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The upcoming 2023 federal budget is expected to include significant investments in the clean economy as an answer to the bold climate spending of U.S. President Joe Biden.

Biden met with Prime Minister Justin Trudeau in Canada last week, where the two leaders emphasized their commitment to working together on catalyzing clean energy and creating good jobs in the process.

Last August, Biden introduced the Inflation Reduction Act (IRA), which includes nearly US$370 billion to accelerate the U.S.’s energy transition. Since then, fossil fuel companies and climate organizations alike have clamoured for the federal government to follow suit — albeit, in different ways — so Canada doesn’t fall behind.

On March 28, Finance Minister Chrystia Freeland will table the budget, which she recently said will include a “serious investment” in clean technologies.

Oilsands companies have been gunning for more carbon capture, utilization and storage (CCUS) subsidies. They say support for CCUS included in the IRA makes Canada’s proposed investment tax credit look like weak sauce and doesn’t do enough to incentivize investments north of the border.

“It's one thing to get an investment tax credit to build the facility, but your bigger costs are going to be in operations,” James Millar, president and CEO of the Regina-based International CCS Knowledge Centre, told Canada’s National Observer in an interview. He points out that unlike Canada’s program, the IRA also covers a chunk of operating costs.

With an estimated price tag of $8.6 billion, Canada’s proposed tax credit will help companies cover up to 50 per cent of the cost of investing in equipment for CCUS projects. Analysis by the Pembina Institute found the U.S. offers less financial support for CCUS than Canada’s suite of federal and provincial programs.

Many climate groups argue where Canada is actually falling behind is in renewable energy.

The Americans provide support for solar, wind and batteries, ranging from US$64 billion to US$161 billion. Canada’s federal spending, on the other hand, remains low, with the $1.5-billion Smart Renewables and Electrification Pathways Program and a proposed 30 per cent clean technology investment tax credit, according to Environmental Defence. The clean technology tax credit is expected to be finalized in tomorrow’s budget.

The upcoming #Budget2023 is expected to include significant investments in the clean economy as an answer to the bold climate spending of U.S. President Joe Biden. Environmental groups want to see the feds go big on clean electricity. #cdnpoli

To achieve 100 per cent zero-emissions electricity by 2035 — as is the country’s stated goal — the federal government must invest $20.9 billion over the next five years, according to the Green Budget Coalition. The coalition is a group of more than 20 of Canada's largest environmental organizations that collaborate on budget priorities.

That $20.9 billion would support transmission lines between provinces and territories, investment tax credits for renewable electricity like wind and solar, energy storage, grid upgrades and support for low-, middle-class and Indigenous communities during the transition, said Stephen Thomas, clean energy manager at the David Suzuki Foundation and co-author of the coalition’s feature recommendations for Budget 2023.

In 2022 alone, the federal government provided more than $20 billion in financial support to oil and gas companies, analysis by Environmental Defence reveals. This includes $12 billion for the Trans Mountain (TMX) pipeline expansion, $10 billion of which is in the form of a loan guarantee. TMX’s construction costs recently hit $30.9 billion, more than four times the estimate when the federal government bought it. The federal government has yet to explain how the Trans Mountain Crown corporation will secure funding to cover the new cost overruns.

“Budget 2023 is a critical opportunity for the Government of Canada to uphold its commitment to ending all fossil fuel subsidies and redirect that support into clean energy,” said Julia Levin, associate director of Environmental Defence’s national climate program.

At the same time, the U.S. and Canadian governments continue to approve new fossil fuel infrastructure, said Kathryn Harrison, professor of political science at the University of British Columbia — just as the world’s leading climate scientists are jumping up and down saying, “We're sure it's urgent. We know what to do. We have to act now.”

Earlier this month, the Biden administration approved a massive oil development in northern Alaska, and Canada’s federal government greenlit the Cedar LNG project in Kitimat, B.C.

As usual, Harrison will be looking out for “subsidies for fossil fuels with green strings attached to them” in this budget, particularly whether a commitment to clean electricity will “be an indirect subsidy for fossil fuels, particularly for electrifying LNG terminals.”

Natasha Bulowski / Local Journalism Initiative / Canada’s National Observer