Environmental funding in Canada’s 2021 Federal Budget

May 13, 2021 | Graham May

Canada’s 2021 Budget announced funding and initiatives which will have bearing for three areas of the environmental sector: (1) climate change; (2) clean tech; and (3) conservation of land and waters. These new investments will have direct and indirect impacts on the activities and mandates of many environmental charities and non-profits, and thus are worth examining.

Regarding climate change, the funding pool grew. The 2021 Budget announced $94.4 million in funding between 2021-26 for Environment and Climate Change Canada to increase climate change mitigation and adaptation. Carbon capture was a major thrust of new spending. The 2021 Budget committed a further $319 million between 2021-2028 for carbon-capture research and development, and proposed a new tax credit for investments in carbon capture projects (effective 2022). The federal government also announced a “green bond” framework in 2021-22, with an issuance target of $5 billion, to finance further federal environmental action.

Clean tech also received large direct funding and new tax incentives. The 2021 Budget committed $5 billion in funding between 2021-28 through the “Net Zero Accelerator” to support the adoption of clean tech in high-emitting industrial sectors such as steel and cement. A further $1 billion will be available between 2021-26 to encourage private investment in clean tech projects, and a targeted $54.8 million will boost alternative uses of wood, such as biofuels and bioplastics. The 2021 Budget also halved the general corporate and small business income tax rate for businesses that manufacture zero-emission technology, and expanded generous tax deductions for several types of renewable energy investments.

Finally, the 2021 Budget also made large investments in marine and terrestrial conservation. $2.3 billion in funding was allotted to conserve up to 1 million square kilometers of land and inland waters, create thousands of new jobs in conservation and management, and fund protection for species at risk. Another $976 million was announced for coastal conservation and sustainable fisheries, and $200 million for green infrastructure. Targeted initiatives included $60 million to protect wetlands and trees on farmland  and $10 million for marine plastics removal.

It is open for debate whether the environmental pledges in the 2021 Budget are sufficient to achieve Canada’s commitments to reduce greenhouse gasses and increase protected land and waters. But the injection of cash and establishment of new initiatives is likely to support and compound important work being done across the Canadian environmental non-profit sector.


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