This year's federal budget will be tabled in a week of high-stakes political drama in Ottawa. To make sure that clean energy doesn't get lost between the photo-ops and the fighter jets, here's our checklist for a strong clean energy budget.
Support energy efficiency
Along with our colleagues at the Green Budget Coalition, we believe that Budget 2011 needs to make it a priority to support energy efficiency. Canadians still have very high energy use per capita, so initiatives that improve our efficiency put money back into Canadians' pockets.
This year, we're recommending (see p. 6) a national green homes retrofit strategy, with targeted support for low-income Canadians. By 2030, 100 per cent of Canadian homes should be upgraded to improve their efficiency, and a goal of 15 per cent of homes retrofitted by 2015 is entirely achievable.
As of now, the government's major support program for energy efficiency — a suite of initiatives known as "ecoENERGY" — is scheduled to run out of funding at the end of March 2011. (The popular ecoENERGY home retrofit program has been tapped out since 2010.) While they could be tweaked to perform even better, internal federal assessments have shown that the programs are cost-effective, create jobs and reduce greenhouse gas (GHG) pollution. If the ecoENERGY programs are not renewed, or replaced with new initiatives, in Tuesday's budget, Canada would be left without any significant federal support for energy efficiency.
Invest in renewable energy
Like the efficiency programs in ecoENERGY, the federal government's incentive program for low-impact renewable energy has run out of funding to support new projects (although projects already in the queue will continue to receive funding over the next few years.) We've made some specific suggestions for new renewable power initiatives in this year's budget, including support for solar hot water heaters and geothermal mapping (see p. 31).
Beyond those specifics, an important part of the story about renewable electricity is that it can create more jobs than alternatives like coal, nuclear power or natural gas. So a federal budget that fails to support clean power isn't just the wrong approach environmentally; it also means that Canada would be missing out on job creation opportunities. (In fact, we estimated that Canada could have created nearly three times as many jobs if the infrastructure funding in its economic stimulus package had been entirely dedicated to clean energy.)
Cut fossil fuel subsidies
We know that Canada is facing a deficit, so the Minister of Finance might worry that he simply doesn't have the resources to support clean energy. Luckily, we know exactly how to fund these essential investments: by cutting the estimated $1.4 billion in annual subsidies and tax breaks to Canada's oil industry. Prime Minister Harper promised to do this at a G20 meeting in 2009, and the Department of Finance agrees that many of these tax breaks just aren't needed anymore.
Cutting fossil fuel subsidies is good for the environment, because the subsidies are designed to encourage faster development of areas like Alberta's oilsands. Phasing out subsidies is good for job creation too: moving public dollars away from the capital-intensive oil and gas extraction sector to more labour-intensive parts of the economy has been shown to increase employment. And the dollars the government would save make the other clean energy investments we need eminently affordable.
Support climate action in poorer countries
Developing countries need support from countries like Canada to adapt to the consequences of global warming and curb their own emissions. Last year, Canada pledged $400 million as its 2010 contribution to the international effort. Unfortunately, just 11 per cent of that total was dedicated to adaptation, and three-quarters was provided as loans, not the grants that poorer countries need to put policies in place and build capacity.
Canada can do better in 2011 and 2012 (see p. 37). First, the government should deliver $400 million in grants (or grant-equivalent) funding, cutting back dramatically on the use of loans. This year's funding should offer with a much more even split between adaptation and emission reductions. And with an announcement last year that the aid budget is now frozen, it's essential that the government's climate financing dollars are over and above the existing aid budget, not subtracted from it. (Those fossil fuel subsidy savings could come in very handy here too.)
Fund urgent regulatory work at Environment Canada
Those of us following Canada's torturous path to cutting industrial GHG emissions know that the government is once again starting from scratch. Instead of implementing a cap-and-trade system, or using the 2007-08 "Turing the Corner" plan, Environment Minister Peter Kent now proposes to regulate industrial emissions sector by sector.
We're disappointed that the government has chosen this approach: all the economic evidence suggests that carbon pricing is faster to implement and much more cost-effective. But if sector-by-sector regulations are the plan, the government needs to fund that work adequately. It's going to take a small army of officials to negotiate these detailed rules, and right now, Environment Canada's budget projects a significant (59 per cent) decrease in funding for the "Climate Change and Clean Air" initiative, which includes the money Environment Canada was using to develop domestic GHG regulations. The budget needs to provide renewed funding for developing these regulations; if it fails to do so, we could be wait even more years before seeing any meaningful restrictions on GHG pollution from Canada's heavy industry.
Looking for a transformation
Even without this week's political wrangling, budgets are always incredibly important policy documents. They reveal a government's real priorities much more clearly than Parliamentary speeches or media soundbites.
This year, we're looking for investments that lay the foundations of a clean energy transformation for Canada's economy. Capturing the jobs, export markets and environmental benefits of clean energy is a long-term project, so we know that one budget alone can't get us there. But the investments we've outlined here would push Canada in the right direction.
A token effort wouldn't be enough, especially not when countries like China are moving fast to win the global competition for clean technology. But we'd be delighted to celebrate if Stephen Harper's government makes a serious clean energy investment in their 2011 budget.
