What’s ahead for Canadian climate and energy policy in 2021?

The Canadian government has a full climate change agenda ahead when it reconvenes Parliament on January 25, not the least of which will be the debate and passage of Bill C-12, the Net-Zero Emissions Accountability Act , analyzed by the Climate Action Network here.  After its introduction in November, C-12 was criticized for lacking urgency and specific plans – for example, in an article by Warren Mabee in The Conversation which calls for three per cent to four per cent GHG reductions “every year, starting now.”

On December 11, the government  released its latest climate plan,  A Healthy Environment and a Healthy Economy, previously discussed in the WCR and noted primarily for its proposed carbon tax hike to $170 per tonne by 2050. According to  “The good, the bad and the ugly in Canada’s 2030 climate plan” (The National Observer, Jan. 18):  “The good news is that …The government’s recently announced A Healthy Environment and a Healthy Economy plan contains enough new climate policy proposals that, if implemented, will allow Canada to reach its 2030 target. The bad news is….Climate laws enacted by Canadian politicians to date don’t come anywhere close to meeting our 2030 target. With time running out and a gigantic emissions gap to close, Canada needs to enact climate laws now.”

Clean Fuel Standard, Hydrogen, and Small Nuclear Energy Policies released

On December 19, the government released the long-awaited draft regulations for a Clean Fuel Standard, triggering a 75-day consultation period, with final regulations expected in 2021, to take effect in 2022.   According to the government Q&A  website, the new regulations differ from previous drafts in that they apply only to liquid fossil fuels : gasoline, diesel and oil.  Producers and importers of fossil fuels will be required to reduce their carbon content by 2.6% by 2022 and by 13% by 2030 over 2016 levels.  Clean Energy Canada compiled the reactions of several environmental groups here .  The Pembina Institute called the regulations “both fair and cost-effective” in a press release reaction.  Their report , The Clean Fuel Standard: Setting the Record Straight (Nov. 2020) stated: “ The Clean Fuel Standard is expected to create as many as 30,000 jobs as new clean fuel facilities are built, supplied and operated. While some job losses could result from choices made under the CFS, robust modelling shows a net gain for Canadian workers: Energy-economic modelling suggests the CFS will yield a net employment gain resulting in between 17,000 and 24,000 additional jobs.” These projections are taken from on a technical analysis, conducted by Navius and EnviroEconomics consultants before the switch in scope to liquid fossil fuels only.  

Next, on December 16, the Minister of Natural Resources Canada released A Hydrogen Strategy for Canada: Seizing the Opportunities A Call to Action, another long-awaited strategy document which is the result of three years of study, analysis, and consultations, along with collaboration with industry associations: the Transition Accelerator, the Canadian Hydrogen and Fuel Cell Association (CHFCA), the Canadian Gas Association, and others . The report states that the government will now establish a Strategic Steering Committee, with several targeted task teams, to implement recommendations.  Key highlights of the Hydrogen Strategy are here; the government’s Hydrogen website is here . 

From page 86, a glimpse into the thinking behind the report:

“The energy transition will fundamentally shift the Canadian economy and alter value chains in many related sectors. One shift of particular importance is the transition away from the direct burning of fossil fuels without carbon abatement. Canada’s energy sector accounted for 900,000 direct and indirect jobs as of 2017, with assets valued at $596 billion . This industry’s significant energy expertise and infrastructure can be leveraged to support the development of the future hydrogen economy in Canada. Hydrogen will be critical to achieving a net-zero transformation for oil and natural gas industries. It provides an opportunity to leverage our valuable energy and infrastructure assets, including fossil fuel reserves and natural gas pipelines, providing a pathway to avoid underutilizing or stranding these assets in a 2050 carbon neutral future. Leveraging these valuable assets will not only be instrumental in achieving the projected economic growth for the domestic market, but also presents the opportunity for Canada to position to become a leading global clean fuels exporter.”

Regarding regulatory changes, the report states: “Policies and regulations that encourage the use of hydrogen technologies include low carbon fuel regulations, carbon pollution pricing, vehicle emissions regulations, zero emission vehicle mandates, creation of emission-free zones, and renewable gas mandates in natural gas networks. Mechanisms to help de-risk investments for endusers to adapt to regulations are also needed.”  There is no mention of training or transition policies, although the report  forecasts a  job creation potential for hydrogen which might reach more than 350,000 jobs in 2050 at the upper end  – “a combination of new job growth and retrained and reskilled labour”. (pages 85 and 86).  

