Green strings

The Green Budget Coalition recommends that the following “green strings” be applied to relevant funding programs across government, noting the particular importance for ISED, FIN, and NRCan. Other departments also have an important role in implementing green strings for programs that are designed to help deliver on, or could undermine, the federal government’s climate and nature-related goals (e.g., ECCC, AAFC, INFC).

1. Access to funding, across all streams and programs, should be conditional on:

• A commitment by provincial, territorial or municipal government recipients to develop a net-zero target and an emission reduction target consistent with or exceeding Canada’s 2030 goal;
• A commitment to work with provincial, territorial, Indigenous and federal counterparts to deliver on Canada’s goal of halting and reversing biodiversity loss by 2030, including by protecting at least 30% of land and ocean by 2030, and supporting Indigenous-led conservation.
• If not already established, a commitment by other recipients (including private sector recipients) to develop a net-zero target and an emissions reduction target consistent with or exceeding Canada’s 2030 goal and to develop a plan to meet them based on a robust and agreed upon framework;
  • To increase accountability at the corporate level, corporate net-zero commitments should set milestone targets in alignment with, or exceeding, the federal government’s targets. A robust framework must set limits on the percentage of milestones that can be met through offsets and include all emissions scopes.
• A commitment by recipients, particularly private sector recipients, to disclose climate and nature-related risks based on a robust and agreed upon framework;
  • Incentivizing the reporting of climate-related financial information based on the standards developed by the Task Force on Climate-Related Financial Disclosures (TCFD) and/ or other recognized reporting frameworks would ensure companies are making resilience a key part of their plans while leading to strategic competitive advantage. As such, the federal government and provincial securities commissions should formally adopt TCFD disclosure requirements.
  • Similarly, encouraging up-take and application of the framework being developed by the Task Force on Nature-related Financial Disclosure (TNFD) will help to minimize the risk nature loss poses to business, while embracing the opportunity offered by nature-positive investments. The market-led, science-based TNFD framework will enable companies and financial institutions to integrate nature into decision-making.
• If an industrial emissions reduction project is dependent on technology, a commitment to deploying best in class technology.

2. To provide transparency in how programs are managed and deliver on their intended outcomes:

• Details of funding agreements (e.g., nature and infrastructure agreements between federal and provincial/territorial governments) should be transparent, publicly available and include clear accountability mechanisms to ensure delivery of agreed-to actions and outcomes;
• Recipients should have an obligation to disclose information on actual investments made and measurable outcomes achieved in terms of GHG reductions, protection and/or restoration of nature, and job creation/ retention (and other environmental benefits);
• For grants to private sector recipients, participation should come with penalties and corrective actions if conditions are not met (e.g., grants are converted into loans if the commitment to net-zero has not been developed within a reasonable time period);
• The federal government should make information publicly available on how fund recipients were selected; and
• The government should initiate timely and publicly available monitoring and evaluation of programs within the first year in order to assess that funds are reaching the right types of applicants and projects to contribute to net-zero and nature-related goals.

3. We also strongly encourage the federal government to consider the following criteria when establishing funding eligibility and selecting recipients:

• Establishing prioritization criteria to maximize outcomes:
  • Projects with largest absolute GHG reduction and GHG reduction potential per dollar invested; and
  • A critical assessment and prioritization of proven solutions to achieve near-term reductions to reach Canada’s 2030 target versus strategically investing in those emerging technologies that are most likely to enable Canada to reach our 2050 goal—or safe bets and wild cards as put forward by the Canadian Climate Institute.
• Ensuring alignment with robust just transition principles (see Just Transition to a clean energy future for workers and communities, later in this document) to minimize and address negative impacts to workers.
  • In particular, applicants to federal emissions reduction programs such as the Net Zero Accelerator should demonstrate that the project will lead to job creation or reduce job loss, or identify strategies to support impacted workers consistent with just transition.
• Ensuring that Indigenous authority is upheld, including through Free, Prior and Informed Consent, and Nation-to-Nation funding arrangements (e.g., through direct transfers to Indigenous recipients).
  • In particular, gaps for Indigenous engagement and inclusion have been identified in current federal climate and energy policies, programs, procurement, and infrastructure investment. Government clean energy funding programs (such as the Net-Zero Accelerator) should include provisions for Indigenous participation and leadership in order to advance reconciliation, as recommended by Indigenous Clean Energy.
  • Funding for Indigenous-led land and ocean protection and stewardship should catalyze a paradigm shift towards permanent, predictable, sustainable, Nation-to-Nation financing, co-designed with Indigenous peoples and implemented by Indigenous-led institutions (see Delivering on Canada’s land and ocean protection commitments, earlier in this document).

Considerations for specific programs

• Considerations per stream of the Net-Zero Accelerator and other targeted funding programs:
  • Automobile & aerospace: to accelerate transition to an emissions-free vehicle fleet, funding should be prioritized for zero-emission vehicles, rather than hybrids or plug- in hybrids.
  • Battery innovation: research has shown that the Net-Zero Accelerator may not be the best funding for battery supply chain development, including due to project eligibility thresholds and pace of funding availability. Canada will need to take additional measures to promote “clean” battery supply chains, and can look to the EU’s proposed battery regulation for inspiration.
  • If the fund supports fuel switching projects for industrial processes that require high temperature, it should only support projects that adopt renewable inputs such as green hydrogen.
  • Support should not be provided for projects and industries that are clearly incompatible with a net-zero trajectory. Support should not create or lock in brown infrastructure, such as new infrastructure that increases capacity for emissions-intensive fossil fuel production.
• Nature-related funding agreements with provinces and territories:
  • Bilateral Nature Agreements that provide federal nature funding to provinces and territories should be transparent and require provinces and territories to commit to measurable and specific additional conservation outcomes on the ground that meet agreed-to standards and make a significant contribution to the 30% land protection targets, including Indigenous-led conservation initiatives.
• Mitigating risk to wildlife from infrastructure funding:
  • Infrastructure funding flowing to provinces and territories for linear infrastructure (e.g., highways, railways) should include a requirement to incorporate wildlife mitigation considerations and measures (e.g., underpasses, overpasses, fencing).

See also Aligning federal investments and policies, including subsidies, with Canada’s Nature commitments, later in this document.