In fact, the new government was elected on a strong platform for climate action that buttresses affordability, security and competitiveness in a world shaken by these new uncertainties. Meeting this economic moment will require building on Canada’s strengths and policy successes, as well as working together with provinces and territories.

With that in mind, here are our suggestions for top priorities in the new government’s first 100 days.

First, strengthen industrial carbon pricing. Industrial carbon pricing is Canada’s single most powerful policy tool for reducing emissions and protecting industrial competitiveness, all at minimal cost to households. But it needs improvement. The Canadian Climate Institute’s extensive research on these systems shows they can reduce more emissions and give investors greater certainty if they are modernized to be more stringent, more transparent and better aligned across the country. The federal government has a crucial role to play in these efforts because it writes the minimum standards that underpin provincial systems across the country. It’s time those standards were updated.

Second, finalize methane regulations for oil and gas. Cutting emissions of methane – a particularly potent greenhouse gas – is a good-news story. We know how to reduce these emissions that are released in oil and gas production and pipeline transport, and doing so is cost-effective. In fact, Saskatchewan, Alberta and British Columbia have already slashed these powerful emissions by more than half in less than a decade. The last federal government almost finished this work with draft regulations released last summer that would require methane emissions associated with oil and gas to drop 75% by 2030. Thanks to shared federal-provincial action, the oil and gas sector is already well on its way to meeting this target. Our modelling has shown that Canada can go even further to reach 80% – and the government should consider doing so. Some provinces have already taken steps toward stronger action. British Columbia, for example, has committed to near zero methane from all industrial activities by 2035.

Third, finalize the clean electricity investment tax credit (ITC). Electrifying Canada’s economy with clean power will underpin the country’s success in reducing national emissions and attracting investment. That means a big build-out of intra- and interprovincial electricity infrastructure, but it will also require investment incentives like the ITCs. While the other federal ITCs were put into law last summer, the clean electricity ITC is still pending. Finalizing this long-promised policy will benefit all provinces and territories as they clean up their grids with billions in new investment support, all of which will ultimately help keep energy bills down. The clean electricity ITC is also the only one of its kind to make tax-exempt entities eligible, which will incentivize investors including First Nations, municipalities and pension funds.

Finally, establish a made-in-Canada climate taxonomy for the financial sector. Investment decisions are being shaped by climate change more than ever before, whether from disrupted supply chains, higher costs from more frequent and severe climate impacts, or rapid shifts in clean-energy and technology costs. A national climate taxonomy – a well-defined set of criteria to determine which activities and assets contribute to climate objectives – will give investors the standardized approach they need to evaluate these material risks and opportunities against their bottom lines. This type of policy is already in place or under development in more than 30 jurisdictions around the world. Ultimately, a climate taxonomy will enhance our country’s ability to attract investment. The federal government endorsed the approach recommended by Canada’s largest financial institutions last fall, which included a world-leading framework to classify emissions-intensive activities on the path to net-zero. The next step is to establish an independent body with stable funding to deliver this much-needed market guidance.

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Taken together, these four actions will help build on previous policy wins that have driven national emissions down to where they were in the 1990s – more than 8% below 2005 levels at last count. There is still significant work ahead to set Canada up for success in a world economy rapidly adjusting to new trade disruptions while the inevitable shift toward clean energy technologies continues to gather pace globally. While combatting climate change is a multi-decade endeavour, there is much that Canada can do right away. The next 100 days is plenty of time to implement the four actions we believe should sit atop the list of the new government’s climate priorities.

Rick Smith and Peter Nicholson are, respectively, president and chair of the board of the Canadian Climate Institute.

The post These should be the climate change priorities for Canada’s new government appeared first on Corporate Knights.

Of the 10 potential candidates identified in news reports so far, at least three can claim credentials in some aspect of climate response or energy transition, while another three are seen to be more closely aligned with fossil fuel interests. Depending on which of those voices show up in the campaign, one veteran observer says a lukewarm Liberal response could open the door for the New Democratic Party to regain ground on climate change and energy.

In his statement Monday morning, Trudeau asked Governor General Mary Simon to prorogue Parliament until March 24, declaring that he isn’t the right choice to lead his party into this year’s federal election. The announcement followed months of drama, dissent and cratering public support, culminating in the resignation last month of Finance Minister and Deputy PM Chrystia Freeland, now considered a top leadership contender. In the wake of Freeland’s announcement, a growing wave of Liberal caucus members prevailed on Trudeau to stand aside.

“This country deserves a real choice in the next election, and it’s become clear to me that if I’m having to fight internal battles, I cannot be the best option in that election,” Trudeau told media.

Those words opened a leadership process that will begin with a six-hour national caucus meeting Wednesday, the Toronto Star reported, then a discussion by the Liberal Party’s national executive, The Globe and Mail said, in the story that broke the news.

Trudeau, who will stay on as PM and Liberal leader until his successor is chosen, made his announcement just two weeks before Donald Trump begins his second term in the White House. Trump greeted the news by doubling down on his mutterings about annexing Canada as a 51st U.S. state – a notion that has already prompted at least one call to defend Canadian sovereignty by standing up for community energy and energy democracy.

CBC has the most complete rundown so far of the potential candidates. They are (in alphabetical order):

• Transport Minister and former Treasury Board president Anita Anand

• Former Liberal MP Frank Baylis

• Mark Carney, a climate finance expert and former governor of both the Bank of Canada and the Bank of England who has never held elected office but is reportedly making the rounds to pitch his candidacy to the Liberal caucus

• Innovation, Science and Industry Minister François-Philippe Champagne, who’s been at the forefront of efforts to promote Canada as a destination for clean energy investment

• Former British Columbia Premier Christy Clark, a relentless advocate for her province’s liquefied natural gas industry while she was in office

• Freeland, once referred to as Trudeau’s “Minister of Everything” and long touted as a future leadership candidate

• Government House Leader Karina Gould

• Foreign Affairs Minister Mélanie Joly

• Public Safety Minister Dominic LeBlanc, who stepped in as interim finance minister when Freeland resigned and once saw fit to consult the federal ethics commissioner over his ties to New Brunswick’s powerful Irving Oil empire

• Natural Resources and Energy Minister Jonathan Wilkinson, a former environment and climate minister who ran a cleantech firm before he entered politics

Fernando Melo, federal director of policy and government affairs at the Canadian Renewable Energy Association (CanREA), declined to comment on individual candidates’ track records or future prospects. But “anyone who has served in the Liberal government has shown a remarkable understanding of the role of renewable energy and energy storage in accelerating Canada’s economy, and in a moment of affordability, helping to reduce costs for all Canadians,” he says.

