Federal budget spending big on zero-emission vehicles

Canada’s federal government will invest $780.9 million into medium- and heavy-duty zero-emission vehicles (ZEVs) over the next five years, under commitments unveiled in the 2022 federal budget.

“Businesses across Canada want to upgrade their fleets to be part of the solution to climate change. However, those upgrades can be expensive, and businesses need to be confident that ZEVs can reliably transport their goods to market,” the budget document notes.

(File photo: Volvo Trucks North America)

Over the next four years, $547.5 million will be invested in a new Transport Canada purchase incentive program for medium- and heavy-duty ZEVs. The funds grow from $11 million in 2022-23, rising to $97 million in 2023-24, $149 million in 2024-25, and $290 million in 2025-26.

Another $33.8 million will be used to help Transport Canada, provinces and territories to harmonize regulations and complete safety testing for zero-emission longhaul trucks. That investment begins with $4 million this year, and doubles in 2023-24.

Green retrofits

Natural Resources Canada’s Green Freight Assessment Program – renamed the Green Freight Program – will see $199.6 million over five years to help decarbonize vehicles already on the road. “This will support assessments and retrofits of more vehicles and a greater diversity of fleet and vehicle types,” the budget notes.

That funding will include $23 million in 2022-23, expanding in following years to a respective $45 million, $53 million, $49 million and $29 million.

The funding comes as Canada looks for zero-emission vehicles to account for 35% of new medium- and heavy-duty equipment sales by 2030. Where feasible, some subsets of new vehicle sales will need to be entirely zero-emission models as early as 2040.

The Canada Infrastructure Bank will invest $500 million in large-scale urban and commercial ZEV charging and refueling infrastructure. Over the next five years, another $400 million will be used by Natural Resources Canada to help deploy ZEV charging infrastructure in sub-urban and remove communities.

Tax credits

Businesses that manufacture zero-emission technologies will also see federal tax rates halved.

“Continued investments in transportation infrastructure will help ensure Canada’s supply chains can meet the needs of our economy and withstand disruptions caused by climate change and global events,” the budget adds.

Plans were also unveiled to establish an investment tax credit of up to 30% that focuses on net-zero technologies, battery storage solutions, and clean hydrogen. Details are to be offered in the 2022 fall economic and fiscal update.

“In Canada – and around the world – climate action is no longer a matter of political debate or personal conviction. It is an existential challenge. That means it is also an economic necessity,” Deputy Prime Minister and Finance Minister Chrystia Freeland said when unveiling the budget.

“This is the most profound economic transition since the Industrial Revolution. The world economy is going green. Canada can be in the vanguard, or we can be left behind.”