Federal Budget 2026 sets out a transformational path towards electrifying Canada’s economy through the commitment of $52 billion to clean electricity over the next five years. Green Communities Canada (GCC), alongside many partners through the Green Budget Coalition (GBC), welcomes this investment as it represents this government’s signature climate investment.
GCC’s Response:
This investment in electrifying Canada is complemented by the recently announced National Heat Pump Rebate. However, that rebate program does not include measures to reduce energy demand or improve resilience through whole-of-home retrofitting. This is a crucial gap in the rebate program that leaves opportunities to increase affordability and reduce peak demand off the table. Budget 2026 also fails to mention dedicated funds for Active Transportation (AT), Electric School Buses (ESBs), and adaptation and resilience measures through community-based green infrastructure.
“Budget 2026 makes bold investments to build a better country for Canadians. We applaud the investments in clean energy and affordable housing. And yet we are concerned by the omission of dedicated funding for sustainable mobility, whole-of-home retrofits, and community-based restoration, adaptation, and resilience projects. These are not big-ticket items in a budget this ambitious, but the return on investment is huge and the need for these investments is urgent and crucial.”
Brianna Salmon, Executive Director of Green Communities Canada.
DETAILS
Home Energy Solutions
GCC is pleased to see investment to support the transition towards more efficient homes through $2 billion to support up to 820,000 electric heat pumps over the next eight years. Budget 2026 also commits to $107.1 million over three years to tackle deep retrofits in commercial, institutional, and mid- or high-rise multi-unit buildings. These investments chart a course towards important reductions in fossil fuel emissions from Canada’s building stock.
However, the current commitments demonstrate a limited focus on fuel switching from oil and gas (and electric baseboard heating) to electric heat pumps. What’s needed to improve resilience, affordability, and reduce energy demand is a focus on building envelope work and verification with independent energy advisors. A more comprehensive approach to retrofitting Canada’s homes has the potential to create a made-in-Canada supply chain and retrofit economy supporting over 300,000 good Canadian jobs. The current limited focus will result in significantly less progress towards cutting energy consumption, creating green jobs, and reducing energy bills.
“Many Canadians heat their homes using fossil fuels. Without reducing the demand for household energy, through proven strategies to better insulate and weatherproof homes, many Canadians will not realize savings on their home energy bills nor will they be able to invest in homes that are more resilient to our changing climate.”
Jared Kolb, Managing Director of Green Communities Canada.
Recommendations
- Include EnerGuide Energy Advisors and home energy assessments in the process, and strengthen incentives for deep energy retrofits to reduce electricity demand and fraud risk.
- Provide funding and training for the HVAC industry and Energy Advisors to support properly sized heat pumps.
Sustainable Mobility
Active Transportation Strategy and Fund
The current National Active Transportation Strategy and Fund ends in December 2026. GCC worked with the Canada Active Transportation Alliance (CATA) – including Vélo Canada Bikes, CAA, and the Heart & Stroke Foundation – to advocate for the creation of this strategy and fund. We are deeply concerned at the lack of any mention of earmarked funding to continue this critical area of investment for communities and public health across Canada. We’ve continued to work alongside CATA, as well as the Green Budget Coalition (GBC), to renew this funding.
Recommendation:
- Commit to a renewed National Active Transportation Strategy with $500 million in funding over 4 years.
Electric School Buses
Budget 2026 makes a generational investment in boosting Canada’s supply of clean electricity: the time is now to extend those benefits to Canadian children through the transition to electric school buses.
GCC awaits details about dedicated funding for electric school buses within the Canada Public Transit Fund (CPTF). In our pre-budget submission and Electric School Bus Report Card, we asked the Federal government to allocate $250 million per year for incentives that would level the cost of ESBs with diesel buses.
Electric school buses cost 1.5 to 2.5 times more than diesel buses, and while there are long-term fuel and maintenance savings, the up-front costs are unlikely to reach price parity before 2040. Reliable CPTF funding is vital to speed up the transition.
Recommendation:
- Allocate $250 million per year for incentives that would level the cost of electric school buses with diesel buses.
Green Infrastructure Adaptation and Restoration
The Federal government’s Force of Nature strategy, representing a commitment to protecting 30 per cent of Canada’s land and waters by 2030, is a significant investment in nature. However, we are concerned that Budget 2026 is silent on adaptation and restoration efforts to assist communities struggling with environmental degradation, wildfires, flooding, and lack of urban canopy cover.
Our green infrastructure work at GCC is specifically focused on restoration in the communities that need it most. Budget 2026 does not provide details about how the Adaptation Fund, National Adaptation Strategy, or other initiatives may provide support for nature-based solutions and resilience projects in the urban and Indigenous communities that need it most.
As the Insurance Bureau of Canada commented in August, the country faces a more than $65 billion stormwater and wastewater infrastructure deficit. The Green Budget Coalition has provided specific recommendations on Page 30 here. The Federal government must set out concrete goals to address the highest climate risks, with real funding and monitoring to ensure success.
Recommendation:
- Update the National Adaptation Strategy with transformational investment to prepare Canadians for increasingly damaging weather events with clear goals and progress reports to address the most significant climate risks.