New Fossil Subsidies, $6B for Skilled Trades, $13B for Climate Finance as Feds Release Spring Economic Statement

Buoyed by surging global oil prices, Finance Minister François-Philippe Champagne released a Spring Economic Update Tuesday that included two new fossil fuel subsidies, $6 billion for skills training, and a long-awaited pledge on international climate finance.

“We’re building big, we’re moving fast, and we’re just getting started,” the update states. In a “fragmented and unpredictable world” of interlocking crises and disrupted trade relationships, “we are acting decisively to protect our economic sovereignty, strengthen our strategic industries, and position Canada for long-term growth.”

So far, the document adds, “the economy is expected to continue growing, but the outlook is subject to heightened global uncertainty, including ongoing trade tensions and geopolitical risks.”

The update projects a $66.9-billion federal deficit, $11.5 billion lower than the one in Champagne’s November, 2025 budget. It allocates just over half of the savings to Red Seal trades training for 80,000 to 100,000 skilled workers by 2031. The training will create “paid, direct pathways for young Canadians to help build housing, major infrastructure, and defence capacity at speed and scale,” the update says.

Analysts said the update likely underestimates future revenue from a stronger economy and higher oil prices—a tactic that at least one opposition MP said has been standard practice for past governments.

“The government took the opportunity to stabilize the narrative around deficits… and then address some of the affordability measures that Canadians find particularly important,” Sahir Khan, executive vice-president of the University of Ottawa’s Institute of Fiscal Studies and Democracy, told CBC.

But since the update is based on private sector economic forecasts assembled in March, when the American/Israeli war on Iran was just getting under way, the financial projections were based on average benchmark oil prices of about US$80 per barrel for the year, far below today’s levels above $100. That could translate into a $60-billion windfall for federal coffers.

“I think there’s a lot of slack in the figures presented today, which means come the fall budget we are going to see much more room for this government to spend,” Khan said.

A Punt on Clean Electricity

But while it affirmed that “clean, affordable, dependable electricity is central to Canada’s long-term economic strength,” the Calgary-based Pembina Institute said the economic update lacked specifics on how the country will deliver on that goal.

“We were looking for the signals the clean energy and clean tech industries need to invest, but instead, action has been punted to future strategies and updates,” Executive Director Chris Severson-Baker said in a release.

“As the world grapples with the worst energy crisis in decades, countries around the world are rushing to the security, reliability, and affordability renewable energy sources now deliver,” he added. But “unfortunately, Canada is not yet leaning into our potential as a clean energy superpower. With national security and affordability top of mind for Canadians, we should be working to decouple our economy from volatile, inflationary oil and gas markets—not further entrench it.”

The section of the update on strengthening the electricity grid reiterated the government’s commitment to a nuclear energy strategy, backstopping what it sees as a “high-value-added industry” that supports “cutting-edge Canadian R&D, the diversification of Canada’s trade relationships, and bolstering Canada’s role as a middle power.” A day later, Energy and Natural Resources Minister Tim Hodgson pledged to help finance a “nuclear renaissance” with new power plants both at home and abroad, the Toronto Star reports.

In a release, Hodgson’s department said the strategy would support:

• Building new nuclear plants across Canada;

• Positioning Canada as a “global supplier and exporter of choice”;

• Expanding uranium production and “nuclear fuel opportunities”; and

• Developing new Canadian “innovations” in both nuclear fission and fusion. [Memo to Hodgson: On that nuclear fusion thing, we’ll bet you a glitzy dessert—Ed.]

A Pivot on Enhanced Oil Recovery

The update included two new fossil fuel subsidies—a tax credit for enhanced oil recovery (EOR) associated with carbon capture and storage (CCS) projects, and faster capital cost write-offs for liquefied natural gas (LNG) facilities that use “low-carbon” production technology.

The EOR provision formalizes a climate policy pivot that Ottawa committed to in its controversial memorandum of understanding (MOU) with Alberta last fall, The Canadian Press reports.

In the 2025 budget, the Liberals promised to not make enhanced oil recovery eligible for a tax credit for the development of carbon capture and storage systems.

But 10 days after the budget passed the House of Commons, the MOU extended the tax credit to include enhanced oil recovery projects that involve injecting captured carbon into depleted oil wells to increase their production. At the time, Liberal MP Patrick Weiler (L—West Vancouver—Sunshine Coast—Sea to Sky Country) said Carney “will have to answer” questions on why he reversed his earlier budget commitment.

The spring economic update lays out the criteria for accessing the tax credit in Alberta and other provinces where there are “sufficient regulations to ensure CO2 is permanently stored,” such as B.C. and Saskatchewan.

Ottawa projects the measure, which takes effect immediately, will generate $395 million in federal revenue over the next three years, CP says.

Green Party Leader Elizabeth May disputed the claim that the measure would create any revenue at all, calling the assertion “misleading.”

“I really did drill down on this quite a lot in our questioning to finance officials because there’s no way that an increased subsidy to oil and gas doesn’t cost Canadians taxpayers money,” May said.