 An article in The National Observer discusses the strategy, the state of hydrogen initiatives in Alberta , and reaction of environmental groups, including a quote from  Environmental Defence, saying: “…. “a focus on fossil hydrogen only serves the interests of the oil and gas sector as they seek to create new markets for their products.” Similarly, Clean Energy Canada released a statement saying, “Canada’s long-awaited federal hydrogen strategy … falls short of what some other nations have put forward in terms of investment and ambition.”   A New Hope, published in October 2020, fleshes out Clean Energy Canada’s recommendations about hydrogen in Canada.

Finally, on December 18, Canada’s Minister of Natural Resources released a national Small Nuclear Reactor Action Plan (SMR) , which responds to the 53 recommendations identified in Canada’s SMR Roadmap from November 2018. The list of organizations endorsing the SMR Agenda reflects the entrenched “who’s who” of Canada’s “ 75-year nuclear energy heritage.”  Each of these organizations – governments, public utilities, Indigenous groups, and unions, contributed a chapter to the Plan – available here. Individual endorsements include: the International Brotherhood of Electrical Workers; The International Union of Operating Engineers ; Power Workers Union – which highlights the pending closure of the Pickering Nuclear Generating Station in 2025 and the need to transition that workforce; and the National Electrical Trade Council (NETCO) a workforce development organization for Red Seal electrical trades in Canada, jointly led by  the Canadian Electrical Contractors Association (CECA) and the International Brotherhood of Electrical Workers (IBEW) .

Favourable reaction by Canadians to an updated Climate Plan -including a carbon tax rising to $170 per tonne by 2030

On December 11, the federal government released its highly-anticipated new climate plan, A Healthy Environment and a Healthy Economy, announcing 64 policy measures costing $15 billion. The Plan addresses energy, energy efficiency, infrastructure,  transportation emissions, the Clean Fuel Standard, an adaptation strategy – and a centrepiece policy to increase the carbon tax by $15 a tonne each year for the next eight years, as summarized by the CBC in  “Ottawa to hike federal carbon tax to $170 a tonne by 2030 “. Taken with the proposed Canadian Net-Zero Emissions Accountability Act currently before Parliament, which formalizes Canada’s target of net-zero emissions by the year 2050, A Healthy Environment and a Healthy Economy lays out the most specific path forward for Canada since the 2016 Pan-Canadian Framework in 2016.

A Backgrounder is here,  and specific initiatives are explained in Annex documents here.  One missing piece, as pointed out in Unifor’s reaction to the new Plan: the previously-promised Just Transition Act.   Also missing: the slightest notice by the international press, even the normally climate-vigilant Guardian in the U.K.  Reaction within Canada was strong, and ranged widely (compiled by the CBC here). In the mainstream media, the conservative-leaning Globe and Mail  approved in its Editorial:  “Justin Trudeau goes all in on the carbon tax. It’s the right thing – for the environment, and the economy”. Political writer Paul Wells uses similar language and  confesses to “startled admiration” in “On climate, at last, Justin Trudeau is all in” in Maclean’s magazine . The National Observer published  “Trudeau goes it alone with new climate plan, proposes carbon price hike”, drawing the contrast with the 2016 Framework, which was drafted in consultation with all the provinces.  The Energy Mix  is less approving in “With $170/Tonne Carbon Price, $15b In New Spending, Canada’s 2030 Carbon Target Still Falls Far Short”  (Dec. 14), which summarizes reaction from environmental groups.

Reaction from Labour and Environmentalists:

Like Unifor , the Canadian Labour Congress highlights the need for more transition measures in the new Plan, and states: “Labour will be looking to the federal government to make good on its commitment to supporting local job creation, skills training, apprenticeships and decent wages for workers, especially to those historically underrepresented in the skilled trades sector, including Indigenous workers, racialized workers and women…. Canada’s unions welcome the government’s emphasis on domestic manufacturing, including developing Canadian supply chains for low-emission building materials, clean tech, and aerospace and automotive investments, and leveraging the power of public procurement. Additionally, unions are noting the crucial commitments made today towards bringing Indigenous communities into the process.”

The International Brotherhood of Electrical Workers Canada (IBEW) commends the Plan and states:  “The highly skilled members of the IBEW are trained and ready to take on these important jobs, and the government’s commitment to investing in green buildings and retrofits, electrified public and private transportation and grid modernization will require exactly the sort of knowledge and skills that IBEW members demonstrate on the job every day.”

From the Climate Action Network Canada, which includes both labour and environmental groups:  “… this plan does not change the fact that Canadian governments continue to double down on fossil fuels, subjecting workers and our economy to the ever-increasing volatility of oil and gas markets…. It’s good to see policies that can, if implemented quickly and with the greatest stringency possible, take Canada’s climate ambitions further than our current insufficient Paris pledge – reducing emissions up to 40% below 2005 levels by 2030. It is also good to see a significant investment of $15B in climate action. However, these numbers pale in comparison to commitments being made by our closest trading partners in the EU and the U.S. (under a new Biden administration)”.

