09 May Canada still has a long way to go on addressing the Climate Crisis
Canada still has a long way to go on
addressing the Climate Crisis:
The Commissioner of Environment and Sustainable Development releases his Spring 2022 Report
Since 1995, the Office of the Auditor General of Canada has had a mandate related to the environment and to sustainable development which is carried out by the Commissioner of Environment and Sustainable Development (CESD). Under the Federal Sustainable Development Act, the CESD reports on the federal government’s efforts to protect the environment and foster sustainable development. This includes monitoring the sustainable development strategies of federal departments as per the Federal Sustainable Development Strategy, as well as, the Government of Canada’s implementation of climate change mitigation measures.
The CESD, Jerry DeMarco, released his five Spring 2022 Reports on April 26, 2022:
- Just Transition to a Low-Carbon Economy.
- Greening Government Strategy.
- Hydrogen’s Potential to Reduce Greenhouse Gas Emissions.
- Funding Climate-ready Infrastructure – Infrastructure Canada.
- Carbon Pricing – Environment and Climate Change Canada.
This blog post provides a quick overview of each of the Spring 2022 Reports. These reports follow from the Fall 2021 reports (which provided an overview of Canada’s climate record, see our blog here) by looking at specific federal programs designed to address the climate crisis and reduce greenhouse gas (GHG) emissions.
In this report, the CESD looked at “whether Natural Resource Canada working with Employment and Social Development Canada and partners has prepared to support workers and their communities for a just transition to a low-carbon economy” (para. 1.9). A just transition “would provide equitable support to a low-carbon economy while sharing the costs across society” (para. 1.2). The Canadian government has made international commitments to a just transition in the Paris Agreement and in the Powering Past Coal Alliance Declaration.
The lead department for advancing legislation “to support the futures and livelihoods of workers and their communities in the transition to a low-carbon economy” is Natural Resources Canada (NRC) (para. 1.5). As well, the Minister of Natural Resources is responsible for reporting on two coal transition programs – the Canada Coal Transition Initiative and the Canada Coal Transition Initiative Infrastructure Fund – which are intended to support skills development and economic diversification for workers and communities impacted by the phase-out of coal-fired electricity. NRC is supported or partnered with other departments, including Employment and Social Development Canada (ESDC), in terms of advancing relevant legislation, and designing and implementing these programs.
The audit found that neither NRC and ESDC are prepared to support a just transition to a low-carbon economy. There is no governance structure in place to set out related roles, responsibilities and accountabilities, nor is an implementation plan in place. The CESD points out that with no federal approach for a just transition, supporting and partner departments have to rely on existing program mechanisms which are not designed to support a just transition. In addition, there is no framework to measure, monitor, and report on actions to support a just transition.
The CESD recommends that a federal implementation plan, a formal governance structure, and a measuring and monitoring system be put into place by NRC and its supporting and partner departments.
In this report, the CESD looked at the Greening Government Strategy which was launched in 2017 by the Treasury Board of Canada Secretariat. A key commitment of that strategy is to reduce GHG emissions by government operations to 90% below the baseline for fiscal year 2005-06 without the use of carbon removals, with the ultimate goal of achieving net-zero emissions by 2050. Achieving the net-zero goal means that emissions must be reduced to as close to zero as possible with remaining emissions balanced out with an equivalent amount of carbon removal.
The federal government groups its GHG emissions into 2 categories: departmental emissions which include buildings and 50+ vehicle fleets, and national safety and security fleet emissions. The sources of GHG emissions are also categorized in terms of scopes:
- Scope 1 being direct emissions from assets owned or controlled by government;
- Scope 2 being indirect emissions from the generation of purchased electricity, heat, cooling and steam required by government operations; and
- Scope 3 being all indirect emissions resulting from government operations.
The CESD’s audit specifically looked at whether the Treasury Board of Canada Secretariat led the Greening Government Strategy in a “manner that supported the federal government’s progress toward reducing its greenhouse gas emissions” (para. 2.11). It also looked at whether the departments of National Defence and Transport Canada reported “results that were supported by the implementation of internal controls and took appropriate measures to reduce greenhouse gas emissions in their areas of responsibility” (para. 2.11). The CESD chose these two departments because National Defense represents nearly half of all federal governmental Scope 1 and 2 emissions, and Transport Canada provides an example of a department with significant fleet emissions.
