Budget 2026 advances clean electricity but misses adaptation, climate institute says

OTTAWA · The federal government's Budget 2026 makes significant investments in clean electricity and electrification but misses a key opportunity to fund climate adaptation, according to the Canadian Climate Institute. The budget commits $50 billion to double Canada's electricity generation and build necessary transmission lines. It also expands eligibility for the Clean Electricity Investment Tax Credit to include high-voltage intra-provincial electricity transmission. Executive Vice President Dale Beugin said the budget recognizes that climate progress and economic goals can be mutually reinforcing.

"While Budget 2026 is rooted in economic objectives, it recognizes that climate progress and economic goals can and should be mutually reinforcing," said Beugin. "The budget lays out actions and public dollars for clean electricity and electrification." He said the budget establishes a framework for building a clean economy, but the government's next steps must be to finalize policy details and track progress in concrete terms. The budget reiterates the government's commitment to net zero and defines a new framework for delivering on that goal.

Beugin said tracking progress will be critical. The framework includes building clean electricity, shifting to electricity, transforming energy systems to waste less energy, and innovating new technologies. This aligns with new work the Climate Institute is launching soon on tracking progress toward clean growth. "The next challenge will be tracking progress and ensuring the scale and pace of policy is proportional to the change necessary to deliver on net zero," Beugin said.

READ MORE: China's solar capacity claims fail to account for unused power, analyst says

READ MORE: LNG Canada greenlights $33 billion expansion despite ongoing flaring issues

Alongside the budget, the government published an updated National Electricity Strategy. The $50 billion commitment builds on previous announcements. The budget also opens the door to developing new financial mechanisms to share costs and risks with interested provinces and territories. Beugin said this reinforces other policy approaches that can help scale electricity systems while moderating rate pressure. The budget also proposes investments in deploying heat pumps, expanding charging networks for electric vehicles, and adopting energy-saving technologies at industrial facilities.

Beugin said these investments can help unlock decarbonization while keeping energy costs affordable for consumers. The budget also makes steps forward on sustainable finance to catalyze private investment. It commits to using the Made-in-Canada sustainable investment guidelines for a new federal Sustainable Bond Framework. The budget highlights the institute's upcoming Sustainable Finance Conference in February 2027.

Beugin said Budget 2026 misses an opportunity to broadly advance climate preparedness. He referenced a recent landmark federal report on climate impacts that said Canada can expect increasingly severe extreme weather events. "Escalating damages can only be lessened through targeted investments and policy changes in adaptation," Beugin said. "As our research has consistently shown, funding for adaptation can more than pay for itself over time and help protect communities across the country." He noted the budget does not mention the National Adaptation Strategy.

With files from Canadian Climate Institute