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Deputy Prime Minister and Minister of Finance Chrystia Freeland today released Budget 2023: A Made-in-Canada Plan (Budget 2023). Resilient’s bulletin outlines key climate, energy, and Indigenous highlights from Budget 2023.   Clean Electricity, Clean Economy Budget 2023 introduces “Canada’s Plan for a Clean Economy” (the Clean Economy Plan) with the following priorities: electrification; clean energy; clean manufacturing; emissions reduction; critical minerals; infrastructure; electric vehicles and batteries; and major projects. The Clean Economy Plan is centred on three tiers of federal financial incentives: (i) an anchor regime of clear and predictable investment tax credits; (ii) low-cost strategic financing; and (iii) targeted investments and programming to respond to the unique needs of sectors or projects of national economic significance.   Clean Electricity. Budget 2023 notes that Canada’s electricity demand is expected to double by 2050 and will require electricity capacity to increase by 2.2 to 3.4 times compared to current levels and proposes the following new funding and investments to support clean electricity in Canada: Canada Infrastructure Bank (CIB) will invest at least $10B through its Clean Power priority area, and at least $10B through its Green Infrastructure priority area, at least $20B to support the building of major clean electricity and clean growth infrastructure projects; $3B over 13 years to Natural Resources Canada to: Recapitalize funding for the Smart Renewables and Electrification Pathways Program to support critical regional priorities and Indigenous-led projects, and add transmission projects to the program’s eligibility; Renew the Smart Grid program to continue to support electricity grid innovation; and Create new investments in science-based activities to help capitalize on Canada’s offshore wind potential, particularly off the coasts of Nova Scotia and Newfoundland and Labrador. funding to advance the Atlantic Loop and support ongoing negotiations with provinces and utilities to identify a clear path to deliver the project by 2030. Clean Economy. Budget 2023 proposes the following new funding and support for…

The United States has just passed arguably its most significant and meaningful legislative instrument on climate change and clean energy. It is intended to have positive implications for climate and clean energy markets around the globe. On Sunday, August 8, 2022, the US Senate passed the Inflation Reduction Act of 2022 (the Act). The Act was then passed by the House of Representatives on Friday, August 12, 2022, and President Biden signed it into law today (Tuesday, August 16, 2022). The Act represents a central pillar of President Biden’s policy agenda and is extremely ambitious in scope, with significant implications for healthcare, taxes, and climate change. It authorizes approximately US$430 billion in spending, with approximately US$369 billion of that sum directed to clean energy and addressing climate change. This bulletin highlights the central climate and energy provisions of the Act. It is noteworthy that Senate Democrats estimate that the Act will raise US$739 billion in new revenue through measures such as increasing the IRS’s enforcement of tax evasion, and a new 15% minimum tax rate applicable to corporations with profits of $1 billion or more. These new revenues are intended to more than offset the expenses resulting from new programs, resulting in a projected reduction in the federal government’s deficit. The Senate was the critical hurdle for the Act, with approval remaining in doubt until its final passing by a vote of 51-50 (along strict party lines with Vice President Harris casting the 51st and tie-breaking vote).   Senate Democrats indicate that the climate change provisions of the Act will result in a 40 percent reduction in carbon emissions by 2030 compared to 2005 levels when fully implemented. While this falls short of America’s updated Paris Target of a 50-52% reduction from 2005 GHG emissions by 2030, it constitutes meaningful progress toward that goal.    The climate and energy portions…

