Climate change/greenhouse gas: appearance before the Standing Committee (March 10, 2021)

Canada’s Strengthened Climate Plan

On December 11, 2020, the Government announced A Healthy Environment and a Healthy Economy – Canada’s strengthened climate plan of federal policies, programs; and $15 billion in investments to accelerate the fight against climate change, create good new jobs, make life more affordable for households, and build a better future. The plan includes steps to:

• Make the places Canadians live and gather more affordable by cutting energy waste;
• Make clean, affordable transportation and power available in every Canadian community;
• Continue to ensure that pollution isn’t free and that households get more money back;
• Build Canada’s clean industrial advantage; and,
• Embrace the power of nature to support healthier families and more resilient communities.

A Healthy Environment and a Healthy Economy builds on the important achievements and work underway to implement the 2016 Pan-Canadian Framework on Clean Growth and Climate Change, in collaboration with provinces, territories, and Indigenous peoples.

Taken together with the Pan Canadian Framework, A Heathy Environment and a Healthy Economy will allow Canada to exceed its 2030 greenhouse-gas-reduction target. In partnership with provinces and territories, and working with the private sector and others, Canada can, as a nation, achieve reductions in the range of 32-40% below 2005 levels.

The plan will also establish the right building blocks to get to net-zero, which Canada has committed to achieving by 2050.

Since the Strengthened Climate Plan was released, the Government of Canada has:

• Announced the Growing Canada’s Forest Commitment as the next step of the Government’s commitment to plant two billion trees.
• Announced $14.9 billion for public transit projects over the next eight years, which includes permanent funding of $3 billion per year for Canadian communities beginning in 2026-27.
• Launched the updated Greening Government Strategy to transition to net-zero carbon and climate-resilient operations, while also reducing environmental impacts beyond carbon, including on waste, water and biodiversity.
• Released the Hydrogen Strategy for Canada that outlines a framework for hydrogen to become a key tool in enabling Canada to achieve a prosperous net-zero emissions future.
• Launched Canada’s Small Modular Reactor Action Plan containing over 50 recommendations to advance this technology.

Examples of new and strengthened measures

Buildings

• $2.6 billion over seven years to help homeowners make their homes more energy efficient. This funding will provide grants of up to $5,000, up to one million free EnerGuide assessments, and support to recruit and train EnerGuide auditors.
• $1.5 billion over three years for green and inclusive community buildings, and requiring that at least 10 per cent of this funding be allocated to projects serving First Nations, Inuit and Métis communities.
• Accelerating work with provincial and territorial governments to develop and adopt increasingly stringent model codes, with the ultimate goal of a net-zero energy ready model building code by 2030.

Transportation

• Additional $287 million over two years to continue the Incentives for Zero-Emission Vehicles (iZEV) program until March 2022.
• Additional $150 million over three years in charging and refueling stations across Canada.
• Working with partners in the year ahead on supply-side policy options to achieve additional reductions from Canada’s light-duty vehicle fleet, including regulations and investments to accelerate and expand the consumer availability of ZEVs in Canada as demand grows.
• Developing a national active transportation strategy and working to deliver more active transportation options such as walking trails, cycling paths and other forms of active mobility.

Electricity

• Additional $964 million over four years to advance smart renewable energy and grid modernization projects.
• Additional $300 million over five years to advance the government’s commitment to ensure rural, remote and Indigenous communities that currently rely on diesel have the opportunity to be powered by clean, reliable energy by 2030.
• Working with provinces and territories to help build key intertie projects with support from the Canada Infrastructure Bank.
• Working with provinces, territories, utilities, industry and interested Canadians to ensure that Canada’s electricity generation achieves net-zero emissions before 2050. The Government of Canada will explore the role of a clean electricity performance standard in the context of the full set of measures in place and proposed by this plan.

Carbon Pricing

• Federal proposal to increase the carbon price through to 2030, increasing $15/t each year starting in 2023 to $170 in 2030.
• Provinces and territories will continue to have flexibility to implement their own systems, aligned with minimum national stringency standards (federal benchmark).
• To ensure carbon pricing systems are fair and effective, also propose to strengthen the minimum national criteria each system has to meet (federal benchmark). This will help ensure consistent coverage of GHG emissions, provide more stability over time (e.g. through multi-year assessments), and ensure all systems provide a strong incentive to reduce emissions and spur innovation.
• The federal pollution pricing system will remain revenue neutral – all direct proceeds will be returned to the jurisdiction of origin. The federal government is committed to ensuring that the price on pollution remains affordable, and helping household and businesses to increase energy efficiency and reduce emissions.
• The federal government returns the majority of proceeds collected under the fuel charge directly to individuals and households in some jurisdictions. In order to maintain the incentive to reduce emissions, the amount returned to households is not related to the costs they incur due to the federal carbon pricing system.

Clean Industry

• Launching a Net-Zero Challenge for large emitters to support Canadian industries in developing and implementing plans to transition their facilities to net-zero emissions by 2050.
• $3 billion over five years for the Strategic Innovation Fund’s Net-Zero Accelerator Fund to support decarbonization and .create jobs, in complement to the Challenge.
• $165.7 million over seven years to support the agriculture industry in developing transformative clean technologies and help farmers adopt commercially available clean technology.
• Setting a national emission reduction target of 30% below 2020 levels from fertilizers and work with fertilizer manufacturers, farmers, provinces and territories, to develop an approach to meet it.
• Developing new federal regulations to increase the number of landfills that collect and treat their methane, and ensure that landfills already operating these systems make improvements to collect all they can.
• Additional $750 million over 5 years to recapitalize SDTC.

Nature

• Up to $3.16 billion over 10 years, to partner with provinces, territories, non-government organizations, Indigenous communities, municipalities, private landowners, and others to plant two billion trees.
• Up to $631 million over 10 years to work with provinces, territories, conservation organizations, Indigenous communities, private landowners, and others to restore and enhance wetlands, peatlands, grasslands and agricultural lands to boost carbon sequestration.
• $98.4 million over 10 years to establish a new Natural Climate Solutions for Agriculture Fund.

Adaptation

• Developing Canada’s first-ever national adaptation strategy, working with provincial, territorial and municipal governments, Indigenous peoples, and other key partners.

Indigenous Partnership

• Co-developing, on a distinction basis, an Indigenous Climate Leadership agenda which builds regional and national capacity and progressively vests authorities and resources for climate action in the NIORs.
• Working with First Nations, Inuit and Métis peoples to co-develop decision-making guidance that will ensure all of Canada’s future climate actions help advance Indigenous climate self-determination.
• Starting in 2020-21, triple the net fuel charge proceeds available to Indigenous governments in federal backstop jurisdictions. These proceeds will be returned through co-developed solutions.

