On March 28, the federal government released Budget 2023. It’s the most climate-focused budget ever released in our country’s history. It contains a comprehensive plan to help Canadian cleantech development flourish, with incentives in clean electricity and grid development, tax credits for hydrogen, CCUS, and critical minerals, as well as a pledge to scale Canada’s biofuel sector and shore up worker protections.
Budget 2023 sends a clear message that cleantech development and emissions reduction is an important priority, and that message is backed by investments in key sectors that will help Canada move toward net zero. However, Budget 2023 still missed a few critical opportunities. For Canada to meet its ambitious climate targets, there are a few vital things to address.
A wider scope of what constitutes cleantech is necessary
Currently the Cleantech Investment Tax Credit and the Manufacturing Tax Credit cover technologies related to clean electricity, hydrogen, CCUS, and critical minerals. While those are vital technologies that are necessary for our net zero goals, a broader definition of cleantech would enable more Canadian innovators to develop and deploy their solutions in Canada.
The budget is missing support for critical cleantech sectors, including the circular economy and agtech innovation, which have the potential to reduce a significant amount in waste and emissions. Currently, there is no process to appeal the definition of what constitutes a clean technology, or a process for a company that is not currently eligible for the tax credit to apply for it.
The federal budget should include a mechanism for cleantech ventures to apply for the tax credit.
Government spending
Budget 2023 signals a shift away from direct investments into cleantech projects, and moves toward corporate incentives. Given the urgency in the latest IPCC climate change report that was described as a “final warning” to governments, the time for immediate and decisive action is now.
While incentives and tax credits are a fantastic start, and could bend the curve on our national emissions, what we need is direct spending from government alongside those incentives in order to rapidly transform our economy and get us to net zero. Climate change is such a massive problem. It’s going to take leadership and collaboration from innovators, industry, and government if we want to mitigate the worst effects of climate change and ensure a livable, just, and prosperous Canada. That’s the bad news.
The good news is that Foresight is here to help. We partner with industry leaders to find solutions to their most pressing emissions challenges. Through our government and industry innovation programs, we can find ready-to-deploy solutions to help reduce their carbon footprints, and clean up operations quickly and effectively. Reach out to us to find out how we can help you solve your sustainability challenges.
A rigorous, just, and inclusive transition plan
The time for incremental changes has come and gone. If the aforementioned IPCC report is to be taken seriously (it is), we are at a pivotal moment in the climate crisis. The actions we take now will reverberate through generations to follow. Canadian author and climate policy advocate Seth Klein, in his book A Good War, describes what he calls the “markers of emergency.”
To name a few relevant to this point: in a time of emergency the government must spend what it takes to win, create necessary crown corporations and institutions whose sole focus is the emergency, and implement a just and urgent transition plan.
Budget 2023 falls short of these markers. We need all hands on deck to fight the climate emergency – innovators, private investors, industry leaders, academics, and the government must take decisive and bold action to reduce our emissions if we want to avoid irreversible damage to vital ecosystems, and significant economic interruptions.
As we approach 2030, we are still a long way off from our goal of reducing our emissions to 40 per cent below 2005 levels (741 Mt) of greenhouse gas emissions. In 2022, our national emissions clocked in at 672 Mt, the first time since 2009 we’ve slipped below the 700 Mt mark. If we are to achieve net zero by 2050, we have to act now.
The federal budget needs more funding to support early-stage cleantech ventures, as capital is the number one barrier preventing SMEs from deploying, commercializing, and scaling their technologies.
All in, Budget 2023 earmarks about $80 billion over 10 years for the clean economy. This is a fantastic investment that is sure to have a massive impact on the Canadian cleantech ecosystem. We are thrilled to see this step being taken, and that the government recognizes cleantech and a clean economy as top priorities.
However, an increase in coordination between the government and industry leaders to determine where targeted spending could have the highest impact will position Canada as a leader in the space, and send the signal to the world that Canada is the destination to discover and deploy clean technologies.
At Foresight, our goal is to see Canada become the first G7 nation to achieve net zero. We are still a long way off, but with a solid and supportive legislative framework, and concerted collaboration between stakeholders, we can do it.