CanREA has “a really open door engaging with all the parties right now,” he adds. Whichever one forms the next government, “the big question will be how we ensure that Canada remains an attractive place to invest capital” while provinces carry through with the now 13,000 megawatts of clean electricity they’re in the process of procuring.

“It’s a competitive market for investment, and it’s not just Canada that needs new renewable electricity and storage. The globe does,” Melo says. “So whoever forms a government needs to think long and hard about how we continue those things.”

Tyler Meredith, a former policy director to Freeland and founding partner of Meredith Boessenkool & Phillips policy advisers, says that climate and energy issues would more likely come to the surface in a longer leadership campaign that ran 90 to 100 days, with time for policy debates on different topics across all the regions of the country. A shorter calendar – dictated by the prorogation date of March 24, and the likelihood that the government will fall to a non-confidence motion immediately afterwards – would “leave very little time to have a really rich policy debate.”

But all of the candidates will be looking for ways to differentiate themselves, Meredith says, from each other and from Trudeau – and for some of them, that will mean focusing on energy and environment.

In spite of the Conservative opposition holding a 25-point lead over the Liberals – and Trudeau carrying a -43 net favourability rating – in the aftermath of Freeland’s resignation, Meredith stresses that all the leadership candidates will be running for government, not opposition. “Don’t discount the possibility that this leadership race has the effect of potentially energizing things,” he says.

Climate Emergency Unit team lead Seth Klein says that the Liberal leadership race could also open up an opportunity for the NDP – particularly if the winning candidate is Clark, whose provincial climate-action plan was literally written (or, at least, rewritten) in the boardroom of the Canadian Association of Petroleum Producers, or Freeland, long seen as the biggest obstacle to more ambitious climate action in the Trudeau cabinet.

“If you are a climate voter, you’re much more likely to have seen the Liberal Party as the strongest on climate over the last few years, whereas the NDP ranks at the same level as the Conservatives,” Klein says, mainly because “you never heard about climate” from NDP leader Jagmeet Singh. But if the Liberals choose a leader who looks to be shifting its priorities in a different direction, “that would open up space for the NDP to pick up the banner.”

In a release Monday afternoon, Climate Action Network Canada said that Trudeau “accomplished more on climate policy than any other Canadian Prime Minister so far,” leading “a revolution in how we tackle climate change” that still fell short of what the country needed.

“The resulting policies have contributed to, and will continue, improving the lives of people and communities,” executive director Caroline Brouillette said. But “we have seen that no climate approach will be successful without dismantling the fossil fuel industry’s grip on Canada’s policy and politics.”

This article originally appeared in The Energy Mix. It has been edited to conform with Corporate Knights style. Read the original article here. 

The post With Trudeau exit, will the Liberal leadership race drive bolder climate policy? appeared first on Corporate Knights.

In particular, the budget, released Tuesday, failed to clarify how the government plans to make up for its $14-billion climate funding shortfall – the gap that Corporate Knights has identified between federal commitments and funds disbursed as of the end of fiscal year 2024.  

While the federal government didn’t trumpet climate as a priority in its main communications about the budget, new climate funding over the next 10 years was the single largest spending increase in the budget, with a total of $14.2 billion in new climate funding commitments through 2035, according to calculations by Corporate Knights.  Two-thirds of that climate funding is via clean-economy tax credits meant to expire by 2035, while most new spending items are fanned out over the next five years.

The federal government has upped the ante on its running tally of climate funding commitments from 2015 through 2035, from more than $120 billion in Budget 2023 to more than $160 billion in Budget 2024. (While $40 billion in climate spending has been announced this year, only $14.2 billion of that was new in this budget.) But Budget 2024 reissued the same drawn-out timeline for the five climate-investment tax credits that were announced last year. And most of the new spending is backloaded into future years, with less than $1 billion flowing in 2024 to close Canada’s climate funding gap.  

When it released the 2022 budget, the federal government estimated the overall climate funding gap in Canada to be up to $125 billion per year. Over the next 10 years, planned federal climate investment averages $15 billion per year, mostly in the form of investment tax credits. 

This leaves a gaping hole of up to $110 billion a year, which the federal government along with other levels of government and the private sector will need to fill if Canada is going to meet its climate commitments and seize upon clean-economy growth opportunities.  

The federal government expects investments and tax credits for carbon capture, utilization and storage and clean technology to receive royal assent by June (six months after they were introduced in Parliament). It also plans to introduce legislation for the other previously announced tax credits for clean hydrogen, clean technology manufacturing and clean electricity this fall. The government plans to introduce a sixth climate-investment tax credit announced in this budget, called the Electric Vehicle Supply Chain Investment Tax Credit, in 2025. 

The government now estimates that its suite of climate-investment tax credits is worth up to $93 billion, up from $80 billion in Budget 2023. Normalized to gross domestic product, this would translate to about $1 trillion in the U.S., on par with the higher end of clean-economy funding the U.S. Inflation Reduction Act will provide.  

Considering that the lion’s share of the federal government’s planned climate funding over the next decade is via tax credits, it is concerning that none of the government’s six clean-economy tax credits worth $93 billion has yet been passed into law. 

