Canada’s 2022 Budget serves as a strong building block for the electric vehicle industry

April 8, 2022

Electric Mobility Canada (EMC) applauds the federal government for including investments across the entire electromobility ecosystem in its 2022 Budget. From critical minerals to education, this is a big step forward for Canada’s electric vehicle (EV) sector.

“Although there is more work to be done, EMC is looking forward to supporting the Canadian government in the advancement of electromobility across the country. Several of the items outlined in this year’s budget align with EMC’s pre-budget recommendations, and EMC’s 2030 EV Action Plan – an industry-led project containing 32 policy recommendations that is intended to ensure Canada succeeds in the transition to electric mobility,” says Daniel Breton, President & CEO of EMC.

Highlights of this year’s budget include:

Light Duty EV Adoption

  • $1.7 billion over five years, starting in 2022-23, with $0.8 million in remaining amortization, to Transport Canada to extend the Incentives for Zero-Emission Vehicles (iZEV) program until March 2025. Further details about broadened eligibility will be announced by Transport Canada in the coming weeks.
  • The federal government will put in place a sales mandate to ensure at least 20 per cent of new light-duty vehicle sales will be zero-emission vehicles (ZEVs) by 2026, at least 60 per cent by 2030 and 100 per cent by 2035.

EMC is looking forward to learning more about the broadened eligibility criteria for the iZEV program and is hoping that incentives will also be available for used EVs. EMC also fully supports the introduction of a ZEV mandate for light duty vehicles that includes interim targets. Canada must also continue to support consumer EV awareness and education initiatives across the country and should look into purchase incentive measures to support low- and modest income households.

Medium-, Heavy-Duty Fleet Electrification

  • $547.5 million over four years, starting in 2022-23, to Transport Canada to launch a new purchase incentive program for medium- and heavy-duty ZEVs.
  • $33.8 million over five years, starting in 2022-23, with $42.1 million in remaining amortization, to Transport Canada to work with 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 Green Freight Assessment Program, which will be renamed the Green Freight Program. This will support assessments and retrofits of more vehicles and a greater diversity of fleet and vehicle types.

EMC applauds the introduction of a purchase incentive and a sales mandate for medium- and heavy-duty ZEVs. These are critical first steps on the path to electrifying this more challenging part of the transportation sector, and to broadening feasibility across a wider array of vehicle categories and niches/applications.

National EV Infrastructure

  • $500 million in large-scale urban and commercial ZEV charging and refuelling infrastructure. Funding will be sourced from the Canada Infrastructure Bank’s existing resources 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 sub-urban and remote communities through the Zero-Emission Vehicle Infrastructure Program (ZEVIP).

Canada should set targets for EV charging installations for all types of vehicles and charging situations such as fleet installations, public charging networks, and multi-unit residential buildings. National building codes need to be updated with EV charging requirements and energy efficient home retrofit programs should include incentives for EV charging infrastructure.

2030 Electric Vehicle Strategy and EV Regulation

  • The federal government will put in place a sales mandate to ensure at least 20 per cent of new light-duty vehicle sales will be zero-emission vehicles (ZEVs) by 2026, at least 60 per cent by 2030 and 100 per cent by 2035.
  • The federal government will aim to achieve 35 per cent of total MHDV sales being ZEVs by 2030 and will develop a medium- and heavy-duty ZEV regulation to require 100 per cent MHDV sales to be ZEVs by 2040 for a subset of vehicle types based on feasibility, with interim 2030 regulated sales requirements that would vary for different vehicle categories based on feasibility and explore interim targets for the mid-2020s.

Canada’s 2022 budget contains many of the building blocks needed for a national electric mobility strategy such as these sales mandates.

Domestic EV Jobs and Manufacturing Capacity

  • $3.8 billion in support over eight years, on a cash basis, 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 the critical minerals supply chains, with a focus on priority deposits;
    • $79.2 million over five years on a cash basis, starting in 2022-23, for Natural Resources Canada to provide public access to integrated data sets to inform critical mineral exploration and development; and
    • The introduction of a new 30 per cent 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 on a cash basis, starting in 2024-25, to Innovation, Science and Economic Development Canada for the Strategic Innovation Fund. Combined with $500 million drawn from existing program funding, this will provide $1.5 billion in targeted support towards critical minerals projects, with prioritization 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 meet important national economic policy goals: 1) To reduce emissions and contribute to achieving Canada’s climate goals; 2) To diversify our economy and bolster our exports by investing in the growth of low-carbon industries and new technologies across new and traditional sectors of Canada’s industrial base; and 3) To support 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 2022 fall economic and fiscal update.
  • Creation of a federal innovation and investment agency, with $1 billion over five years, starting in 2022-23, to support its initial operations. Final details on the agency’s design and mandate are to be determined following further consultation later this year with both Canadian and global experts, and will to be announced in the 2022 fall economic and fiscal update.

These initiatives can be used to support and attract EV-related business and investment in Canada. Training programs should target automobile technicians to help them transition to EV-only services.

Federal Leadership

  • $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 vehicle fleet to ZEVs.
  • $250 million over four years, starting in 2022-23, to Natural Resources Canada to support pre-development activities of clean electricity projects of national significance, such as inter-provincial electricity 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 also supporting economic development through investments in new infrastructure and the enhanced security and reliability of our clean energy supply.
  • $600 million over seven years starting in 2022-2023 to Natural Resources Canada for the Smart Renewables and Electrification Pathways 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 Grid Council, which would provide external advice in support of national and regional electricity planning.
  • $25 million starting 2022-23, to Natural Resources Canada to establish Regional Strategic Initiatives to work with provinces, territories, and relevant stakeholders to develop net-zero energy plans.

“Along with the Emissions Reduction Plan released last week, Canada’s 2022 budget highlights the need for a national electromobility strategy,” notes Mr. Breton. Although the foundation for such a strategy is present in Canada’s 2030 Emissions Reduction Plan and the 2022 budget, an overarching plan is necessary to optimize economic and labour transition away from fossil fuels and to firmly establish Canada as an industry and technology leader in clean transportation.