Federal Government Announces New Climate Change Plan, Carbon Price to Increase to $170 by 2030

Today, Prime Minister Trudeau and Ministers McKenna, Wilkinson, and Guilbeault announced a new and updated climate change plan: A Healthy Environment and a Health Economy (the Plan). The Plan, released by Environment and Climate Change Canada (ECCC), seeks to strengthen Canada’s emissions reduction commitments under the Paris Agreement while simultaneously investing in cleaner and more sustainable economic growth. Starting in 2023, the Plan will increase the federal carbon price by $15 per year to $170 by 2030.


The Plan includes 64 new measures and $15.2 billion in new investments on top of the previously committed $60 billion in the 2016 Pan-Canadian Framework on Clean Growth and Climate Change and $6 billion to be invested in clean infrastructure by the Canada Infrastructure Bank (CIB).


The Plan includes investments in the following categories:


Making the Places Canadians Live and Gather More Affordable by Cutting Energy Waste. The federal government will invest $1.5 billion for green and inclusive community buildings, with 10% allocated to First Nations, Inuit, and Métis communities, $2.6 billion to help homeowners make their homes more energy efficient through grants of up to $5,000, and $2 billion in financing for commercial and large-scale building retrofits as part of the CIB’s $10 billion Growth Plan.


Making Clean, Affordable Transportation and Power Available in Every Canadian Community. The federal government will invest an additional $287 million over two years to continue the Incentives for Zero-Emission Vehicles (iZEV) program until March 2022, additional $150 million over three years in charging and refuelling stations across Canada, an additional $964 million over four years to advance smart renewable energy and grid modernization projects, an additional $300 million over five years to advance the government’s commitment to ensure rural, remote and Indigenous communities that currently rely on diesel have the opportunity to be powered by clean, reliable energy by 2030. The federal government is also committing to work with provinces and territories to connect clean hydroelectricity with parts of the country that are currently more dependent on fossil fuels. This will include an additional $25 million to support predevelopment work in addition to the $2.5 billion earmarked by the CIB as part of its Growth Plan.


Continuing to Ensure Pollution Isn’t Free and Households Get More Money Back. The federal government will continue to put a price on pollution through to 2030, increasing at $15 per year after 2022 and rising to $170 per tonne of carbon pollution in 2030. The federal carbon price is expected to remain revenue neutral, returning all fuel charge proceeds to Canadians, with quarterly payments starting in 2022. In addition, the Clean Fuel Standard (CFS), expected to be in force mid-2022, will now only cover liquid fossil fuels. It is expected that ECCC will publish draft regulations for the CFS before the end of this year.


Building Canada’s Clean Industrial Advantage. The federal government will invest $1.5 billion in a Low-carbon and Zero-emissions Fuels Fund to increase the production and use of low-carbon fuels (e.g., hydrogen, biocrude, renewable natural gas and diesel, cellulosic ethanol), $165.7 million over seven years to support the agriculture sector in developing transformative clean technologies and help farmers adopt commercially available clean technology, and an additional $750 million over five years to support the Sustainable Development Technology Canada.


Embracing the Power of Nature to Support Healthier Families and More Resilient Communities. The federal government will invest up to $3.16 billion over 10 years to plant over 2 billion trees, invest up to $631 million over 10 years to restore and enhance wetlands, peatlands, grasslands and agricultural lands to boost carbon sequestration, and provide $98.4 million over 10 years to establish a new Natural Climate Solutions for Agriculture Fund.


The Prime Minister stated that the Plan will allow Canada to surpass its 2030 targets under the Paris Agreement, which was signed five year ago on December 12, 2015.


Interestingly, the government did not proceed with a guaranteed quantity of reductions to meet its current and projected emissions reductions targets. It is relying on the increased price on emissions to ensure that the 2030 target is met. To date, Canada has failed to meet its 2012 Kyoto and 2017 Copenhagen targets set by prior governments.


For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@demarcoallan.com.

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