Environmentalists see the extension of the tax credits to enhanced oil recovery as a direct subsidy of oil production. The industry persists in the claim that tax credits are not subsidies.

The accelerated capital cost allowance for “low-carbon” LNG production confirms a measure that was first laid out in the 2025 budget. It would allow LNG companies to claim capital costs against their taxes faster than would otherwise be the case, CP writes.

“This just means there’s more taxpayer dollars that are going to fund projects that are financially risky, that are not in the best interests of Canadians, that are really not going to do very much to build our nation’s economy up and stronger,” Richard Brooks, climate finance director at Stand.earth, told the news agency. “LNG is the fuel of the past, and what we need to be moving toward is becoming an electrostate, not more of a petrostate.”

In British Columbia, a group of Indigenous leaders, doctors, and environmental organizations said support for LNG in the economic update ignore economic trends that undermine the market for the fuel, misrepresent environmental impacts, sideline Indigenous rights, and free up billions in subsidies for long-term fossil fuel expansion.

“Ottawa’s failure to seize this moment, and its decision to double down on fossil fuels as the path to economic salvation, is deeply irresponsible,” said marine scientist Tracey Saxby, executive director of Squamish, B.C.-based My Sea to Sky.

“This ongoing LNG obsession runs directly counter to climate science and Canada’s stated climate commitments,” she added. “At a time when global energy systems are rapidly shifting, this approach risks locking in higher emissions, undermining marine and coastal ecosystems, and leaving Canada behind in the renewable energy transition already under way.”

“Positioning LNG expansion as part of Canada’s climate strategy while cheerleading for projects that lack Free, Prior, and Informed Consent exposes a fundamental credibility gap on both fronts,” said Gwii Lok’im Gibuu (Jesse Stoeppler), Gitxsan Wilp Spookwx, co-executive director of the Skeena Water Conservation Coalition. “From excluding most emissions in its ‘low-carbon’ LNG definition to acknowledging increased emissions and environmental degradation, the facts contradict Ottawa’s spin.”

‘Significant Support’ for Trades Apprenticeships

The government’s new $6-billion skills development initiative, titled Team Canada Strong, is meant to address a long-standing shortage of skilled tradespeople that is expected to deepen as older workers retire, the Globe and Mail reports.

“This is a smart investment in the future of our country,” Canadian Labour Congress President Bea Bruske said in a statement. “At the same time, we need to see the government invest in building physical and social infrastructure so these skilled workers can be put to work in good, unionized jobs.”

“Think of it as a human resources strategy to go alongside the major projects capital investment strategy,” Marc Desormeaux, vice-president of policy at the Business Council of Canada, told the Globe. “A major challenge for our economy over the long run, particularly to our building ambitions, is to get the right people with the right skills able to fill labour shortages.”

The plan includes:

• $2 billion over five years, including wage subsidies of $10,000 per employee, to help workers aged 15 to 30 get entry-level trades experience;

• $3.4 billion over five years to help apprentices complete their training.

The federal government estimates its plans for new housing, infrastructure, and large resource projects will require 1.4 million additional trades positions by 2033, a far cry from what the economic update funding will support.

Deloitte economist Trevin Stratton called the announcement “definitely a step in the right direction”. But he told the Toronto Star the government has “very ambitious building targets and objectives, and so more will probably be needed for us to fully meet those.” A report last October, which he co-authored, warned that Canada’s economy could look like Alberta and B.C. in the early 2000s when a “perfect storm” of energy projects created “bidding wars for electricians, welders, crane operators, and concrete crews, schedule delays, and spiralling costs.”

When that happened, the report added, “it was not a shortage of money or projects holding back activity, but the lack of available workers.”

Efficiency Canada cited Team Canada Strong as one of the highlights of the economic update, along with a permanent capital gains tax exemption for employee ownership and several other measures. Social Capital Partners Chair Jon Shell praised the employee ownership announcement as “huge news”, noting that the provision is now a permanent part of Canada’s tax code.

“The exponential growth of employee ownership in both the UK and the U.S. has been driven by policies exactly like the one the Canadian government just announced,” he wrote on LinkedIn. “It’s going to be a tonne of fun to watch the same thing happen here.”

$13B Over Five Years for Climate Finance

The economic update also earned praise for pledging $13 billion over five years for international climate finance.

“The government’s move to scale up and reorient $13 billion in international climate finance is… welcome, helping emerging economies cut emissions while opening markets for Canadian clean technologies and crowding in private investment,” Canadian Climate Institute President Rick Smith said in a release.

“There haven’t been many wins for climate action lately, but Canada’s renewed and increased climate finance commitment is one worth celebrating,” agreed Climate Action Network Canada Executive Director Caroline Brouillette. “Amid other countries’ devastating cuts and delays, this move illustrates what Prime Minister Carney meant by a principled and pragmatic approach to international relations. It shows that Canada remains committed to its Paris Agreement obligation to provide climate finance, and reinforces that international cooperation is in Canada’s interest.”