But the government’s current timeline indicates that the most recently announced tax credit for EV supply chains may not be passed into law until after the next federal election. As the United States showed with the Inflation Reduction Act (with total climate spending ranging from $369 billion to $1.2 trillion), targeting clean-economy growth through more straightforward tax rebates tied to actual clean-economy outputs (such as kilograms produced of clean hydrogen), it is possible to move much faster with larger sums of money.  

 The federal budget’s running tally of climate funding commitments through 2035 leapt by almost $40 billion over the past year to $160 billion.

The post Climate was biggest winner in 2024 budget, but climate funding gap persists appeared first on Corporate Knights.

As for the Conservatives, they see a wedge issue they can stir up to their political benefit, and their “Axe the tax” slogan is tailor-made for riling up their base: it rhymes, it fits on a baseball cap, and it supports their “divide and conquer” strategy for electoral victory. Combined with the Liberals’ intransigence on the issue, the stage is set for a shouting match over the carbon tax at a time when we urgently need a grown-up conversation about how to address the climate emergency while securing Canada’s place in the emerging new-energy economy.

Canada is one of the most decentralized federations in the world, and achieving consensus on national policy is difficult at the best of times. In addition, unlike most of its OECD (Organisation for Economic Co-operation and Development) trading partners, revenue from oil and gas exports is important to the national economy and the economic lifeblood of the producing provinces. While the Supreme Court of Canada has ruled that the federal government has the constitutional right to put a price on carbon, it has proven a formidable political challenge to find a solution that responds to the climate emergency while reconciling the interests of producing and consuming provinces as well as the competing imperatives of short-term gain and long-term prosperity.

The result is the revenue-neutral, two-part federal carbon-pricing policy we have today: a carbon tax on fuel rebated to households and most of the economy, and an output-based regulatory pricing and trading system for emissions-intensive industries (the big polluters). Both systems share a common carbon price that increases to $170 per tonne by 2030 from its current level of $80 per tonne. Provinces and territories may opt in or out of either or both parts by substituting their own approach as long as they are consistent with the federal government’s carbon-pricing schedule. The result is a patchwork with four tax regimes and nine separate industrial pricing systems that could all come apart at the seams if national and provincial leaders keep turning up the heat.

The Canada Carbon Rebate — now you see it, now you don’t

The first part of our carbon-pricing system is the one most familiar to Canadians: a “tax and dividend” approach in which fuel distributors pay the carbon levy and pass it on to consumers. The revenue – about $8.3 billion in 2022/2023 – is returned to the provinces in which it is raised, mostly in the form of quarterly rebates that are based on the total carbon emissions of the province but not on the emissions of individual households. For most households, the rebate is larger than the tax paid, and the idea is to provide an incentive for them to reduce their carbon emissions so that they can continue to come out ahead as the carbon levy increases year by year.

Polling from Nanos indicates that nearly half of Canadians don’t believe that the carbon tax is effective, and as the people whose behaviour it is designed to influence, they should know. The impact that the tax has at the gas pump is less than the routine variation in gas prices to which Canadians have become accustomed. The impact on heating bills is more noticeable but not by itself sufficient to cover the capital costs of the deep retrofits and heat pump conversions needed to get the buildings off fossil fuels. Meanwhile, the government is faltering on public relations; indeed, a large portion of the population does not realize that the quarterly rebates are related to the carbon tax, and many do not even know they are receiving the rebates, which are mostly delivered via direct bank deposits. The government’s recent rebranding of what was previously called the “Climate Action Incentive Payment” as the “Canada Carbon Rebate” signals a renewed commitment to shoring up sagging support for carbon pricing.

Economists have oversold the effectiveness of carbon pricing in the real world.

Skepticism about the impact of the carbon tax is fuelled by assertions that it is the most efficient and effective way to reduce emissions, which fly in the face of common sense. Economists have oversold the effectiveness of carbon pricing in the real world, where fuel prices are a relatively small portion of the cost of services and amenities. Lower-income households feel its pinch more than others, but they are also in a weaker position to make the investments needed to reduce their energy use.

From building codes to vehicle fuel-efficiency standards, examples abound where rules and regulations win hands down over carbon or energy pricing in bringing about efficiency and emission reductions. In 1987, U.S. president Ronald Reagan was able to trigger a dramatic increase in refrigerator efficiency with a new set of appliance rules for the manufacturers. It boggles the mind to imagine just how much fuel tax it would have taken to raise the price of electricity high enough to achieve the same results.

Carbon pricing has been on the policy agenda since the 1980s, but in the last few years the technological pathway for decarbonizing buildings, transportation and electricity has come into sharper focus, and the urgency of addressing the climate emergency has increased. At worst, the Canada Carbon Rebate is an innocuous, zero-sum shell game. At best, a continuously rising carbon price will have a marginal direct effect on emissions while increasing the receptivity and success of the quicker, targeted and more direct measures that are needed now to address the climate emergency.

The biggest polluters pay the least

If you think the Canada Carbon Rebate is complicated, buckle up: there are hundreds of pages of rules and regulations governing the various federal and provincial systems for industrial carbon pricing.

In a nutshell, the second part of Canada’s “carbon tax” system works like this: Each facility covered by the federal output-based pricing system (OBPS) is permitted to freely emit greenhouse gases up to an annual limit. That limit depends on the facility’s emissions output and an emissions-intensity standard specific to the product being made in the facility, be that cement or steel, et cetera. If the facility’s emissions exceed this cap, then the company must either pay the carbon price on the additional emissions or submit what are called surplus allowances – effectively, credits it has banked from previous years when it didn’t exceed the cap or bought on the secondary market from other companies.

Still with me?

