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Smoke pours from the stacks at the Portlands Energy Centre in Toronto, January 15, 2009.

Frank Gunn/THE CANADIAN PRESS

The Liberal government will spend more than $7-billion over the next two years on environmental protection with the big ticket items aimed at expanding public transit, fixing the country's aging water and waste water infrastructure and supporting provincial efforts to reduce greenhouse gas emissions.

In his first budget released Tuesday, Finance Minister Bill Morneau characterized the new government as a "champion of clean growth and a speedy transition to a low-carbon economy."

Mr. Morneau delivered on Liberal election promises to dramatically boost spending on climate action, with several programs aimed at boosting the application of clean-technology innovation throughout the economy.

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Prime Minister Justin Trudeau met provincial and territorial premiers in Vancouver this month and laid the groundwork for a pan-Canadian strategy on clean growth and climate change. While the leaders agreed on the need for "carbon pricing" and greater effort to hit Canada's international emission targets, there was no consensus on what might constitute "pricing" or whether there should be a national floor price. Ottawa is aiming to conclude a deal next fall.

"Some believe we must choose between a strong economy and a clean environment," Mr. Morneau said in his budget speech in the House of Commons. "They are simply wrong."

He noted widespread adoption of clean energy across the world, and argued Canada needs to claim a leadership role in that economic transformation.

Over the next two years, Ottawa will spend:

• $2.5-billion on public transit;

• $1.8-billion on green infrastructure, most of which will go to repair water systems;

• $574-million for energy and water efficiency upgrades to the country's social housing stock;

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• $401-million for a variety of clean-tech development efforts; and

• $1.7-billion for climate and environmental protection.

Mr. Morneau announced an additional $1-billion in 2018-19 to establish a two-year, $2-billion low-carbon economy fund that will provide funding to provinces and territories that sign on to a national climate agreement. The fund will be used to help finance additional actions that provinces and territories undertake to reduce GHG emissions.

"Resources will be allocated to those projects that yield the greatest absolute greenhouse gas reductions for the lowest cost," Finance Canada said in the budget documents.

It will provide new capital to the government's venture capital agency, Sustainable Development Technology Canada, as well as Natural Resources Canada to boost research and commercialization of clean technology.

The government suggested the investments on clean economy "are just a start" and more action will be taken.

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Environmental groups applauded the wide-ranging efforts to reduce pollution and cut greenhouse gas emissions.

"This is laying the groundwork for a green energy economy, and it is doing so with some smart investments," said Clare Demerse, policy director with Clean Energy Canada.

She pointed to the government's plan to spend on recharging infrastructure for electric vehicles in concert with provinces, as well as a study on how to connect clean-electricity suppliers in Canada with provinces that are cutting their dependence on coal-fired power.

The government has not moved to cut subsidies in the fossil fuel industry, as promised in their election platform. Indeed, it confirmed it will allow producers of liquefied natural gas (LNG) to write off their capital investments at an accelerated pace, at least for the next 10 years.

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