investments, many of which will also enhance mobility, air quality, and resilience. This is a great step forward towards the City’s climate goals.

The new city-wide carbon budget process* identifies and prioritizes accelerated climate action investment opportunities. Essentially, all of the City’s divisions, agencies, and corporations were asked to put forward ideas for new or enhanced climate actions along with estimates of costs, carbon reduction and co-benefit potential. This yielded 112 proposals from sixteen different City entities. Those proposals were evaluated based on carbon impact, co-benefits, cost-effectiveness and other criteria. Thirty-one high ranking proposals were ultimately built into the 2025 budget. An additional 23 promising proposals that didn’t make the cut were identified for further review and development and may be advanced at a later date. 

Notable climate investments advanced through the carbon budget process include: 

• $636 million over two years at the TTC for purchase of electric buses and charging systems, to replace aging diesel buses.  
• $30 million over four years for enhancements to the Home Energy Loan program to improve accessibility for low-to-moderate income homeowners and develop a bulk purchase initiative for heat pumps 
• $34 million over three years to Toronto Community Housing for deep retrofit projects. These projects will improve comfort and quality of life for 276 families, while addressing deferred maintenance.  
• $239 million to Shelter and Support Services to acquire new buildings and renovate them into net-zero ready shelters for people experiencing homelessness.  

The new carbon budget process marks a significant improvement to Toronto’s budgeting and climate action planning. It is already driving an increased level of investment in climate action, while creating more transparency around what climate projects are being funded – or not funded. It is certainly not a guarantee of sufficient investment. For example, this budget featured disappointingly small investments in public charging infrastructure ($8M in 2025), less than half the funding proposed in a staff report last spring.  

While there remain areas where more investment is needed, the new standard is a very good start and provides a solid foundation. As the examples above illustrate, many of the new climate investments are also designed to enhance mobility and ensure climate actions equitably benefit lower-income communities. Smart investments in climate action are also investments in a more livable and equitable city.  

• *The new carbon budget process is not to be confused with the City’s Carbon (emissions) Budget, despite the same name. The Carbon Budget is a way of setting climate targets that the City implemented in 2023. Previously, climate targets had been set in terms of a percentage reduction by a milestone year. For example, Toronto’s 2030 target is a 65% reduction compared to 1990 levels. There are two limitations to this sort of annual target. First, it doesn’t take into account emissions between milestone target years, even though these emissions are just as important. Second, because the target years are multiple years in the future, it encourages the natural tendency to delay climate action and focus on shorter-term priorities. The Carbon Budget combats this by setting out a cumulative multi-year target. Toronto’s 2026-2030 Carbon emissions Budget is 53 million tonnes.