Greening Government

• Updating the Greening Government Strategy to align with the new federal target to be net-zero emissions by 2050 and accelerating the interim target for federal facilities and conventional fleet to a 40% reduction by 2025 (instead of 2030).
• Developing a climate lens to integrate climate considerations throughout government decision-making and explore options for its implementation. These considerations include both short and long-term climate mitigation, Indigenous climate leadership, as well as climate resilience and adaptation.
• Updating the Government of Canada’s social cost of carbon estimates to ensure Canada’s methodology aligns with the best international climate science and economic modelling.

Net-Zero 2050 Commitments

Canadian Net-Zero Emissions Accountability Act

• The proposed Canadian Net-Zero Emissions Accountability Act (Bill C-12) requires the Government of Canada to set national emissions reduction targets based on best available science at five-year intervals for 2030, 2035, 2040, and 2045, and requires the government to develop emission reduction plans for each target as well as explain how each plan will contribute to reaching net-zero in 2050.
• Bill C-12 also requires that the Government of Canada table the first emissions reduction plan within 6 months of the coming into force of the Act, which will be well before 2030. It will also ensure that the government provides an update on progress toward achieving the 2030 target at least two years prior to 2030.
• As part of its suite of accountability and transparency mechanisms, the Act will also require Canada’s Commissioner of the Environment and Sustainable Development to examine and report on implementation of the measures intended to achieve the target at least once every five years.

Net-Zero Advisory Body

• The Act also establishes an advisory body to provide independent advice to the government and conduct engagement on optimal pathways to achieve net-zero emissions by 2050.
• The Net-Zero Advisory Body (NZAB), launched on February 25, 2021, will follow a transparent and inclusive process to engage with government and hear from provinces, territories, Indigenous peoples, youth, businesses, environmental groups, and interested Canadians.
• Some of the Advisory Body’s work will include:
  • focusing immediately to identify actions that Canada can take to set a strong foundation to achieve net-zero while also supporting economic recovery following the COVID-19 pandemic;
  • continuing to identify next steps in the years ahead to fight climate change and reach net-zero emissions that will grow the economy, while also making life more affordable; and,
  • helping to mobilize stakeholders and other Canadians to take action towards the net-zero goal.
• Seeking expert advice on charting Canada’s path to net-zero emissions by 2050 remains critical to the government’s work. The Advisory Body will provide ongoing advice to the Minister as Canada develops and implements its emission reduction plans. This is an important requirement of the Canadian Net-Zero Emissions Accountability Act.
• The NZAB is inspired by international best practices, but designed specifically for Canada’s unique considerations and needs, including the importance of traditional resource economy and shared jurisdiction on environment.

Clean Fuel Standard

What is the Clean Fuel Standard?

• The Clean Fuel Standard will reduce the emissions associated with the production, delivery and use of fuels in Canada.
• It will also create an incentive to use less-polluting fuels, drive innovation in the oil and gas sector, and encourage increased production of clean fuels in Canada.
• Once fully implemented, the Clean Fuel Standard will help cut more than 20 million tonnes of emissions in 2030.

What fuels will be affected by the Clean Fuel Standard?

• The Clean Fuel Standard will target liquid fossil fuels like gasoline and diesel that are used mostly in transportation.

Why does the Clean Fuel Standard no longer include a gaseous or solids stream? How is Canada going to make-up the lost 10 Mt of emissions reductions the Clean Fuel Standard promised?

• The Clean Fuel Standard (CFS) has been re-scoped to only liquid fuels because Canada’s strengthened climate plan will:
  • increase the price on carbon pollution, driving reductions and innovation; and,
  • introduce new funding to support the production of cleaner fuels in Canada, such as hydrogen and biofuels, and improve energy efficiency in buildings.
• Canada’s strengthened climate plan will enable Canada to exceed its Paris Agreement target, while position Canada as a leader in clean fuel.

Who has been consulted on the proposed Clean Fuel Standard?

• The regulations are developed through extensive consultation, including with provinces and territories, industry, and other stakeholders.
• We are also learning from other jurisdictions such as California and British Columbia, which have already implemented similar measures.

What are the next steps for the Clean Fuel Standard?

• The proposed Clean Fuel Regulations were published in Canada Gazette, Part I, in December 2020.
• We are receiving input from stakeholders on the draft regulations, and will account for this input as we finalize the regulations for publication this fall. The reduction requirements will then come into force in 2022.

What are the implications of the Clean Fuel Standard on households that rely largely on home heating oil? What is being done to offset these impacts?

• We understand that the home heating oil users are more impacted under the regulations. We are considering how this may be addressed.

How will the $1.5B for a Low-carbon and Zero-emissions Fuels Fund, announced in A Healthy Environment and Healthy Economy, impact the Clean Fuel Standard?

• The funding will support the production and use of low-carbon fuels (e.g., hydrogen, renewable natural gas and diesel) in Canada, while the Clean Fuel Standard will incentivize the industry to invest in these fuels through the creation of credits. Together, these measures will work hand in hand to grow the clean fuels market in Canada.

Backgrounder

The Clean Fuel Standard is an important part of Canada’s climate plan. On December 18, 2020, Environment and Climate Change Canada published proposed regulations in the Canada Gazette, Part I.

The regulations will require fossil fuel producers and suppliers to make the fuels they supply cleaner and less polluting overall. In so doing, they will contribute to the reduction of GHG emissions, mostly from the transportation sector, which accounts for 25 per cent of Canada’s total emissions in 2018.

The Clean Fuel Standard builds on current federal and provincial renewable fuel rules. By moving to regulations that focus on emissions throughout the lifecycle of fuels, the Government of Canada is following similar approaches that already exist in British Columbia, California, Oregon and other jurisdictions.

The Clean Fuel Standard will promote investments in low carbon fuels and new low carbon technologies in Canada. This will:

• drive innovation and create conditions for jobs across multiple sectors of the economy, including in clean technology and low carbon energy sectors, such as biofuels and hydrogen;
• help diversify energy choices and grow Canada’s clean fuels industry at a time when the global market for clean solutions is rapidly expanding; and
• create opportunities for industries that are producing renewable fuels, and promote faster growth of zero-emission vehicles.

Changes to support competitiveness

The government recognizes the importance of the energy sector in the Canadian economy.

Environment and Climate Change Canada has undertaken a number of changes in the design of the Clean Fuel Standard to better support the oil and gas sector.

• It has narrowed the coverage of the Clean Fuel Standard to liquid fuels only. This means natural gas will not face a regulatory obligation and there will be no natural gas price increases due to the Clean Fuel Standard.
• It has made the Clean Fuel Standard less stringent in the years immediately following its implementation and provided more time between the final regulations and the coming-into-force of the regulatory requirement. This means more lead-time for investments. It will allow companies to bank more credits in those early years for use when the requirement becomes more stringent later on.
• It introduced a generic quantification method for oil and gas GHG reduction projects with a streamlined assessment process to determine whether projects would result in incremental GHG reductions. This will broaden opportunities for companies to generate Clean Fuel Standard credits.
• Moreover, the initial crediting period for projects has been extended from 5 to 10 years, except for carbon capture and storage, which has been extended from 10 to 20 years. This will increase certainty for investors.

