OTTAWA, ON — The Government of Canada yesterday released the 2022 Fall Economic Statement, which included a number of announcements aligned with Canada’s climate commitments.
Initiatives aimed at scaling up private investment in clean technology, including renewable power and battery storage to support a net-zero electricity grid, as well as in projects that will reduce emissions from heavy industries, demonstrate the government’s recognition that private capital will be crucial in transforming Canada’s economy to net-zero. Meanwhile, initiatives aimed at supporting and reskilling workers shows an intention to bring the economic benefits of the energy transition to communities throughout Canada.
Pembina Institute analysts and policy experts are available for comment on issues encompassing oil and gas, electricity, transportation, buildings, and ways Canada can ensure an equitable transition for workers and communities.
Key announcements include:
- The launch of a Canada Growth Fund to help Canada meet its economic and climate policy goals.
The Canada Growth Fund is a new public funding tool intended to catalyze private sector capital to reduce emissions. It will do this by accelerating deployment of technologies such as low-carbon hydrogen and carbon capture and storage, scaling up cleantech companies across industries, capitalizing on Canada’s natural resources and developing critical supply chains. Unlike other federal grants and programs or for-profit private sector investment initiatives, the Growth Fund distinguishes itself by recovering capital from its portfolio which is reinvested into further projects. We support this overall approach, so long as it does not entrench fossil fuel assets that are inconsistent with Canada’s climate goals, and declining global oil demand.
- A new two per cent corporate tax on share re-purchases, aimed at encouraging companies to reinvest profits into their operations. This will redirect some of those profits into jobs and economic activity where companies operate.
The two per cent tax on share buybacks is an indication that the federal government wants to see Canada’s oil and gas sector invest its record profits in Canada and in a way that is aligned with the sector’s need to urgently reduce emissions. In the last week, as oilsands companies have released their latest round of financial results, we have seen that 2022 continues to be a historic boom year for the sector – and that companies continue to use their windfall profits to reward shareholders at record levels. In past booms, some of those profits would stay in the country and have been reinvested into their future operations. Oil demand is set to decline this decade, and to stay competitive in a low-carbon energy future, Canada’s oil and gas sector must make concrete plans to invest in the decarbonization projects that will future-proof their own operations.
- A thirty per cent investment tax credit for clean technologies, including wind and solar projects, battery storage technology, and high-performance electric heating systems for companies.
The federal government has been taking some early but earnest steps towards its commitment of a national net-zero electricity grid by 2035 by trying to create regulatory certainty through the development of the Clean Electricity Regulations. The support for investment announced here is a welcome carrot to complement the regulatory stick. The $6.7 billion devoted to an investment tax credit for clean technology will help scale the deployment of critical grid decarbonization solutions such as wind, solar and storage, as well as electricity end-uses, such as space heating equipment. However, some other clean technologies necessary to Canada’s energy transition were not mentioned in the Fall Economic Statement, such as high-performance windows and doors and low-carbon insulation products; we hope they will be included when the program is launched. There’s also more needed to unlock other key components of grid decarbonization that could also support affordable electricity from the net-zero grid, such as transmission infrastructure and energy efficiency on the grid.
- $250 million of funding to assist workers through the energy transition.
A transition of Canada’s energy sector is coming, and governments, businesses, workers’ associations, and individuals need to prepare, plan, and reskill so that the country can take advantage of the ensuing opportunities. The $250 million proposed to assist Canadian workers in a changing economic landscape is welcome support. We are glad to see that the Sustainable Jobs Training Centre and sustainable jobs training stream under the Union Training and Innovation Program have a mandate to reach underrepresented groups, which have not historically had access to these good jobs.
- Launch of consultations on an investment tax credit for clean hydrogen.
Our research shows that a significant proportion of heavy-duty vehicles will be fueled by hydrogen. We support the tax credit as long as the maximum credit is only available to hydrogen produced with zero or near-zero carbon emissions.
- Launch of the Advanced Manufacturing Competitiveness initiative, aimed at spurring homegrown development and production of clean technologies, including electric vehicle and battery manufacturing.
We welcome the announcement of the Advanced Manufacturing Competitiveness initiative, and expect upcoming consultations on the initiative to inform:
- How investments from international manufacturers can support Canadian companies;
- What policies are being deployed to accelerate production, while also growing demand and investment for zero-emissions vehicles; and
- Which other sectors of clean economy manufacturing will be included in the program, (e.g. components for clean energy generation, distribution, energy efficiency ) and how eligibility criteria can be aligned with the clean energy tax credit to create synergies.
- Launch of a new tax savings account to facilitate access to home ownership.
Providing Canadians additional tax incentives to save will help some access the important wealth creation benefits of home ownership. However, the Fall Economic Statement does very little to support the many Canadian renters to mitigate the increase in housing costs, nor does it help owners of rental buildings invest in the refurbishment and upgrade of the rental stock, preparing them for heat waves and extreme weather events.
The Pembina Institute is a member of the Green Budget Coalition, which has presented the government with a suite of recommendations for investments in climate action, nature conservation, environmental justice and more. Read more about these recommendations.
Contact
Victoria Foote
Communications Director
647-290-9384
Alex Burton
Communications Manager
825-994-2558
Karen Garth
Senior Communications Lead
403-890-5778