The federal government has committed significant public funds to cut emissions, but can be more transparent about where the money is spent.
One way to track Canada’s progress to net zero is to study the trajectory of carbon emissions. Another way is to follow the money that is being spent on climate action.
Public spending plays several critical roles in reducing emissions: among other things, it supports the research, development and commercialization of emissions-reducing technology; helps build low-carbon infrastructure; and can encourage private-sector investment across sectors.
Of course, money is only one tool in any government’s kit. Carbon pricing and smart, flexible regulations create powerful incentives that reduce emissions and allow governments to spend more judiciously. And not every dollar spent necessarily translates into climate progress.
But by examining where and how a government is investing in emissions reduction, we can start to understand whether public funds are being used cost-effectively and achieving their intended results.
We analyzed all federal budgets, fall statements and climate plans announced since 2016 to track the money that the Government of Canada is spending to cut carbon emissions. Our analysis identified more than $190 billion in planned federal spending over 15 years that is dedicated to reducing the country’s emissions. While there are some important caveats to these numbers, they represent a substantial commitment to meeting Canada’s climate targets.
Figure 1: Federal spending commitments total more than $190 billion to cut emissions across sectors since 2016
CLIMATE SPENDING HAS INCREASED BUT IS DIFFICULT TO TRACK
The data tell us a few things.
First, the federal government has ramped up its commitment to cutting emissions. Budget 2023, its latest, was an historic investment in emissions reduction on an even more ambitious scale than previous budgets, particularly in its spending on clean electricity.
The federal government is also clearly counting on the potential of clean technology as a tool for both economic development and for decarbonizing industry. It has set aside specific funding envelopes for some technologies, like carbon capture, utilization and storage, while delivering other funds through broader measures, often in the form of tax credits, that apply to everything from fittings for nuclear power plants to heat pumps to zero-emission mining vehicles.
At the same time, the breadth of some government measures, like the ones that apply to multiple clean technologies, can make spending difficult to follow. It can be equally hard to know when—or even if—the money has been spent, since governments often reallocate funds between programs or “reprofile” money to spend it at a different time. These challenges currently make it hard to track who benefits from climate spending and what exactly the money has accomplished.
More information will make it easier to track climate progress
The federal government can make it easier to analyze the results of climate spending. It could start by aggregating information about the outcomes of individual projects funded by federal programs, information that is currently scattered across volumes of documentation that government departments publish every year. It can go further by sharing details that aren’t currently public, like which clean technologies receive the greatest benefit from tax credits and the sectors that are investing the most in those technologies, for example. The federal government’s annual report on tax expenditures might be a useful place to publish this information.
The data we have now offer enough detail for us to see that the government is prioritizing emissions reduction and to follow roughly where the money is going. But more transparency is crucial for understanding the impact of those funds.
Ross Linden-Fraser is a Senior Research Associate at the Canadian Climate Institute.
Arthur Zhang is a Research Associate at the Canadian Climate Institute.