Those free emission allowances are adjusted to protect the viability and competitiveness of Canadian producers in global markets, so that, say, a steel company in Northern Ontario doesn’t drown in carbon taxes trying to compete with cheaper steel from abroad. It’s a system built for gaming, and a small army of consultants and lobbyists work hard at minimizing the costs that companies are paying for their emissions. Large emitters pay the carbon charge on only a portion of their actual emissions and so end up paying less for carbon than the average Canadian family. Suncor Energy, for instance, one of the largest oil companies in Canada, paid just $1.67 per tonne of greenhouse gases in 2020 when Canadian families were paying $30 per tonne. (Suncor estimates it will pay $8.97 per tonne between 2021 and 2030, less than a 10th of the $103 average price of carbon during this period.)

Large emitters end up paying less for carbon than the average Canadian family. Suncor Energy paid only $1.67 per tonne in 2020, when families paid $30.

Although transparency was a stated design objective of the OBPS, the carbon market that it spawned is a muddy swamp, causing headaches for regulators and uncertainty for investors. As Dave Sawyer, the Canada Climate Institute’s chief economist, notes, “It’s astounding that systems are not in place to track how these markets function and whether the market price holds.”

The rationale for granting these emission allowances to large emitters like pulp and paper mills is that they’re considered “trade exposed,” or at an unfair disadvantage in global markets against competitors that aren’t similarly taxed. This argument is stronger from some industries than others: in the case of steel or cement, paying a carbon tax of $50 per tonne doubles the costs of production, while in the case of oil extraction, it adds only a few dollars per barrel – enough to incentivize pollution reduction but not a competitiveness deal-breaker.

But the tide is turning now as the green transition moves forward, industrial processes evolve, and the European Union and the United States move to impose tariffs on carbon-intensive imports (so-called carbon border adjustment mechanisms). In other words, carbon pricing is coming for these industries, one way or another, and these industries need to decarbonize to survive. To be effective, the current output-based pricing system must be evenly applied across the country, driven by a carbon price aligned with international best practice, and integrated with other government initiatives for industrial decarbonization.

Ultimately, carbon pricing is a small component of the full suite of government spending, lending, and regulatory and tax instruments that are needed to effectively respond to the climate emergency while securing a place in the global low-carbon economy. The last thing the country needs is a “take no prisoners” battle to the death over the carbon tax that could set back what climate progress has been made. If the Liberals did an about-face on the retail portion of the tax while doubling down on the industrial pricing, it would lower the temperature on the climate conversation at a time when the world can’t afford any further warming.

Ralph Torrie is director of research at Corporate Knights.

The post Is it time to axe the carbon tax? appeared first on Corporate Knights.

The environment is often a forgotten issue once politicians are on the campaign trail. But this time, propelled by the catastrophic wildfires in British Columbia this summer and the dire conclusions in the recently released sixth assessment report of the Intergovernmental Panel on Climate Change, climate change sits at or near the top of the list of issues most important to voters. Yet Justin Trudeau’s early election call may have set the stage for a major setback on climate action.

The election call was met with immediate questions about its rationale, given a minority but relatively stable and productive Parliament, the crisis in Afghanistan and a mounting fourth wave of COVID-19.

Polls are suggesting that after a weak start, Trudeau’s Liberals are only just catching up to Erin O’Toole’s Conservatives.

This is likely due to O’Toole’s largely successful repositioning of his party towards the political centre, including a belated recognition of the reality of climate change and the need for some form of carbon pricing.

But it’s important to look beyond the rebranding and consider what a Conservative win might mean for Canada’s approach to climate change.

Climate action in motion

Progressive voters have been left confused and more than a little annoyed by Trudeau’s election call. The Liberal minority government that resulted from the October 2019 election was dependent on the support of Jagmeet Singh’s NDP and, to a lesser extent, Yves-Francois Blanchet’s Bloc Québécois to survive. The result had been considerable action on climate change and a host of other issues.

The Liberal government, bolstered by a series of court decisions culminating in a March 2021 Supreme Court of Canada ruling that upheld the validity of its backstop carbon pricing system, had implemented the federal system, as promised, in those provinces without adequate carbon pricing systems of their own.

The federal backstop charge on heating and transportation fuels now applies in Ontario, Manitoba, Yukon, Alberta, Saskatchewan and Nunavut. An output-based pricing system for industrial emitters is in place in Ontario, New Brunswick, Manitoba, Prince Edward Island, Yukon, Nunavut and partially in Saskatchewan.

Although the carbon pricing system goes far further than any previous federal government has gone to implement substantive climate policies, it’s not without significant weaknesses.

The burden of the pricing system falls overwhelmingly on individual consumers and households rather than industry. In addition to that unfairness, the effective cost to industrial facilities is far too low to significantly affect their behaviour. What’s more, the standard applied by the federal government to provinces seeking exemptions on the basis of their own systems has been profoundly inconsistent.

Liberal climate commitments

At the same time, the Liberals had committed to moving the carbon price to $170 a tonne by 2030 and revising what’s known as the Nationally Determined Contribution to reduce emissions under the 2015 Paris climate agreement. The Liberals originally committed to a 30 per cent reduction by 2030 and increased it to a 45 per cent reduction. It also adopted a broader net zero emission target for 2050.

A national phaseout of coal-fired electricity has been accelerated and new programs for funding public transit, electric vehicles and energy-efficient renovations for buildings are under way or proposed.

In a reversal from the government’s previous contradictory position of both pursuing reductions in greenhouse gas emissions and the expansion of fossil fuel exports, Trudeau has reaffirmed the commitment implied in the Liberals’ December 2020 climate policy paper to capping and reducing emissions from the fossil fuel sector.

Beyond the environment, the government has also adopted legislation recognizing the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), and has been moving forward with a national child-care plan.

Low voter turnout?

The risks in this context are enormous. The unpopular and unwelcome election call, in combination with the continuing threat of COVID-19, is a potential recipe for low voter turnout. Under Canada’s first-past-the-post electoral system, there’s the potential for irregular electoral outcomes.

The core Conservative voter is generally loyal and reliable, giving O’Toole a significant advantage in such a scenario.

Other factors may also favour the Conservatives, including the Bloc Québécois’s potential for growth in Québec. Although the federal Greens have diminished as a factor outside of a few specific ridings, the risks of vote-splitting between the Liberals and NDP exist.

