This article was previously published in Corporate Knights.
The dust has settled on a unique federal election, and Canada will have a new government led by Prime Minister Mark Carney, backed by a fresh mandate from the voters. And while the election was rightly dominated by how to deal with threats of American economic aggression, climate and energy issues played an important supporting role in the campaign.
In fact, the new government was elected on a strong platform for climate action that buttresses affordability, security, and competitiveness in a world shaken by these new uncertainties. Meeting this economic moment will require building on Canada’s strengths and policy successes, as well as working together with provinces and territories.
With that in mind, here are our suggestions for top priorities in the new government’s first 100 days.
First, strengthen industrial carbon pricing. Industrial carbon pricing is Canada’s single most powerful policy tool for reducing emissions and protecting industrial competitiveness, all at minimal cost to households. But it needs improvement. The Canadian Climate Institute’s extensive research on these systems shows they can reduce more emissions and give investors greater certainty if they are modernized to be more stringent, more transparent, and better aligned across the country. The federal government has a crucial role to play in these efforts because it writes the minimum standards that underpin provincial systems across the country. It’s time those standards were updated.
Second, finalize methane regulations for oil and gas. Cutting methane emissions—a particularly potent greenhouse gas—is a good news story. We know how to reduce these emissions that are released in oil and gas production and pipeline transport, and doing so is cost-effective. In fact, Saskatchewan, Alberta, and British Columbia have already slashed these powerful emissions by more than half in less than a decade. The last federal government almost finished this work with draft regulations released last summer that would require methane emissions associated with oil and gas to drop 75 per cent by 2030. Thanks to shared federal-provincial action, the oil and gas sector is already well on its way to meeting this target. Our modelling has shown that Canada can go even further to reach 80 per cent—and the government should consider doing so. Some provinces have already taken steps towards stronger action. British Columbia, for example, has committed to near zero methane from all industrial activities by 2035.
Third, finalize the Clean Electricity Investment Tax Credit (ITC). Electrifying Canada’s economy with clean power will underpin the country’s success in reducing national emissions and attracting investment. That means a big build out of intra- and inter-provincial electricity infrastructure, but it will also require investment incentives like the ITCs. While the other federal ITCs were put into law last summer, the Clean Electricity ITC is still pending. Finalizing this long-promised policy will benefit all provinces and territories as they clean up their grids with billions in new investment support, all of which will ultimately help keep energy bills down. The Clean Electricity ITC is also the only one of its kind to make tax-exempt entities eligible, which will incentivize investors including First Nations, municipalities, and pension funds.
Finally, establish a made-in-Canada climate taxonomy for the financial sector. Investment decisions are being shaped by climate change more than ever before, whether from disrupted supply chains, higher costs from more frequent and severe climate impacts, or rapid shifts in clean energy and technology costs. A national climate taxonomy—a well-defined set of criteria to determine which activities and assets contribute to climate objectives—will give investors the standardized approach they need to evaluate these material risks and opportunities against their bottom line. This type of policy is already in place or under development in more than 30 jurisdictions around the world. Ultimately, a climate taxonomy will enhance our country’s ability to attract investment. The federal government endorsed the approach recommended by Canada’s largest financial institutions last fall, which included a world-leading framework to classify emissions-intensive activities on the path to net zero. The next step is to establish an independent body with stable funding to deliver this much-needed market guidance.
Taken together, these four actions will help build on previous policy wins that have driven national emissions down to where they were in the 1990s—more than eight per cent below 2005 levels at last count. There is still significant work ahead to set Canada up for success in a world economy rapidly adjusting to new trade disruptions while the inevitable shift towards clean energy technologies continues to gather pace globally. While combatting climate change is a multi-decade endeavour, there is much that Canada can do right away. The next hundred days is plenty of time to implement the four actions we believe should sit atop the list of the new government’s climate priorities.