Next steps

Moving into the first part of 2021, Environment and Climate Change Canada will continue consultations with provinces, territories, industry, and others on the proposed Clean Fuel Standard. Final regulations will be published in late 2021, with the coming into force of the regulatory requirement in December 2022.

Climate Action Incentive Fund

Why is Climate Action Incentive Fund programming only available in certain provinces?

• In October 2016, the Government of Canada announced the Pan-Canadian Approach to Pricing  Carbon Pollution, which gave provinces and territories the flexibility to implement their own carbon pollution pricing systems, as long as they met minimum federal criteria. The federal government also committed to implementing a federal carbon pollution pricing system in provinces and territories that request it or do not have a carbon pollution pricing system that meets those criteria.
• The Climate Action Incentive Fund is returning a portion of the proceeds collected from the federal carbon pollution pricing system back to the jurisdictions that did not implement a carbon pricing system that met the federal criteria and did not request the federal system (i.e. Saskatchewan, Manitoba, Ontario and New Brunswick for the entirety of 2019-20). The federal fuel charge came into effect on April 1, 2019, in Saskatchewan, Manitoba, Ontario and New Brunswick, and on January 1, 2020, in Alberta. New Brunswick later adopted its own carbon pollution pricing system that meets the federal fuel charge benchmark, and the federal fuel charge no longer applied in that province as of April 1, 2020.
• The Government of Canada committed to return the majority of the direct proceeds collected from the federal fuel charge directly to individuals and families in those provinces through Climate Action Incentive payments. The remainder of the proceeds were allocated to be distributed through federal programming. For proceeds collected in 2019-20, the Climate Action Incentive Fund provided support to small and medium-sized businesses (SMEs) and schools in the province from which the proceeds were collected.
• There are efforts being made across the Government of Canada related to the next phase of climate actions. This will require engagement, including with provinces and territories as relates to carbon pollution proceeds returns. All direct fuel charge proceeds from 2019-20 will be returned to the jurisdiction of origin and the same will continue to be true for carbon pollution proceeds from subsequent fiscal years.

Will Climate Action Incentive Fund programming be available in additional provinces and territories?

• The Climate Action Incentive Fund is returning a portion of the proceeds collected from the fuel charge through the federal carbon pricing system back to the jurisdictions that did not implement a carbon pricing system that met the federal criteria and did not request the federal system (i.e. Saskatchewan, Manitoba, Ontario and New Brunswick for the entirety of 2019-20).
• As indicated in the letters sent in December 2017 by then Minister of Environment and Climate Change, Catherine McKenna, and then Finance Minister, Bill Morneau, to provinces and territories, there will be an annual verification process to ensure carbon pollution pricing systems continue to meet the federal benchmark stringency requirements. Major changes to provincial and territorial systems will also be monitored on an ongoing basis.
• If a province or territory changes its approach to pricing carbon pollution, the approach will be assessed against the federal benchmark stringency requirements. The results of that assessment would inform the Government of Canada’s decision on application of the federal system in that jurisdiction and how proceeds are returned. For example, New Brunswick adopted a pricing system that was determined to meet the federal benchmark, so the federal fuel charge was discontinued in the province as of April 1, 2020. If the fuel charge portion of the carbon pollution pricing system applies, the Minister of Finance will make specifications on how that is returned to jurisdictions of origin, such as through programming like the Climate Action Incentive Fund.

Who was eligible to apply for the Climate Action Incentive Fund SME Project stream?

• To be eligible, applicants had to have been an incorporated small or medium-sized enterprise (with fewer than 500 employees), operating in one of the eligible provinces (Saskatchewan, Manitoba, New Brunswick and Ontario). There are currently no active intakes under the program and no further intakes are being planned.

What types of projects does the Climate Action Incentive Fund SME Project stream fund?

• The Climate Action Incentive Fund SME Project stream provided funding support to projects that have helped eligible applicants reduce their energy use, costs, and greenhouse gas (GHG) emissions. To be considered for funding, projects must have been located in one of the eligible provinces and must have requested between $20,000 and $250,000 in funding towards eligible costs.

How much did the Government of Canada contribute to individual projects?

• The federal contribution per project and per applicant under the Climate Action Incentive Fund SME Project stream is 25% of eligible expenditures, up to a maximum of $250,000 in each eligible province. There were also stacking limits on groups and affiliates, such as franchises.

How were projects selected to receive funding under the Climate Action Incentive Fund SME Project stream?

• Applications were reviewed by Government of Canada officials. Successful projects met recipient and project eligibility requirements and demonstrated energy savings, cost savings, and/or reduced GHG emissions.

How have funds under the Climate Action Incentive Fund SME Project stream benefited small and medium-sized businesses and Canadians?

• The SME Project stream of the Climate Action Incentive Fund has supported energy efficiency projects in sectors such as buildings, transportation, industry, waste and agriculture, with projects such as energy efficient lighting improvements, upgraded heating and cooling systems, better-insulated windows, and renewable energy systems.
• The Climate Action Incentive Fund has helped SMEs be more productive and competitive as they reduce energy use, energy-related costs, and greenhouse gas emissions, directly benefitting their own competitiveness and indirectly all Canadians.

When will the Climate Action Incentive Fund Rebate stream launch?

• As the Rebate stream could not be delivered in the manner that had been envisioned, it was not launched. No launch is currently planned. The Government of Canada is considering options to ensure the return of fuel charge proceeds to jurisdictions of origin efficiently and effectively moving forward.

When will other potential recipients be eligible under the Municipalities, Universities, Schools and Hospitals (MUSH) Retrofit stream?

• The Government of Canada identified schools as a priority recipient for 2019-20 carbon pollution fuel charge proceeds for energy efficiency and retrofit projects. The government will announce how it is supporting other sectors in due course.
• As part of Canada’s strengthened climate plan, A Healthy Environment and a Healthy Economy, there are efforts being made across the Government of Canada related to the next phase of climate actions. The Government of Canada is considering options to ensure the return of fuel charge proceeds to jurisdictions of origin efficiently and effectively moving forward. All direct fuel charge proceeds from 2019-20 will be returned to the jurisdiction of origin and the same will continue to be true for carbon pollution proceeds from subsequent fiscal years.

Only a fraction of proceeds from the federal fuel charge have been returned through the Climate Action Incentive Fund. Why the delay?