The situation could lead to a Conservative victory and even a majority.

O’Toole has, so far, done a skillful job moving his party from the right to the moderate centre, but major questions still have to be asked what sort of government he would actually lead. Although acknowledging the reality of climate change, his party’s climate policies, particularly on carbon pricing, remain weak shadows of what’s being proposed by the Liberals, NDP, Bloc and Greens.

Conservatives more popular in the West

The Conservatives may see some gains in Ontario and Québec, but they’re still fundamentally grounded in Alberta and Saskatchewan where many voters are hostile to climate action and dependent on resource development industries.

A Conservative cabinet would likely include more than a few holdovers from the Stephen Harper era, which was defined by the abandonment of Canada’s international climate change commitments, particularly the Kyoto Protocol.

A new Conservative federal government would likely draw heavily on Jason Kenney’s government in Alberta, and Doug Ford’s in Ontario, for political staff and advisers.

Both governments have been unwilling to act on climate change and have been criticized for their poor management of the COVID-19 pandemic. They remain overwhelmingly pro-industry, carbon-intense and development-friendly.

This all makes for some very difficult choices for voters concerned about climate change. Many would prefer a Liberal minority government dependent on the NDP, Bloc Québécois and/or Greens for support.

Such outcomes are, however, notoriously difficult to engineer from the perspective of individual voters.

O’Toole’s recent stumble on gun control may significantly weaken his party’s appeal to moderate voters, particularly in Québec and in urban areas.

But Canadians are still faced with an unwanted election, that has placed climate progress at unnecessary risk.

Mark Winfield is a professor of environmental studies at York University.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The post Climate action is at risk because of the snap federal election call appeared first on Corporate Knights.

As the country’s need for power grows through the decarbonization of transportation, industry and space heating, the Liberal Party climate plan is proposing a clean energy standard to help Canada achieve a 100% net-zero-electricity system by 2035. 

The proposal echoes a report released August 19 by the David Suzuki Foundation and a group of environmental NGOs that also calls for a clean electricity standard, capping power-sector emissions, and tighter carbon-pricing regulations. The report, written by Simon Fraser University climate economist Mark Jaccard and data analyst Brad Griffin, asserts that these policies would effectively decarbonize Canada’s electricity system by 2035.

“Fuel switching from dirty fossil fuels to clean electricity is an essential part of any serious pathway to transition to a net-zero energy system by 2050,” writes Tom Green, climate policy advisor to the Suzuki Foundation, in a foreword to the report. The pathway to a net-zero grid is even more important as Canada switches from fossil fuels to electric vehicles, space heating and industrial processes.

While the NDP and Greens also call for a net-zero grid by 2030 (five years earlier than the Liberals), only the Liberals have promised to institute a clean electricity standard, which is the specific mechanism under federal law that would permit Ottawa to use regulation and carbon pricing to achieve its target. And while the Conservatives promise to upgrade the grid, their platform doesn’t include a net-zero electricity system target.

Under Jaccard and Griffin’s proposal, a clean electricity standard would be established to regulate CO2 emissions specifically from power plants across Canada. In addition, the plan includes an increase in the carbon price imposed on electricity system releases, combined with tighter regulation to ensure that 100% of the carbon price set by the federal government is charged to electricity producers. The authors propose that the current scheduled carbon price of $170 per tonne of CO2 in 2030 should rise to at least $300 per tonne by 2050.

In Alberta, Saskatchewan, Ontario, New Brunswick and Nova Scotia, the 2030 standard would mean that all fossil-fuel-powered electricity plants would require carbon capture in order to comply with the standard. The provinces would be given until 2035 to drop to zero grams CO2 per kilowatt hour, matching the 2030 standard for low-carbon provinces (Quebec, British Columbia, Manitoba, Newfoundland and Labrador and Prince Edward Island). 

Alberta and Saskatchewan targeted 

Canada has a relatively clean electricity system, with about 80% of the country’s power generated from low- or zero-emission sources. So the biggest impacts of the proposal will be felt in the higher-carbon provinces of Alberta and Saskatchewan. Alberta has a plan to switch from coal-based electric power to natural gas generation by 2023. But Saskatchewan is still working on its plan. Under the Jaccard-Griffin proposal, these provinces would need to install carbon capture on their gas-fired plants by 2030 and carbon-negative technology (biomass with carbon capture, for instance) by 2035. Saskatchewan has been operating carbon capture and storage technology at its Boundary Dam power station since 2014, but large-scale rollout at power plants has not yet been achieved in Canada. 

With its heavy reliance on nuclear and hydro generation, Ontario’s electricity supply is already low carbon. Natural gas now accounts for about 7% of the province’s grid, but the clean electricity standard could pose a big challenge for the province as it ramps up natural-gas-generated power to replace electricity from its aging Pickering station, scheduled to go out of service in 2025. Pickering currently supplies about 14% of Ontario’s power. 

Ontario doesn’t have large geological basins for underground CO2 storage, as Alberta and Saskatchewan do, so the report says Ontario will have to build up its solar and wind generation significantly or find a solution to capture CO2 from its gas plants. The Ontario Clean Air Alliance has kicked off a campaign to encourage the Ontario government to phase out gas-fired generation by purchasing power from Quebec or installing new solar or wind power.

As the report points out, the federal government has Supreme Court–sanctioned authority to impose carbon regulations, such as a clean electricity standard, and carbon pricing on the provinces.

The federal government can also mandate a national approach to CO2 reduction regardless of fuel source, encouraging higher-carbon provinces to work with their lower-carbon neighbours. The Atlantic provinces would be encouraged to buy power from hydro-heavy Newfoundland, for example, while Ontario would be encouraged to buy power from Quebec, Saskatchewan from Manitoba, and Alberta from British Columbia.

The Canadian Electricity Association, the umbrella organization for Canada’s power sector, did not respond to a request for comment on the Jaccard-Griffin report or the Liberal net-zero grid proposal.

