Two engineers with laptop discussing on a wind farm
Federal Budget

Green recovery plan a key focus of federal budget

Measures build on the updated climate plan introduced by the government in December 2020

Two engineers with laptop discussing on a wind farmThe 2021 federal budget provides a variety of incentives for businesses to invest in world-leading technologies (Getty Images/Westend61)

One of the cornerstones of the 2021 federal budget is the government’s plan for a “green recovery” to fight climate change and help the country transition toward a net-zero economy by 2050. 

According to the budget document (page 21), “Building a net zero economy is no longer a matter of debate … it’s about leaving a healthy planet, with clean water and clean air, for our children and their children. It is about averting a climate catastrophe.”

Building on the updated climate plan introduced by the government in December 2020, the budget includes measures designed to help Canadians make their homes greener, as well as a variety of incentives for businesses to invest in world-leading technologies. 

“CPA Canada welcomes the measures in Budget 2021 to accelerate the transition to a clean economy,” says Gord Beal, vice-president, research, guidance and support at CPA Canada. “The budget contains a wide range of measures to support Canadians and Canadian business to ride out the challenges of the pandemic and, as we emerge from that, to embrace the opportunities of a cleaner, digitally enabled economy.” 

Beal adds that the budget’s focus on the longer-term is in keeping with CPA Canada’s pre-budget submission, which stated: “As we revive the post-COVID economy, business needs a line of sight in order to make its own plans and investments and to foster a shared commitment toward sustainable objectives.” 

Here are some of the specific incentives designed to encourage businesses to invest in a cleaner future. 


The budget notes that Canada is a global leader in clean technology, with 11 companies included in the 2021 Global Cleantech 100 list. Still, the sector lags behind other countries in commercial scale-up, export and industry adoption.

As James Richardson, manager, government relations, at CPA Canada, points out, the budget proposes several measures to support cleantech businesses. One of these is a reduction of 50 per cent in the general corporate and small business income tax rates for businesses that manufacture zero-emission technologies. 

“Measures like this are meant to enhance Canada’s competitiveness in attracting investment in cleantech manufacturing, while also supporting existing businesses in the sector,” he says. 


Launched in the updated climate plan last December, the Net Zero Accelerator is an initiative designed to accelerate the adoption of emission-reduction technologies by heavy industry, says Richardson.

“The budget proposes to provide $5 billion over seven years (cash basis), starting in 2021-22, for projects that will help reduce domestic greenhouse gas emissions across the Canadian economy, including the auto and aerospace sectors,” he says. “These measures incent and support businesses to make the kinds of investments that are needed to not only become more sustainable, but also more competitive.”


CCUS uses advanced technologies to capture carbon dioxide emissions from fuel combustion, industrial processes or directly from the air. The captured carbon can be stored underground or used in the development of innovative products.

In order to support and accelerate the adoption of these technologies, the budget proposes a number of measures, such as the introduction of an investment tax credit for capital invested in CCUS projects with a view to reducing emissions by at least 15 megatonnes of CO2 a year. This measure will come into effect in 2022. 

“There has been a strong push to introduce this sort of support for CCUS to match the tax incentives offered in the U.S.,” says Richardson. “If this technology can be developed at scale and at a reasonable cost, there is potential to apply it to a variety of heavy industries in Canada and also to export it around the world.”


The budget points out that, in order to ensure a stable transition to a low-carbon economy, stakeholders require standardized information about the climate-related risks and opportunities organizations face.

In this regard, it says the government intends to engage with the provinces and territories on the adoption of climate disclosure requirements that are consistent with the Task Force on Climate-related Financial Disclosures (TCFD). Federal Crown corporations will adopt the TCFD recommendations and CPA Canada is aligned with the government in hoping that all jurisdictions work collaboratively to implement the TCFD recommendations across the Canadian economy.

“With rising concerns about the impact of climate change, multiple stakeholders will want to know what organizations are doing to address it,” explains Beal. “This extends beyond investors to include the general public. To achieve a consistent approach, all sectors need to play their part.”

Beal adds that full adoption of the TCFD recommendations across the Canadian federation requires action by governments and regulators in all jurisdictions. A collaborative approach between the federal, provincial and territorial governments would be welcomed.


The budget includes several measures designed to support climate change adaptation and resilience as well as preparedness for climate-related disasters. These include, for example, $1.4 billion over 12 years to top up the Disaster Mitigation and Adaptation Fund in order to support projects such as wildfire mitigation activities and restoration of wetlands and shorelines.

Beal notes that one of CPA Canada’s key recommendations was addressed in the updated climate plan announced in December—i.e., the government’s intention to develop the first-ever National Adaptation Strategy. This strategy will be developed in consultation with provinces, territories, municipalities, First Nations and other stakeholders and will likely take several years.

“We are particularly pleased to see the recognition that Canada needs a national plan for addressing the inevitable impacts of climate change,” says Beal. “We have been recommending this for several years as there is a need to coordinate the adaptation efforts of different levels of government as well as the private sector. CPA Canada looks forward to supporting and contributing to the development of this strategy.” 


The budget includes a plan to undertake Canada’s first-ever census of the environment in order to increase our knowledge of the country’s environment and ecosystems, as well as species and their relationship to local communities. 

To create the census, the government would commit $25.6 million over five years, starting in 2021-22, and $5.8 million per year ongoing to Statistics Canada, in addition to $1.9 million over five years, starting in 2021-22, and $0.3 million per year ongoing to Environment and Climate Change Canada.

This is another initiative that CPA Canada strongly supports. As Beal says, “CPA Canada has voiced the need for better access to decision-useful climate data and a better understanding of the value of natural capital and bio-diversity. A census of the environment could provide foundational data to advance both of those areas of work.”


As the foreword to the budget notes, “[This is] a plan that embraces this moment of global transformation to a green, clean economy.” Time will ultimately gauge the effectiveness of the government’s fiscal blueprint, but it does offer an opportunity for the business community and governments to come together to facilitate a green recovery. Beal reiterates that the time to act is now and is hopeful that the opportunity will be seized. 


Read CPA Canada’s federal budget analysis and tax highlights and learn more about the government’s plan for a resilient economic recovery.