Canada Weighs Greater Municipal Role in Delivering Climate and Infrastructure Investments

Canada is exploring a larger role for municipalities in delivering climate and infrastructure funding, as local governments argue they can move projects faster and more effectively than new federal programs.

According to documents obtained through an Access to Information request, the Federation of Canadian Municipalities (FCM) has urged Ottawa to channel part of a new $6 billion climate and infrastructure funding stream through its existing Green Municipal Fund.

The proposal is linked to the federal government’s $51 billion Build Communities Strong Fund announced in Budget 2025, which includes support for building retrofits, climate adaptation projects, clean energy systems, and community infrastructure.

FCM argues that directing just $400 million through the Green Municipal Fund could enable more than 70 high-impact projects to be approved within three years, with funding decisions potentially beginning within six months due to existing delivery mechanisms.

Established in 2000, the fund has supported more than 2,700 municipal projects nationwide and helped avoid nearly three million tonnes of greenhouse gas emissions through investments in energy efficiency, electrification, and climate resilience.

Municipal leaders say faster access to funding is increasingly important as communities face mounting climate-related challenges. Local governments are responsible for much of Canada’s public infrastructure and are often on the front lines of dealing with flooding, wildfires, extreme heat, and other climate impacts.

At the same time, cities argue they face growing financial pressures while receiving only a small share of overall tax revenues. Many large-scale climate projects, including building retrofits and resilience upgrades, continue to face delays due to lengthy funding application processes.

Climate advocates say empowering municipalities could accelerate Canada’s energy transition and adaptation efforts, particularly as some provinces scale back climate commitments. As Ottawa evaluates funding delivery options, the debate highlights a broader question: how best to ensure climate investments reach communities quickly enough to address both infrastructure needs and escalating climate risks.

Municipal delivery of climate infrastructure changes procurement, disclosure and community-partnership positioning for corporates operating locally, and it typically accelerates project pipeline in ways that federal-only funding rarely does. Our impact-assessment and ESG-strategy teams help clients evaluate what municipal-level frameworks mean for their infrastructure strategy and disclosure.