Liberal-NDP battle over climate policy

The proposed clean electricity standard is part of a Liberal-NDP battle over climate policy in the current election campaign, prompted in part by an assessment by Jaccard of the parties’ climate platforms. Jaccard has rated the overall Liberal climate plan as 8/10, which is not surprising given that his own recommendations for carbon pricing and the more recent clean electricity standard are in the plan. At the same time, he ranked the NDP’s climate platform at 2/10, saying it was hobbled by unrealistic burdens on industry to pay for decarbonization.

Ironically, the NDP plan calls for the kind of strong regulation and stringent carbon pricing throughout the economy that Jaccard specifically recommends for the electricity system in his net-zero electricity report.

Just how much more clean power will Canada need? 

The proposal has also kicked off a debate about exactly how much additional electricity Canada will need in coming decades.

In his 2015 report, Pathways to Deep Decarbonization in Canada, energy and climate analyst Chris Bataille estimated that to achieve Canada’s climate net-zero target by 2050 the country will need to double its electricity use by that year.

Jaccard and Griffin agree with this estimate, saying that Canada will need more than 1,200 terawatt hours of electricity per year in 2050, up from about 640 terawatt hours currently.

But energy and climate consultant Ralph Torrie (also director of research at Corporate Knights) disputes this analysis.

He says large-scale programs to make the economy more energy efficient could substantially reduce electricity demand. A major program to install heat pumps and replace inefficient electric heating in homes and businesses could save 50 terawatt hours of consumption on its own, according to a recent report from Torrie and colleague Brendan Haley. 

Put in context, 50 terawatt hours would require generation from 7,500 large wind turbines. Applied to electric vehicle charging, 50 terawatt hours could power 10 million electric vehicles.

While Torrie doesn’t dispute the need to bring the power system to net-zero, he also doesn’t believe the “arm-waving argument that the demand for electricity is necessarily going to double because of the electrification associated with decarbonization.” 

Eugene Ellmen writes on sustainable business and finance. 

The post Cleaning up Canada’s electricity is critical to meeting climate pledges appeared first on Corporate Knights.

In the first week, however, the spotlight shone on the humanitarian crisis in Afghanistan and the ongoing debate about whether the government should require certain employees to be vaccinated as another wave of COVID-19 infections swells. Canada’s role in safeguarding future life on this planet has yet to be broached in a serious way. That is likely to change.

This campaign is bookended by a summer in which the climate emergency became increasingly apparent and the UN climate summit this fall – to be hosted in November by British Prime Minister Boris Johnson – in which nations will be expected to make more ambitious commitments to head off global environmental disaster.

Each of the political parties has made sweeping promises for climate change action, and voters need journalists to ask probing questions about their adequacy and credibility.

Journalist Markham Hislop recently commented that the Conservative Party of Canada’s climate change policies as outlined in their platform effectively “close the gap” with the Liberals’ stance on the issue while suggesting that the New Democrats offer a slightly more ambitious plan than the one put forward by the Trudeau government.

The result, he suggested, is less opportunity for wedge politics in which the Conservatives are painted as Neanderthals, as they were under Andrew Scheer during the 2019 campaign.

There is some truth to Hislop’s contention, especially when journalists are preoccupied with other priorities that create more clearly defined wedges. Still, there are yawning differences among the parties with regard to climate ambition. There continue to be deep cleavages in terms of how they would treat the oil and gas sector, which is responsible for 25% of Canada’s greenhouse gas (GHG) emissions.

Liberals remain vulnerable 

In the past nine months, the Liberal government moved the yardsticks on climate ambition. They announced a tougher 2030 target and commitment to net-zero emissions by 2050, passed legislation that provides some accountability on meeting GHG-reduction targets, and announced plans to raise the carbon price to $170 a tonne by 2030. They also announced more than $15 billion in spending to commercialize and adopt clean technologies that will help Canada meet its commitment and create jobs in the zero-carbon economy.

Still, the Liberals remain as vulnerable as they were in the 2019 election among voters who rank climate change high on their list of priorities and are unhappy with the Trudeau government’s ongoing support for the fossil fuel industry.

In addition to support for the Trans Mountain oil pipeline and export facilities for natural gas, the Liberal government provided some $1.9 billion in subsidies to the industry in 2020, the International Institute for Sustainable Development concluded in a report this year. Activists say that figure dramatically underestimates federal assistance by excluding things like pandemic-related wage subsidies and Bank of Canada bond purchases.

Conservative climate platform falls short 

Conservative Leader Erin O’Toole, meanwhile, is determined to give his party more credibility on climate change policy, but so far he has had mixed success.

His platform promises $15 billion in spending over several years to support the development and adoption of low-carbon technology. It includes a modest carbon price of $50 per tonne but would allow consumers to keep the proceeds of the levy to spend on a variety of energy-saving devices. The move may appeal to voters, but it would do little, if anything, to encourage less fuel consumption. The Liberal program provides cash payments to Canadians to ease the burden of the levy but is not tied to their actual spending.

When O’Toole released his climate plan last spring, analysts concluded it was a “serious” plan that could, if fully implemented, achieve GHG reductions that would put Canada within reach of our initial target of reducing emissions by 30% below 2005 levels by 2030. It’s a target that may have been reasonably laudable when it was initially set by former Conservative PM Stephen Harper in 2015.

However, that target is clearly insufficient to put the country on course for achieving net-zero status by 2050. The Liberals will no doubt remind climate-conscious voters that the Conservatives have not endorsed the net-zero target.

In April, the Liberal government increased its ambition to reduce emissions by between 40 and 45% by 2030 and hit that mid-century, net-zero goal. The New Democrats would set a target of 50% GHG reduction by 2030, while the Green Party of Canada says we need to go further and cut GHGs by 60% in the next decade.

O’Toole has the least ambitious targets, while at the same time, his party lacks credibility to implement the plan for a number of reasons.

