New Canadian Transit Fund Aligns Housing & Mobility, Retires Flawed Hydrogen Push – CleanTechnica

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Canada has taken a major step forward in its approach to public transit funding. The new Canada Public Transit Fund, announced last year and going into effect in 2026, replaces the Zero Emission Transit Fund with a permanent, predictable framework that will shape investments for decades. Instead of short-term envelopes that expire, the government has committed to about $30 billion over the first 10 years and $3 billion annually on an ongoing basis starting in 2026. That scale and predictability allow agencies to plan with confidence rather than wondering if the money will dry up before their fleet renewal schedules come into alignment.

The problem with the Zero Emission Transit Fund was not its intent. It got agencies moving toward planning for electric buses and funding the first waves of purchases. A big problem was that it was temporary, application driven, and narrowly scoped. Agencies could secure funding for feasibility studies — and this was another big problem with the ZETF — depot modifications, or bus orders, but they could not count on a steady stream of support across a long-term transition plan. That kept procurement piecemeal, and it made it harder for manufacturers and integrators to count on consistent Canadian demand. The new program fixes this by embedding transit capital into the core of federal infrastructure funding, with baseline allocations that agencies can rely on and targeted calls for competitive projects that advance specific national priorities.

The structure of the new fund is worth pausing on. There are baseline allocations to regions that deliver predictable amounts every year. There are targeted calls for proposals on specific issues like active transportation or electrification. There are Metro-Region Agreements that require integrated planning across transit, land use, and housing, along with Integrated Regional Plans that knit those pieces together. And importantly, non-capital projects like planning and feasibility remain eligible, with up to 80% of costs supported by federal dollars. That is critical, because it means agencies can still do the front-end work needed to de-risk investments before committing large sums.

The new funding model also aligns with the broader housing initiative that Mark Carney has put forward, recognizing that transit and housing are inseparable parts of livable, low-carbon cities. In my work I have often pointed to Singapore’s Housing Development Board estates, where no project proceeds without being well served by transit, something I discovered in my two years in that city state a decade ago. That alignment between where people live and how they move is one of the reasons Singapore avoided the car-dependent sprawl that burdens so many other nations.

By embedding Metro-Region Agreements and Integrated Regional Plans into the Canada Public Transit Fund, the federal government is taking a step in the same direction. It is signaling that housing growth must be tied to reliable, clean, and affordable transit, and that public money should not subsidize sprawl disconnected from mobility. This is an important shift that mirrors lessons from Singapore and applies them to Canada’s own pressing housing and climate challenges.

The biggest change for feasibility work is that it will no longer be tied to a single provider. Under the Zero Emission Transit Fund, Infrastructure Canada designated CUTRIC as the national planning service through a rushed and questionable procurement process. That meant that agencies seeking the 80% subsidy for studies had to go through CUTRIC. For years, this gave the organization a sole-source role that excluded competition. While it gave some agencies access to theoretically useful modelling and scenario tools they did not have in-house, it also created bias and opened the door to work that downplayed costs or overstated benefits for certain technologies. Most obviously, it created space for repeated claims that hydrogen buses were a viable and cost-effective pathway when the total cost of ownership numbers did not support that position.

In reviewing CUTRIC’s body of work on transit decarbonization, both I and Michael Raynor found a consistent pattern of flawed assumptions and selective omissions that tilted outcomes heavily toward hydrogen buses. Studies repeatedly downplayed the full infrastructure and fueling costs, applied fuel price forecasts that bore little resemblance to market realities, and ignored the higher emissions that come with hydrogen produced from natural gas in Canada’s current energy mix. The worst case was Brampton’s CUTRIC study, sub-contracted in large part to Deloitte as CUTRIC isn’t resourced for significant engagements, where there were $1.5 billion out of a $9 billion cost case skewed toward hydrogen, when a realistic assessment would have found battery electric bus fleets were far cheaper.

Raynor’s independent review confirmed what I had been documenting: that these were not neutral feasibility assessments but biased scenarios constructed to keep hydrogen in play. The result was to present city councils and transit boards with numbers that looked balanced on paper but would have led to higher long-term costs and worse climate outcomes in practice.

In examining CUTRIC’s structure and governance, I found deep conflicts of interest that undermined the credibility of its studies. The organization’s board and membership included firms with direct financial stakes in hydrogen and natural gas, from utilities to equipment suppliers, yet it was simultaneously producing supposedly impartial analyses meant to guide public procurement decisions. This overlap created a situation where the very companies that stood to benefit from hydrogen bus contracts were shaping the assumptions and scenarios used in feasibility work. That conflict went largely unacknowledged in the reports, leaving municipalities to believe they were receiving neutral advice when in reality the analysis was framed by vested interests.

I’m pleased to say that in reviewing CUTRIC’s Board of Directors for the updated assessment, the three organizations with large conflicts of interest in favor of hydrogen buses — Enbridge, Ballard Power and New Flyer — who had representatives on the Board no longer have seats. I claim no responsibility for CUTRIC cleaning up its governance, but I’m pleased to see this. They still have a membership structure which means that their highest paying members have an outsized weighting to organizations which will only benefit if hydrogen stays at the table, so they aren’t out of the woods from my perspective. Natural gas and hydrogen oriented organizations paying large fees to influence a transit think tank’s results isn’t appropriate in 2025.

