OTTAWA - Green groups were singing the blues after the federal budget killed a clean-car rebate just one year after it was born to much fanfare.

The program that offered up to $2,000 rebates for fuel-efficient vehicles will not be renewed beyond its current two-year shelf life and will not apply beyond 2008 model vehicles.

Finance Minister Jim Flaherty's budget speech did not include the words "climate change'' but it did earmark hundreds of millions for an array of green initiatives like public transit and energy research.

And one week after British Columbia instituted a carbon tax the federal government made it clear that it would be the provinces that will take the lead on putting a price on pollution.

Voter preoccupation with the environment propelled the Conservatives into action on a variety of fronts last year. Polls have suggested the environment was dropping as a priority for Canadians while concern over the economy mounted. Those shifting priorities are reflected in the budget, environmentalist say.

"This is not an environmental budget,'' said Andrew Van Iterson of the Green Budget Coalition, a collection of environmental groups.

"They've missed a great opportunity to be a global environmental leader. Canadians want to be a leader -- and the government's not catching up.''

He compared the budget unfavourably to the one tabled last week in British Columbia.

Respected environmental economists like Simon Fraser University's Mark Jaccard argue that carbon-pricing is the most effective way to curb greenhouse gas emissions. Big business, represented by the Canadian Council of Chief Executives, has endorsed the idea.

But the government rejects Jaccard's assertion that a carbon tax would have a microscopic impact on the economy, and that it would raise revenues that could allow tax cuts or other spending.

The budget does promise:

  • $500 million for public transit, to be placed in a trust fund and distributed to provinces and territories on a per-capita basis.
  • It will be used for projects including Vancouver's Evergreen Light Rapid Transit System, the re-establishment of a rail link between Toronto's Union Station and the City of Peterborough, and rapid transit routes to Montreal airports.
  • $250 million for automotive research aimed at developing more fuel-efficient cars.
  • $300 million to help Atomic Energy of Canada Limited develop its next-generation Advanced Candu nuclear reactor, and maintain safety at Ontario's Chalk River facility.
  • $21 million for law-enforcement officers to crack down on pollution in national parks.
  • $240 million to help Saskatchewan build a carbon-capture system for its coal plants, and $5 million to help Nova Scotia research the feasibility of carbon capture there.

"Canadians demand and expect that action is being taken to reduce harmful emissions and to crack down on polluters,'' Flaherty said.

"We are taking action to fulfil our commitments to a cleaner, healthier environment.''

But Aaron Freeman of Environmental Defence questioned the efficacy of many of the government's choices.

"A lot of these measures are industry-subsidy programs that don't have an environmental impact,'' said Aaron Freeman of Environmental Defence.

"We are going to have a price on carbon sooner or later. . . The longer we drag our feet the farther behind we'll fall.''

The government is promising to introduce industrial targets this spring for large emitters, and says those targets will help Canada reduce its emissions by 20 per cent from 2006 levels within 12 years.

Companies that pollute beyond their acceptable levels will be slapped with a fine -- which, the government will argue, does indeed put a price on carbon.

Tuesday's budget also earmarked $66 million to help implement the industrial-pollution regulations, with computerized reporting and tracking systems for companies to use.

As for the clean-car rebate, consumers will no longer be eligible to collect cash after March 31, 2009.

Finance Department officials said there had never been any plans to extend the program beyond the two-year window outlined in last year's budget.

The government will keep its gas-guzzler tax -- which only applies to a few extremely high-polluting vehicles.

Van Iterson wasn't impressed by the Tories' track record.

"They showed some potential last year to use fiscal instruments to realign our economy to be greener and cleaner,'' he said.

"They haven't built upon that this year in any substantive manner.''