Toronto's Landmark $2 Billion Carbon Budget to Combat Climate Change

In a groundbreaking move, Toronto City Council has adopted its first-ever annual budget to include a carbon budget process, marking a significant step forward in the city’s fight against climate change. The new budget allocates nearly C$2 billion to fund 31 new or enhanced climate actions, which are projected to reduce carbon emissions by 244,615 tonnes annually once fully implemented. This innovative approach integrates climate considerations into financial planning, ensuring that the city’s spending aligns with its ambitious climate goals.

A New Era of Climate-Focused Budgeting.

The carbon budget process, a first for Toronto, represents a transformative shift in how the city approaches climate action. By embedding carbon reduction targets into its financial planning, Toronto is taking a proactive stance in addressing the climate crisis. The process generated 112 emission reduction proposals from 16 city entities, with the 31 most impactful initiatives selected for inclusion in the 2025 budget.

Bryan Purcell, Vice President of Policy and Programs at The Atmospheric Fund (TAF), praised the new approach, calling it a “significant improvement to Toronto’s budgeting and climate action planning.” He noted that the process has already driven increased investment in climate action while improving transparency around which projects are funded—or overlooked.

Key Investments in Climate Action

The $2 billion in new climate investments spans a wide range of initiatives designed to reduce emissions, improve energy efficiency, and promote sustainable living. Some of the most notable allocations include:

·  $636 million over two years for electric buses and charging systems: This investment will help transition Toronto’s public transit system to zero-emission vehicles, significantly reducing the city’s carbon footprint.

· $239 million for net-zero-ready shelter space: Funds will be used to acquire and renovate new shelter spaces, ensuring they meet high energy efficiency standards.

· $34 million over three years for deep energy retrofits in public housing: This initiative will improve energy efficiency in public housing units, reducing energy costs and emissions.

· $30 million over four years for home energy loans: Homeowners will have access to loans to finance energy-efficient upgrades, making sustainable living more accessible.

While these investments represent a major step forward, Purcell pointed out that some areas still fall short. For example, the $8 million allocated for charging infrastructure was less than half of what city staff had recommended, highlighting the need for continued advocacy and investment in key areas.

A Work in Progress.

The carbon budget process is not without its challenges. Former city councillor Mike Layton, now Vice President of Philanthropy, Corporate, and Community Partners at Second Harvest, reflected on the long journey to this milestone. “I remember when we first proposed this approach many budgets ago,” Layton wrote. “It had a couple of failed starts—at one point, rehabilitating the Gardiner Expressway was considered as a project advancing our climate initiative. But I’m happy to see Toronto start to genuinely connect carbon emissions and budgeting. It’s still a work in progress, but some progress is being made.”

Layton’s comments underscore the complexity of integrating climate considerations into municipal budgeting. While the carbon budget process represents a significant leap forward, it is not a guarantee of sufficient investment. Continued advocacy and public support will be essential to ensure that climate action remains a top priority for the city.

The Bigger Picture: Toronto’s Climate Leadership.

Toronto’s adoption of a carbon budget process places it at the forefront of municipal climate action in Canada. By aligning financial decisions with emission reduction targets, the city is setting a powerful example for other municipalities to follow. This approach not only addresses the urgent need to reduce carbon emissions but also demonstrates how local governments can play a critical role in combating climate change.

The $2 billion investment in climate programs is a testament to Toronto’s commitment to sustainability. However, as Purcell and Layton both noted, there is still much work to be done. The carbon budget process is a promising start, but it will require ongoing refinement and increased funding to achieve its full potential.

Looking Ahead.

As Toronto implements its first carbon budget, the focus will shift to ensuring that the funded projects deliver on their promises. The city will need to monitor progress closely, making adjustments as needed to stay on track with its emission reduction targets. Public engagement will also be crucial, as residents play a key role in supporting and advocating for climate action.

The success of Toronto’s carbon budget process could inspire other cities to adopt similar approaches, amplifying the impact of local climate initiatives across the country. By taking bold action today, Toronto is paving the way for a more sustainable and resilient future.

Conclusion.

Toronto’s first-ever carbon budget represents a historic step forward in the city’s climate action efforts. With $2 billion allocated to 31 new or enhanced initiatives, the city is making significant progress toward its emission reduction goals. While challenges remain, the carbon budget process demonstrates the power of integrating climate considerations into financial planning. As Toronto continues to refine this approach, it sets a powerful example for other municipalities and reinforces the critical role of local governments in addressing the global climate crisis.

This story was originally reported by The Atmospheric Fund (TAF) and highlights Toronto’s innovative approach to climate-focused budgeting.