The federal government recently tabled its 2008 Budget. The following are the highlights pertaining to the energy sector:

  • The government plans to strengthen its ecoACTION plan by:
  • Providing $66 million over two years to establish the regulatory framework for industrial air emissions which will impose binding national regulations on greenhouse gas emissions and air pollutants across all major industrial sectors. The greenhouse gas regulations will come into force in 2010 and provide for market-based mechanisms that will establish a price for carbon and support the development of carbon trading in Canada. Key features of this regulatory regime include:
      • An electronic tracking system for units traded in the carbon market;
      • A single window reporting system for industry;
      • An industry-supported technology fund to invest in emissions for reduction projects;
      • An offset system to finance emission reduction projects in non-regulated sectors; and
      • Better modelling of air quality.
  • Providing $250 million for a full-scale commercial demonstration of carbon capture and storage in the coal-fired electricity sector, research on the potential for carbon storage in Nova Scotia and economic and technological issues. Of the $250 million, $240 million is earmarked for the proposed full-scale commercial demonstration of carbon capture and storage in the coal-fired electricity sector in Saskatchewan. Little is known of the geological formations outside the Western Sedimentary Basin that could be used for carbon capture; therefore, Budget 2008 provides $5 million, along with a complementary investment by the province of Nova Scotia, to support geological research for potential carbon capture in Nova Scotia;
  • Increasing the capital cost allowance (CCA) rate for carbon dioxide (CO2) pipelines, which is a component of carbon capture and storage systems, from 4% to 8%. The CCA rate for pumping and compression equipment on CO2 pipelines will be set at 15%;
  • Expanding eligibility for accelerated CCA to the following applications:
      • Ground source heat pump systems used for space heating and hot water;
      • Biogas production systems that use animal waste and sewage treatment residue as inputs and those that produce biogas for commercial sale;
      • Electrical or thermal generating systems that use purchased biogas; and
      • Systems that produce bio-oil, or heat from specified waste sources, where the system output is sold to a third party that uses it for specified purposes.
  • Providing $10 million over two years for scientific research and analysis on biofuels emissions to support the development of regulations and demonstration projects to verify that new blended renewable diesel is safe and effective for the Canadian climate and conditions;
  • Investing $300 million to support nuclear energy, including the development of the Advanced CANDU Reactor and maintaining the safe, reliable operations of the Chalk River Laboratories;
  • Extending GST/HST relief to land leased to situate wind or solar power equipment for the production of electricity. This relief will be applicable to lease payments due on or after February 26, 2008; and Providing $21 million over two years to make environmental law enforcement more effective.

The government also plans to strengthen the ability of Canadian universities to attract and retain the world's top science leaders by providing $21 million, over two years, to establish up to 20 Canada Global Excellence Research Chairs. The new research chairs will be offered in what the government sees as four priority areas: the environment, natural resources and energy, health and information and communication technologies.