In Depth
Federal Budget 2007
Environment
Budget allocates $4.5 billion for environmental programs
March 21, 2007
CBC News
The Conservative government used its second budget to earmark $4.5 billion for environmental initiatives, including the previously announced $1.5 billion ecoTrust program for provincial energy and pollution-reducing projects.
Other spending targets in Monday's budget include:
- Incentives to encourage people to buy more efficient vehicles and stop driving polluting ones.
- Increased subsidies for cleaner energy and reduced subsidies for oilsands.
- A national water strategy to improve drinking water quality and preserve the country's fish.
Fuel-efficient vehicles
Driving accounts for about 12 per cent of Canada's greenhouse gas emissions and Canadian purchase 1.5 million passenger vehicles each year, according to the budget documents.
Now, the government plans to offer incentives for drivers to buy or lease more fuel-efficient cars, SUVs and minivans and drivers will pay if they opt for gas guzzling vehicles.
The Conservatives are also setting aside $36 million over two years (including $34 million in new money) for programs to encourage people to get rid of old, polluting vehicles.
All these programs together are expected to be roughly revenue neutral.
The new vehicle programs, effective on purchases or leases made after Mar. 20, 2007, include:
- Rebates of $1,000 to $2,000 on the purchase of fuel-efficient models or ones that use less polluting fuels.
- Levies of $1,000 to $4,000 for the least fuel-efficient models. The levy will replace the existing excise tax on heavy vehicles, which is based on weight and usually $100 to $700 per heavy vehicle.
Energy subsidies
The budget helps change the focus of energy subsidies from the oilsands to cleaner, less profitable areas of the energy industry.
The government has announced $2 billion for renewable fuel production. That includes $1.5 billion over seven years for:
- A subsidy of up to $0.10 a litre on the price of gasoline alternatives, such as ethanol.
- A subsidy of up to $0.20 a litre on the price of diesel alternatives, such as biodiesel.
The maximum subsidy will be in effect for the first three years, and will decline after that. It will be eliminated when company makes more than 20 per cent profit annually.
Another $500 million will be used to help companies establish large-scale production of "next-generation" renewable fuels from agricultural and forestry waste products.
In addition, the tax incentives once used to spur the development of the oilsands will be directed to renewable fuels. The subsidies take the form of accelerated capital cost allowances (ACCA), which allow companies to reduce tax payments by claiming deductions for investments in things such as infrastructure sooner than usual. For oilsands development, they are worth roughly $300 million a year.
The ACCA will:
- Extend to include wave and tidal, solar, fuel cells, biogas, pulp and paper waste fuels, waste-fuelled thermal energy, fuel upgrading equipment.
- Be phased out for oilsands development projects, starting 2010. However, oilsands development projects well underway before March 2007 will receive the full development ACCA over their lifetime. Projects after March 2007, but before 2010 will receive a full ACCA that will gradually be reduced between 2011 and 2015. In the future, ACCA for oilsands will be targeted at investments that remove carbon dioxide and reduce pollution.
Water
The 2007 budget's national water strategy, aimed at improving the country's drinking water and preserving its fish, includes:
- $11 million over two years to help speed the cleanup of eight areas in the Great Lakes as part of the Canada-U.S. Great Lakes Water Quality Agreement, plus another $5 million to study it.
- $12 million over two years to clean up phosphorous in Lake Simcoe.
- $7 million over two years to develop a plan to clean up Lake Winnipeg.
- $39 million over two years for fisheries research.
- $324 million for six new Coast Guard vessels: four for patrol, two for offshore fishery science. They will be in service in five to seven years, with costs starting in 2009-2010.
- $19 million over two years to keep coastal waters clean.
- $33 billion over seven years in infrastructure money to help provinces, territories and municipalities pay for water and wastewater treatment projects.
Other
- $1.5 billion in previously announced funds for the ecoTrust program, which provides funding for provincial projects that reduce pollution or greenhouse gas emissions.
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