Up-front multi-year funding

• Clean technologies and energy efficiencies enhance economic performance
• Canada’s natural resources are sustainable

The GMF is a revolving fund administered by the Federation of Canadian Municipalities (FCM). It provides municipalities and municipal partners with grants, loans, and loan guarantees to encourage innovative environmental municipal projects. The Government of Canada provided the FCM with a total of $1,625 million^{Footnote 1} for this initiative through a series of budget decisions beginning in 2000 through to 2019. Each investment was provided as an up-front multi-year payment, with a portion of funds provided as concessional for granting and operating expenses. FCM is responsible for maintaining a nominal value of at least $1,012.5 million for the GMF endowment.

The GMF was established to enhance Canadians’ quality of life by improving air, water, and soil quality, and protecting the climate, while delivering economic and social benefits to communities. Eligible projects may take the form of plans, feasibility studies, pilot projects, and capital projects. The GMF Core Offer supports projects in five sectors: brownfields, energy, transportation, waste and water. The Signature Initiatives Offer supports highly innovative projects that cross sectors or do not fit those categories. The Budget 2019 investment targeted energy efficiency through three new funding streams to increase efficiency and reduce greenhouse gas emissions from buildings: Sustainable Affordable Housing; Community Efficiency Financing; and Community Buildings Retrofit. The GMF also houses the National Office for the Low Carbon Cities Canada (LC3) Network. As the final part of Budget 2019 investment, FCM provided grants to these seven climate centres in major cities across Canada, for each centre to establish its own endowment from a total envelope of $177 million.

The Funding Agreement allows GMF to provide grants and loans for municipal projects totalling between $62 and $182 million in a given year, with additional grant funds available for the first five years of the new funding streams under the Budget 2019 investment. The amount of funding available for any one project is directly related to the environmental benefits or innovation of the project, while taking into account economic and social considerations. For the carrying-out of studies, assessments, sustainable community plans, and pilot projects: grants up to eighty percent (80%) of Eligible Project Costs are available. For the execution of any other Eligible Projects where environmental, economic or social benefits are deemed to be exceptional, as defined by the FCM Board of Directors on the recommendation of the Council: grants, loans (at fixed interest rates no lower than the Government of Canada bond rate for equivalent terms up to thirty (30) years minus two percent (2%) and/or loan guarantees to an Eligible Recipient in respect of an Eligible Project may, in combination, be up to (80%) of Eligible Project Costs. For greater certainty, for the purposes of these exceptional circumstances, the value of the grants shall not exceed fifty percent (50%) of Eligible Project Costs.

As stipulated in the GMF Funding Agreement between the FCM and the Government of Canada, the FCM has created two advisory bodies: the GMF Advisory Council and the Peer Review Committee. The GMF Council’s role is to assist the FCM Board of Directors, the decision-making body for the GMF, in approving projects proposed by municipalities. The eighteen member GMF Council includes six federal members: two from Environment and Climate Change Canada (ECCC), two from Natural Resources Canada (NRCan), one from Infrastructure Canada (INFC) and one from Canada Mortgage and Housing Corporation (CMHC). Members of the Peer Review Committee, up to ten of whom are NRCan representatives, provide financial and technical reviews of all project applications that are used to inform Council recommendations. All federal members are appointed by the FCM Board of Directors based on recommendations from the responsible Minister.

The evaluation of the Green Municipal Fund (GMF) Program was approved in March 2024.

The evaluation concluded that the GMF program remains relevant and operates both effectively and efficiently. It assists municipalities in achieving climate goals while aligning with federal priorities. The GMF demonstrates flexibility and adaptability, though areas for improvement include better measurement of economic and social benefits and enhanced communication between federal partners. The program's financial management is robust, and it has successfully implemented its planned activities. With demonstrated expertise in environmental projects, the GMF is also expanding to include climate adaptation initiatives. Overall, the GMF has been effective in achieving its objectives, leveraging significant private capital and collecting comprehensive environmental data.

A total of two recommendations were made.

Since its inception, FCM has completed more than 1,262 plans, studies and pilots, and 185 capital projects. This has resulted in 990,000 gigajoules of energy saved per year, 2.9 megatonnes of GHG emissions avoided, in addition to economic benefits such as contributing to the national GDP, employment, and social benefits like improved quality of life and reduced poverty.

The GMF Annual Report 2022-23 was published in Fall 2023 and is currently available on the FCM website. The 2023-24 information above is from the draft version of the 2023-24 Annual Report with the final version to be delivered to NRCan by August 31, 2024, and published in Fall 2024.