the Networks of Centers of Excellence programme, which was initiated in 1988 with a budget commitment of C$240 million ($156 million) for five years and recently renewed with additional funds. The NCE are required to include leading researchers from across Canada and to involve an active collaboration between researchers and the potential users of new technologies, industry for the most part or government agencies.

Environmental research has not traditionally been the focus of a special institution. Consequently environmental activities have had to be funded through the traditional avenues of research support.

Environment Canada is a ministry with limited executive functions. Consequently funding of environmental research to support Environment Canada's mission represents one of its most important activities.

The Government's Green Plan, announced in 1990, is a national strategy to take a step towards sustainable development in Canada. Twenty-five of the Plan's initiatives have a significant science and technology content, amounting to C86.6 million ($56 million) in 1992–1993. Among these are Global Warming Science Program (C$4.8 million), Technology for Environmental Solutions (C$2 million), and Eco-Research (C$3.3 million). The latter program encourages cross-disciplinary research and training on environmental issues.

The Networks of Centers of Excellence included two environmental topics in its 1994 call for proposals but only one was funded, a project on sustainable forest management. No network was funded to address the linked issues of trade, competitiveness, and sustainability, which had also been identified as a priority in the call for proposals.

The peculiar distribution of authority between the federal government and the provinces makes the provision of funding by the federal government (essentially subsidies) an important instrument to leverage desired outcomes, either from provincial governments or from industry. These subsidies frequently support specific research and development efforts designed to permit the more rapid or more efficient adjustment of policies or enterprises to the demands of federal government environmental priorities. An example of this process was the promise of subsidies to a major mining and smelting operation in Sudbury, Ontario to facilitate reductions in what was at the time the largest single source of sulfur dioxide emissions in North America. The result of this effort was the development of new smelting technology, which not only reduced emissions dramatically but proved to be economically superior to other available technologies and can therefore successfully be commercialized and sold to other companies. In this case, the promise of subsidies alone proved an effective tool, since the profitability of the new technology obviated most elements of subsidy.