• Carbon pollution proceeds for a portion of the fuel charge from 2019-20 are being returned to SMEs and schools through the Climate Action Incentive Fund in support of projects to reduce GHG emissions, energy usage, and energy costs.
• As is common with new programs, time was needed to establish elements such as IT infrastructure and key materials to support application, approval, agreement, and reimbursement processes. The process of returning 2019-20 proceeds was slowed by a number of factors, including the Federal Election in fall 2019 and the associated implementation of the Caretaker Convention across the federal public service. Additional delays continue as a result of the COVID-19 pandemic.
• Climate Action Incentive Fund recipients themselves have, in many cases, faced project implementation delays due to limited access to goods and services during the pandemic. Some projects supported by the Climate Action Incentive Fund have been cancelled or modified by applicants.

What steps will the federal government be taking to ensure that proceeds from the fuel charge are returned as quickly as possible as originally promised?

• There are efforts being made across the Government of Canada related to the next phase of climate actions. This will require engagement, including with provinces and territories as relates to carbon pollution proceeds returns. The Government of Canada is considering options to ensure the return of fuel charge proceeds to jurisdictions of origin efficiently and effectively moving forward, and the same will continue to be true for carbon pollution proceeds from subsequent fiscal years.

Vote 10C shows funding for the Climate Action Incentive Fund of $9,180,137. Could you comment on the “in and out” nature of this funding, what the estimated revenue is from this fund, and how this line item relates to funding being collected and incentives being distributed to Canadians.

• As per the Government’s 2018 commitment to return carbon pollution pricing proceeds to jurisdictions of origin, ECCC has been delivering a portion of fuel charge proceeds that are not returned through Climate Action Incentive payments through the Climate Action Incentive Fund (CAIF) to targeted recipients in the involuntary backstop jurisdictions of Saskatchewan, Manitoba, Ontario and New Brunswick.
• The Climate Action and Incentive Fund is returning a portion of 2019-20 carbon pollution pricing over two fiscal years, 2019-20 and 2020-21.
• *Redacted*
• Environment and Climate Change Canada has continued and is continuing to administer the Climate Action Incentive Fund throughout 2020-21.
• This funding will cover personnel and other operating costs that had been incurred in 2020-21. These costs include all elements of program implementation, including but not limited to: application reviews, negotiating funding agreements, supporting recipients, assessing results, and information system development and maintenance.
• As part of program administration, Environment and Climate Change Canada staff reviewed over 700 applications for the Climate Action Incentive Fund funding and continues to manage around 425 signed funding agreements for projects undertaken by small and medium-sized businesses in addition to four broader agreements to support hundreds of projects in schools in Saskatchewan, Manitoba, Ontario and New Brunswick.
• Fuel charge proceeds returns are statutory and subject to specifications from the Minister of Finance. Fuel charge proceeds can be returned through the Climate Action Incentive Fund for eligible expenditures incurred by program recipients until March 31, 2021.
• The Government of Canada will return all direct fuel charge proceeds from 2019-20 to the jurisdictions of origin. The same will continue to be true for carbon pollution proceeds from subsequent fiscal years. That is a requirement in legislation (Greenhouse Gas Pollution Pricing Act). Details on program implementation and funding invested through the Climate Action Incentive Fund will be made available, including through the next Greenhouse Gas Pollution Pricing Act annual report.

Indigenous Relations on Climate Change

How does the Strengthened Climate Plan respond to Indigenous peoples’ climate priorities?

• The Strengthened Climate Plan positions Indigenous climate leadership as a cornerstone of Canada’s path forward to exceeding its 2030 target. In doing so, Canada recognizes the importance of investing in the agency of Indigenous peoples and communities, supporting Indigenous-led and delivered solutions, equipping Indigenous peoples with equitable resources, and ensuring appropriate access to funding to implement self-determined climate action.
• The government is committed to collaborating with Indigenous organizations and representatives in the rollout of the plan to set an agenda for joint climate action and a framework for collaboration.
• The plan already contains proposals to support Indigenous climate priorities while building capacity to lead on climate action, including measures to improve:
  • Food security, by enhancing responsiveness to address vulnerabilities in Indigenous food systems;
  • Clean energy, including $300M over 5 years to help transition diesel-dependent communities to clean energy;
  • Resilient infrastructure, notably integrating climate risk assessments and adaptation solutions into infrastructure management on reserve and allocating $150M to Indigenous communities for greener community infrastructures; and,
  • The protection of biodiversity through the creation of Indigenous Protected and Conserved Areas and the allocation of a portion of $631 million over 10 years to work with Indigenous communities to restore and enhance wetlands, peatlands, grasslands and agricultural lands to boost carbon sequestration.
• The plan proposes that the government work with First Nations, Inuit and Métis peoples to co-develop an Indigenous Climate Leadership agenda. This agenda would be used across government to guide decision-making, and ensure all of Canada’s future climate actions help advance Indigenous climate self-determination. For example, this could impact federal climate actions by:
  • Ensuring that policy and program decisions support the devolution of federal resources to Indigenous peoples to address climate change; and,
  • Leading Ministers across government to include Indigenous peoples in the design and implementation of any climate programming, even for measures that are not targeted to Indigenous peoples (e.g. with carve-outs for Indigenous applicants).

Were First Nations consulted or involved in the development of the Strengthened Climate Plan?

• A Healthy Environment and a Healthy Economy is directly informed by the climate priorities First Nations, Inuit and Métis have identified in partnership with federal officials since the coming into force of the Pan-Canadian Framework. This collaboration has been instrumental in ensuring that the plan promotes positive climate outcomes for Indigenous peoples while accommodating evolving priorities, including new or renewed Indigenous climate strategies.
• The plan is a proposal to Canadians in general and Indigenous peoples in particular. Canada’s intention is to propose a framework for continuing its collaboration with First Nations, Inuit and Métis on an ongoing and distinction-based basis. It will take many years to address the consequences of the changing climate, and it is of utmost importance that Canada strengthen its partnership with Indigenous peoples to continue to move in the right direction.
• More work is required over the coming months to ensure that Indigenous self-determined climate priorities are reflected in the concrete actions and measures that Canada will put in place in both the near and medium term.
• The government will engage with First Nations, Inuit, and Métis people to ensure the measures that follow from the proposals in A Health Environment and a Healthy Economy are responsive to their needs.

How do climate actions take into account the unique needs of Indigenous communities? On reserve? North of 60? Remote communities?