Similarly, from Environmental Defence: “The climate action plan released today has a more comprehensive suite of climate policies than in the past and we welcome the meaningful escalation of the retail portion of the carbon price. We’re also pleased about the portion of the $15 billion investment that is not in effect yet another fossil fuel subsidy. But that amount, which is a small fraction of what other countries are doing on a per capita basis, clearly cannot get the job done. In fact, Canada should be investing $270 billion if it was following the level of ambition of the US or EU.”  West Coast Environmental Law agrees with these points, and also  states:  “While we applaud much of this climate plan, the government continues to ignore the reality that climate leaders don’t build oil pipelines. The recent analysis released by Canada’s Parliamentary Budget Officer confirms that the Trans Mountain pipeline will lose money if any climate action is taken, let alone the action promised in this plan. If Canada is serious about acting on climate change, the government must cancel this ill-conceived project once and for all.”

Economists applaud carbon tax initiative

The federal government announcement includes a 4-page Annex document about its carbon pricing proposals. The carbon tax will rise by $15 per tonne after 2022 until 2030, when it will reach $170 per tonne. The government is banking on a favourable decision by the Supreme Court of Canada when it rules on the constitutionality of the existing federal carbon tax in 2021. In a politically shrewd change from current practice, carbon rebates will be distributed to households on a quarterly basis, and as now, most households will receive more in rebates than they pay out.

Mainstream economic voices support the carbon tax:  The Canadian Institute for Climate Choices calls the plan “a big deal”, and says: “The government’s emissions projections under a carbon price that rises by $15/tonne per year is consistent with analysis from the Parliamentary Budget OfficeClean ProsperityCanada’s Ecofiscal Commission, and our own principal economist, Dave Sawyer. This is a policy that can deliver on the emissions reductions it promises.” Clean Prosperity states “This is a bold, brave, and wise move that will set Canada on the path to decarbonization. It sends a clear message to investors around the globe that Canada is serious about climate action.…. This was not an easy choice, but it’s the right choice. The government is wisely adopting a low-cost policy option that is good for the economy.”   And Merran Smith, speaking for Clean Energy Canada, calls it a “comprehensive and honest plan…. historically and globally significant. The plan will retool and position Canada’s economy to be increasingly competitive in a low-carbon world.”

Parliamentary Budget Office repeats the message: TransMountain pipeline is inconsistent with Canada’s zero emissions target

A Report from the independent Parliamentary Budget Officer (PBO) released on December 8  examines the financial viability of the Trans Mountain Pipeline, and includes updated employment and economic impact forecasts.  The press release summarizes the findings, including that the Trans Mountain pipeline has increased in value from $4.4 billion when the federal government purchased it in 2018, to $5 billion, using net present value calculations. However, that value is conditional on global demand for oil, on construction delays and costs, and – the crux of the matter –  “the profitability of the Trans Mountain assets is highly contingent on the climate policy stance of the federal government. Consistent with modelling from the Canada Energy Regulator (CER), if policy action on climate change continues to become more stringent, it is possible for the Trans Mountain assets to have a negative net present value.” In other words, as 350.org  says:  “two government agencies have said the exact same thing. The Canada Energy Regulator and the Parliamentary Budget Officer have made it clear that Trudeau has to choose between building Trans Mountain and confronting the climate emergency. It’s past time that Trudeau was honest: does he want to build a pipeline or tackle the climate crisis? He simply can’t do both.”  (The 350.org sign-on online campaign is here ; B.C.’s Dogwood Institute also has an online petition to Chrystia Freedland to Rethink TransMountain)

Discussion of the PBO report appears in the National Observer in “Budget officer provokes fresh round of suspicion over Trans Mountain profitability” (Dec. 9) , and in The Energy Mix  and the CBC .

Canada’s legislation for net-zero emissions lacks urgency and enforcement mechanisms

On November 19, Canada’s Environment Minister introduced Bill C-12,  the Canadian Net-Zero Emissions Accountability Act in the House of Commons.  If passed, it would establish in law the already-promised national net-zero greenhouse gas emissions target for 2050, and require the Minister to establish a national greenhouse gas emissions target and plan for 2030 within six months of the Act coming into force. Requirements for public consultation and progress reports are included, along with a provision for an advisory body which would also be required to conduct “engagement activities”.  A summary of provisions appears in the government’s press release and in press reports from the CBC and  the Toronto Star . Initial reactions to the legislation abound on Twitter, mostly noting that  2030 is a disappointingly slow first target date. In an article in Behind the Numbers, Hadrian Mertins-Kirkwood calls the legislation “much ado about nothing” , and says “the bill’s failure to require a new emissions reduction target before 2030 means the federal government can continue delaying the kinds of transformational climate policies we require to meet the scale of the climate change threat. A new 2025 target would have put real pressure onto the present government rather than shirking responsibility to a future one.”  Legal group Ecojustice  calls the legislation “a significant first step” , and West Coast Environmental Law calls the legislation a “critical juncture for Canada”.   WCELpledges to work towards improving the Bill  in the course of the parliamentary debate…. “to be effective, the Canadian Net-Zero Emissions Accountability Act will need to prioritize immediate climate action by setting a 2025 target, and ensure that all the targets we set are as ambitious as possible. It also needs stronger requirements to ensure those targets are actually met.”

