November 12, 2023
Version published in The Conversation, November 19, 2023
It has been a bad few weeks for the federal government’s strategies around climate change
A decision to respond to concerns, principally in Atlantic Canada, about the impact of federal ‘backstop’ carbon pricing system on heating costs for households relying on fuel oil, has devolved into a wider debate on the role of the federal government’s carbon pricing system. Alberta, Saskatchewan and Ontario are now demanding that the carbon price be withdrawn from all heating fuels.
Adding to the federal government’s difficulties was a report from the Commissioner for Environment and Sustainable development that Canada was unlikely to meet its 2030 emission reduction targets under the Paris Climate Agreement. The situation was found to be a combination of slow implementation of key measures, and overly optimistic assessment of the impacts of the measures that have been adopted.
The federal Liberals find themselves far behind the Conservative opposition, who have no meaningful climate plan, in public opinion polls. Even the government’s NDP ‘supply and confidence’ allies voted with the Conservatives in favour of the suspension of the application of the ‘backstop’ fuel charge to all heating fuels. The situation has highlighted the political fragility of the federal government’s approach to the climate crisis.
It wasn’t supposed to be this way.
Little more than five years ago there was a relatively strong federal-provincial consensus around action on climate. That consensus included a national carbon pricing system, with the federal government providing a ‘backstop’ system where provinces didn’t price carbon themselves. With provinces (BC, Alberta, Ontario and Quebec) representing 80% of Canada’s population having carbon pricing systems of their own already, it was expected that the federal government’s role in carbon pricing would be largely residual.
Moreover, most provinces had comprehensive climate change strategies of their own, with the overall federal-provincial consensus captured in the December 2016 Pan-Canadian Framework on Clean Growth and Climate Change (PCF). Only Saskatchewan was left as a serious outlier on climate policy.
Sadly, the federal-provincial consensus was to be short-lived, breaking down in aftermath of elections in key provinces from the summer of 2018 onwards, beginning with the arrival of Doug Ford’s government in Ontario. Since then, the role of the provinces in climate policy has evolved, with the possible exception of BC, in directions ranging from disengagement to outright hostility to climate action.
The federal government’s initial response to these developments was to continue to carry through, in its view, on the PCF consensus, enacting the Greenhouse Gas Pollution Pricing Act, providing authority for a federal backstop carbon price, through its 2018 Budget. The federal government then proceeded to implement its ‘backstop’ pricing system in those provinces that had not systems of their own, or who, as in the cases of Alberta and Ontario, had dismantled their systems. The constitutional basis for the federal legislation would ultimately be upheld by the Supreme Court of Canada in its March 2021 carbon pricing reference case.
In proceeding with the implementation of its ‘backstop’ carbon price over the objections of the provinces without carbon pricing systems of their own, rather than delaying in the face of growing provincial objections, Ottawa made an implicit choice to play a far more active role in the implementation of carbon pricing than it had ever anticipated at the time of the adoption of the PCF. Ultimately, the federal government would find itself moving from a position of providing a ‘backstop’ of last resort to being the primary implementor carbon pricing in Canada, particularly for the charge on heating and transportation fuels.
Beyond carbon pricing, the PCF and subsequent December 2020 federal Healthy Environment, Healthy Economy paper recognized the need to employ a wider range of instruments than carbon pricing alone to achieve Canada’s climate commitments. Again however, implementation of these tools, including clean fuel and electricity standards, zero-emission (i,e, EV) vehicle sales mandates, an emissions cap on the oil and gas sector, and a growing range of subsidies and expenditures, has been almost entirely left to Ottawa.
In the end, the federal government has found itself carrying the overwhelming bulk of substantive climate policy implementation through carbon pricing, regulatory measures and subsidies. The federal-provincial sharing of the political risks and costs associated with climate policy implementation, implicit in the 2016 PCF, had vanished. Ottawa was left to bear these political costs almost entirely alone.
The federal government has attempted to advance constructive engagement with increasingly recalcitrant, if not openly hostile, provinces. Federal subsidies and expenditures around themes that provinces see as important to their economic strategies, like carbon capture, utilization and storage (CCUS), the Trans Mountain pipeline, hydrogen, nuclear energy, ‘critical’ minerals and EV and battery manufacturing, have emerged as a central instrument in this effort, particularly through the 2021-23 federal budgets.
There are serious debates about the likely actual contributions of many of these initiatives to GHG emission reductions and their non-climate environmental, economic social and cultural impacts. In federal-provincial terms, the provinces have been happy to receive federal support for these activities. But they have not reciprocated with support for the more politically challenging aspects of climate policy. Quite the opposite, most have continued to respond with indifference at best, and intensified hostility at worst.
The resulting situation is one of deep political fragility, with the primary federal opposition partly opposed to carbon pricing and other substantive climate policy measures other than the subsidization of technology development. Outside of BC there are no obvious provincial champions to provide the subnational climate policy leadership that was a defining feature of the 2006-2015 Harper period. At the same time, as highlighted by last summer’s record wildfire season, the impacts of a changing climate are becoming ever more obvious, and the timeframe for effective action continues to shrink.
Given the levels of provincial hostility to the non-expenditure-based dimensions of the federal government’s climate strategy, the only short-term path forward to federal-provincial harmony would seem to be to sacrifice climate policy measures widely seen as essential to the achievement of Canada’s GHG emission reduction goals, particularly carbon pricing and regulatory measures like the CER. Fiscal support for the ‘clean’ industrial strategies, which have been well-received at the provincial level, might be retained.
Such an approach would effectively follow the pathway taken as a matter of political necessity by the US Biden Administration through its Inflation Reduction Act. It is also the essence of what the current federal Leader of the Opposition proposes. Such an approach is attractive in terms of reducing the levels of intergovernmental conflict around climate policy. But it would be almost certain to fail to deliver the required substantive climate outcomes.
A better approach may be for the federal government to continue to refine and carry through on its substantive climate policies while tying federal support for 'clean' industrial strategies to more constructive provincial engagement on the climate file. Whether the federal government takes that pathway remains an open question.