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Équiterre’s expectations for the federal budget

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On March 19, the Trudeau government will be releasing the final budget of its mandate; a last chance to deliver on the commitments it made at the start of and during its time in office. Of these commitments and priorities, there still remains the implementation of the Pan-Canadian Framework on Clean Growth and Climate Change, including eliminating fossil fuel subsidies and implementing fiscal measures to promote of zero-emission vehicles.

Here are Équiterre’s expectations for the 2019 federal budget.

Fossil fuel subsidies

The phase-out of subsidies to the fossil fuel industry was among the priorities that the federal government set out in 2015 when it came into office. The commitment is included in the mandate letters for the Minister of the Environment and Climate Change and the Minister of Finance.

Équiterre and its partners – Climate Action Network and Environmental Defence - have three demands on this for the 2019 budget:

  • That the government commit to publishing a roadmap to phase out all remaining federal subsidies to fossil fuel production. The Minister of Finance must commit in the 2019 budget to publishing a roadmap with specific timelines for completely eliminating, between now and 2025, all federal fossil fuel subsidies that are still in effect.
  • That the government commit to the public release of the fossil fuel subsidies peer review exercise with the Government of Argentina. In 2009, the member countries of the G20 committed to the gradual elimination of “inefficient” fossil fuel subsidies. At the G7 in 2018, Canada entered into a peer review process of their respective fossil fuel subsidies with Argentina and this review must be concluded and submitted to Parliament before the end of 2019.
  • That the government commit to selling the Trans Mountain pipeline system by the end of 2019. Budget 2019 should provide full transparency and public disclosure of the pipeline purchase and the costs and risks associated with the Trans Mountain Expansion (TMX). Canadian taxpayers now own the Trans Mountain pipeline network—a risky investment from both a financial and an environmental standpoint.

Budget measures to support the adoption of zero-emission vehicles (ZEVs)

In Canada, almost one quarter of greenhouse gas (GHG) emissions come from the transportation sector. Among the more troubling trends that foreshadow a continued increase in GHGs from passenger vehicles are the low sales in ZEV on the Canadian market.

It should be noted that this year, the federal Minister of Transport, the Honourable Marc Garneau, committed to meeting the following sales targets for ZEV vehicles in Canada:

  • 10% by 2025;
  • 30% by 2030;
  • and 100% by 2040.

To achieve these targets, Équiterre has submitted six ZEV demands to the federal government for its 2019 budget:

  • Implement a pan-Canadian ZEV mandate. In Canada, limited supply (the lack of ZEV models and availability) remains the primary barrier to their adoption. A ZEV mandate would require that a certain percentage of sales of all passenger vehicles in Canada be ZEVs.
  • The federal government should provide a temporary purchase rebate of $6,000 per ZEV (for ZEVs under $50,000 purchase price) over the next two years. This type of incentive would stimulate consumer demand in provinces where purchase incentives are not offered.
  • The federal government should reform the Green Levy (the federal tax on fuel- inefficient vehicles) to make it more effective. Among other things, the tax should apply to a greater number of vehicles.
  • The federal government should invest $20 million per year over five years to continue to build ZEV charging infrastructure. This funding must be dedicated strictly to ZEV charging stations and exclude alternative fuels in personal transportation. The government’s investments in charging station projects under Phase 1 of the Electric Vehicle and Alternative Fuel Infrastructure Deployment Initiative have amounted to a meagre $5.0 million out of an allocated total of $14.5 million. A lot more funding needs to be allocated to this in order to increase the availability of ZEV charging stations throughout the country and at the same time stimulate private investment in ZEV charging infrastructure.
  • The federal government should make ZEVs purchased as part of a business fleet eligible for the 100 per cent capital cost deduction for Clean Energy Equipment. While sales of ZEVs to individual consumers is important, electrification of the vehicle fleets of businesses and public agencies represents 20% of vehicles on our roads. It is therefore essential that institutional fleet be electrified.
  • Innovation, Science and Economic Development should restructure the federal Strategic Innovation Fund to dedicate a minimum of $400 million over five years strictly to fund ZEV technologies in Canada, including the upskilling and training of labour in the Canadian automotive industry. This would help position Canada as a favourable investment market for the electrification of transportation and create jobs in the Canadian ZEV supply chain. The recent closing of GM’s Oshawa plant was the result of the lack of supportive Canadian policies to attract investment, whereby the company decided not to invest in the restructuring of its assembly plan to respond to the growing demand for low- or zero-emission vehicles.
  • The federal government should invest $10 million per year in a public education campaign on ZEVs.

On March 19, Équiterre will be closely watching to see if the latest budget from the government addresses the contradictions between Canada’s dependence on fossil fuels and the climate emergency. Stay tuned on social media for our reactions!