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Budget 2016 on pipelines, green infrastructure spending and climate

Photo: Council of Canadians

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It certainly is far different evaluating this year's federal budget than the last four I've written about. While Harper government budgets had scant if any mention of climate change and funneled money towards oil and gas infrastructure, all the while gutting environmental protections, last week's budget directly mentions green infrastructure spending and the need to adapt to, and address climate change.

But is it enough? And how exactly will the money be spent? These are key questions.

Here is a breakdown of some key areas we see for moving towards a more equitable, green economy and society relevant to the proposed budget.

You can find the full budget here

Eliminating fossil fuel subsidies: Trudeau government takes a pass

The Council of Canadians, alongside many voices, has been calling for an elimination of subsidies to the fossil fuel sector for years. Canada publicly promised to phase out these subsidies along with other G20 nations in 2009.

In its 2015 report, Oil Change International and Overseas Development Institute found Canada provides $1.8 billion CAD in federal subsidies yearly to fossil fuel producers. Further, Export Development Canada, owned by our government, provides as much as $6 billion yearly to energy producers.

Budget 2016 was a lost opportunity to redirect funds from climate change causing industries to climate solutions. There was nothing in the budget cutting back these significant subsidies. 

In fact, it allocations $50 million over two years to Natural Resources Canada to "invest in technologies that will reduce greenhouse gas emissions from the oil and gas sector [p.154, Budget 2016]." In other words, taxpayer money is going towards a new subsidy helping oil and gas producers reduce their climate impacts. The budget also did not remove a capital cost allowance for controversial liquefied natural gas (LNG) projects that have the potential to balloon B.C.'s climate pollution, along with raising other serious environmental and social concerns [p. 221, Budget 2016].

Fairly evaluating pipeline projects: It's a start, but devil is in the details

On the campaign trail, Trudeau famously said, while governments grant permits, communities grant permission, in addressing controversial pipeline projects. Promises were made to revamp the broken federal review process for pipelines under the National Energy Board (NEB) and reinvigorate the Canadian Environmental Assessment Agency (CEAA) and our environmental laws. 

Minister Carr and McKenna recently announced plans to overhaul the NEB and CEAA but put existing projects like the Kinder Morgan, Line 3 and Energy East pipelines under an interim review process. For our take on these interim measures, including why we think Energy East should fall under the new rules, see this blog.

Budget 2016 provides $16.5 million over three years (starting 2016-2017) to the NEB, Natural Resources Canada and Transport Canada towards implementing the interim approach. It specifies, "This funding will support public and Indigenous participation in enhanced consultations in projects undergoing reviews by the National Energy Board and to support Crown consultations with Indigenous people [p. 165, Budget 2016]."

Broken down, this amounts to $5.5 million per year across the three agencies. This appears to be disconcertingly lower than needed given the promise of enhanced consultations. We hope this new injection of money is in addition to the $5 million already allocated as participant funding (used to pay experts and lawyers, key to effective participation) under the NEB Energy East review. Bear in mind that people applying as intervenors have already been told per-intervenor funding was cut in half for the Energy East review. Bear in mind also that some of these funds will go towards other projects including Kinder Morgan and Line 3 pipelines.

The budget also does not shed light on whether the enhanced consultations promised in the interim measures, in the case of Energy East, would be done through the NEB or a subsequent process led by Natural Resources.

Critical questions remain including whether who is allowed to be an intervenor under the NEB is opened up, whether there will be cross-examination and how additional funds will be available to intervenors. If there is a separate consultation process led by Natural Resources, how will they define who can participate? Will participants have access to funds like with the NEB to support their participation? The interim process has been criticized by Chiefs from B.C., Manitoba, Quebec and Labrador as insufficient -- we stand in solidarity with this analysis.

Budget 2016 also includes $14.2 million over four years (starting in 2016-17) to the CEAA, towards "activities, such as increasing Agency capacity to undertake consultations with the public and Indigenous groups, and will support compliance and enforcement."

