Statement by Keith Brooks, Programs Director, Environmental Defence
Ottawa | Traditional, unceded territory of the Algonquin Anishinaabeg People – Budget 2025 and the Climate Competitiveness Strategy was an opportunity for Canada to supercharge the energy transition needed for a strong, future-focused economy, but instead offered little substance and no new measures — all while extending fossil fuel subsidies, backing away from anti-greenwashing rules, and creating a path to axing the long-awaited oil and gas emissions cap.
We are disappointed to see that the government is expanding capital cost-allowances for LNG and tax incentives for carbon capture and storage (CCS), which is an expensive and underperforming technology. Investment tax credits for CCS are set to remain until 2040, increasing the risk of creating stranded assets. Since CCS operations began in Canada in 2000, it has only captured 0.0004 per cent of Canada’s GHG emissions.
It’s also concerning that the government intends to allow the Major Projects Office to access public financing for projects that could include further subsidies for fossil fuel infrastructure and carbon capture. This budget gives no indication that the government intends to uphold their commitment to phase out fossil fuel subsidies.
Furthermore, budget 2025’s framing around low-carbon fossil fuels is very problematic. Fossil fuels are the main driver of the climate crisis, and the myth of low-carbon fossil fuels is dangerous.
The government is also taking a step in the wrong direction by committing to amend Canada’s anti-greenwashing rules. We are well aware that industry has been lobbying against these rules because they are effective at stopping companies from making unbacked claims. The government should hold firm rather than bow to industry pressure.
And while the government’s reconfirmation of a sustainable finance taxonomy with specific dates for next steps is a positive step for accountability, this will not be enough to align the financial system with climate action. As Prime Minister Carney said himself in previous roles, a cohesive package of mandatory transition plans, disclosure, and taxonomy are core for Canada to become serious on sustainable finance and align itself with important trading partners in Europe.
It is also concerning that even though $54 billion has been earmarked for public infrastructure, the transit allocation remains unclear and that the budget reduces the Permanent Public Transit Fund when cities face multi-million dollar transit deficits. This ill-timed cut risks triggering service reductions, fare increases, and long-term ridership decline as transit agencies approach a fiscal cliff.
More positively, the government promises that the Climate Competitiveness Strategy will strengthen industrial carbon pricing, including strengthening the backstop and fixing the benchmark. It also promises to “promptly and transparently apply the federal backstop wherever a [provincial or territorial] system falls below the benchmark.” We applaud this commitment and hope that provinces that are currently out of compliance – namely Saskatchewan and Alberta – take notice.
It will be important for the strengthened industrial carbon pricing regulations and the upcoming methane rules to be void of loopholes, while also being stringent enough to reduce emissions from the oil and gas sector, at minimum, to a level that is equivalent to what would have been achieved by the oil and gas emissions cap. Oil and gas production is Canada’s largest source of emissions by a wide margin.
We are also glad to see the government reaffirm its commitment to the Clean Electricity Regulations. A clean electricity grid is essential and we hope that provinces that are looking to build more gas plants – like Ontario, New Brunswick, and Alberta – take notice. We also hope that Saskatchewan backs away from its plan to keep its coal plants going.
Finally, this budget does not clarify whether the federal government intends to meet, or even seek to meet, Canada’s international climate commitments per the Paris Accord. It does not offer any details as to what Canada intends to do to make up for emissions reduction policies that this government has cancelled. Canada is still without a functioning climate plan.
ABOUT ENVIRONMENTAL DEFENCE (environmentaldefence.ca): Environmental Defence is a leading Canadian environmental advocacy organization that works with government, industry and individuals to defend clean water, a safe climate and healthy communities.
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Alex Ross, Environmental Defence, media@environmentaldefence.ca
