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Small businesses hoping to get funds from the federal carbon tax for energy-retrofit projects are still waiting, as the government has stopped the distribution of grants until after the election. Some business owners worry a potential change in government could mean the promised funds will never materialize.

When the Climate Action Incentive Fund for small and medium-sized enterprises opened to applicants in July, it listed its application period as “90 days starting July 17, 2019, or until funding exhausted.” Stakeholders who participated in government webinars and meetings say they were told the response time on applications would be quick – somewhere between 25 and 35 business days. Many businesses rushed to get applications in early, hoping for approvals before the Oct. 21 election and the potential for a new government to cancel the program.

Now, Environment and Climate Change Canada says the 300-plus projects already submitted won’t be approved until after the election.

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“That is certainly different than what we heard before,” said farmer Will Heeman. His London, Ont., greenhouse and strawberry farm, Heeman’s, has submitted an application to erect solar panels.

Marilyne Lavoie, a spokesperson for the federal environment department, did not respond Sept. 12 to questions about the contradictory messaging. However, on Friday, a day after The Globe and Mail’s inquiry, stakeholders received a government e-mail about the delay. “The period of time from Sept. 11 and until after Oct. 21 will not be included in our service standard period of 25 business days,” the e-mail says.

The e-mail also states the 25-day waiting period began Aug. 27 – not July 17 when the program launched. The program application’s guide – most recently updated Sept. 6 – includes this, but separately states approvals could begin in Summer 2019.

While it is typical for governments to refrain from financial decisions during an election period, it is not clear why no applications were approved before the election campaign officially started on Sept. 11 or why this information wasn’t communicated to applicants, grant-writing consultants or stakeholders until after The Globe’s inquiry.

Green Economy Canada, which sits on a government advisory panel related to the fund, also learned about the delay from The Globe.

“The emphasis [had been] on a simplified application process that could move good projects forward quickly. … The impact of the election period wasn’t discussed,” said Priyanka Lloyd, president of Green Economy Canada, which supports a network of hubs that help businesses set and achieve sustainability targets.

Ms. Lloyd said businesses are concerned about the effect of a change in government on the program. “The concern we hear from the business community is having policy certainty … for businesses to make this investment and be assured of the funding.”

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The fund – set at $106.7 million for 2019/2020 – is paid for by carbon tax revenue. It is open to businesses with fewer than 500 employees in Saskatchewan, Manitoba, Ontario, and New Brunswick – provinces subject to the federal fuel charge. It funds up to 25 per cent of the cost of approved projects that “help eligible applicants reduce their energy use, costs, and/or greenhouse gas emissions,” according to the federal department’s website. Companies can request between $20,000 and $250,000.

Some businesses have complained the carbon tax will increase their costs, and the Canadian Federation of Independent Business has already expressed concerns at the slow pace of the rebate program. That organization estimates that small businesses account for almost 50 per cent of carbon-tax revenue, but will only get 7 per cent back through rebates.

Ms. Lloyd says small and medium-sized businesses are typically more willing to invest in climate action when provided an incentive, and that the Climate Action Incentive Fund’s straightforward application process was welcomed by applicants. One shortfall of the program, however, is that a business with multiple locations cannot submit one project application covering more than one address, she said. Entrepreneurs can submit up to five applications, but each must meet the $80,000 minimum project threshold. “We have been told that would be considered in the next round.”

Mr. Heeman is asking for $75,000 toward a $300,000 solar project that would fulfill about 75 per cent of his farm’s electricity needs, offsetting approximately 10,100 kilograms of carbon dioxide equivalent annually for the estimated 30- to 40-year life of the project, according to his application. He noted that his company earlier had been approved for a separate emissions-reduction grant from the Ontario government, but it was cancelled when the Progressive Conservatives took over from the Liberals in 2018.

Split Rail Brewing Co., on Ontario’s Manitoulin Island, is still working on its application, but hopes to build a canning line. The company currently has a bottling line, but one tank of beer takes several days to bottle, and recycling glass takes more energy than aluminum. The new line would can a tank in one day, using less energy, and would also eliminate the transportation costs associated with bringing in a mobile canning line from Toronto, nearly 600 kilometres away. “With this grant, we’d get the line a year earlier than what we were planning on,” said production manager Brent Pottage.

Split Rail plans to go ahead with an application despite the uncertainty. Founder Andrea Smith said the company is getting help from its local green economy hub, part of the Green Economy Canada network. She was surprised to hear projects wouldn’t be approved in “a couple weeks" as she had been told.

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“We have no idea what direction it will go in, but we are still going to try.”

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In 2018, the federal government announced that all provinces would need to implement a carbon-pricing system by April 1, 2019 and those that didn't would fall under a federal carbon tax. But what is carbon pricing anyway?
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