When Prime Minister Trudeau announced that he would host Canada’s premiers in Ottawa for their second climate meeting this year, not many thought he’d pull it off without a hitch. After all, this was the moment when the federal government’s lofty talk on climate would collide head-on with the provinces’ own views on what interventions (if any) were appropriate for Canada’s economy and environment.
Despite the groundwork having been laid for a successful conference, last-minute posturing had some people wondering whether a deal would materialize at all. Would Canada have its hopes raised and dashed in a rollercoaster experience akin to that of the global community in 2009, when the now-infamous Copenhagen climate conference crumbled?
Those who suspected the talks wouldn’t be easy were proven right. With British Columbia’s “will-they-won’t-they” antics, and Saskatchewan and Manitoba holding out for another time, the first ministers’ meeting was one of the more dramatic days of Canadian politics in recent memory.
Despite those two provincial holdouts, the Pan-Canadian Framework on Clean Growth and Climate Change deserves recognition as Canada’s first truly national climate plan. We welcome any plan that keeps the high-ambition actors in the tent, and doesn’t wait for those who aren’t yet ready to take advantage of the economic opportunity that climate action presents. Instead of letting the laggards hold the country back, the pan-Canadian plan establishes national policy benchmarks, compelling the slow starters to catch up — while working with the leaders to move us forward.
Our assessment is that the two provincial holdouts ultimately won’t water down the national approach. Manitoba Premier Brian Pallister has said his province will continue to design their climate approach, including their plan to price carbon. Saskatchewan’s opposition to the climate plan, while more pronounced, is likely to end up with the same outcome. Legal experts have concluded that the federal carbon tax can easily be imposed on provinces — so we expect that sooner or later Premier Brad Wall will shift from “opposition mode” to “program design mode,” in the interest of designing an approach that bolsters the competitiveness of Saskatchewan’s emissions-intensive and trade-exposed sectors.
Unpacking the pan-Canadian plan
The political theatre, though distracting, does not undermine the substance or the importance of Friday’s outcome. With 11 of 13 provinces and territories embracing the cooperative approach, Canada is enjoying the broadest (and likely most durable) consensus it’s ever had on climate action. For the first time in our history, we have a plan that unites the country — and all sectors of the economy — behind a credible course of action on climate change.
Previously announced measures like the national price on carbon, oil and gas methane reductions by 2025, and a national clean fuel standard are critical pieces of the puzzle – but according to estimates produced before the plan’s release, together were not enough to achieve Canada’s 2030 target.
Thankfully, Friday’s plan contained additional measures to move the country forward on climate. The federal government announced they would develop a “net-zero energy ready” model building code by 2020, with the goal that all provinces and territories adopt the standard by 2030. This will be complemented by energy efficiency requirements for existing buildings, which will be prepared by 2022. In the transportation sector, Canada will have a national zero-emissions vehicle strategy by 2018. And, first ministers will support new and improved transmission lines between and within provinces and territories, and will work with Indigenous communities to phase-out diesel power in northern communities.
Before the first ministers met, we outlined four key expectations for the pan-Canadian plan. We’re happy to report many were achieved. A credible plan with policies for all sectors was developed. While the framework had fewer numbers and emissions projections than we’d hoped, we do appreciate that the first ministers detailed the efficacy of all current and proposed policies and recognized that additional actions would be required to get on track. Before year-end, we expect that they will deliver additional details on how specific sectors are performing out to 2030 through the federal government’s annual Emissions Trends report.
And while we didn’t see a detailed or policy-specific implementation schedule for all recently announced commitments, we were happy to see the first ministers commit to continuing to work together on policy implementation. Specifically, they have promised “to take regular stock of progress achieved, to report to Canadians and, [sic] to inform Canada’s future national commitment in accordance with the Paris Agreement.” For that commitment to be meaningful, first ministers will need to provide additional details on their implementation and policy review timelines. We recommend that, in 2017, the federal government reveal additional details on how they intend to keep the pace on implementation and ensure marquee policies are delivered effectively.
Next stop: stale coffee and windowless consultation rooms
The policy development work to translate those commitments into best-case-scenario action will animate many experts over the coming years. It is less likely to see time under the hot lights of national media, but it is critical for Canada’s continued progress. The pan-Canadian framework sketches the path to meeting our 2030 emissions target, but rapid implementation is required to ensure those policies perform and bring down national emissions in the near-term.
