Action on Climate Needed Now!

Action on Climate Needed Now!

The Commissioner of Environment and Sustainable Development releases his Fall 2021 Report

Since 1995, the Office of the Auditor General of Canada has a mandate related to the environment and sustainable development which is carried out by the Commissioner of Environment and Sustainable Development (CESD).  Under the Federal Sustainable Development Act, the CESD is given the mandate to report on the performance of federal organizations in relation to the Federal Sustainable Development Strategy and on the Government of Canada’s implementation of climate change mitigation measures.

The CESD, Jerry DeMarco, released his five Fall 2021 Reports on November 25, 2021:

• Scientific Activities in Selected Water Basins.
• Emissions Reduction Fund – Natural Resources Canada.
• Lessons Learned from Canada’s Record on Climate Change.
• Departmental Progress in Implementing Sustainable Development Strategies.
• Environmental Petitions Annual Report.

It should be noted that there were also 2 reports released in Spring 2021 (addressing implementation of the UN’s sustainable development goals and natural health products).  This blog post provides a quick overview of each of the Fall 2021 Reports.  However, because the CESD regularly reports on departmental progress in implementing sustainable development strategies and the environmental petitions process, the blog puts emphasis on the other three reports.

Scientific Activities in Selected Water Basins

This audit looked at whether Environment and Climate Change Canada (ECCC) and Agriculture and Agri-Food Canada (AAC) took a “coordinated and risk-based approach to reduce the impact of excess nutrients on ecosystem health” in the Lake Erie, Lake Winnipeg and Wolastoq, Saint John River water basins (page 7). These three water basins were selected for the audit because they each cross international or interprovincial boundaries and each has significant or emerging algal blooms (which affect the health of humans and ecosystems).  It is notable that the Lake Winnipeg Basin includes the North and South Saskatchewan River basins in Alberta.

Overall, the CESD found that ECCC and AAC did take a coordinated and risk-based approach to reducing the impact of excess nutrients in the three selected water basins.  However, there are several areas where coordination can be improved.  Firstly, there is no formal and consistent way for the departments to share the information gathered via their respective risk-assessment tools.  Secondly, while there is some coordination between the ECCC and AAC on specific projects, coordination and planning across scientific activities could be improved.

The CESD stated that coordination is vital given that excess nutrients and algal blooms are concerns in all three water basins and may be exacerbated by climate change; and at the same time, AAC has a stated goal of increasing agricultural production which could contribute to nutrient runoff.  As such, the CESD recommends the ECCC and ADD formally and consistently share information on nutrient management, and on current and emerging risks facing each water basin. Further, there should be a formal mechanism for sharing scientific activity in the three water basins and regional joint science committees should be re-established (at one point, there were formal agreements in place for the Lake Erie and Lake Winnipeg water basins but not for the Wolastoq, Saint John River water basin).  The CESD recommends that ECCC and AAC jointly review their scientific projects related to nutrient management in the three water basins (in order to identify opportunities to coordinate activities, share information and expertise, and address gaps).  Finally, both ECCC and AAC lacked an overall strategy for sharing results of scientific activities with third parties which the CESD recommends be rectified.

Furthermore, the CESD found that the ECCC’s tool for understanding current and emerging risks to water basins is not complete.  The risk-based basin-analysis tool used by ECCC failed to achieve four of its stated seven goals:

• Identify where national monitoring efforts could be optimized, where there is duplication of effort, or where there are gaps in the national networks;
• ensure that ECCC is monitoring the appropriate parameters given the upstream stressors and activities, and downstream aquatic resources;
• develop a tool to better assess sensitivity of aquatic resources that would improve prediction of an impact; and
• demonstrate the ECCC’s leadership role in water quality monitoring.

Without meeting these goals, the CESD found that the ECCC did not have all the information it needed to inform its monitoring activities.  The CESD recommends that ECCC should take steps toward achieving these four remaining goals in order to enable comprehensive risk assessment and strengthen decision-making on where scientific efforts should be directed.

Emissions Reduction Fund – Natural Resources Canada

This audit looks at Natural Resources Canada’s Onshore Program of the Emissions Reduction Fund (Onshore Program) which was launched in November 2020 as part of the COVID-19 Economic Response Plan.  The Onshore Program was “designed to support emission reduction efforts by providing financial support to struggling companies” in the onshore (i.e. land-based) oil and gas sector (page 2).  The Onshore Program provided money to be distributed in the 2020-21 and 2021-22 fiscal years, to be repaid by recipient companies by 2026-27.  Under the Onshore Program, oil and gas companies had to propose projects designed to reduce or eliminate intentional venting of methane and other greenhouse gases in order to comply with or surpass Phase 2 of the federal methane regulations (coming into force January 2023).  If a company’s proposed project would merely bring it into compliance, then it was only eligible for a repayable, interest-free loan. Those companies whose proposed project would surpass federal requirements were eligible for partly repayable interest-free loans and partly non-repayable grants.