• Together, Budgets 2016 and 2017 committed $425M over 12 years across 11 programs to support Indigenous Peoples’ adaptation and mitigation actions. The Strengthened Climate Plan builds on these initial investments by confirming more than $450M over 5 years in additional funding for Indigenous peoples.
• Additionally, in the context of carbon pollution pricing, the Strengthened Climate Plan proposes to triple the net fuel-charge proceeds available to Indigenous governments and groups in federal backstop jurisdictions. These proceeds will be returned through co-developed solutions.
• The federal government has partnerships with Indigenous peoples through three senior-level, distinctions-based bilateral tables on clean growth and climate change. Discussion at these tables have directly contributed to the Strengthened Climate Plan and have informed modifications to federal programs.
• Federal departments responsible for delivering climate programs are engaging directly with Indigenous peoples. This engagement helps identify the specific needs and concerns of Indigenous peoples, including those who live in the North, in other remote communities, or on reserve.

How is this plan consistent with the United Nations Declaration on the Rights of Indigenous Peoples?

• The Government of Canada supports without qualification the United Nations Declaration on the Rights of Indigenous Peoples, including free, prior and informed consent. To formalize this commitment, the government has recently tabled legislation in support of the Declaration (Bill C-15 - United Nations Declaration on the Rights of Indigenous Peoples Act).
• The government is already building the principles of UNDRIP into new legislation. For example, the proposed Canadian Net-Zero Emissions Accountability Act (Bill C-12) stipulates that the Minister of Environment and Climate Change must provide Indigenous peoples of Canada with the opportunity to make submissions when setting or amending a national greenhouse gas emissions target or an emissions reduction plan under this legislation.
• Under the Strengthened Climate Plan, the Government proposes to further the principles of UNDRIP, working with First Nations, Inuit and Métis peoples to co-develop decision-making guidance that will ensure all of Canada’s future climate actions help advance Indigenous climate self-determination.
• In all aspects of the climate agenda, the government looks forward to advancing solutions in partnership with First Nations, Inuit and Métis and exploring new opportunities for joint decision-making.

Low Carbon Economy Fund

What is the Low Carbon Economy Fund?

There are two parts to the Low Carbon Economy Fund:

1. The Low Carbon Economy Leadership Fund provides up to $1.4 billion to provinces and territories to deliver on their commitments to reduce carbon pollution and contribute to meeting Canada’s 2030 climate target.
2. An additional approximately $500 million is available through the Low Carbon Economy Challenge. This portion of funding was open to all provinces and territories, municipalities, Indigenous communities and organizations, businesses and not-for-profit organizations. Projects leverage Canadian innovation across the country to reduce emissions and generate clean growth.

What were the opportunities to apply for funding under the Low Carbon Economy Challenge?

• Champions stream: with approximately $450 million available, this stream provides funding to eligible applicants including provinces and territories, municipalities, Indigenous communities and organizations, businesses and not-for-profit organizations. The deadline for submitting formal proposals was September 28, 2018.
• Partnerships stream: with up to $50 million available, this stream provides funding through two separate opportunities:
  • First intake: Approximately $40 million for projects led by Indigenous communities and organizations, small and medium-sized businesses, not-for-profit organizations, and small municipalities. The deadline for submitting proposals was March 8, 2019.
  • Second intake: Approximately $10 million for small and medium-sized businesses in Canada with up to 499 employees. The deadline for submitting proposals was November 15, 2019.

How will projects funded through the Low Carbon Economy Fund benefit Canadians?

• Canadians will benefit in multiple ways. For example, the Low Carbon Economy Fund is supporting energy efficiency projects in provinces and territories across Canada. Energy efficiency projects will help Canadians and businesses save money by lowering energy bills. Efficient buildings are also healthier and more comfortable to live and work in. Additionally, support is available to industries to put in place clean technologies that will help them be more efficient and innovative, creating jobs and cost savings across Canada.

Leadership Fund

How are projects selected for the Leadership Fund?

• Following the launch of the Low Carbon Economy Fund in June 2017, provinces and territories proposed project ideas under the Low Carbon Economy Leadership Fund.
• The federal government worked with each province and territory to develop these ideas and agree on the best ones to fund.
• Projects had to meet four minimum requirements:
  • Emissions reductions must be material (measurable and verifiable);
  • Emissions reductions must be in addition to existing or planned actions;
  • Emissions reductions must contribute towards Canada’s 2030 climate target;
  • Projects must be as cost-effective as possible.

The Challenge

What are the primary benefits expected to be achieved through the Low Carbon Economy Challenge?

• The Low Carbon Economy Challenge will help reduce carbon pollution, save money, reduce emissions, create jobs, and drive economic growth.

How can Indigenous Peoples benefit from the Low Carbon Economy Challenge?

• Indigenous communities and organizations were able to apply directly for funding through the Champions stream of the Low Carbon Economy Challenge, for example to support projects that reduce reliance on diesel or to deploy energy efficient technologies in homes and businesses. Additionally, Indigenous communities and organizations were eligible applicants for funding through the first intake of the Partnerships stream of the Low Carbon Economy Challenge. Indigenous-owned small and medium-sized businesses were eligible applicants under the second Partnerships stream intake.

What projects are eligible for funding through the Low Carbon Economy Challenge?

• Eligible sectors under the Low Carbon Economy Challenge include: building retrofits, industrial energy efficiency, fuel switching and process changes; forestry; agriculture; waste; transportation retrofits; and energy production for own-use.

Were provinces that did not adopt the Pan-Canadian Framework eligible to apply for funding from the Low Carbon Economy Challenge?

• Yes, all provinces and territories, as well as municipalities, Indigenous communities and organizations, businesses, not-for-profit organizations, universities, schools and hospitals located in those provinces were eligible to apply for funding under the Champions stream.

Were applicants able to apply to multiple parts or streams of the Low Carbon Economy Fund?

• Provided they meet eligibility criteria, applicants that already received funding from the Leadership Fund were able to submit a proposal for a separate project under one of the Challenge streams, but no individual project can be funded by more than one part or stream of the Low Carbon Economy Fund.

Champions

How were projects selected under the Challenge Champions stream?

• Potential applicants were invited to submit an Expression of Interest to Environment and Climate Change Canada (ECCC). Expressions of Interest were reviewed and applicants with the most promising project proposals that also met the eligibility criteria were invited to submit a formal proposal. Successful applicants include those that prioritized low-cost domestic greenhouse gas reductions while also encouraging other benefits that contribute to clean growth, such as saving energy and creating jobs. Criteria for assessing proposals included:
  • Greenhouse gas emissions reduced in 2030 per dollar of LCEF funding
  • Cumulative greenhouse gas emissions reduced per dollar of LCEF funding
  • Project feasibility and risk
  • Other benefits that contribute to clean growth and a clean environment
• Emissions reductions must also:
  • Be material (measurable and verifiable)
  • Be in addition to existing actions
  • Contribute towards Canada’s 2030 climate target
  • Be as cost-effective as possible

How much is the Government of Canada contributing to individual projects under the Champions stream?

