06/15/2017 12:08 EDT | Updated 06/15/2017 12:08 EDT

Manitoba And Saskatchewan May Miss Millions In Federal Climate Cash

They've been given until the end of December to sign on to the national climate change agreement or lose out on millions.

OTTAWA — Manitoba and Saskatchewan have been given until the end of December to sign on to the national climate change agreement or lose out on millions in federal funding to help cut emissions.

Environment Minister Catherine McKenna will unveil details today of the promised $2-billion Low Carbon Economy Fund, to be spent in two streams over the next five years.

The first is a $600-million pool for industry and public sector projects, doled out on the basis of project merit.

The second is a $1.4-billion per capita fund for provinces and territories that have signed on to the Pan Canadian Framework on Clean Growth and Climate Change.

catherine mckennaEnvironment Minister Catherine McKenna.

Each eligible province will receive a base of $30 million plus a per-capita share of up to $1 billion.

Manitoba and Saskatchewan, the only two provinces that have not signed on, will only get their share of the funding if they sign up by the end of the year.

If not, their shares — about $66 million for Manitoba and $62 million for Saskatchewan — will be transferred to the merit-based project pool. Industries or public sector organizations in those two provinces can apply for money from that fund.

The merit fund will have a broad range of eligible projects in areas such as green energy production, forestry, agriculture and lowering emissions.

Part of race to meet Paris climate targets

The fund was first created in the 2016 federal budget to help provinces fund initiatives to significantly cut greenhouse gases, part of Canada's race to meet its targets under the Paris climate change accord.

Canada must cut almost 200 million tonnes of emissions by 2030 to meet its target of reducing greenhouse gases to 30 per cent below 2005 levels. That's the equivalent of taking more than twice as many cars off Canada's roads as are even in the country.

The fund was initially to be a two-year program, with the $2 billion equally divided between 2017-18 and 2018-19, until it became clear early in the negotiations that the provinces and territories needed more time to find the best uses for the money.

The money was reprofiled over five years in this year's budget, starting with $250 million in 2017-18. There will be $500 million available in each of the next three years and the final $250 million in 2021-22.

brad wall saskatchewanSaskatchewan Premier Brad Wall is threatening to sue the government if it tries to impose a carbon tax. (Photo: Bloomberg via Getty Images)

The federal government wants the funds spent on projects that significantly reduce emissions, prioritizing those that reduce the most emissions most cheaply. Initiatives must also be in addition to existing projects or those that are already planned.

A spokeswoman for McKenna told The Canadian Press recently the fund would only be available to "support serious action on climate change for those who have committed to the Pan Canadian Framework.''

Thus far, the promise of a piece of the $2-billion pie has not been enough to lure either Saskatchewan or Manitoba to sign the framework.

Saskatchewan Premier Brad Wall is adamant he will never sign the framework as long as it requires him to introduce a price on carbon. He is threatening to sue Ottawa if it tries to impose a carbon tax on the province.

brian pallisterManitoba chose not to sign the climate framework in attempt to leverage more money for health care. (Photo: CP)

As part of the framework, Ottawa requires every province to implement a minimum $10 per tonne price on carbon by the spring of 2018, or Ottawa will do it for them. The price has to rise by $10 per tonne per year until it hits $50 per tonne by 2022.

Ottawa pledges any revenue raised by a carbon tax directly will stay within the province it came from, although only those with their own carbon price program will get to decide how to spend it.

The federal government will decide how to allocate the money raised by carbon taxes it imposes, and is looking at giving at least some of it back in direct grants to individual families and small businesses.

Manitoba chose not to sign the framework in an attempt to leverage more money for health care. It is less opposed to a price on carbon, but sources tell The Canadian Press the province may prefer a federally imposed carbon tax to force Ottawa to wear the political fallout.

Manitoba officials and Ottawa officials continue to negotiate possible terms to have Manitoba join the agreement.

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