Clean Prosperity welcomes new details about an expanded carbon contracts for difference program in the 2024 Federal Budget.
The 2024 Budget commits the Canada Growth Fund to developing an expanded range of carbon contracts for difference offerings, including exploring ways of developing off-the-shelf contracts for certain jurisdictions.
“A broad-based contracts for difference program is the key to unlocking billions of dollars of investment in industrial decarbonization. Budget 2024 offers a promising plan to realize the program’s potential. Now the government must act swiftly over the coming year to bring an expanded program to life.”
Clean Prosperity Executive Director Michael Bernstein
“A broad-based contracts for difference program is the key to unlocking billions of dollars of investment in industrial decarbonization,” said Clean Prosperity Executive Director Michael Bernstein. “Budget 2024 offers a promising plan to realize the program’s potential. Now the government must act swiftly over the coming year to bring an expanded program to life.”
The government has also pledged to continue funding contracts for difference beyond the initial $7 billion allocation announced last year, including by potentially backstopping liabilities associated with the program.
Without a broad-based program of contracts for difference accessible to emitters across the economy, Canada risks missing out on significant low-carbon investment and emissions reduction. Analysis by Clean Prosperity showed that a broad-based program could deliver 33 megatonnes of additional decarbonization by 2030.
Carbon contracts for difference act as an insurance policy on the value of carbon credits traded in provincial carbon markets. By guaranteeing credit values, contracts for difference give firms the confidence to make big investments in low-carbon projects.
The federal government and the Canada Growth Fund will need to work closely with provinces in expanding the carbon contracts for difference program and strengthening provincial carbon markets. Provinces manage most of Canada’s industrial carbon pricing systems, so effective collaboration will be key to building robust carbon markets.