The House of Commons website here will link to the Debates on Bill C-12, and chronicle its passage through the legislature. Already, the new Leader of the Green Party, Annamie Paul, has issued a reaction titled, A failure of leadership: Government’s climate bill squanders “the opportunity of a lifetime” for a green economic recovery Former leader Elizabeth May is quoted in the same press release saying “Having worked on the climate issue for over thirty years, watching one government after another kick the problem down the road, today is the tragic low-point. The window on holding to a livable climate will close, forever, before this legislation holds anyone to account.”

Canadian Labour Congress calls for “a climate-action budget” for post Covid recovery

To coincide with Labour Day, the Canadian Labour Congress unveiled its new social media campaign, “Forward Together: A Canadian Plan” with a press release which says: “We need the government to reject calls for austerity and make real investments in our future. The only way to fix what’s broken is to invest,” …. “Workers are key to the recovery. The federal government can help alleviate a lot of anxiety by investing in jobs, making long-term care part of public health care, supporting a child care strategy, and implementing national pharmacare.”

The CLC campaign comes in advance of the federal government’s recovery plan, scheduled for release in the Throne Speech of September 23, and urges Canadians to contact their members of parliament. The campaign launched was amplified by member labour unions, and covered in mainstream press: for example, the Toronto Globe and Mail published an Opinion piece by CLC President Hassan Yussuff ; The Tyee published “Canada’s Top Labour Leader on Building a Better Life for Workers after the Pandemic”; the CBC posted “Workers’ group marks Labour Day with push for changes in Liberals’ throne speech”. In all of these articles, the focus was on the employment impacts of Covid-19 and recommendations to expand employment insurance.

CLC’s Pre-Budget Submission to the Government prioritizes Climate Action and Just Transition

This coverage doesn’t match up with the CLC’s associated pre-Budget Submission to the federal government in August, Forward Together: A Good Jobs and Climate Budget. It states : “Budget 2021 must be a Climate Action budget” and makes the first of its five recommendations: “Budget 2021 should set out a plan, with clear targets, benchmarks and timetables, for achieving Canada’s greenhouse gas emissions targets, committing $81 billion over 5 years to expand renewable energy, home and building retrofits, public transit, and Just Transition measures supporting workers and their families.”   

In the full text of the Submission, under the heading “Climate Action and Just Transition”, the CLC states: “Budget 2021 must be a Climate Action budget. The CLC recommends that the federal government adopt a five-year plan setting out a bold plan with clear targets, benchmarks and timetables for accomplishing a systematic shift in Canada’s energy system, its transportation networks, and housing and building stock. Expanded public investments in renewable energy production, green building construction, and public transportation offer major opportunities for skills training and the large-scale creation of good jobs. Along with its partner organizations in the Green Economy Network, the CLC calls for investments of $81 billion over 5 years in order to develop renewable energy, home and building retrofits, and low-emissions public transportation in urban centres.

The CLC recommends that the federal government establish a Crown corporation mandated to overhaul and transform Canada’s energy industry in collaboration with provinces and territories. It would identify renewable energy projects and ensure that existing and new manufacturing sources increase capacity to supply parts, equipment and new technology to meet Canada’s renewable energy needs. Through direct investment and procurement policy, the federal government should support continued conversion of idle plant for the manufacture of medically-necessary and green economy products and equipment. Consistent with this, it should invest in the conversion of the General Motors Oshawa facility to produce zero-emission vehicles to electrify the Canada Post fleet.

Budget 2021 must significantly expand investments in Just Transition measures to assist workers, their families and their communities affected by climate change policy to access training and employment services, relocation, childcare and housing assistance to adjust to new jobs, and support for older workers to transition to retirement.

Following the experience of the European Union, the federal, provincial and territorial governments should establish a guarantee that all young people under the age of 25 will receive a good-quality offer of employment, continued education, an apprenticeship or a traineeship within a period of four months of becoming unemployed or leaving formal education. This could include a focus on providing decent jobs in land remediation and restoration, climate adaptation, and energy efficiency. It should also include green skills training and learning opportunities through partnerships with public education and training providers, with an emphasis on women, marginalized, low-income and at-risk youth.”