Deputy Prime Minister and Minister of Finance Chrystia Freeland yesterday released Budget 2022: A Plan to Grow Our Economy and Make Life More Affordable (Budget 2022). This bulletin outlines key climate, energy, and Indigenous highlights from Budget 2022, part of total new spending of $31.2B, which includes: A proposal to establish the Canada Growth Fund (initial investment of $15B over five years), directly targeted at reducing emissions and enabling the transition to a low-carbon economy. Confirmation of the government’s intention to establish a refundable investment tax credit for carbon capture, utilization and storage (CCUS) projects to the extent that they permanently store captured CO2 through an eligible use. Plans to engage with experts on establishing an investment tax credit of up to 30 per cent, focused on net-zero technologies, battery storage solutions, and clean hydrogen. Support for the co-development of an Indigenous Climate Leadership Agenda to support self-determined action in addressing Indigenous Peoples’ climate priorities. Climate Budget 2022 includes new and proposed funding supporting important climate action, as follows: Canada Growth Fund. Budget 2022 proposes establishing the Canada Growth Fund, with an initial $15B investment over the next five years and the aim of attracting substantial private sector investment supporting the following economic policy goals: reduce emissions and contribute to achieving Canada’s climate goals; diversify the economy and bolster exports by investing in the growth of low-carbon industries and new technologies across new and traditional sectors of Canada’s industrial base; and support the restructuring of critical supply chains in areas important to Canada’s future prosperity—including our natural resources sector. Clean technology. Budget 2022 proposes the following new clean technology funding and investments: engage with experts to establish an investment tax credit of up to 30 per cent, focused on net-zero technologies, battery storage solutions, and clean hydrogen; provide $2.2B over…

Environment and Climate Change Canada (ECCC) today released a discussion paper, “A Clean Electricity Standard in support of a net-zero electricity sector” (the Discussion Paper), as part of its first steps in developing and consulting on a Clean Electricity Standard (CES) under the Canadian Environmental Protection Act, 1999. This bulletin summarizes key details of the Discussion Paper and provides important information on ECCC’s consultation on developing a CES.   Purpose. The Discussion Paper indicates that its purpose is to support the government’s intention to introduce regulations to achieve a net-zero electricity system by 2035 and invite comments regarding the scope and design of the CES. The Discussion Paper notes that Canada’s electricity system is currently 82% non-emitting but remains Canada’s 4th largest source of emissions, accounting for 8.4% of total greenhouse gas (GHG) emissions in 2019.   Proposed CES Regulations. The Discussion Paper notes that carbon pricing will be insufficient to ensure that the electricity sector achieves net-zero emissions by 2035 or likely even by 2050. Therefore, a nation-wide CES regulation will complement carbon pricing by requiring the phase-out of all conventional fossil fuel electricity generation and incentivizing fuel switching in other sectors. The scope and design of the CES regulations will also need to provide enough compliance flexibility to allow for the use of natural gas for emergency events, back-up power to complement renewables, and supplying power during seasonal peaks of demand. The proposed CES regulations may, among other things: apply to all sources of emitting electricity generation that sell to the grid; transition the electricity sector to net-zero by 2035 while providing increased supply of electricity to support electrification and the role of available technologies in the provision of clean power to Canadians; be stringent enough to achieve its objectives while including compliance flexibility, such as robust GHG offsets, and allow for the…

Ontario’s Ministry of Energy (the Ministry) this week announced its intention to develop a new voluntary clean energy credit registry (CEC) registry. The Ministry has directed Ontario’s Independent Electricity System Operator (IESO) to research and report on the design of a provincial CEC registry by July 4, 2022. The Ministry also indicated that it intends to consider the IESO report and stakeholder feedback before implementing the CEC registry by January 2023.   The Ministry stated that the CEC Registry will assist businesses operating in Ontario to meet corporate environmental and sustainability goals. The voluntary CECs would represent 1 MWh of clean electricity generated from one or multiple non-emitting sources such as solar, wind, bioenergy, hydroelectric and nuclear. Purchasers will be allowed to purchase and retire the voluntary CECs to meet corporate and individual goals and demonstrate that their electricity is generated from non-emitting sources.  Revenue from the sale of CECs could (i) be returned to Ontario ratepayers to lower the cost of electricity and/or (ii) support future clean energy generation projects. The proposed CEC registry is intended to assist businesses to reduce emissions and meet the climate targets of the Made-in-Ontario Environment Plan, Ontario’s climate and environment plan.   The CEC registry would match similar voluntary registries in Ohio, Pennsylvania, Illinois, Indiana, Wisconsin, and New England For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com.