Canada’s federal budget for 2022-23, released last month, has no major new transportation infrastructure initiatives, but it does include first-time funding and incentives for projects to stem climate change impacts.

The budget offers $603.2 million in spending over five years for highways, railways and ports and boosts provincial spending for transportation and water projects. The government also will extend the $26-billion Investing in Canada Infrastructure Program’s construction start deadline to 2033, from 2027. The extension is linked to pandemic-related schedule disruptions since 2020, said Nadia Todorova, executive director of the Residential and Civil Construction Alliance of Ontario, a labor-management group. “It is more time to propose projects, and that is welcome,” she said.

But also included in this year's federal budget is $2.1 billion in various tax credits over five years to cover up to 60% of the costs for equipment, transportation and storage in carbon-capture projects, although the level is below what the Canadian Association of Petroleum Producers sought. These credits will be cut in half starting in 2031 to spur earlier investment.

Colena Der, a partner at Osler, Hoskin & Harcourt and a carbon-capture project expert, said the fact that the tax credit is refundable means it could have more impact on potential projects. “I know many projects that are under consideration where this credit was one funding avenue that project proponents were looking at,” she said.

The government also will spend $3 billion through 2030, plus more in tax credits, to boost domestic production of lithium, copper and other strategic minerals to propel Canada’s electric vehicle supply chain. Funding includes grants for mineral surveying, processing and recycling as well as tax credits for mine development and subsidies for infrastructure, although it does not reduce regulatory or environmental oversight.

Meanwhile, Ontario moved forward on a major transit project, awarding the ONxpress consortium a contract to design, build, operate and maintain an electric commuter rail system in greater Toronto. The first phase is valued at $1.26 billion. 

Contractors Aecon and FCC Construcción, along with Deutsche Bahn International Operations GmbH and Alstom, will develop the GO Transit network, to include 127 miles of new track, 427 miles of electrified existing track, upgrades to Union Station platforms and tracks, new and existing bridge construction, and other related projects.

Work is set to begin next year, with the new system to come online in 2025 or 2026.