Federal Government Accelerates Cleantech Focus in 2019 Budget

The Canadian federal government released its 2019 budget on Tuesday (March 19), highlighting a significant focus on cleantech as the government seeks to accelerate its efforts to meet 2030 climate change targets.

Finance Minister Bill Morneau’s final budget ahead of October’s federal election has several incentives for the cleantech sector, including proposed rebates for those purchasing zero-emission vehicles.

As “more and more” Canadians choose to drive zero-emission vehicles, the Trudeau government is seeking to make these vehicles more affordable under the federal purchase incentive scheme that subsidizes the cost of a vehicle.

In his preparedspeech at the House of Commons, Morneau said that “building a better Canada also means helping people be part of a clean economy.”

“With this budget, we are taking steps to make zero-emission vehicles more affordable for more Canadians, with a new federal purchase incentive of up to C$5,000 for electric battery or hydrogen fuel cell vehicles for Canadians who want to make the switch and pay less at the pump,” he said.

Of note, the proposed incentive of up to C$5,000 is applied to electric or hydrogen fuel vehicles with a retail price of less than C$45,000. The incentives are part of the C$300 million that the federal government has allotted over the three-year period commencing in late 2019 as it bids to encourage more Canadians to buy zero-emission vehicles.

In November 2018, Fleetcarmanoted that over 34,000 electric vehicles were sold in Canada in the first 10 months of 2018, including plug-in hybrid-electric vehicles.

Meanwhile, the federal government will provide C$130 million to Natural Resources Canada over a five-year period commencing in 2019 for the deployment of charging stations at several locations, including public parking spots, commercial buildings and multi-unit residential buildings.

Although the government has set a target to sell 100 percent zero-emission vehicles by 2040, with sales targets of 10 percent by 2025 and 30 percent by 2030, it has chosen not to impose a mandatory target to automobile manufacturers.

However, the government will provide C$5 million over a five-year period to Transport Canada for securing voluntary sales targets from auto manufacturers.

“We’re going to invest in the middle class and in the things that matter most to Canadians: good jobs, strong communities, a clean environment and better opportunities for future generations,” Morneau said.

The government approved 33,000 infrastructure projects that will be supported by federal investments of up to C$19.9 billion, some of which have a cleantech focus.

Notably, the government highlighted that it will provide C$30 million to a wind-generation project in Inuvik. The budget states that the project will “create a more efficient, more reliable and cleaner source ofenergy for residents” in the region.

In an email statement to the Investing News Network (INN), the Canadian Wind Energy Association (CanWEA) said that it sees the project as a “great news” and that it is “pleased” to see it in the budget.

Halagonia Tidal Energy, a DP Energy associate, will receive C$29.8 million in federal support for its marine renewable energy project, which provides clean electricity to Nova Scotia.

Morneau’s budget also includes a C$183-million investment in Low Carbon Cities Canada (LC3), an initiative to accelerate urban carbon reduction solutions. The incentives to LC3 are part of the C$350-million investment in the Federation of Canadian Municipalities’ (FCM) Green Municipal Fund for Collaboration on Community Climate Action.

“Climate change affects every municipality in Canada, large or small, and all of them want to be part of the solution as direct partners,” Vicki-May Hamm, president of FCM,said in a release. “Powered by the federal government’s investment in LC3, FCM will help stimulate and share carbon-reduction solutions and best practices with cities and communities across the country.”

Crucially, it was also revealed that the government will be finetuning its federalcarbon pollution pricing system. In a separaterelease, the department of finance said that it is seeking additional comments on a set of draft regulations that would provide additional relief measures to existing framework on carbon pricing.

“To help protect the health of our planet, we put a price on pollution — and, to make a cleaner economy more affordable for Canadians, we’re giving back all the money we collect directly from the price on pollution. Every cent,” Morneau said.

Jean-François Nolet, the vice president of policy and communications at CanWEA, told INN he is pleased with the focus on the cleantech sector in the budget, including support for electric vehicles and charging infrastructure.

“Climate change is driving an urgency to accelerate the adoption of cleaner energy systems, including low-cost non-emitting renewable electricity generation, and it is encouraging to see the federal government taking steps to enable the shift to sustained decarbonization,” Nolet said.

Image: Canadian Finance Minister Bill Morneau with Prime Minister Justin Trudeau ahead of the 2017 budget.

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Securities Disclosure: I, Bala Yogesh, hold no direct investment interest in any company mentioned in this article.

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