• The maximum federal contribution to any project funded through the Champions stream of the Low Carbon Economy Challenge is $50 million.
• Additionally, the maximum percentage of total project costs the federal government can contribute towards a LCEF Champions project varies depending on the ultimate recipient of the funding. The maximum federal share for specific recipients is as follows:
  • 25% for businesses,
  • 40% for municipalities,
  • 40% for not-for-profit organizations,
  • 50% for provincial governments,
  • 75% for territorial governments, and
  • 75% for Indigenous communities and organizations.

Partnerships

How were projects selected under the Challenge Partnerships stream?

• Potential applicants for the Partnerships stream were invited to submit an application to Environment and Climate Change Canada that outlines the project proposal and provides detailed information related to anticipated costs and estimated greenhouse gas emission reductions. If a proponent applied to the Champions stream and also wanted to be considered through the Partnerships stream, they were required to submit their application again for the Partnerships stream.
• Applications were assessed by Government of Canada officials. Successful projects were selected based largely on their ability to reduce greenhouse gas emissions. The evaluations also considered a project’s potential contribution to clean growth, energy savings, and job creation.
• Canadian small and medium-sized businesses with one to 499 employees were able to apply for funding through the second intake of the Partnerships stream focused on SMEs. This funding opportunity was available to businesses in all provinces and territories.

How much is the Government of Canada going to contribute to individual projects under the Challenge Partnerships stream?

• First intake: Approximately $40 million for Indigenous communities and organizations, small and medium businesses, not-for-profit organizations, and small municipalities.
  • A minimum of $500,000 to a maximum of $10 million in LCEF funding per project.
• Small and medium business intake: Approximately $10 million for small and medium businesses in Canada with up to 499 employees:
  • A minimum of $20,000 to a maximum of $250,000 in LCEF funding per project or portfolio of projects.
• Additionally, the maximum percentage of total project costs the federal government can contribute towards a project varies depending on the ultimate recipient of the funding.
• The maximum federal share for specific recipients is as follows:
  • 25% for small and medium sized businesses (under 500 employees),
  • 40% for small municipalities (under 100,000 residents),
  • 40% for not-for-profit organizations, and
  • 75% for Indigenous communities and organizations

Future opportunities

Will there be future intakes and funding opportunities under the Low Carbon Economy Fund?

• There are efforts being made across the Government of Canada related to the next phase of climate actions. As a part of Canada’s strengthened climate plan, A Healthy Environment and a Healthy Economy, the Government of Canada is considering options for further climate action, including programming options.
• The possibility exists for a second intake under the Champions stream in 2021-22 to invest unallocated funding.

Are there delays in transferring funds to provinces and territories through the Low Carbon Economy Leadership Fund?

• Provinces and territories are responsible for submitting claims for eligible expenses as per the schedule outlined in their funding agreements. Environment and Climate Change Canada (ECCC) and the provinces and territories are in regular contact.
• Federal transfer payments to provinces and territories as part of the funding agreements under the Low Carbon Economy Leadership Fund are initiated when claims received are deemed eligible.
• Additional claims will be submitted under the Low Carbon Economy Leadership Fund from provinces and territories, in which case claims would be reviewed and subsequent payments would be processed.

Is there a problem in terms of Low Carbon Economy Leadership Fund claims in British Columbia?

• British Columbia has approved programming to access the entirety of its over $162 million notional allocation under the Low Carbon Economy Leadership Fund. It is expected that ultimately the full amount will be paid for eligible expenses towards programming that will reduce GHG emissions.
• ECCC continues to work with provinces and territories to finalize claims submitted for expenditures incurred in previous years as well as the current fiscal. The department values its collaboration with British Columbia on efforts to reduce GHG emissions through program that leverages investments from the Low Carbon Economy Leadership Fund.
• *Redacted*

Nature-Based Climate Solutions

Why is the government investing in nature-based climate solutions? Aren’t there more cost-effective options to reduce emissions?

• Nature-based solutions are key to addressing the twin crises of climate change and biodiversity loss.
• A 2017 study found that nature-based climate solutions have the potential to provide over 30 per cent of cost-effective global climate solutions.
• Forests, grasslands, croplands, and wetlands including peatlands provide a wide range of benefits to Canadians. Among nature’s benefits to people, these ecosystems help store and take carbon pollution out of the air and, as such, have the potential to make significant contributions to Canada’s 2030 and 2050 climate goals. An approach that includes wetlands, grasslands and other natural ecosystems will be important to ensure that gains are made early as trees take time to reach their full mitigation potential.
• Work is needed to better quantify and account for the contribution of natural ecosystems to Canada’s carbon budget and to ensure that the emission reductions associated with investments in natural climate solutions are captured in Canada’s reporting.
• The tree-planting component of the commitment has been designed to provide co-benefits for biodiversity, including, restoring habitat for species for example by replanting seismic lines in caribou critical habitat.
• Parks and protected areas in Canada also help nature and people adapt to climate change. These places conserve biodiversity, protect ecosystem services, connect landscapes, take up and store carbon, build knowledge and understanding, and inspire people.

Why has it taken so long for the government to launch a Canada-wide nature-based solutions program?

• As you know, the fight against COVID-19 and addressing the impact on our nation’s economy has been and continues to be the Government’s top priority.
• At the same time, the Government is deeply committed to working with all orders of government, Indigenous peoples, industry, and stakeholders to deliver on the promise to plant two billion trees as part of a broader commitment to nature-based climate solutions that also encompasses wetlands and urban forests, as well as grasslands and agricultural lands.
• In January 2021, Environment and Climate Change Canada hosted an engagement session, along with Agriculture and Agri-food Canada, on the nature-based climate solutions work that the two departments will lead. This session was used to gather input and validate our thinking on program design in an effort to ensure that, when launched, the program will be a success. Natural Resources Canada similarly held engagement sessions on the 2 billion trees work in late 2020.
• I am currently working with Ministers O’Regan and Bibeau to finalize the plan to operationalize this commitment and to ensure that the benefits of these efforts for climate change mitigation can be rigorously tracked and reported.
• We are committed to begin implementation of the program as of spring 2021.

Why haven’t any of the two billion trees been planted?

• Currently in Canada, between 500-600 million commercial seedlings are planted per year primarily to replant harvested areas. Achieving the two billion trees commitment requires increasing the number of trees planted by approximately 40 per cent annually for ten years. Time is needed for the nursery sector to ramp up to meet that increased demand for seedlings.
• An initiative of this scale requires strong partnerships to succeed, and the government has heard from provinces and territories, Indigenous communities and stakeholders on the ways that each could be involved.
• Last year, COVID-19 shifted the Government’s priorities to focus on supporting the health, safety and well-being of Canadians, including those working in the forest sector. The federal government, working with the provinces, provided small and medium-sized forest sector enterprises with $30 million to cover costs associated with COVID-19 health and safety measures to ensure a successful 2020 tree-planting season and safe mill operations.
• We are on track to begin implementing the nature-based solutions initiative this spring. In February 2021, Natural Resources Canada invited prospective partners to submit Expressions of Interest and Request for Information to identify potential tree planting projects that can be completed within the coming fiscal year.
• Minister O’Regan/Natural Resources Canada colleagues can provide additional details.

