August 28, 2006

CCA urges incentives to upgrade equipment fleets

PATRICIA WILLIAMS

staff writer

TORONTO

The Canadian Construction Association (CCA) has called for financial incentives to help firms replace outdated equipment fleets — part of its proposed made-in-Canada climate change and air pollution reduction strategy to be published this fall.

In its pre-budget submission to the Commons standing committee on finance, the association said the construction sector “has made great strides” in improving its record when it comes to greenhouse gas emissions.

Data released by the Canadian Industrial Energy End-use Data and Analysis Centre shows the industry’s emissions of greenhouse gases decreased by 14 per cent between 1990 and 2004, despite significant economic growth during that period.

Furthermore, the building and design sectors are working together to reduce energy consumption and greenhouse gas emissions from the built environment as a result of such programs as Leadership in Energy and Environmental Design, CCA said.

“However, there is further progress that could, and should, be made,” said the association, which represents some 20,000 enterprises across the country.

Jeff Morrison

“In the case of the construction industry, the largest source of such emissions is from use of off-road heavy equipment vehicles and equipment,” said Jeff Morrison, CCA’s director of Government Relations and Public Affairs.

This year, Environment Canada introduced regulations that have an impact on the 2007 model engines, requiring new diesel engines sold in Canada to meet more stringent emission standards.

The standards virtually eliminate particulate matter and nitrous oxide, and will result in significant reductions in other emissions, CCA said.

“It is therefore in the federal government’s interest for companies to replace as many off-road vehicles and equipment as possible with newer models,” CCA said. “However, because most construction firms are small businesses, with little capital available for larger expensive acquisitions, the turnover rate for new equipment is not very high.

“A proper financial incentive can assist businesses to replace their outdated fleets with more energy-efficient, less-polluting models.”

CCA believes that “the most effective and administratively efficient” incentive for companies to replace their fleets is through an accelerated capital cost allowance provision.

It recommended that the allowance be introduced for all equipment and off-road vehicles that meet Environment Canada’s emission-control standards for post-2007 model years.

The Canadian Trucking Alliance has proposed that the accelerated capital cost allowance rate be equalized with American rates. Equipment and materials typically are replaced every three to five years in the U.S. compared to seven to 10 years in Canada.

CCA supports that proposal, which it says has the additional advantage of providing a more competitive tax framework for Canadian companies.

“An expedited equipment and vehicle replacement rate will allow businesses to become more productive and innovative by allowing them quicker access to the most up-to-date technologies.”

The accelerated capital cost allowance recommendation is part of a broader package of climate change and air pollution reduction measures being drafted by CCA in conjunction with sister associations in the architectural and engineering sectors.

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