Environmental economist Nic Rivers – who was quoted in the platform as lauding its seriousness – notes that many of the proposals are conditional on a number of factors, often requiring identical American action. While the platform has some serious policy proposals, it is easy to be skeptical about whether there will be seriousness in implementing them, Rivers says.

Conservatives remain deeply divided about the importance of GHG reductions. At a spring policy convention, the delegates voted down a resolution that would recognize the reality of climate change and the need for Canada to address it.

The party has oil in its DNA. Conservatives have worked hand-in-glove with the industry’s leaders in recent years to oppose Liberal climate and environmental policies, and their platform calls for continued expansion of oil and natural gas exports.

While Conservatives have endorsed technology to capture carbon emissions in industry, that approach faces serious limitations. Chief executives at Suncor Energy and Cenovus Energy say it would require $75 billion to decarbonize the oil sands, and they want the federal government to pay. It would take additional billions to capture carbon from conventional oil and natural gas production. None of this would address emissions that occur when the oil or natural gas is burned as fuel.

One telling item, as reported last week by The Narwhal’s Fatima Syed: the Conservative platform proposes to criminalize civil disobedience actions that would interfere with oil and gas projects. Conservatives – both federally and in Alberta – have waged war on environmental groups that oppose oil pipelines and liquid natural gas facilities as unsustainable fossil infrastructure. Former PM Stephen Harper and his cabinet minister Joe Oliver targeted environmental groups, including increased audits of their charitable status by Revenue Canada.

Still, the Conservatives are clearly hoping mainstream voters will see a “serious” enough plan to check the climate box as they consider their election options. Liberals, meanwhile, have upped their ambition considerably since 2019 and want to persuade Canadians that theirs is an urgent but pragmatic approach.

Avid climate voters, including young Canadians who rank it as a high priority, will have to decide whether Liberal actions are sufficient or opt for a more ambitious NDP environmental platform that would intrude heavily in areas of provincial jurisdiction. The Green Party has the most ambitious climate agenda and could attract ardent environmentally minded voters. However, internal battles derailed its campaign before the election even started.

In a tight contest, the parties’ ability to manage the climate agenda could be one key to electoral success.

The post Climate crisis remains wedge issue on campaign trail appeared first on Corporate Knights.

The plan, put forward by the Council for Clean Capitalism, calls for the federal government to invest $50 billion per year over six years in key sectors: buildings, transportation, electricity, heavy industry, and oil and gas.

It came in the waning days of a federal election campaign in which the climate crisis has been a central issue, and in which all leading parties have pledged to take action to reduce emissions, though with vast difference in terms of policy ambition.

The Capital Plan for Clean Prosperity represents the kind of government efforts that are typically employed only in time of a major war or economic crisis, and its proponents argue that such an economy-wide intervention is precisely what is required to prepare Canada for the rapid transition to a low-carbon economy that will be essential to avert the worst impacts of climate change.

Under the council’s proposal, grants would be made available to oil and gas and heavy industry companies that could guarantee that the investments would result in a 50% reduction in either greenhouse gas emissions or energy use in the targeted operations. Similarly, developers and contractors would receive grants for zero-carbon-ready buildings, whether through new construction or retrofits, while fleet operators, including transit authorities, would receive grants to cover the incremental costs of upgrading new vehicle purchases to be zero-emissions vehicles (ZEV). Funds would also be made available to cover the full cost of interprovincial high-voltage, direct-current (HVDC) power lines.

The council argues that the increased debt incurred by Ottawa would be offset by massive job creation and higher tax revenues that would result from the increased business activity.

All told, the investment effort would reduce greenhouse gas emissions (GHGs) by 139 megatonnes annually by 2025, taking Canada 70% of the way to its Paris treaty commitment, according to modelling done by Corporate Knights, an affiliate of the Council for Clean Capitalism. Under the Paris Agreement, Canada committed to reduce emissions to 30% below 2005 levels by 2030 and is now being urged by the Intergovernmental Panel on Climate Change to be even more ambitious.

The GHG reductions would be in addition to the impact of measures adopted by federal and provincial governments over the past four years, which Environment Canada has projected would leave Canada some 78 megatonnes above its target of 513 megatonnes in 2030.

“The Capital Plan for Clean Prosperity demonstrates that transitioning to a low-carbon economy is less about ‘shutting down’ than it is about retooling, diversifying and growing,” said council coordinator Toby Heaps, who is also the publisher of Corporate Knights magazine. He added that the investment benefits are especially significant in the oil sector, “which offers the biggest carbon savings bang for buck, and where production costs per barrel will be critical to remaining competitive.” The plan estimates that an investment of $21 billion over six years would reduce GHGs by 30 megatonnes per year by 2025, saving the sector $10 billion in energy costs over the same time frame.

The members of the Council for Clean Capitalism include Teck Resources, HP Canada, Sun Life Financial Canada, BGIS (formerly Brookfield’s real estate management arm) and BASF Canada. Corporate Knights did the economic modelling for the capital plan.

Any effort to implement such a plan would run into significant challenges. It would add $300 billion to the federal debt over six years, represent a massive government intervention in the economy, and effectively subsidize the country’s oil and gas producers despite calls from clean energy advocates to eliminate fossil fuel subsidies.

However, when outlining the plan for the council, Heaps said that the urgent nature of the climate crisis justifies an unprecedented response from government.

“Stimulus of this scale would be justified by the economic benefits that accrue from a once-in-a-generation energy transition and by the need to respond to the climate emergency,” he said.

The plan would add $50 billion annually to the federal deficit for six years – roughly 2% of gross domestic product (GDP) – and drive the federal debt-to-GDP ratio up by 10 percentage points, to 44%. The Conservative government under Stephen Harper posted a deficit of $55.6 billion in the depths of the Great Recession in 2009/10, or 3.4% of GDP, but cut the shortfall in half within two years.

“Stimulus of this scale would be justified by the economic benefits that accrue from a once-in-a-generation energy transition and by the need to respond to the climate emergency.”

