Among the most notable climate measures in Budget 2024 are cash for home retrofits and a new investment tax credit to bolster electric vehicle supply chains.
Unveiled by Finance Minister Chrystia Freeland on April 16, this year’s federal budget includes big-ticket housing items and proposes raising the capital gains tax on the extremely wealthy.
“In a sense, it’s a substitute for a wealth tax,” said David Macdonald, senior economist at the Canadian Center for Policy Alternatives. Canadian National Observer in the budget blockade.
“This is an important change in taxation. “We are not playing around with the edges.”
Changes to the capital gains tax would only affect the 0.13 per cent of Canadians who have capital gains over $250,000 each year and about 12.6 per cent of corporations. The measure is expected to generate $19.4 billion over five years, starting this year.
The NDP, Green Party and Bloc Québécois have periodically called for an excess profits tax on the oil and gas industry, but that was not part of this budget.
This year’s budget proposes spending $800 million over five years to launch a new housing retrofit program starting in 2025. The new program replaces the federal government’s popular $2.6 billion Canada Greener Homes grant, which was left out of funds earlier this year. The new Greener Home Affordability Program is aimed at low- and middle-income households.
The fact that this new program begins in mid-2025 “could leave both energy customers and retrofit companies ready to do the work in the lurch,” said Brendan Haley, policy director at Efficiency Canada, in a statement sent by email to Canadian National Observer.
Reducing emissions from buildings is an important piece of Canada’s greenhouse gas reduction strategy: buildings accounted for about 13 per cent of the country’s planet-warming emissions in 2021.
Money for home retrofits and a new investment tax credit to bolster electric vehicle supply chains are among the most notable climate measures in Budget 2024, but they are not enough to meet the moment and address climate change, say its defenders.
Macdonald was encouraged to hear that the housing retrofit program had been renewed, but said: “The scale of the program is not up to the challenge we face in terms of the climate crisis.”
The budget includes an additional $73.5 million over five years to help renew and modernize existing energy efficiency programs and “spur the development of better, more ambitious building codes to further reduce emissions and lower energy bills.” ”, which provinces and territories will be encouraged to implement. adopt.
Another $30 million over five years will help provide homebuyers with information about the energy efficiency of their new home through labeling.
The 2024 budget also added another clean economy investment tax credit to the five previously proposed in previous budgets. Last year, the federal government announced a set of investment tax credits to boost the clean economy in response to the American Inflation Reduction Act. In total, these investment tax credits add up to about $93 billion, Freeland boasted during a press conference Tuesday afternoon.
The EV supply chain investment tax credit is estimated to cost more than $1 billion. The 10 percent tax credit would apply to the cost of buildings used in electric vehicle assembly and battery production. More details about this tax credit will appear in the fall economic statement, but it is intended to complement a previously proposed 30 percent investment tax credit for clean technology manufacturing (purchase of equipment and machinery).
NDP Leader Jagmeet Singh criticized the federal budget, saying his party wanted an excess profits tax.
The 2024 budget confirms that provinces and territories will have to agree to “work towards” a net-zero electricity grid by 2035 so that Crown corporations can access the $25.7 billion clean electricity tax credit. To access the 15 per cent tax credit, provincial and territorial governments must also order Crown corporations that claim the credit to publicly report each year on how the tax credit has improved taxpayers’ bills.
Alberta and Saskatchewan have openly opposed the federal government’s clean grid goal, with Alberta Premier Danielle Smith calling it “unrealistic” on multiple occasions.
When the federal government says net-zero electricity, it means that the electricity generated (for example, by natural gas power plants) emits no planet-warming greenhouse gas emissions when emissions-reducing technologies are taken into account. such as carbon capture or carbon offsets.
Finance Canada will consult with provinces and territories on the details of these conditions before the legislation is introduced this fall, according to the budget.
A new set of measures proposes to “clarify and reduce” deadlines so that major projects are built faster. This includes a three-year target for nuclear project reviews working with the Canadian Nuclear Safety Commission and the Canadian Impact Assessment Agency to streamline the process. Additionally, there is a similar goal of five years or less to complete the federal impact assessment and permitting processes for federally designated projects, and a goal of two years for non-federal projects.
More than $2.5 billion in revenue will go toward the federal carbon price. “urgently returned” directly to about 600,000 small and medium-sized businesses in provinces where the federal carbon fuel tax applies.
Biofuels received an increase in the federal budget, with a focus on renewable diesel, sustainable aviation fuel and renewable natural gas. The federal government intends to spend up to $500 million per year from Clean Fuels Regulation compliance payment revenue to support biofuel production in Canada, with more details to come in the fall. Additionally, it says biofuel production will benefit from a minimum investment of $500 million from the Canada Infrastructure Bank’s green infrastructure investment stream.
Transport Canada will receive almost $608 million over two years to complement a program that offers incentives for Canadians to lease or purchase electric and hybrid vehicles, including rebates of between $2,500 and $5,000 for eligible vehicles.