Finance Minister Bill Morneau's first federal budget
includes many of the environmental initiatives the Liberals raised
in their election platform. The federal government's approach
is to infuse environmental concepts into a broad range of policy
initiatives. This update will highlight certain features of the
1. The Federation of Canadian Municipalities will receive
$250 million to be invested as follows:
$125 million for local governments to address climate change
related risks to municipal assets; and
$125 million into the Green Municipal Fund to invest in
projects which are intended to reduce greenhouse gas
2. Two existing climate change adaptation projects
will receive the following funding:
$248 million to the Lake Manitoba and Lake St. Martin Outlet
Channels project to provide enhanced flood protection to adjacent
$212 million to the Lions Gate Wastewater Treatment Plant to
make it more resilient to climate change related weather
3. The federal government will establish a new Clean Water
and Wastewater Fund with $2 billion in funding for immediate
improvement to water distribution and treatment infrastructure
across the country.
4. Natural Resources Canada is set to receive new funding
for each of the following initiatives:
$82 million to support research and development into clean
$62.5 million to support the deployment of alternative
transportation fuels infrastructure, including electric and
$2.5 million to facilitate research studies and dialogue on
replacing aging electricity infrastructure with projects with the
potential to achieve significant greenhouse gas emissions
$50 million to invest in technologies to reduce greenhouse gas
emissions in the oil and gas sector;
$2.1 million to create improved clean technology data
collection and track progress;
$128.8 million to deliver energy efficiency policies and
5. The federal government intends to invest $1 billion
directly into clean technology in the forestry, mining, energy,
fishing and agricultural sectors, with more details to follow.
6. Sustainable Development Technology Canada will receive
$50 million to invest in clean technology projects that address
climate change, air quality, clean water and clean soil.
7. The federal government will create a Low Carbon Economy
Fund and provide $2 billion in funding. The Fund will support
provincial and territorial actions that materially reduce
greenhouse gas emissions and are incremental to current plans, and
achieve significant reductions within the period of Canada's
nationally determined emissions reductions target. Resources will
be allocated towards those projects that yield the greatest
absolute greenhouse gas reductions for the lowest cost per
8. Environment and Climate Change Canada will receive new
funding for each of the following initiatives:
$109 million to develop climate change data reporting and
policy/regulatory development; and
$56.9 million for continuing development of regulations toward
a cleaner transportation sector.
9. Indigenous and Northern Affairs Canada will receive
$10.7 million to implement off-grid renewable energy projects
adjacent to Indigenous and Northern communities.
10. Seven different federal agencies/departments will
receive $129.5 million, in aggregate, to facilitate climate change
adaptation across a broad range of economic sectors and
11. The federal government will invest $40 million to
integrate climate change resistance concepts into building
The federal budget also included two key changes to the
Income Tax Act and Regulations to address
"green" matters included in the budget:
Existing taxation rules provide for accelerated capital cost
allowance (CCA) deductions for certain assets types (Class 43.1 and
Class 43.2) that generate energy by using renewable energy sources
or efficiently use fossil fuels. The federal government has
expanded the types of assets eligible for such accelerated CCA
treatment to include electric vehicle charging stations and certain
electricity storage equipment.
With the broad reintroduction of greenhouse gas emissions
trading regimes, stakeholders expressed some concern regarding the
uncertainty of how to treat certain transactions from a taxation
perspective. The federal government intends to amend the Income
Tax Act to clarify the treatment of emission allowances and to
eliminate potential double taxation of certain free allowances.
Emission allowances will be treated as inventory for all taxpayers,
however taxpayers will not be able to use the "lower of cost
or market" method of inventory valuation.
We would be pleased to discuss with you how the foregoing budget
details may impact your business.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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