What is the real cost of the nature-based solutions initiative? Why is the Parliamentary Budget Officer estimating that the cost will be significantly higher than what was announced in the Fall Economic Statement?

• As announced on November 30, 2020, the federal government has committed to investing up to $3.9 billion over 10 years in nature-based climate solutions, of which $3.16 billion will go towards planting 2 billion trees.
• I understand that in January the Office of the Parliamentary Budget Officer (PBO) estimated that the full cost of the initiative would be roughly double the federal investment.
• However, the PBO estimates did not factor in any cost-sharing.
• Cost-sharing was always part of the plan for nature-based climate solutions, and the benefits of these efforts will also be shared across all participating jurisdictions.
• Minister O’Regan/Natural Rescources Canada colleagues can provide additional details.

How much could nature-based solutions contribute to reducing Canada’s GHG emissions?

• Natural climate solutions, such as planting trees, restoring grasslands and wetlands and improving land management practices in the agriculture and forestry sectors, have the potential to make significant contributions to Canada’s 2030 and 2050 climate goals.
• A 2017 study suggested that nature-based climate solutions have the potential to provide over 30 per cent of cost-effective global climate solutions.
• It is expected that the government’s current investment in nature-based climate solutions will reduce Canada’s carbon emissions by an estimated four to seven million tonnes annually in 2030.
• An approach that includes the restoration and management of wetlands, grasslands and other natural ecosystems will be important to ensure that gains are made early as trees take time to reach their full mitigation potential.
• That said, it should be noted up front that more work is needed to improve the understanding of Canada’s natural carbon stores and fully account for ecosystem-based emissions, which is something that we are looking at building into the natural climate solutions initiative.

Will using nature-based solutions to fight climate change advance the government’s nature commitments? How?

• Yes. Nature-based climate solutions offer an opportunity to deliver nature and climate outcomes in an integrated way. This is important because biodiversity loss and climate change are inter­connected issues.
• Restoring grasslands, planting trees, and improving land management practices offer win-win opportunities for climate and nature. For example, forest restoration can provide important habitat for forest-dependent species like caribou, while also sequestering carbon.
• We also recognize that Canada’s existing natural areas are significant carbon stores. Conservation is an important way to prevent particularly carbon-rich ecosystems from disturbance that would release GHGs and move us away from our climate targets.
• In these ways, the climate and nature agendas are complementary and mutually reinforcing.

Will work under the Natural Climate Solutions Fund qualify for credit under the GHG offset system?

• [AAFC and NRCan will] [All three implicated departments will] [Departments may] allow project proponents to seek carbon offset credits to increase the financial incentive for private sector investors and private landowners to participate in the nature-based climate solutions work. Departments [would / will] require recipients to indicate whether they expect to register their projects in an existing or future federal, provincial or territorial offset system in Canada.
• Regardless of the approach chosen, not all projects would automatically be eligible for offsets – projects would need to register, meet all the eligibility requirements and an approved protocol would need to be available for use.
• Our focus at the moment is on determining how this can be operationalized effectively to ensure that various risks and challenges are taken into consideration.

The Supplementary Mandate Letter of the Minister of Environment and Climate Change includes as a priority the expansion of urban parks to increase Canadians’ access to green spaces. How does it fit into the nature-based solutions work?

• There are opportunities to connect the work on expanding urban parks and the nature-based solutions initiative.
• Natural Resources Canada and Parks Canada will work together to identify opportunities to fund small to large community-led initiatives related to urban tree planting or management plans to expand, maintain and diversify urban forests, or for activities involving trees and forests that increase community resilience to climate change.
• [Given that the Parks Canada Agency is the lead for the National Urban Park Strategy, Ron Hallman, the President & Chief Executive Officer for the Parks Canada Agency, can elaborate on this point if needed.]

How will ECCC deliver on the Natural Climate Solutions Fund?

• Environment and Climate Change Canada, Agriculture and Agri-Food Canada and Natural Resources Canada are working together to deliver on the Natural Climate Solutions Fund. NRCan will implement the 2 billion trees component and Environment and Climate Change Canada and Agriculture and Agri-food Canada will deliver on nature-based solutions in other ecosystems such as in grasslands and wetlands.
  • ECCC will use funding of $631M over 10 years to implement activities under the Natural Climate Solutions Fund. The bulk of the funding will go to on-the-ground projects and will be cost-shared with partners.
  • Projects will restore wetlands and grasslands, improve land management, and prevent forest and wetland conversion all with a view to reduce or avoid greenhouse gas emissions.
  • As part of this, there will be investments in research, monitoring, science and reporting activities that are essential for our ability to better understand and track the GHG reductions from funded activities.
• This initiative will support Canada’s strengthened climate plan while providing complementary benefits for biodiversity and human well-being.
• ECCC will build on existing work such as the Habitat Joint Ventures Partnerships under the North American Waterfowl Management Plan, which has resulted in significant securement and restoration of wetlands and associated uplands.
• New investments in nature-based climate solutions will also complement existing federal programs including the Disaster Mitigation and Adaptation Fund which supports natural infrastructure projects to enable communities to better manage risks of current and future natural hazards.

How will you ensure that the design and implementation of the nature-based solutions initiative takes into account the latest scientific evidence, Indigenous knowledge and stakeholder views?

• Several steps have been and are being taken to ensure that the range of views on nature-based climate solutions are considered in the design and implementation of the initiative.
• For example, in January 2021, Environment and Climate Change Canada hosted an engagement session, along with Agriculture and Agri-food Canada, to seek the views of stakeholders and Indigenous peoples on the design and implementation of the nature-based solutions initiatives to be led by those departments.
• In addition, Environment and Climate Change Canada is working with Natural Resources Canada to set up an expert advisory committee to ensure that program design maximizes emission reductions while also delivering biodiversity and human well-being co-benefits.
• The Advisory Committee will be diverse in terms of the sectors represented and the subject matter expertise of its members.
• Finally, any program design or implementation elements that could affect Aboriginal or treaty rights will be discussed directly with rights holders, such as modern treaty governments.

