The upcoming federal budget will include up to $50 million to help remote communities develop renewable energy projects and get off diesel as a power source, CBC News has learned.

Sources say Ottawa is prepared to make "a sizable investment" to help mostly Indigenous communities develop renewable energy projects that could include hydro, solar, wind or biomass energy.

"I think it's fair to say that the government will be making additional investments," said a government official who was not authorized to speak publicly about the budget.

The federal government has been helping remote communities reduce their dependence on diesel power generators for more than a decade. But until now, the money has largely been used to fund feasibility studies and community engagement.

In the 2016 budget, the Liberal government set aside $10.7 million over two years for the Northern Responsible Energy Approaches for Community Heat and Electricity Program, which is designed to help deploy renewable alternatives to diesel fuel.

Diesel is expensive because it has to be moved either by trucks over ice roads in winter or shipped by barge to remote communities. It's also a dirty fuel, second only to coal in the amount of greenhouse gases it emits when burned. Yet 200 communities across the country rely on diesel fuel to heat homes and keep the lights on.

The Pan-Canadian Framework on Clean Growth and Climate Change signed in December 2016 by Prime Minister Justin Trudeau, along with eight provinces and three territories, promised to "intensify" efforts to move away from diesel as a way to reduce Canada's greenhouse gas emissions.

Earmarking new money in the budget would be part of that effort.

Hydroelectric energy

The new budget could be good news for community like Inukjuak, in northern Quebec, located on the east side of Hudson Bay south of the Arctic Circle.

Inukjuak, with a population of 1,800, is 300 kilometres away from the nearest road or transmission line. Every year the Inuit community uses about three million litres of diesel at a cost of about $2 a litre — the cost approaching $6 million a year is subsidized by the Quebec government.

"It's as reliable as it can be," said Eric Atagotaaluk, president of the Pituvik Landholding Corporation, which manages the community's land and economic development. "But every so often we have community blackouts. There was one time in the early 2000s that we had a community blackout that lasted two days for mechanical reasons."

In 2010, residents voted to develop their own hydroelectric dam on the nearby Inukjuak River. The Innavik Hydro Electric Project would be owned by the community and sell the renewable power back to Hydro-Québec. It would maintain the power lines and distribute the electricity to the town.

The Innavik hydroelectric dam on the Inukjuak River would be owned by the community, which would sell power back to Hydro-Québec. (Provided/Chris Henderson )

Inukjuak wants to be more self-sufficient, less dependent on government and reduce its greenhouse emissions, said Atagotaaluk.

"Being owned by the community, it will generate some revenue. We will contribute that revenue towards economic development, social economy and education for future generations. And 60 to 80 per cent of the greenhouse gases coming from our community will be reduced," he said.

Inukjuak has completed a feasibility study and is bringing in a partner to share the investment and risk in the $97 million hydroelectric facility. But the community would have to pay a portion of the cost itself.

Atagotaaluk said that's why they need federal money to make it happen.

"If we don't get that assistance, we won't be able to develop this project."

A different path to reconciliation

A leading expert in clean energy says Inukjuak is an example of the growing potential of these kinds of projects.

"There has been a remarkable growth in Indigenous participation in clean energy projects," said Chris Henderson in an interview with CBC News.

Henderson is president of Lumos Energy, which is working as an adviser and community advocate for the Innavik Hydro Electric Project. He thinks the project is an example of an emerging trend that needs more federal support.

There are 135 Indigenous renewable energy projects up and running in Canada now, with another 200 to 300 waiting in the wings.

"There is a real synergy between Indigenous culture and taking the power from Mother Earth versus fossil fuels," said Henderson. "Because those resources come from land and waters where they have rights, those circumstances have led them to say, 'Hmm this is something we really want to move on.'"

Henderson also believes that renewable energy can pave a different approach to reconciliation, which has become a priority for the Trudeau government.

"At the end of day, if we strike a new relationship that is ground in commercial terms, in something like energy, it has bite. Clean energy is the secret story of reconciliation."