Summary:
The federal government has cut a $1 billion green fund following a report by Auditor General Karen Hogan, which revealed significant lapses in Sustainable Development Technology Canada’s (SDTC) management of public funds. SDTC violated conflict of interest policies in 90 instances, awarding millions to ineligible projects, and overstating the environmental benefits of many initiatives.
OTTAWA – The federal government has scrapped a $1 billion green fund in response to a scathing report by Canada’s Auditor General, Karen Hogan, which unveiled gross mismanagement within Sustainable Development Technology Canada (SDTC). The audit, released Tuesday, highlighted repeated violations of conflict-of-interest policies, overstatement of environmental benefits, and funding granted to ineligible projects.
The audit found that SDTC, a federal foundation created in 2001 to support small and medium-sized cleantech businesses, breached its conflict-of-interest rules 90 times, granting $59 million to 10 ineligible projects. Auditor General Hogan also found that the environmental impact of several projects was overstated, with 12 out of 18 completed projects delivering only half the projected reduction in greenhouse gas emissions.
The foundation, which had entered a five-year, $1-billion agreement with the Department of Innovation, Science and Economic Development (ISED) in 2021, faced additional scrutiny after whistleblower complaints about preferential treatment for certain entrepreneurs. The government had frozen SDTC’s funding in late 2023 while the audit was underway.
A Shift in Management
In light of the report’s findings, François-Philippe Champagne, Minister of Innovation, Science and Industry, announced that SDTC’s funds would be transferred to the National Research Council of Canada (NRC). The NRC, a government organization with stricter oversight, will now manage the public funding allocated to support Canada’s cleantech sector. SDTC employees will be offered roles at the NRC as part of the transition.
“We welcome the Auditor General’s findings and are committed to implementing stricter oversight to ensure public funds are managed with accountability, transparency, and integrity,” Champagne stated.
Impact on Canada’s Cleantech Sector
Since its inception, SDTC has approved 226 projects worth a total of $836 million, aiming to support the development of green technologies across the country. However, the Auditor General’s analysis of a sample of these projects revealed that $51 million had been allocated to eight projects that did not meet the criteria of developing or demonstrating new technologies. Furthermore, several projects were found to have exaggerated their projected environmental benefits.
The foundation defended its practices, with spokesperson Janemary Banigan stating that SDTC has since implemented measures to improve its management of public funds and comply with conflict-of-interest policies.
Despite these assurances, the federal government’s decision to dissolve the fund under SDTC’s management marks a turning point in how Canada’s cleantech sector will receive future funding. The move is expected to restore public trust, but concerns remain over the long-term consequences for green innovation in the country.
Industry stakeholders have stressed that while mismanagement must be addressed, continued government support for cleantech is crucial for Canada to remain competitive in the fight against climate change.