Net-Zero Advisory Body

(*New Note)

• The Canadian Net-Zero Emissions Accountability Act establishes an advisory body to provide independent advice to the government and conduct engagement on optimal pathways to achieve net-zero emissions by 2050.
• The Net-Zero Advisory Body (NZAB), launched on February 25, 2021, will follow a transparent and inclusive process to engage with government and hear from provinces, territories, Indigenous peoples, youth, businesses, environmental groups, and interested Canadians. The Terms of Reference for the NZAB were made public at launch.
• Some of the Advisory Body’s work will include:
  • focusing immediately to identify actions that Canada can take to set a strong foundation to achieve net-zero while also supporting economic recovery following the COVID-19 pandemic;
  • continuing to identify next steps in the years ahead to fight climate change and reach net-
    zero emissions that will grow the economy, while also making life more affordable; and,
  • helping to mobilize stakeholders and other Canadians to take action towards the government’s goal of Canada reaching net-zero emissions by 2050.
• The role and design of the NZAB is informed by international best practices, but designed specifically for Canada’s unique considerations and needs, including the importance of a traditional resource economy and shared jurisdiction on environment.
• Seeking expert advice on charting Canada’s path to net-zero emissions by 2050 remains critical to the government’s work.
• The Advisory Body was announced while the Canadian Net-Zero Emissions Accountability Act is under consideration by Parliament in order to enable the advisory body’s important work to begin as soon as possible.
• The Advisory Body’s terms of reference allow for adjustments by the Minister of Environment and Climate Change.
• Should any changes to the mandate and operations of the NZAB be required as a result of Parliament’s consideration of the proposed legislation, corresponding adjustments will be to the Terms of Reference of the Advisory Body.
• The Advisory Body is intended to be a permanent resource that provides ongoing expert advice to the Minister of Environment for the duration of the 30 year timeline Canada has set to achieve net-zero emissions by 2050.
• The 14 members initially appointed by the Minister of Environment and Climate Change are volunteering their time.
• Consistent with the proposed Canadian Net-Zero Emissions Accountability Act, members of the Net-Zero Advisory Body may be appointed by the Governor-in-Council in the future.
• The Minister of Environment and Climate Change selected members based on expertise and credibility in at least one of the following areas:
  • climate change/environmental policy
  • energy, industrial and finance sectors
  • scientific background
  • innovation and entrepreneurship
  • economics, jobs, or labour policy
• The Advisory Body is also gender-balanced and includes representation from British Columbia, the Prairies, Ontario, Quebec, Atlantic Canada, and the North, as well as Canada’s Indigenous peoples.
• As of February 25, 2021, the 14 members of the Advisory Body are:
  • Marie-Pierre Ippersiel, co-chair (QC)
  • Dan Wicklum, co-chair (AB)
  • Catherine Abreu (NS)
  • Kluane Adamek (YK)
  • Theresa Baikie (NL)
  • Lindy Coady (BC)
  • Simon Donner (BC)
  • Sarah Houde (QC)
  • Peter Tertzakian (AB)
  • Gaetan Thomas (NB)
  • Kim Thomassin (QC)
  • John T. Wright (SK)
  • Yung Wu (ON)
  • Hassan Yussuff (ON)

Returning Federal Carbon Pollution Pricing Proceeds

When the Government of Canada introduced a price on carbon pollution across Canada in 2019, Quebec, British Columbia and Alberta already had carbon pricing systems. Since then many of the other provinces and territories have introduced their own carbon pollution pricing systems. They use the proceeds as they see fit. Those governments that opted for the federal pricing system receive all the proceeds back directly and decide how to reinvest them. There are two parts to the federal price on carbon pollution: the fuel charge and the Output-Based Pricing System.

Return of proceeds from the fuel charge

In the provinces where the federal price on carbon pollution is in effect, the Government of Canada returns most of the fuel charge proceeds directly to families through Climate Action Incentive payments, currently delivered through annual tax returns. In 2019-20, approximately 90% of proceeds flowed directly back to individuals in Ontario, Manitoba, New Brunswick and Saskatchewan through Climate Action Incentive payments. The Government of Canada applied an additional top-up to Climate Action Incentive payments for Canadians who live in rural and smaller centres.

The remainder of proceeds, approximately 10%, were to be returned via programming to support small and medium-sized businesses (SMEs), Indigenous peoples, and other recipients reduce energy use, costs, and greenhouse gas emissions.

Environment and Climate Change Canada (ECCC) is returning a portion of carbon pollution proceeds from 2019-20 to small and medium-sized businesses and to support projects in schools under the Climate Action Incentive Fund (CAIF). These projects reduce energy use and greenhouse gas emissions, and save money.

Under the Small and Medium-sized Enterprises Project stream of the Climate Action Incentive Fund, over 700 project proposals were approved-in-principle, ranging from solar energy generation, building retrofits, industrial equipment upgrades, and lighting upgrades that include:

• Installing a solar power system at a grain farm in Saskatchewan;
• Installing new windows, doors, insulation, and heat pumps at a commercial building in New Brunswick;
• Replacing an old, inefficient grain dryer at a family operated farm in Ontario; and,
• Installing building retrofits including LED lighting fixtures at a storage facility in Manitoba.

Also with funding from the Climate Action Incentive Fund, school boards in the provinces have been able to upgrade and improve aging infrastructure in schools. Through investments in better-insulated windows, newer heating and cooling systems and other energy efficiency projects, these projects can contribute to improved indoor air quality in classrooms, for students and teachers alike, as well as making them more comfortable while lowering energy costs.

Some of the 2019-20 fuel charge proceeds is being returned to jurisdictions of origin through other federal programming:

• Crown-Indigenous Relations and Northern Affairs Canada’s Indigenous Community-Based Climate Monitoring Program;
• Indigenous Services Canada’s Capital Facilities and Maintenance Program /First Nations Infrastructure Fund; and,
• Natural Resources Canada’s Clean Energy for Rural and Remote Communities Program, and Energy Manager Program.

The Government of Canada will return all direct fuel charge proceeds from 2019-20 to the jurisdiction of origin and the same will continue to be true for carbon pollution proceeds from subsequent fiscal years.

There are efforts being made across the Government of Canada related to the next phase of climate actions, including those associated with the strengthened climate plan – A Healthy Environment and a Healthy Economy. This will require engagement, including with provinces and territories, as relates to carbon pollution proceeds returns.

Return of proceeds from the Output-Based Pricing System

In the provinces where the federal Output-Based Pricing System (OBPS) is in effect, proceeds collected from the OBPS will be used for industry to further support industrial projects to cut emissions and use new cleaner technologies and processes, as part of the plan to decarbonize industrial sectors. These proceeds will start to be collected in the spring of 2021, after which the Government of Canada plans to launch a call for proposals to find the most promising projects across industries that will contribute greenhouse gas emissions reductions.

Reporting

The first annual Greenhouse Gas Pollution Pricing Act Report to Parliament covered the general administration of the Act, including the implementation of the federal fuel charge and the Output-Based Pricing System from the coming into force of the Act in 2018 up to the end of 2019. A second annual report is under development and will be published later this year.