The Federal Government released its budget on March 3rd 2010 and as many suspected, there were no big surprises. The government sees its continued investments as a means of generating jobs and solidifying Canada’s economic recovery over the 2010-2011 fiscal period. However for some the link between economic recovery and greening the economy has weakened. Most of the concerns have focused on the failure to renew or expand spending in several key areas including the ecoENERGY Technology Initiative, a critical source of funding for clean technology projects since its inception in 2007. Some key technology players like Sustainable Development Technology Canada (SDTC) seem to have been left out of the budget process altogether and without a recapitalization of their program it is difficult to see how Canadian technologies, in particular those focused on GHG reduction, will be advanced in the future.
The full funding implications arising from the budget may take weeks or even months to sort out but what seems likely is that programs that have not fared well may be in for a long period of attrition. The government made clear that it is committed to the continuation of the second year of spending for Canada’s Economic Action Plan, but when this fiscal period is completed (March 31, 2011) the focus will shift to managing the deficit. Government departments will be expected to contribute to this effort.
However the news is not all bad. The 2008 commitment of $2B to the Clean Energy and Green Infrastructure Funds remains strong. The budget highlights the $800M that has been committed to research and demonstration of Carbon Capture and Storage (CCS), more than half of which has already been committed to CCS projects. The Pulp and Paper sector will see an additional $100M to advance clean energy opportunities arising from the $1B committed to the Green Transformation Program in June of 2009.
The government also continued its practice of considering fiscal instruments as a means to encourage innovation. A previous commitment to investigate how CCS investments and assets will be treated is restated, as is the expansion of technologies that are eligible for accelerated capital cost allowance (Class 43.2). The expansion includes a broader range of heat recovery applications and distribution equipment used in district energy systems.
Despite the continuation of investments in innovation noted above there are many who believe that the commitments are only a fraction of those being made in the US. The Pembina Institute’s analysis of the budget suggests that US investments in clean energy are outpacing Canada’s 17 to 1 on a per capita basis. Canada’s strategy on climate change and clean energy has been to match US actions - which many interpret should include spending on innovation. 2010 is shaping up to be a year that will provide further contrast on green economic recovery and fiscal management, much of which will be defined by our clean energy investments.
By Bruce Dudley, .(JavaScript must be enabled to view this email address)