While the CESD’s audit found that the Treasury Board of Canada Secretariat “took initial steps to support the federal government’s efforts to reduce its greenhouse gas emissions”, its efforts were not as complete as they could be (para. 2.15). The audit found that, although the Treasury Board of Canada Secretariat provided departments with useful guidance and tools to help them develop emissions reduction plans and reports, it did not include sufficient detail about some incomplete commitments. As well, the Secretariat had a limited approach to identify, monitor or mitigate potential threats to the government’s ability to achieve its climate change targets (i.e. important management elements – like risk management – were limited or incomplete). The audit also found that some information the Secretariat provided about the government’s progress was unclear, incomplete, or hard to find.
With respect to the departments of National Defense and Transport Canada, the CESD audit found that both aligned their GHG emission reduction plans with the Greening Government Strategy, reduced their emissions, and reported annually. But the analyses provided by the department of National Defense did not demonstrate how its short-term actions were contributing to the 2050 net-zero goal. In addition, Transport Canada did not provide sufficient context on its reported emissions or results when it reported in formats other than those intended for the Secretariat. Neither department has an approach to identify, monitor or mitigate potential threats to their ability to implement the Greening Government Strategy.
In this report, the CESD looked at whether Environment and Climate Change Canada (ECCC) and NRC “comprehensively assessed the role that hydrogen should play as a pathway to reach Canada’s climate commitments” (para. 3.12). The CESD indicates that it important that ECCC and NRC appropriately project hydrogen’s impact on reducing emissions, otherwise there is a risk that Canada will not achieve its emissions reductions targets. NRC has published the Hydrogen Strategy for Canada which is also referenced in Canada’s federal climate plan, A Healthy Environment and a Healthy Economy.
The CESD found that ECCC and NRC had different approaches in assessing the role of hydrogen in reducing GHG emissions with ECCC projecting a 15 megatonnes of carbon dioxide equivalent emission reduction in 2030 versus NRC projecting up to 45 megatonnes. The CESD concluded that ECCC ought to have exercised stronger coordination in estimating the potential role of hydrogen in meeting emission reduction targets.
As well, the CESD found that both departments used “unrealistic assumptions for modelling the potential of hydrogen to reduce greenhouse gas emissions” (para. 3.16). As a result, the CESD is concerned that the federal climate plan – A Healthy Environment and a Healthy Economy – is not aligned with Canada’s climate commitments that were in effect at the time the plan was developed. Furthermore, the plan is not fully transparent because it includes assumptions that are not clear and relies on policies that are not in effect or announced which “compromises the credibility of the expected emission reductions” (para. 3.17).
The CESD notes some of the problematic assumptions in the Hydrogen Strategy for Canada include:
- favouring the transformative scenario which is “aggressive modelling that assumes the most favourable regulations, technological developments, and adoption growth rates” (para. 3.23);
- unfounded assumptions of policy implementation across jurisdictions (i.e. assumptions are not backed up by either federal or provincial policies, and assumed to be uniform across all provinces);
- unrealistically low production cost assumptions (i.e. electricity prices were assumed to be much lower than recent prices);
- no consideration of supporting infrastructure costs such as the required electrical grid size to support hydrogen deployment; the real rate of carbon capture, utilization and storage; and pipeline and storage needs; and
- overly ambitious assumptions of technology uptake.
When modelling hydrogen demand in the federal climate plan (i.e. A Healthy Environment and a Healthy Economy), the ECCC used a hydrogen-natural gas blending obligation which was not based on any existing provincial or federal policy. Furthermore, the CESD audit found that this approach was uneconomical based on the current trend of carbon pricing. The result, according to the CESD, is that it calls “into question whether the emission reduction pathway was realistic and achievable” (para. 14).
The CESD recommended that NRC should perform comprehensive modelling for the use of hydrogen and publish a hydrogen market development roadmap to track progress and outcomes. In addition, the CESD recommends (among other things) that ECCC adopt a standard framework to estimate emission impacts of proposed policies, clean technologies and fuels.
