Canada’s 2022 budget provides a solid foundation for the electric vehicle industry
Electric Mobility Canada (EMC) applauds the Government of Canada for including investments in the entire electromobility ecosystem in its 2022 budget. From critical minerals to education, this is a major step forward for Canada’s electric vehicle (EV) sector.
“While there is still work to be done, MÉC is pleased to support the Canadian government in advancing electromobility across the country. Many of the items highlighted in this year’s budget align with MEC’s pre-budget recommendations, as well as our EV 2030 Action Plan – an industry-led initiative with 32 policy recommendations aimed at ensuring that Canada successfully transitions to electric mobility,” says Daniel Breton, MEC’s President and CEO.
Highlights of this year’s budget include
1.7 billion over five years, starting in 2022-23, with $0.8 million in remaining amortization, to Transport Canada to extend the incentive program for zero-emission vehicles (iZEV) until March 2025. Further details on eligibility will be announced by Transport Canada in the coming weeks.
The federal government will put in place a sales standard to ensure that at least 20% of new light-duty vehicle sales will be zero-emission vehicles (ZEVs) by 2026, at least 60% by 2030 and 100% by 2035.
MÉC looks forward to learning more about the expanded eligibility criteria for the iZEV program and hopes that incentives will also be available for used EVs. CME fully supports the introduction of a ZEV standard for light-duty vehicles and the associated interim targets. Canada must also continue to support EV consumer awareness and education initiatives across the country and should consider purchase incentives to support low- and moderate-income households.
Medium and Heavy Vehicles
547.5 million over four years, beginning in 2022-23, to Transport Canada to launch a new medium- and heavy-duty EV purchase incentive program.
33.8 million over five years, starting in 2022-23, with $42.1 million in remaining amortization, to Transport Canada to work with the provinces and territories to develop and harmonize regulations and to conduct safety testing for long-haul zero-emission trucks.
199.6 million over five years, starting in 2022-23, and $0.4 million ongoing, to Natural Resources Canada to expand the Freight Fleet Energy Assessment Program, which will be renamed the Fuel Efficient Freight Fleet Program. This will support assessments and retrofits for a greater number of vehicles and a wider variety of fleets and vehicle types.
MEC applauds the introduction of a purchase incentive and sales standard for medium and heavy-duty VZEs. These are critical first steps on the road to electrifying this more challenging part of the transportation sector, and expanding the feasibility to more vehicle categories and application niches.
500 million in urban and commercial charging infrastructure for large-scale VZE. Funding will come from existing resources of the Canada Infrastructure Bank under its Green Infrastructure Investment Priority Area.
400 million over five years, starting in 2022-23, to Natural Resources Canada to fund the deployment of ZEV charging infrastructure in rural and remote communities through the Zero Emission Vehicle Infrastructure Program.
Canada should set targets for the installation of charging infrastructure for all types of vehicles and charging situations, such as fleet facilities, public charging networks and multi-unit residential buildings. National building codes should be updated to include EV charging requirements, and home energy retrofit programs should include incentives for charging infrastructure.
Transportation Electrification Strategy and Regulations
The federal government will implement a sales standard to ensure that at least 20% of new light-duty vehicle sales will be zero-emission vehicles (ZEVs) by 2026, at least 60% by 2030 and 100% by 2035.
The federal government aims to have 35% of total MLV sales be ZEVs by 2030 and will develop ZEV regulations for medium and heavy-duty vehicles to require 100% of MLV sales to be ZEVs by 2040 for a subset of vehicle types based on feasibility, with interim regulated sales requirements for 2030 that will vary for different vehicle categories based on feasibility and explore interim targets for the mid-2020s.
Canada’s 2022 budget contains many of the necessary building blocks for a national electric mobility strategy such as these sales standards.
Jobs and manufacturing capacity
3.8 billion in support over eight years, starting in 2022-23, to implement Canada’s first Critical Minerals Strategy.
Up to $1.5 billion over seven years, starting in 2023-24, for infrastructure investments that would support the development of critical minerals supply chains, with a focus on priority deposits;
79.2 million over five years, beginning in 2022-23, for Natural Resources Canada to provide public access to integrated data sets to inform critical mineral exploration and development.
The introduction of a new 30% critical mineral exploration tax credit for specified mineral exploration expenses incurred in Canada and renounced to flow-through share investors.
Up to $1 billion over six years, starting in 2024-25, to Innovation, Science and Economic Development Canada for the Strategic Innovation Fund. Combined with $500 million from existing program funding, this will provide $1.5 billion in targeted support for critical minerals projects, with priority given to manufacturing, processing and recycling applications.
Support for innovative projects through the Strategic Innovation Fund will complement other proposed investments in the sector, including a proposed $1.5 billion investment in infrastructure.
Establish the Canada Growth Fund, a new public investment vehicle initially capitalized at $15 billion over the next five years, to attract substantial private sector investment to help achieve important national economic policy goals: 1) reducing emissions and contributing to Canada’s climate goals; 2) diversifying our economy and boosting our exports by investing in the growth of low-carbon industries and new technologies in new and traditional sectors of Canada’s industrial base; and 3) supporting the restructuring of critical supply chains in areas important to Canada’s future prosperity, including our natural resources sector. The launch of the fund will be included in the fall 2022 Economic and Fiscal Update.
Creation of a federal innovation and investment agency, with $1 billion over five years, beginning in 2022-23, to support its initial operations. Final details on the design and mandate of the agency will be determined following further consultations with Canadian and international experts later this year, and will be announced in the fall 2022 Economic and Fiscal Update.
These initiatives can be used to support and attract EV-related business and investment to Canada. In particular, training programs should target automotive technicians to help them make the transition to EV-only services.
2.2 million over five years, starting in 2022-23, to Natural Resources Canada to renew the Greening Government Operations Fleet Program, which will continue to conduct readiness assessments of federal buildings required to facilitate the transition of the federal fleet to ZEVs.
250 million over four years, starting in 2022-23, to Natural Resources Canada to support pre-development activities for clean electricity projects of national significance, such as interprovincial power transmission projects and small modular reactors. The federal government is already advancing similar work on the Atlantic Loop and Prairie Link projects. Projects like the Atlantic Loop will be critical as we move towards a net-zero emissions electricity system, while supporting economic development through investments in new infrastructure and improving the security and reliability of our clean energy supply.
600 million over seven years, starting in 2022-2023, to Natural Resources Canada for the Smart Electrification and Renewable Energy Program to support additional renewable electricity and grid modernization projects.
2.4 million in 2022-23 to Natural Resources Canada to establish a Pan-Canadian Power System Council, which would provide external advice to support national and regional electricity planning.
25 million in 2022-23 and beyond to Natural Resources Canada to establish regional policy initiatives to work with provinces, territories and relevant stakeholders to develop net zero energy plans.
“Like the Emissions Reduction Plan released last week, Canada’s 2022 budget highlights the need for a national electromobility strategy,” notes Breton. The basics of such a strategy are present in the Emissions Reduction Plan and the budget, but a comprehensive plan is needed to optimize the economic and workforce transition to renewable energy and to firmly establish Canada as an industry and technology leader in clean transportation.