Canadian Manufacturing

The political opportunities and challenges of Canada’s new $9.1B climate plan

It’s hard to fathom Canada reducing its emissions by 40 per cent to 45 per cent in just eight years unless the necessary regulations are finalized in the next one to three years without being watered down.

April 1, 2022   by Kathryn Harrison, Professor of Political Science, University of British Columbia

Arctic Polar Bear. Wikimedia Commons.

With the release of Ottawa’s new “2030 Emissions Reduction Plan” this week, Canada has entered a new phase of climate policy. The 270-page document lays out the path the federal government will take to meet Canada’s Paris Agreement target to cut emissions by 40 per cent to 45 per cent below 2005 levels by 2030.

The new climate plan is the first to be produced under the new Canadian Net-Zero Emissions Accountability Act, which mandates that governments show how they will meet emissions targets and regularly report on their progress. The plan seeks to launch Canada’s economic transformation en route to net zero in 2050 through a combination of $9.1 billion in public spending and regulatory measures.

For three decades, Canada has failed to meet any of its emissions targets. So, it’s high time the country started doing what it takes to meet our target. But there will be both political upsides and downsides in this new era of climate policy.

What’s different this time?

This is Canada’s 10th climate plan since 1990, and only the second to offer a plausible strategy to meet a national target. The first eight plans varied greatly in detail — it’s hard to say whether some even qualify as plans — but all either exaggerated how effective popular policies like subsidies would be, fudged expected reliance on international credits or left a gap for future plans and didn’t even pretend the target would be met.

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In December 2020, the federal government released a strengthened climate plan. It offered a credible package of policies, centred around a steadily increasing carbon price, to meet a 30 per cent reduction in greenhouse gas emissions by 2030, Canada’s initial Paris Agreement target.

That precedent was locked in by the 2021 Canadian Net-Zero Emissions Accountability Act, which requires the government to provide regular updates on how it will meet a series of targets, spaced out every five years, as well as on implementation and progress toward those targets.

The new plan focuses on Canada’s updated 2030 target, setting out specific measures, backed by an implementation schedule and a summary of economic modelling underpinning emissions projections. Headlines have highlighted the additional $9.1 billion Ottawa will spend to cut greenhouse gas emissions, including support for consumer purchases of electric vehicles, homeowner investments in energy-efficient upgrades, like heat pumps, and expanding the network of vehicle charging stations.

These expenditures are helpful and undoubtedly popular, but the heavy lifting in reducing Canada’s emissions will be done by the legally binding measures in the Emissions Reduction Plan: an increasing carbon price, mandates for sale of zero-emission vehicles, a clean electricity standard, methane regulations and a politically contentious cap on emissions from the oil and gas sector.

Critically, the plan is only the first step. All these promises remain to be implemented. Spending commitments must be delivered in future budgets, and regulatory measures must be developed and passed into law.

A new baseline for partisan debate

The good news is that the mandate to produce a credible plan to meet Canada’s target has the potential to set a new baseline for partisan debate. Opposition parties can and must hold government to account by asking tough questions about policies and emissions projections.

They might start by inquiring about the apparent gap between the modelling of a 36 per cent reduction and the claim of hitting the 40 per cent target, and how the particular cap on oil and gas emissions was chosen.

But they, in turn, should expect to be held to the same standard in future elections and government. It’s no longer enough to pretend that some vague alternative approach can magically meet the same target without costs. Show us your numbers, too!

Industry lobbying looms

The bad news is that regulatory development proceeds beyond the limelight of national elections. All those regulatory measures — from an electric vehicle sales mandate to a clean electricity standard — that form the backbone of the new plan still need to be developed and finalized. That’s typically a multi-step process, starting with a discussion paper, followed by opportunity for public comments, release of a draft regulation, another opportunity for comments and finally adoption of a legally binding standard by cabinet.

Many of the relevant documents are highly technical. They’re not announced by the prime minister on TV, or covered by broadcast or print media — except the business pages. But there is a lot at stake and a legion of devils in all those technical details. Even as public attention wanes, the industries facing regulatory compliance costs remain highly engaged, at every opportunity making their case for concessions, delays and subsidies.

We’ll get a first signal on subsidies in the forthcoming federal budget. Although Canada has committed to phasing out fossil fuel subsidies by 2023, the new climate plan previews delivery of tax credits for carbon capture and sequestration that the oil and gas industry has been pushing for.

The risk of delay is also clear. For some measures, including the emissions cap on the oil and gas sector and new methane regulations, the new climate plan offers a schedule only for the next step — a discussion paper — but no indication when the regulation will be finalized. That’s a big worry: the discussion paper for the clean fuel standard, scheduled to be finalized this spring, was published six years ago.

It’s hard to fathom Canada reducing its emissions by 40 per cent to 45 per cent in just eight years unless the necessary regulations are finalized in the next one to three years without being watered down.

Domestic and international offsets

Discussion of the proposed emissions cap on the oil and gas sector is especially hazy. Although the new plan proposes a 31 per cent cut below 2005 levels, it flags the possibility of “time-limited” reliance on domestic and international carbon offsets. Regulated industries welcome offsets as an opportunity to reduce their compliance costs by paying for reductions in other, unregulated sectors or other countries.

However, the track record of domestic offsets is far from reassuring, as Nic Rivers, Mark Jaccard and I have previously warned. The reference to international offsets suggests a back-door departure from federal ministers’ insistence since 2015 that Canada will meet its Paris Agreement target by domestic measures alone.

The good news is that there’s plenty of detail here and an opportunity for vigorous questions in Parliament. The worry is that it can all still go off the rails as we move from releasing a plan with great fanfare to less visible and more technical policy development.

A lot is resting on the required 2023 and 2025 updates, third-party evaluations by the Net-Zero Advisory Body and the Canadian Climate Institute, and members of Parliament’s willingness to dig into the details.

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