441-00526 (Natural resources and energy)

Canada is leading in the deployment of clean fuels, such as Hydrogen, that are essential to both combatting climate change and assuring the energy security of Canada and Canada’s allies.

Canadians made it clear that more needs to be done to reduce emission and fight climate change. This is why the Government of Canada is committed in developing the hydrogen sector as a viable and reliable source of energy. Hydrogen is an important climate solution that is aligned with net-zero while spurring economic growth from coast to coast to coast. In 2019, the hydrogen sector generated $200 million in hydrogen technology exports, such as fuel cells, while employing over 2,000 Canadians. Exports of Canadian hydrogen technologies are growing exponentially and are employed in countries around the world. As our investment in the sector grows, Canada has the potential to become a hydrogen superpower.

Regarding hydrocarbons, the Government of Canada is in the process of developing guidance for all future oil and gas production projects subject to a federal impact assessment, ensuring that they will have “best-in-class” low-emissions performance. Successful proponents are building energy transition considerations into project design, such as plans to transition to hydrogen production and export. Increasingly, consumers are looking to source energy products produced with the lowest possible carbon intensity.

Pipelines are currently the safest and most efficient way to transport crude oil. Their use is expected to evolve as the energy transition continues – including the transportation of hydrogen, ammonia, and carbon dioxide. Canada’s natural gas and petroleum reserves can be converted to hydrogen with carbon abatement, providing a new value-added market for Canada’s conventional energy resources that reduces emissions. The future of global demand in a net-zero economy is for non-combustible petroleum products with minimal production emissions, such as waxes and lubricants.

Investments in clean energy creates sustainable jobs, enhances economic growth and energy security, and supports the shift towards clean electricity generation. Canada is a world leader in terms of clean energy production, including renewable sources of energy such as wind and solar energy.

Canada’s production of clean energy grows from one year to the next. The federal government is investing in clean energy production and the development of new technologies in the energy sector. Investments include the $1.56 billion Smart Renewables and Electrification Pathways Program, to replace fossil-fuel generated electricity with renewables and to fund grid modernization projects, which has already deployed clean energy in coastal, remote, and Indigenous communities. The Government of Canada is also delivering the Clean Energy for Rural and Remote Communities program, which, coupled with additional investments in the Strengthened Climate Plan, provides over $500 million to get rural and remote communities – including Indigenous communities – off of diesel.

Climate change is an existential challenge, and climate action is critical to Canada’s long-term health and economic prosperity. Carbon pricing is widely recognized as effective and the most efficient means of reducing our greenhouse gas emissions, which is why our government has made sure that it is no longer free to pollute in Canada.

The federal price on pollution is revenue neutral for the federal government; the direct proceeds from the federal carbon pricing system remain in the province or territory where they are collected. Put simply, every dollar collected from the carbon price is returned.

In Prince Edward Island, Yukon, and Nunavut, the direct proceeds from the federal system are returned to the governments of these jurisdictions. In provinces that do not have a fuel charge consistent with the federal benchmark—Ontario, Manitoba, Saskatchewan and Alberta—approximately 90 percent of direct proceeds are returned to residents of those provinces through Climate Action Incentive (CAI) payments. Most households receive more in CAI payments than the costs they face from the federal price on pollution.

In 2022-23, these payments mean a family of four will receive $745 in Ontario, $832 in Manitoba, $1,101 in Saskatchewan, and $1,079 in Alberta. In addition, families in rural and small communities are eligible to receive an extra 10 per cent.  Climate Action Incentive payments will begin to be delivered as quarterly payments starting July of this year instead of a refundable credit claimed annually on personal income tax returns.

With respect to the application of the Goods and Services Tax/Harmonized Sales Tax (GST/HST), the GST/HST is calculated on the final amount charged for a good or service.  The general rule that was adopted at the inception of the GST, under the Mulroney government, and carried over for the HST, is that this final amount includes other taxes, levies, and charges that apply to the good or service and are generally embedded in the final price.  This longstanding approach to calculating the GST/HST ensures that tax is applied evenly across goods and services consumed in Canada.  It also makes it easier for vendors to calculate the amount of tax payable, for consumers to understand, and for the Canada Revenue Agency to administer.

High inflation is a global phenomenon, driven by the impacts of Russia’s invasion of Ukraine, which have led to sharply higher food and energy prices, and persistent impacts from supply chain disruptions and the pandemic. In Canada, rising housing-related prices have primarily contributed to the portion of inflation driven by domestic factors.

On the demand side, the Bank of Canada has begun tightening monetary policy, while the government continues to move forward with withdrawing COVID supports that are no longer necessary, while committing to reducing the debt-to-GDP ratio over the medium term. Indeed, the IMF projects that Canada will have the fastest pace of deficit reduction in the G7 by next year. In addition, as announced in Budget 2022, the government is taking measured and appropriate steps to moderate spending through the launch of a comprehensive Strategic Policy Review with a target of finding savings of $6 billion over five years, and $3 billion annually by 2026-27.

On the supply side, to keep inflation expectations in check, the government is taking action to boost the economy’s supply capacity. This directly addresses the biggest threat to long-term price stability: the risk that elevated inflation becomes entrenched in expectations. The government has already made important investments to boost supply capacity. The investment in Early Learning and Child Care, which is expected to yield a material increase in labour-force participation, is one important example. Budget 2022 redoubled the focus on expanding the economy’s capacity with investments to grow and maintain our talented and diverse workforce through immigration and skills development; facilitate the transition to a low-carbon economy; drive innovation and business growth; and make our cities more competitive by expanding the supply of housing. 

To help with affordability challenges, the government is making a number of targeted investments to support Canadians, such as:

• an historic investment of $30 billion over five years to build a Canada-wide early learning and child care system in collaboration with provinces, territories, and Indigenous partners;
• $5.3 billion to provide dental care for Canadians with family incomes of less than $90,000 annually, starting with under 12 years-olds in 2022, expanding to under 18 years-olds, seniors and persons living with a disability in 2023, with full implementation by 2025;
• $475 million in 2022-23 to provide a one-time, $500 payment to those facing housing affordability challenges; and
• beginning this July, a ten percent increase to the Old Age Security (OAS) pension for seniors age 75 and over, which will provide additional benefits of over $766 to full pensioners in the first year.

Importantly, key government benefits are also adjusted for inflation over time, including, among others, Old Age Security (OAS), the Guaranteed Income Supplement (GIS), the Canada Child Benefit, and the GST Credit.