Climate Action Incentive Fund

Summary of a strategic assessment of effects on the environment from the Climate Action Incentive Fund (CAIF).

The CAIF provides funding to small and medium-sized enterprises (SMEs), not-for-profit organizations, Municipalities, Universities, Schools and Hospitals (MUSH) to reduce greenhouse gas (GHG) emissions, promote adoption of clean technology, including fuel switching and process changes, and/or save energy through financial incentives. CAIF is funded from the proceeds of the federal carbon pollution pricing system and applies in provinces that have not committed to their own carbon pollution pricing systems.

CAIF is expected to have positive environmental benefits and result in reductions in GHG emissions and energy use and support the implementation of the Pan-Canadian Framework on Clean Growth and Climate Change by promoting the adoption of clean technology and the transition to a low-carbon economy.

These positive environmental impacts may also extend more broadly to include reduced fossil fuel and ozone depleting substance use, and improved air quality depending on the types of projects funded.

CAIF will contribute to Canada’s Nationally Determined Contribution (30% reduction in GHG emissions from 2005 levels by 2030) under the Paris Agreement.

The outcomes for CAIF are expected to drive the implementation of policies and measures that will reduce emissions across the country. CAIF provides funding to recipients to support projects that align with the following direct outcomes:

• reductions in energy usage
• cost-savings
• reductions in GHG emissions

CAIF will contribute to the following Federal Sustainable Development Strategy (FSDS) goals and targets and Sustainable Development Goals (SDGs) of the United Nations Agenda 2030:

• Effective action on climate change: CAIF will support the transition to a low-carbon economy and will contribute to limiting global average temperature rise to well below two degrees Celsius, and support efforts to limit the increase to 1.5 degrees Celsius. These actions will contribute to the FSDS target that by 2030, Canada's total GHG emissions are reduced by 30%, relative to 2005 emission levels. They will also contribute to SDG 13 Climate action.
• Clean growth: CAIF will support investment in, and the adoption of energy efficient technologies to reduce GHG emissions and energy usage. This will in turn help to reduce the carbon intensity of Canada’s economy, create cost-savings and drive clean growth by supporting the clean technology industry. These actions will also contribute to SDG 12, Responsible Consumption and Production.
• Clean energy: By supporting energy efficiency upgrades, fuel switching and low-emission electricity, energy and fuel production, CAIF will contribute to the FSDS target that by 2030, 90%, and in the long term, 100% of Canada’s electricity is generated from renewable and non-emitting sources. These actions will also contribute to SDG 7 Affordable and clean energy.
• Safe and healthy communities: CAIF will support activities that reduce GHG emissions and energy usage. This in turn will help to mitigate the negative impacts of climate change. This will contribute to the FSDS goal that all Canadians live in clean, sustainable communities that contribute to their health and well-being.  These actions will also contribute to SDG 3 Good health and well-being.
• Modern and resilient infrastructure: CAIF will support energy efficiency projects that will likely include infrastructure-related projects. Energy efficiency upgrades often provide co-benefits in addition to GHG and energy usage reductions that help to make infrastructure more modern and resilient. These actions will also contribute to SDG 9 Industry, innovation and infrastructure

Investments in energy efficiency made through CAIF will create jobs and help to develop Canadian expertise in the clean tech and energy efficiency sectors. This in turn can help to drive clean growth and the transition to a low-carbon economy, and improve Canadian economic efficiency, growth and global competitiveness.

Climate change can have significant impacts on health and well-being, including impacts related to temperature-related morbidity and mortality, weather-related natural hazards, air quality, vector-borne and zoonotic diseases. By funding projects that help to mitigate climate change, CAIF will contribute to preventing these climate-related health impacts.

Environment and Climate Change Canada (ECCC) will monitor and assess the implementation of CAIF to ensure it will achieve the desired results. Federal reporting on CAIF overall will be included, as appropriate, in FSDS reports, the Results and Delivery Charter for Effective Action on Clean Growth and Climate Change, as well as ECCC’s Departmental Results Framework and as part of the Horizontal Management Framework for Clean Growth and Climate Change. Reporting on CAIF will also be included in annual synthesis reports on the PCF provided to First Ministers.