Justin Trudeau’s Liberals are starting with the low-hanging fruit, in their bid to use the recovery from COVID-19 to accelerate the transition to a low-emissions economy.
The two biggest new commitments to climate-related spending in Monday’s fall economic statement - $2.6-billion for energy-efficiency retrofits to Canadians’ homes, and $150-million in new money over the next three years for electric-vehicle charging infrastructure – are ones that anybody following the green-stimulus chatter since last spring could have predicted.
Along with finally starting to make good on last year’s election commitment to plant two billion new trees (toward which the Liberals are committing $3.16-billion over the next decade), these are the sorts of policies to which relatively short-term job-creation numbers can easily be attached alongside emissions-reduction ones.
That sort of political focus makes sense for a government justifiably concerned about being seen to take its eye off Canadians’ immediate needs before the pandemic is over. It also reflects that the Liberals, in this chaotic year, haven’t had the bandwidth to also work their way through the more complex and ambiguous aspects of clean-economy transition.
But that means most of the major financial commitments are still yet to come, if the Liberals are to make good on their promises to put Canada on the path to a net-zero economy and enhance its competitiveness in a decarbonizing world. And the mini-budget hints at some of the heavy lifting pushed to another day.
That’s the case to some extent even with the aforementioned policy priorities – making homes more energy-efficient, helping get more EVs on the road – toward which Finance Minister Chrystia Freeland committed significant sums.
The $2.6-billion in the retrofit program announced on Monday will pay for grants up to $5,000. That sort of money should help fund investments such as better-insulated windows or new lighting systems. But deeper retrofits, such as whole-of-building insulation upgrades and heating systems, will have to wait for a “low cost loan program” that the economic statement promises will come a bit later.
And if transportation electrification is a priority, charging infrastructure is half the battle at best. The bigger challenge in much of the country - making EVs more accessible and affordable - perhaps doesn’t belong in a fiscal plan since it might be tackled with coming regulations. But the document does dangle (absent dollar figures) a coming “plan to help electrify public transit systems across Canada,” at an unspecified time.
What has been especially put off until a later date, though, is support for the various forms of long-term economic transition that Mr. Trudeau and his ministers have already hinted at for a long time. Those measures include diversification of energy sectors in Western provinces toward more sustainable products and development of other clean-technology industries nationwide.
Some related policies, for the resource sector in particular, may be coming soon. The economic statement promises an “action plan” by year’s end for developing and deploying small modular nuclear reactors. It also hints that the hydrogen strategy promised last summer by Natural Resources Minister Seamus O’Regan will be part of the government’s plan to hit 2030 emissions-reduction targets, supposed to be released in December as well. But it’s unclear whether those announcements will include specific funding commitments, and, if so, at what scale.
Other forms of clean-tech support in which the Liberals have previously expressed interest – such as a corporate tax cut for companies that develop and manufacture zero-emissions products, which they promised last election but have yet to deliver – got no mention on Monday at all.
One related area where Ms. Freeland’s plan takes a couple of noteworthy new steps is the encouragement of sustainable private investment. The government is now pledging to begin selling green bonds in the next fiscal year to help fund sustainable infrastructure, which could help spur domestic growth of that market. And it will establish a “Sustainable Finance Action Council” to help develop policies around matters such as climate-risk disclosure, which was a recommendation of a sustainable finance panel headed by Tiff Macklem before his appointment as Governor of the Bank of Canada – although that’s another case of mostly promising policies at a later date.
And the statement further opens one other intriguing door, around carbon border adjustments – essentially tariffs on goods from places without carbon pricing - with another promise of future consideration.
With all the other pressures that the government is facing, it still all adds up to a decent indication that the Liberals are treating this year’s economic upheaval as an opportunity for climate transition, rather than an obstacle to it. And they can claim some announcements earlier this fall – including sign-off on billions of dollars in climate-friendly investments by the Infrastructure Bank, and funding for Ford to start building EVs in Ontario – as further evidence of that prioritization.
But this is also a minority government with an uncertain end date and not generally known for its quickness in making or implementing policy decisions.
The Liberals have a whole lot of follow-up work to do, if Mr. Trudeau wants a green recovery as his legacy, and they can’t really wait until the pandemic is firmly in the rearview mirror before getting down to the longer-term plans they’re still mostly hinting at.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.