2025-2026 Future-Oriented Statement of Operations: Environment and Climate Change Canada

Environment and Climate Change Canada
Future-Oriented Statement of Operations (unaudited)
For the year ending March 31

(in thousands of dollars)	Forecast results 2024-25	Planned results 2025-26
Expenses
Taking Action on Clean Growth and Climate Change	$ 1,400,735	$ 1,241,444
Preventing and Managing Pollution	525,086	472,500
Conserving Nature	756,972	968,275
Predicting Weather and Environmental Conditions	352,677	347,703
Internal Services	293,005	280,925
Total expenses	3,328,475	3,310,847
Revenues
Sales of goods and services - Revenue from exchange transactions	77,435	81,122
Other revenues	60,142	45,185
Revenues earned on behalf of Government	(28,687)	(23,059)
Total revenues	108,890	103,248
Net cost of operations before government funding and transfers	$ 3,219,585	$ 3,207,599

The accompanying notes form an integral part of the Future-Oriented Statement of Operations.

Notes to the future-oriented statement of operations (unaudited)

1. Methodology and Significant Assumptions

The Future-Oriented Statement of Operations has been prepared based on government priorities and departmental plans as described in the Departmental Plan.

The information in the forecast results for fiscal year 2024-25 is based on actual results as at December 31, 2024 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for fiscal year 2025-26.

The main assumptions underlying the forecasts are as follows:

1. The department’s activities will remain substantially the same as in the previous year;
2. 2024-25 estimated expenses and revenues, including the determination of amounts internal and external to the government, are based on historical data and trends, up-to-date Annual Reference Level Update (ARLU) information, supplementary estimates, government wide initiatives and carry-forward funding. The general historical pattern is expected to continue;
3. 2025-26 planned expenses and revenues, including the determination of amounts internal and external to the government, are based on historical data and trends and up-to-date Annual Reference Level Update (ARLU) information. Figures for the planned results do not include items such as carry-forward funding. The general historical pattern is expected to continue; and
4. Estimated year end information for 2024-25 is used as the opening position for the 2025-26 forecasts.

These assumptions are made as at December 31, 2024.

2. Variations and Changes to the Forecast Financial Information

Although every attempt has been made to forecast final results for the remainder of 2024-25 and for 2025-26, actual results achieved for both years are likely to differ from the forecast information presented, and this variation could be material.

In preparing this Future-Oriented Statement of Operations, Environment and Climate Change Canada has made estimates and assumptions about the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances, and are continually evaluated.

Factors that could lead to material differences between the Future-Oriented Statement of Operations and the historical statement of operations include:

1. the timing and the amount of acquisitions and disposals of property, plant and equipment, which may affect gains, losses and amortization expense;
2. the implementation of new collective agreements;
3. economic conditions, which may affect both the amount of revenue earned and the collectability of loan receivables;
4. interest rates in effect at the time of issue, which will affect the net present value of non-interest-bearing loans; and
5. other changes to the operating budget, such as new initiatives or technical adjustments later in the fiscal year.

After the Departmental Plan is tabled in Parliament, Environment and Climate Change Canada will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Results Report.

3. Summary of Significant Accounting Policies

The Future-Oriented Statement of Operations has been prepared using Government of Canada's accounting policies in effect for fiscal year 2024-25, and is based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

(a) Expenses

Transfer payments are recorded as an expense in the year the transfer is authorized, and all eligibility criteria have been met by the recipient.

Other expenses are generally recorded when goods are received or services are rendered and include expenses related to personnel, professional and special services, repair and maintenance, utilities, materials and supplies, as well as amortization of tangible capital assets. Provisions to reflect changes in the value of assets or liabilities, such as provisions for bad debts, loans, investments and advances and inventory obsolescence, as well as utilization of inventories and prepaid expenses, and other are also included in other expenses.

(b) Revenues

Revenues from regulatory fees without performance obligations are recognized when there is authority to claim inflows of economic resources and the past transaction or event has occurred.

Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred.

Deferred revenue consists of amounts received prior to the provision of goods or services that will be recognized as revenue in a subsequent fiscal year as the performance obligations are met.

The compensations for excess emissions provided for under the Greenhouse Gas Pollution Pricing Act are recognized upon confirmation by the registered facility that the compensation is to be provided by means of an excess emissions charge payment to His Majesty in right of Canada.

Other revenues are recognized in the period the event giving rise to the revenues occurred and future economic benefits are expected to be received.

Revenues that are non-respendable are not available to discharge the department's liabilities. Although the deputy head is expected to maintain accounting control, he or she has no authority over the disposition of non-respendable revenues. As a result, non-respendable revenues are earned on behalf of the Government of Canada and are therefore presented as a reduction of the department's gross revenues.

4. Parliamentary Authorities

The Department is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the department differs from financial reporting according to generally accepted accounting principles because authorities are based mainly on cash flow requirements. Items recognized in the Future-Oriented Statement of Operations in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, the department has different net cost of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:  

(a) Reconciliation of net cost of operations to requested authorities:

(in thousands of dollars)	Forecast results 2024-25	Planned results 2025-26
Net cost of operations before government funding and transfers	$ 3,219,585	$ 3,207,599
Adjustment for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets	(47,271)	(50,604)
Services provided without charge by other government departments	(133,676)	(131,549)
Refunds/adjustments to previous years’ expenses	10,672	10,355
Decrease (increase) in accrued liabilities not charged to authorities	(17,324)	(7,062)
Decrease (increase) in vacation pay and compensatory leave	92	75
Decrease (increase) in employee future benefits	2,475	2,624
Decrease (increase) in environmental liabilities and asset retirement obligations	14,316	12,265
Total items affecting net cost of operations but not affecting authorities	(170,716)	(163,896)
Adjustment for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets	124,439	80,696
Decrease in lease obligations for tangible capital assets	1,103	1,165
Increase (decrease) in inventory	3,804	1,456
Total items not affecting net cost of operations but affecting authorities	129,346	83,317
Requested authorities forecasted to be used	$ 3,178,215	$ 3,127,020

(b) Authorities provided/requested:

(in thousands of dollars)	Forecast results for 2024-25	Planned results for 2025-26
Authorities provided/requested
Vote 1 - Operating expenditures	$ 1,223,791	$ 1,133,335
Vote 5 - Capital expenditures	124,439	80,696
Vote 10 - Grants & Contributions	1,386,655	1,050,757
Statutory amounts	443,330	862,232
Total authorities provided/requested	$ 3,178,215	$ 3,127,020

Requested authorities for the year ending March 31, 2026 are the planned spending amounts presented in the 2025-26 Departmental Plan. Requested authorities for the year ending March 31, 2025 include amounts presented in the 2024-25 Main Estimates, Supplementary Estimates (B) as well as government wide initiatives and carry-forward funding.