In particular, given the international commitments made by Canada regarding climate change under the Paris Agreement and the UN’s 2030 Agenda for Sustainable Development, the audit looked at whether Natural Resources Canada:

• designed the Onshore Program to ensure that the anticipated reductions of greenhouse gas emissions in the oil and gas sector after 2023 would be credible and sustainable; and
• conducted due diligence technical and financial assessments of each applicant’s project submission, including assessment of how each contribution would represent value for money.

Overall, the CESD found that the Onshore Program was not designed with either of these considerations in mind.

On the first consideration, the CESD found that the Onshore Program was not designed to achieve credible and sustainable greenhouse gas emission reductions.  Firstly, an applicant company was not required to demonstrate that emission reductions were attributable to the funding and would not have happened without it (i.e. did not have to show the emission reduction were additional).  Secondly, where an applicant company intended to increase oil and gas production as a result of the funding, there was no requirement to account for the related increase in emissions (and this could lead to a net increase in emissions for some projects).  Thirdly, the CESD found the approach to estimating emission reductions under the Onshore Program did not use recognized greenhouse gas accounting principles with the result that there was an overestimation of emission reductions from and a misstated target for emission reductions for the program.  In particular, the emission reduction estimation process lacked transparency; did not have specific baseline and mitigation action scenarios; relied on incomplete information and did not count indirect effects; did not consider overlap of programs; did not define additionality in a manner consistent with recognized accounting principles; and did not use conservative estimate.  Fourthly, there was a lack of performance indicators (such as job retention) for the Onshore Program’s goals.

On the second consideration of “money for value”, the CESD found that while Natural Resources conducted due diligence financial assessments of each applicant, due diligence technical assessments of the proposed projects were not conducted.  There was no assessment of how each contribution would ensure value for money in reducing emissions or achieving economic benefits (such as maintaining employment).  This stems from overestimations of expected project results due to a failure to require applicants to prepare emission reduction estimates in accordance with greenhouse gas accounting principles.

The CESD made a variety of recommendations designed to strengthen the Onshore Program (see the List of Recommendations).  These recommendations include Natural Resources Canada preparing estimates of expected emission reductions in accordance with the greenhouse gas accounting principles set out in ISO 14064-2, and requiring applicants to use those same principles in preparing their estimates.  As well, Natural Resources Canada ought to base its targets for emission reductions arising from a program on the expected additional annual reductions against the projected baseline scenario emissions for that same year.  Natural Resources Canada should also explain how a particular program will provide the announced benefits and objectives by using performance indicators specific to that program.

Lessons Learned from Canada’s Record on Climate Change

Since 1992, Canada has been part of international commitments to fight climate change and the CESD has been reporting on Canada’s climate change performance since 1998.  This report is not an audit report but rather provides a historical perspective of the last three decades of “Canadian action and inaction” on climate change, looking at past audit recommendations and drawing from interviews with climate experts, former government officials, and former CESDs (page 3).  On this basis, the CESD identifies trends in Canada’s efforts to fight climate change and eight lessons learned along the way.

The CESD notes that Canada has participated in more than 30 years of international collective action on climate including participation in the Intergovernmental Panel on Climate Change (IPCC) and the UN Framework Convention on Climate Change.  However, “[d]espite commitments from government after government to significantly reduce greenhouse gas emissions over the past [three] decades, Canada has failed to translate these commitments into real reductions in net emissions” (page 5).  Rather, Canada’s emissions have continued to increase.

Lesson 1: Stronger leadership and coordination are needed to drive progress toward climate commitments.   Coordination is needed across federal departments and agencies, and all levels of government.  Within one level of government, there is potential for competing mandates and responsibilities which can lead to policies and decisions being at cross-purposes  (such as the federal purchase of the Trans Mountain Pipeline expansion which does not mesh with progress toward climate commitments).  Among different levels of government, there can be divergent provincial priorities and interests which impact differently on climate action and can lead to polarization of climate change discussions.

Lesson 2: Canada’s economy is still dependent on emission-intensive sectors.  There are several opportunities identified by the CESD to address the transition away from an emission-intensive economy.  These include long-term funding (to shield economy from ups and downs in oil revenue, and to invest in renewable technologies); diversifying energy production to greater reliance on renewables; shielding workers and communities from negative effects of climate policy (i.e. just transition initiatives); and a national energy strategy to unify diverse energy interests and map a path forward.

