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What Does Canada’s New Prime Minister Mean for Environmental Spend?

On October 20th 2015, Canadians woke up with a new man at the helm. Justin Trudeau, the Liberal Prime Minister candidate, surprised many by winning in a landslide over the incumbent Prime Minister Stephen Harper from the Conservative Party. In addition to securing the PM seat, Liberals have secured the majority in the parliament, meaning that Trudeau will have a far better chance of implementing some of his promised changes to Canadian policy.

Among those changes are some that will directly affect environmental services spending. Firstly, Trudeau intends to raise deficits in order to boost infrastructure funding, some of which, he says, will be built with a “green” intent. As covered in our report, Market Overview: Environmental Services (North America), infrastructure spend drives environmental services work. In Canada’s case, we’re looking at $20 billion over 10 years pledged by the Liberal party for green infrastructure, along with $60 billion promised for classic infrastructure. Firms that combine engineering and environmental management capabilities will likely be in a great position to win some of these large contracts. Trudeau and his party also favor national reduction targets on GHGs, the Keystone XL pipeline, and issuing Green Bonds to fund clean energy projects. This is all in direct contrast to former PM Harper’s policies that saw environmental protections and considerations often take a back seat.

Of course, this could be bad news for Canada’s oil and gas industry, which is a substantial pillar of Canadian environmental spend in its own right. That industry accounted for nearly 40% of Canadian environmental protection spend in 2012, racking up a total close to CAD$2.2 billion. To put that into perspective, the mining industry accounted for the second highest total with environmental protection spend of just CAD$586 million.

Promises are plentiful and suitably ambitious at the beginning of any leadership term, so Verdantix will be monitoring how effectively the new Prime Minister accomplishes his goals. While all environmental services firms will be keeping a close watch on potential opportunities, this will be a critical test of investment strategies, as many firms have invested in newly added expertise though acquisitions or partnerships. For instance CH2M has invested in green infrastructure capabilities, ERM has bolstered its services with its acquisition of NRG, and AECOM merged with URS to grow both capabilities and scale.