According to the federal governments analysis, measures detailed in the pan-Canadian plan will reduce emissions by 86 Mt in 2030, relative to the federal government’s updated reference case of 742 Mt. Those reductions are in addition to the 89 Mt of reductions occurring due to previously announced measures, like Alberta’s climate plan and Saskatchewan’s commitment to 50 per cent renewable energy capacity by 2030. Together, those 175 Mt of emissions reductions — roughly equivalent to all of Canada’s transportation emissions in 2014 — are likely to reduce national emissions to 567 Mt in 2030.
While those 175 MT of reductions make good progress toward the total 523 Mt that Canada needs to meet its target, we should remind ourselves that these emissions reductions are what models tell us is possible — but aren’t guaranteed outcomes. Absent timelines for program design and implementation, and without greater clarity of the interactive effects of multiple policies applied to the same sector, there remains some uncertainty on how close to our 523 Mt goal the whole package of climate tools will get us. Further, additional policy work is required to close the identified 44 Mt emissions gap in 2030, and to set the groundwork for mid-century decarbonization.
We also look forward to getting into the weeds on carbon pricing next year. At a minimum, 2017 will see the provinces without carbon pricing systems designing their approaches and figuring out how they want to use the revenue. The national approach continues to allow them to choose between carbon taxes and cap-and-trade systems with legislated emissions reductions targets, and it leaves decisions around how to use revenue in the hands of the provinces.
Beyond that flurry of activity, the carbon pricing review in 2020 is not far off — and the underlying methodologies for the review will need to be developed well in advance in order to facilitate a productive conversation between governments. This will likely be the first test of how each province’s approach compares with the national benchmark. While questions on methodology remain, the possible outcomes were clearly articulated by the Prime Minister and are reflected in the pan-Canadian agreement: provinces that meet or exceed the federal government’s benchmark carbon price will be fine, but provinces that are deemed to fall short will have to strengthen their systems or have the federal government set a top-up to bring them in line with the benchmark.
2020 will also be an excellent time to establish the next schedule of price increases for the federal benchmark, which currently stops at $50 per tonne of emissions in 2022. Our advice to first ministers on this point is to ensure the carbon price is continually strengthened at predictable rates after 2022, since it’s an important tool that can be used to help the country get all the way to its 2030 targets.
The global climate stage needs more Canada
Predictably, now that historic progress has been made, those who’d rather see Canada mirror Trump’s approach to climate change are opining on the pains of climate action. In a recent Globe and Mail column, Margaret Wente suggested the Paris Agreement needs to be rescued, and that Canada should be doing less, not more to fight climate change. But, let’s not forget that 117 countries — covering 80 per cent of global emissions — have submitted their instruments of ratification with the UN. The Agreement, in other words, is very much alive and kicking.
Will the world suffer if the U.S. quits the deal? Absolutely. But will the remaining 116 countries, still covering more than 65 per cent of global emissions, continue to do the work of finding solutions that grow their economies in less polluting ways? Absolutely – and if our engagement at the last two UN summits in Paris and Marrakech are any indication, Canada will be an important force for good in those international conversations. And Canada’s role within that work could bring low-carbon export opportunities to our entrepreneurs: though our total emissions are small on a global scale (as is the case for most countries), our clean technology footprint doesn’t have to be. According to Analytica Advisors, Canada has 774 clean technology firms — and those firms employ more Canadians than the forestry, pharmaceutical, or medical device industries. With policy support, domestic employment benefits will only grow — as will our market share.
Cooperation, not conflict or “go-it-alone” policymaking, won the day
Instead of focusing on Friday’s political peacocking, let’s reflect on just how much progress Canada has made during our latest orbit around the sun. After a year of intense federal-provincial-territorial discussions, Canada is within striking distance of its 2030 target — with a commitment in hand to review progress and ratchet up ambition, as expected in the Paris Agreement. As we said last week when the plan was released, that’s a landmark achievement.
When embarking on this process to create a pan-Canadian plan, Prime Minister Trudeau placed a bet on a negotiated approach getting the country further in the long run than Ottawa going it alone. It’s safe to say now that his bet paid off. This will be especially important to remember as our political leaders transition this agenda into 2017, with the heavy lifting of policy implementation and increased ambition still ahead.