A recent Scotiabank report suggested that the federal government should be prepared to inject as much as $100 billion of stimulus, or 4% of GDP, into the economy if the global economy stalls as expected.

Heaps acknowledges that it would be challenging to justify a plan that essentially pays corporate Canada to make the reductions that climate crisis advocates argue companies should be doing on their own. However, such investments would pay enormous dividends by preparing the Canadian economy for a low-carbon future, boosting economic activity and jobs, and achieving dramatic reductions in GHG emissions, he said in an interview.

Canada’s response to the looming climate emergency has been a key issue in the election campaign that resulted in a Liberal minority government.

The Conservatives have campaigned against a carbon tax and have offered only modest alternatives, including a two-year subsidy for home renovations, to reduce emissions.

The Green Party occupies the other end of the spectrum from the Conservatives, with ambitious plans for retrofitting buildings, prohibiting the sale of gasoline- or diesel-powered automobiles by 2030 and stopping approvals for new oil and gas projects and slowly decreasing existing operations.

Liberal leader Justin Trudeau has promised to exceed Canada’s 2030 emissions target, but the party has not laid out a clear path to do so. The Liberals point to existing commitments that include major multiyear spending for green infrastructure such as public transit while offering, for example, a new policy of home energy retrofit loans to be financed by the Canada Mortgage and Housing Corporation.

The New Democrats – who may hold a balance of power in a minority government after the election – and the Green Party have both campaigned on a pledge to end subsidies and tax breaks for the oil and gas sector. The plan by the Council for Clean Capitalism would, in contrast, provide the industry – and the oil sands sector in particular – with annual multibillion-dollar subsidies over the next six years.

The Council for Clean Capitalism plan would allocate $21 billion to oil and gas companies to invest in technology that reduces their emissions. Heaps said that the oil industry offers the biggest GHG reductions per dollar invested of any sector and must be part of the solution if Canada is to have a shot at meeting its 2030 emission reduction goals.

The industry, which accounted for 27% of Canada’s emissions in 2017, is already spending more than $1 billion annually on efforts that reduce GHGs. However, it is typically only pursuing operational changes that improve energy efficiency and yield attractive rates of return due to lower operating costs. Suncor Energy, for example, announced last month that it will invest $1.4 billion to replace two coke-fired boilers with natural-gas-fired co-generation units that will produce steam for its oil sands operations near Fort McMurray and provide 800 megawatts of power for the grid. The system will reduce GHGs from steam production at the site by 25% (or 2.5 megatonnes per year) while providing a “robust” rate of return to be a “significant contributor to the company’s goal of growing incremental free funds flow by $2 billion by 2023,” the company said.

Oil industry veteran Gord Lambert said there are significant opportunities to reduce emissions throughout the industry, from the extraction of bitumen to the refining of crude into petroleum products, but companies need to see reasonable payback before making the spending commitments. “Lots of ideas are available to the sector, but the [lengthy] time-to-payout is making investment difficult,” said Lambert, a Suncor retiree who now serves as CEO of Alberta’s energy regulator and as a board member at Alberta Innovates, a provincial agency that provides financial support for innovation.

The province helps finance technological innovation with revenues generated by a provincial carbon levy that was first put in place by a Conservative government and was increased by the New Democrats after they took power in 2015. However, environmental campaigners argue the federal government should not be subsidizing the oil industry, even if such spending reduces emissions per barrel. “We need to get off oil, not reduce upstream emissions per barrel,” Greenpeace campaigner Keith Stewart said. “Public funds should be focused on a wholesale transition off fossil fuels.”

Perhaps a less politically divisive area of focus in the capital plan is its call for investment in energy efficiency and electrification in the buildings and transport sectors, which together account for over a third of the country’s emissions.

Each of the national parties has some form of energy retrofit policy in their platform, ranging from a refundable tax credit worth up to $3,800 offered by the Conservatives to an ambitious plan to retrofit every building in the country by 2030 put forward by the Greens.

The Capital Plan for Clean Prosperity urges Ottawa to allocate $78 billion over six years to cover the incremental costs of making new buildings zero-carbon ready and to retrofit buildings in Canada. It estimates that the industry is prepared to invest $795 billion between 2020 and 2025, and the incremental 10% provided by Ottawa to cover costs of upgrades to new buildings and retrofits would be enough to bring a quarter of all commercial and residential buildings to a zero-carbon-ready standard by the end of 2025. (Zero-carbon ready suggests a property owner can reduce a building’s energy consumption to the point that any emissions from fossil fuels are offset by onsite renewable energy.)

The investment in the building sector would provide the largest boost to economic growth, the council said. The investment program would also lower costs for building owners, whether commercial developers or homeowners, and generate tax revenues for government to help offset the spending.

The targets for building retrofits (3% of total building stock per year) are consistent with the most aggressive plans seen in Europe and in U.S. states like New York and Connecticut, said Brendan Haley, policy director for Ottawa-based advocacy group Efficiency Canada.

However, there is a stubborn resistance among builders and owners to adopt the off-the-shelf technology available to dramatically reduce energy consumption in buildings. Energy efficiency technologies can require significant upfront costs that are only recouped over time. There are also barriers such as the need for management time and attention to decide what technologies to embrace, the reluctance of building operators to incorporate new systems, and the tendency of business executives to want to invest in revenue-generating assets rather than cost-saving operational changes. Those hurdles could be effectively overcome through the provision of “free money” from the federal government that would generate broad economic and environmental benefits for the country, Haley said.

The Capital Plan for Clean Prosperity represents a radical departure for a country that has long struggled to meet its climate commitments and has battled over carbon taxes and the fate of oil pipelines. It also represents an opportunity for whatever party is in power after the Oct. 21 election to demonstrate a vision on the climate crisis that goes beyond “business as usual.”

Shawn McCarthy is an independent writer and senior counsel with Sussex Strategy Group.

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