2007 Federal Budget: What's interesting?

COMMENT:The three big energy and environment announcements in the federal budget are:

3. $1.5-billion Eco Trust, which funds projects jointly with the provinces to reduce greenhouse gas emissions.

OTTAWA — Canadians are being enticed out of their H3 Hummers and into a Toyota Prius as part of surprise new “green levy” introduced in the federal budget.

A fee of as much as $4,000 will be slapped on gas guzzling SUVs and supercharged sports cars to pay for new incentives aimed at getting Canadians behind the wheel of a new hybrid car or other fuel efficient vehicles.

The incentives would be worth up to $2,000 and can be combined with similar offers by several provinces, reducing the purchase costs of hybrids by as much as $4,000.

The measure steals a page from the Green Party's platform and – combined with incentives for renewable fuel production – places vehicle pollution as the top target of its environmental spending plan.

Though environmentalists welcomed the rebates for hybrids, they criticized the budget Monday for falling well short of the “massive scale-up” of efforts that former environment commissioner Johanne Gelinas called for last September in calling for urgent action on climate change.

The Conservative budget contains more than $4-billion over seven years for environmental issues, including incentives for domestic ethanol production and protection for Canadian lakes and forests.

Half of that money follows from the government's announcement last year that five per cent of all gasoline sold in Canada must be from renewable sources such as ethanol by 2010. Two per cent of all diesel must also be from renewable sources.

With the United States and Brazil heavily subsidizing ethanol production, the Canadian industry warned similar incentives were needed for Canada to compete in the rapidly expanding renewable fuels industry.

But environmentalists note that the new money to support renewable fuel refineries is not new money, because it is being paid for by ending an existing tax break for ethanol.

Environmentalists have also expressed concern that the amount of energy required to grow and produce ethanol negates a large amount of the potential reduction in greenhouse gas emissions.

“If you want to subsidize corn producers, that's fine, but it's barely an environmental program,” said Aaron Freeman of Environmental Defence.

They note that the budget makes no mention of how many megatonnes of greenhouse gases would be reduced as a result of the new spending, raising questions as to whether it amounts to an effective way of spending federal climate change dollars.

The new Green Levy on Fuel-Inefficient Vehicles will not apply to pick up trucks. Finance officials said it would be unfair to penalize such trucks because many Canadians require them for work.

Finance officials estimate about 5 per cent of vehicles on the market would be subject to the fee and about three per cent would qualify for the fuel efficiency rebate.

The $110-million expected to be raised by the levee will be used to pay for incentives for the purchase of hybrid and fuel efficient cars, as well as incentives for Canadians to retire older, high-polluting vehicles.

In addition to the vehicle-related measures, the budget phases out the Accelerated Capital Cost Allowance Program that allowed companies in the oil sands to write off the depreciation of their capital assets in the year they were purchased.

Companies that are already using the program will be allowed to enjoy the tax benefits until 2015, at which point it will be entirely phased out. The money saved will go toward a similar tax break for oil sands to encourage the purchase of technology to capture greenhouse gas emissions before they are released into the atmosphere.

In addition, the budget's environmental spending includes:

-- The already announced $1.5-billion Eco Trust, which funds projects jointly with the provinces to reduce greenhouse gas emissions

-- The previously announced $250-million Natural Areas Conservation Program, which encourages the private sector to protect ecologically sensitive lands

-- $10-million for conservation projects in the North West Territories

-- $22-million to hire 100 more officers at Environment Canada to enforce Canada's environmental regulations

-- $110-million to protect the habitat of species at risk

-- $93-million for a national water strategy, which includes clean up projects for the Great Lakes, Lake Simcoe and Lake Winnipeg as well as fisheries research.

“It's pretty clear the Conservatives don't take environmental protection very seriously and they continue to ignore their international commitment on tackling climate change,” said Dale Marshall of the David Suzuki Foundation.

“My question to them would be: ‘If you thought that the previous government's climate change programs were inadequate, then what makes you think that recycling those programs with less money would do anything?'”