Green infrastructure investments: Spending up, but not enough

Back in 2009 when we released our paper Green Decent and Public alongside the Canadian Labour Congress, we called for:

"commitment by the federal government to green infrastructure investments of at least $10 billion dollars over each of the next two years to five areas: energy conservation through building retrofits and renewable energy projects, mass transit, passenger rail and affordable housing."

There indeed are important steps forward here, but it is not enough.

While some may worry about running too large of a deficit, the Canadian Centre for Policy Alternatives rightly points out, "The projected deficit of just over $29 billion for both of the next two years -- amounting to at most 1.5 per cent of GDP -- is relatively smaller than any federal deficit run between 1974 and 1996 and federal government spending as a share of the economy remains at near-historic lows."  

Here are some highlights on green infrastructure investments in Budget 2016 which fall primarily fall under Chapter 2, Growth for the Middle Class and Chapter 4 Clean Growth Economy.

$11.9 billion over five years towards social Infrastructure including affordable housing, as well as public transit. It includes $5 billion towards green infrastructure including climate change mitigation and adaptation projects, municipal capacity building, clean water and waste water fund and water, wastewater and waste management for First Nations communities [p.90, Budget 2016]

Mass transit, passenger rail:

  • $3.4 billion over three years to upgrade and improve public transit systems across Canada [p.88 Budget 2016]. For a breakdown on provincial allocation and reference to certain projects, see p. 91 of Budget 2016.
  • $7.7 million in 2016–17 to VIA Rail to support technical studies and other activities towards the renewal of VIA Rail's fleet [p. 108 Budget 2016]
  • $3.3 million over three years to Transport Canada to support an in-depth assessment of VIA Rail's high-frequency rail proposal (Windsor Quebec corridor) [p.107 Budget 2016]

Affordable housing:

  • Proposes to invest $2.3 billion over two years, starting in 2016–17.
  •  Includes supporting energy and water efficiency retrofits and renovations to existing social housing [p.98 Budget 2016].

Energy conservation, building retrofits, renewable energy:

  • $75 million to the Federation of Canadian Municipalities (FCM) supporting municpally led projects with climate pollution reduction opportunities [p. 93 Budget 2016].
  • $125 million over 2 years to FCM for Green Municipal Fund which finances municipal green infrastructure priorities. Examples of projects supported include the expansion of the Halifax Solar City project to install solar hot water systems and efficient water fixtures in homes [p.94 Budget 2016]
  • The Government will invest up to $2.1 billion towards repairs and retrofits to its wide range of properties and buildings, as well as the greening of government operations [p.106 Budget 2016].

In addition to this spending, under Chapter 4, the government is allocating $3.4 billion over 5 years starting in 2016 to address climate change and air pollution, protect ecologically sensitive areas and restore public trust in the environmental assessment processes. [p. 155, Budget 2016].

Notably, $2.9 billion of this 5 year spending starting in 2016-2017 will go towards:

  • "Support the development of the pan-Canadian Framework, including a Low Carbon Economy Fund;
  • Help ensure that Canada meets its international obligations;
  • Take action to reduce emissions from Canada's largest sources -- transportation and energy;
  • Advance science and programming activities to better understand and adapt to the changing climate; and
  • Enable evidence-based decisions to address air pollution."

Important questions remain about these investments. There are few concrete details such as how many solar panels we can expect to see on buildings or the number of home that will be retrofit. Renewable energy spending doesn't specify whether it will be directed towards public and community ownership models which have a number of advantages (for more on this).

The $1 billion over 4 years (starting 2017-2018) to support "clean technology including in the forestry, fisheries, mining, energy and agricultural sectors, [p.150, Budget 2016]" also raises some questions around corporate responsibility versus government responsibility in reducing climate pollution impacts, and definitely raises green washing potential. 

It is also important to distinguish funding committed during the federal government's current term, versus what is promised beyond the next federal election, putting some of these funds into question.

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