In order to be climate-ready, buildings and other infrastructure need to be adapted to withstand future severe weather events and the long term impacts of climate change. In addition, in order to contribute to Canada’s emissions reduction targets, buildings need to be carbon neutral or highly energy efficient. With this in mind, the federal climate plan included several infrastructure programs:
- Investing in Canada Infrastructure Program;
- Disaster Mitigation and Adaptation Fund;
- Green and Inclusive Community Buildings program; and
- Smart Cities Challenge.
Infrastructure Canada, with support from ECCC, developed the Climate Lens tool “to promote and enable the estimation of expected reductions in GHG emissions, and the assessment of climate risks and resilience outcomes of proposed climate-ready infrastructure projects” (para. 4.5). The Climate Lens was applied to the above programs except for the Green and Inclusive Community Buildings program which was assessed with a different approach (i.e. by requiring applicants to provide climate-related information to the department in their program submission).
The CESD’s audit considered whether Infrastructure Canada designed and implemented an sufficient climate lens approach to these programs, and “whether investments under these programs contributed to more resilient and inclusive, and less carbon-intensive infrastructure investments” (para. 4.10). The audit did find that Infrastructure Canada established a way to assess whether the funded infrastructure projects were more climate-resilient and helped reduce GHG emissions (i.e the Climate Lens tool). However, Infrastructure Canada “did not know the extent to which its investments supported less carbon-intensive and more resilient infrastructure” because the department received incomplete or unreliable information (para. 4.13).
While the initial version of the Climate Lens tool was a sound design that required detailed estimates of expected emission reductions on the basis of clear guidance, those requirements were weakened in 2021 and that reduced the department’s ability to track and report on programs’ contributions to climate-related objectives. The CESD found that the approach for Canada’s Green and Inclusive Community Buildings program did integrate “clear requirements to provide estimates of expected GHG emission reduction and resilience outcomes” (para. 4.17). The audit also found that climate-related information submitted by project proponents was poorly managed by Infrastructure Canada in terms of recording and transferring the data across the department’s databases.
In this report, the CESD audit focused on whether ECCC “ensured that carbon pricing systems in Canada were applied effectively, fairly, and transparently” (para. 5.10). The audit did not look at the effectiveness of the federal approach to carbon pricing in terms of actual GHG emission reductions because it’s too soon to be measurable.
The audit found that ECCC had ensured that carbon pricing systems were in place in all provinces and territories. However, weak minimum standards meant less effective carbon pricing programs were approved by ECCC, especially those respecting large emitters. As well, the audit found that there were several weaknesses in the information needed to demonstrate the effectiveness of existing carbon pricing systems and to guide policy changes. These weaknesses include a lack of transparency as to how provincial/territorial systems compare to the federal benchmark, and insufficient public information on the large emitter programs.
The CESD also found that, while there are efforts to lessen carbon pricing burdens on some groups, Indigenous groups and smaller enterprises remain disproportionately affected. Furthermore, ECCC has not set a requirement for provinces and territories to assess and identify measures to address these burdens.
Overall, the audit found that ECCC had “some weaknesses in its initial standards, which allowed some less effective provincial carbon pricing systems to be accepted” (para. 5.102) The audit notes that ECCC has since strengthened its approach to improve the effectiveness, fairness and transparency of Canada’s carbon pricing systems but that much work remains to be done with respect to large emitters, to alleviate disproportionate impacts on certain groups (such as low income households and Indigenous groups), and to improve reporting transparency.
The ELC’s Key Takeaways from the CESD’s Spring 2022 Reports
Looking at the CESD audit results set out in these reports, it is clear that the federal government has taken steps to address the climate crisis. However, it is also clear that there remains much work to be done: better leadership and direction is needed to ensure a just transition; better and consistent information gathering around policy implementation and impacts is required; consistent and realistic modelling is required to properly anticipate future GHG emissions; and the effectiveness, fairness and transparency of Canada’s carbon pricing approach needs to be improved.
In response to the climate crisis, Canada has set the goal of net-zero by 2050. Achievement of this crucial goal requires us to know where we are and where we are going. We must ensure that our path forward is realistic, transparent and attainable as opposed to a collection of vague and overly-optimistic aspirations.
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