Under normal procurement governance in Canada, sole source contracting is meant to be the exception rather than the rule, reserved for cases where no other qualified provider exists or where an urgent need makes competitive tendering impractical. The intent is to protect public funds by ensuring competition, transparency, and value for money.

CUTRIC’s designation as the exclusive provider of federally subsidized feasibility studies for zero emission buses bypassed that principle entirely. It created a monopoly over a critical stage of decision-making, one that should have benefited from a range of perspectives and technical expertise. By sidelining competition, the government locked agencies into a single source of analysis that was later shown to contain serious flaws and conflicts of interest. Further, there was only a single allowed provider of hydrogen fuel cell buses in Canada, New Flyer, and it had a seat on the Board and was paying the highest class of membership dues. Another sole source conflict at the highest level. This not only undermined the credibility of the results but also eroded trust in the fairness and accountability of federal transit funding.

In recent public comments, the head of CUTRIC sought to attribute this year’s slow progress in battery electric bus procurement to new tariffs, arguing that costs had become prohibitive under the trade regime. But that claim overlooks the larger issue: CUTRIC’s consistent promotion of hydrogen as a comparable option misled agencies for years and discouraged more aggressive movement toward battery electric fleets. Rather than tariffs being the main brake, it was the flawed advice baked into CUTRIC-led feasibility work that clouded the business case and delayed procurement decisions. Now, with CUTRIC’s monopoly breaking down and more honest, unbiased feasibility work becoming possible, the real culprit — poor guidance favoring hydrogen — can no longer hide behind trade arguments.

The new program’s silence on any mandated delivery partner is a clear sign that the door is now open to other organizations. Agencies will be able to choose who they contract with for feasibility studies, provided procurement is transparent and the work aligns with contribution agreements. That introduces competition, which almost always improves quality. It allows local agencies to work with consultants or institutions that understand their grid mix, their depot constraints, and their housing growth patterns. It also makes it harder for any one lobby to skew the analysis.

As the Zero Emission Transit Fund wound down, CUTRIC made a concerted effort to preserve its privileged position by lobbying Ottawa to extend its role as the national planning service into the new framework. In pre-budget submissions and public statements, the organization argued that the feasibility program should be carried forward under its stewardship, framing this as continuity rather than monopoly. The reality is that this was an attempt to lock in sole-source status even as evidence of flawed studies and conflicts of interest mounted. By seeking to embed itself permanently in the new fund, CUTRIC was trying to turn what had been a temporary administrative choice into a structural feature of federal transit policy, one that would have continued to limit competition and skew planning away from the best solutions.

This change matters for the debate about hydrogen buses. For several years, studies produced through the old framework were used to keep hydrogen in the mix. The result was to present scenarios where hydrogen looked comparable to battery electric buses on paper, even though in practice it meant higher costs, higher emissions in most grids, and greater financial risk. With open competition for feasibility work, those kinds of distortions will be easier to challenge. Agencies will have the option to hire independent, competent organizations that are focused on real numbers and real operational constraints. The likely result is that hydrogen bus proposals will become far less common, and electric buses powered by clean grids will move into the default position they already occupy in most of the world.

The permanent nature of the new fund also solves another problem. Manufacturers and integrators need stable demand pipelines to invest in supply chains and workforce. When Canadian agencies order buses in small, irregular batches, suppliers cannot count on the volume needed to secure good pricing or to build service capacity. With baseline allocations in place, agencies can schedule steady procurement streams, and suppliers can plan accordingly. That will improve pricing, reduce delivery delays, and increase the resilience of Canada’s supply chain for zero emission buses and charging equipment.

There is also a fairness element built into the design. Rural and small systems are explicitly included. These are agencies that often could not compete effectively in application-based programs against larger urban systems. They now have a clearer path to planning support and capital dollars. School bus electrification is not spelled out as directly as under the Zero Emission Transit Fund, but provinces and local districts can still access support through the broader framework or through complementary programs.

The big picture is that Canada is maturing its approach to transit decarbonization. Instead of treating electrification as a special project window, it is now part of the permanent infrastructure landscape. That signals to agencies, suppliers, and utilities that the country is serious about the transition. It puts an end to the sole-source arrangement that allowed one organization to shape too many studies in one direction. And it gives room for more competent and unbiased providers to deliver the feasibility work that underpins good investment.

I suspect this will lead to CUTRIC being sidelined, and competent engineering consultancies like WSP and Stantec engaged instead. Perhaps that’s why Ballard Power, Enbridge and New Flyer left the Board, because it no longer was no longer going to be a sole sourced way to push their preferred non-solution. One hopes that consultancies like Deloitte have learned their lesson about their involvement in deeply flawed transit studies with CUTRIC after the Brampton debacle was publicly torn apart by ex-Deloitte managing director Michael Raynor and me.

Canada’s transit systems have needed this certainty for a long time. The new fund does not solve every problem, including the absence of operating support, but it does create the financial foundation for electric buses to scale in a way that is consistent, predictable, and regionally integrated. That is the kind of policy infrastructure that makes real change possible.