Lesson 3: Adaptation must be prioritized to protect against the worst effects of climate change. The frequency and magnitude of droughts, floods, heat waves, wildfires, and storms are being increased by climate change.  The costs associated with these weather-related disasters are also increasing.  Even though the effects of climate change cannot be reversed (due to long-lasting greenhouse gases), measures can be taken to adapt to climate change effects reducing vulnerabilities. Action must be taken at the national and sub-national (i.e. regional, provincial, and municipal) levels to build climate resilience.  As well, adaptation measures should be implemented early to avoid losses, and generate economic, social, and environmental benefits.  Some actions include early warning systems, climate-resilient infrastructure, improved dry land crop production methods, and more resilient water resources.

Lesson 4: Canada risks falling behind other countries on investing in a climate-resilient future. The financial system is deeply affected by climate change risks (e.g. insurance impacts caused by weather-related disasters, shift to lower-carbon ecosystem, physical effects of climate change).  In terms of climate finance, the CESD identifies several opportunities such as disclosing climate-related risks; incorporating sustainable development into finance, and providing support for developing countries.

Lesson 5: Increasing public awareness of the climate challenge is a key lever for progress. Policy and behavioural change hinges on public support and collective action meaning insufficient public awareness can hinder climate change action.  The CESD indicates that the federal government can build public awareness vis enhanced transparency around its progress toward meeting climate commitments and its intended policy measures.  As well, the federal government could put into place a communications strategy that incorporates clear objectives to build awareness and counter misinformation.

Lesson 6: Climate targets have not been backed by strong plans or actions.  Although Canada has repeatedly made commitments to reduce greenhouse has emissions, to adapt to climate change effects, and to support clean energy, these commitments have not been met.  The CESD recommends that the federal government revisit its plan, policies and actions to ensure its new climate commitments (i.e. emissions will be 40-45% below 2005 by 2030) can be met.  The CESD stresses that the emphasis must be on meeting targets (not, as has been the case in the past, just making plans).

Lesson 7: Enhanced collaboration among all actors is needed to find climate solutions. Governments cannot meet climate objectives alone; there must be collaboration with “civil society, the private sector, financial institutions, local communities, and Indigenous peoples” (page 31).  The CESD notes that there are already non-governmental collaborative efforts underway – such as the First Nations Climate Initiative and International Institute for Sustainable Development – which can show how collaboration can occur.

Lesson 8: Climate change is an intergenerational crisis with a rapidly closing window for action.  The CESD points to the recent court decisions – particularly in the Netherlands, France, and Germany – as examples of landmark decisions that force governments to take stronger climate action.  The CESD indicates that government must move away from short-term planning (around election cycles) to long-term planning to allow for stronger climate actions.  The CESD states “Parliament – as a custodian of our democratic institutions and of our collective future – must intensify efforts in the fight against climate change to make up for decades of missed opportunities and missteps” (page 34).

Departmental Progress in Implementing Sustainable Development Strategies

In Fall 2019, the CESD began reporting on departmental progress in implementing sustainable development strategies outlined in the 2016-2019 Federal Sustainable Development Strategy (FSDS). The Fall 2021 Report is the third and last report in this regard and is focused on whether 12 applicable federal departments and agencies are contributing to meeting the goals of:

• healthy coasts and oceans,
• pristine lakes and rivers, and
• sustainable food.

The CESD found that most of the departmental actions did support the goals in the FSDS although progress reporting was poorly performed (which meant that the organizations did not report results for almost half the actions presented in their sustainable development strategies).  Furthermore, about half of the departmental actions were not linked to the federal targets for any of the goals of healthy coasts and oceans, pristine lakes and rivers, and sustainable food.  The CESD recommends that, when reporting on progress, the relevant federal departments and agencies should “clearly describe the extent to which they met the actions in their sustainable development strategies, using the relevant performance indicators” (page 6).

Environmental Petitions Annual Report

The environmental petition process is established under the federal Auditor General Act and implemented by the CESD.  The environmental petitions process allows any Canadian resident, either individually or on behalf of an organization, to bring environmental concerns to the attention of the federal government. An environmental petition is submitted to the Office of the Auditor General (OAG) who forwards the petition to the appropriate Ministry. The Minister is required to respond to an environmental petition within 120 days of its receipt.

Within the audit period covered by the Report (July 1, 2020 to June 30, 2021), the OAG received 14 environmental petitions originating from B.C., Nova Scotia, Ontario, and Quebec. The petitions raised a variety of concerns around biodiversity (migratory bird habitat), climate change (fuel emissions and financial support for the fossil fuel industry), environmental assessment, and toxic substances (pesticides and underwater pipeline leaks). Responses to 12 of the petitions were provided by 19 federal organizations (most typically, ECCC, Natural Resources Canada, Fisheries and Oceans Canada, and Health Canada).  With the exception of 1 petition, all of the responses were provided within 120 days.