Creating a permanent municipal climate action fund

Almost 50% of Canada’s emissions fall largely under city control, therefore targeted climate funding for cities, towns and communities is essential. For example, emissions from Toronto, Edmonton, Calgary and Montreal make up almost 10% of those municipal emissions, on par with total electricity emissions in the country. While the imperative for municipal climate action grows, so too does an infrastructure deficit. For example cities are responsible for 60% of infrastructure costs and collect just 10% of tax dollars. Given these funding deficiencies, robust municipal climate action cannot be adequately funded by the property tax base.

Recent federal budgets have included funding to help municipalities reduce emissions, such as investments in transit, electric vehicle charging infrastructure, building retrofits and nature-based solutions. There are also funding streams for other municipal priorities, such as infrastructure. Yet revenue streams to fully support robust and targeted climate action remain limited and non-permanent. The Canada Community-Building Fund ($2 billion annually for strategic infrastructure investments) offers a model for a permanent, indexed fund provided directly to municipalities. A parallel permanent funding mechanism is needed to enable municipal action on local climate priorities.

Flexible and dependable climate-focused funding options, in particular climate action plan implementation, remain rare. It is critical to move away from one-off grants and toward sustained long-term funding that enables coherent community climate responses. This recommended fund would encourage adoption of standardized indicators and methodologies in climate planning as a condition for funding, similar to funding criteria articulated in the Green Budget Coalition’s Green Strings recommendations, elsewhere in this document.

In addition, the Canada Infrastructure Bank should focus on supporting action at the community scale. This could include community energy planning for technologies such as smart grids or district energy that have the potential to be revenue generators and attract significant private capital.

Recommended focus:

Building off past investments such as the five-year Municipalities for Climate Innovation Program, an expanded, targeted climate fund would allow municipalities to seek resources to take climate action and implement climate action plans not funded by other sources. Projects supported via the fund would need to demonstrate their benefits in terms of reduced emissions and improved resilience to a changing climate.

The Green Budget Coalition recommends a new fund, complementing existing funding streams, that municipalities can access for the following:

  • Developing climate plans, climate data collection and acquisition, and translation. Gaps in consistent GHG emission data
    at the municipal level are enormous and need to be resolved to ensure effective and methodologically consistent climate action. Funding is also needed to undertake standardized climate risk assessments. Resources such as exist, but most municipalities do not have the expertise and resources to use that data to inform their work.
  • Climate mitigation actions. As mentioned above, dedicated funding for implementation of action plans that demonstrate evidence- based and science aligned outcomes.
  • Climate resilient infrastructure—beyond the current scope of the Disaster Mitigation and Adaptation Fund.
  • Support for full municipal and Indigenous community engagement in the planning for and implementation of the National Adaptation Strategy, recognizing the local nature of addressing resilience in the face of worsening climate impacts that disproportionately affect low-income and vulnerable people.

Recommended Investment:

$3 billion per year until at least 2030-31, to establish a municipal climate fund. [INFC]

See also Advancing a zero-emissions electricity grid based on renewables and National Adaptation Strategy – funding implementation, elsewhere in this document.