FACT SHEET: Climate change and drought

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Climate change will increase the risk and severity of droughts in parts of Canada that already struggle with water shortages, like the southern Prairies and the interior of British Columbia (Bonsal et al. 2019). A drought is a period of abnormally dry weather that lasts long enough to cause serious water shortages for natural ecosystems, agriculture, and people.

Climate change is making droughts more frequent and more severe

  • Climate change has made droughts more frequent and severe around the world, and the trend is expected to continue to worsen (IPCC 2023, p. 67; Chiang et al. 2023). 
  • Climate change exacerbates drought, both because it shifts rainfall patterns and because it increases temperatures, leaving ecosystems increasingly vulnerable to dry conditions. Rising temperatures strain water supplies by increasing both evaporation rates and water consumption by plants (Walker and Van Loon 2023), resulting in drier soil conditions and water scarcity (Overpeck and Udall 2020).
  • Rising global temperatures alter precipitation patterns (United Nations n.d.; Zhang et al. 2019), reduce snowpack levels, and threaten glacial run-off as glaciers recede.
  • Climate change is also causing droughts to develop faster, making “flash droughts” more common (Yuan et al. 2023). This new reality makes forecasting and monitoring droughts more difficult.
  • Over the 21st century, the total land area subject to drought is expected to increase, with over 40 per cent of global land area expected to experience year-round drying by the end of the century, even under low-emissions scenarios (IPCC 2023, p. 1119; Cook et al. 2020).

Climate change worsens conditions in drought-prone regions

  • The southern Prairies and the interior of British Columbia are especially susceptible to drought and have seen several prolonged droughts in the past century. 
  • Climate change is likely to substantially increase the frequency, severity, and duration of summer droughts in interior B.C. and the southern Prairies by end-of-century (Bonsal et al. 2019). 
  • In the Western provinces, declining mountain snowpack and shrinking glaciers will further reduce summer river flows, compounding drought risk.
  • Much of Southern Canada may experience more frequent severe-to-extreme drought conditions by the late century, including in B.C., the Prairies, and Ontario (Dai, 2012; Zhao and Dai, 2015).

Droughts are costly disasters

  • Droughts were an important factor in the recent dramatic increase in crop insurance payments in Canada, which surged from $890 million in 2018 to $4.9 billion in 2022 (Arnason 2024). 
  • Drought insurance payouts to Alberta’s farmers and agri-businesses reached a record $326.5 million in 2023, more than tripling the payouts from the 2021 drought, according to the Agriculture Financial Services Corporation (Smith 2024).
  • Due to severe drought, crop production in Saskatchewan fell by a record 47 per cent in 2021. That year, Saskatchewan was the only province to see its economy contract (-0.3 per cent). Statistics Canada reported that while “activity was up in most sectors of the economy, those gains were entirely negated by the worst drought in nearly two decades” (Statistics Canada 2022).
  • In the Abitibi region of Québec, hay producers received a record $6.8 million in compensation for the 2023 drought, more than triple the annual average (Cameron 2024).
  • Droughts limit hydroelectricity generation, cutting revenue for utilities, increasing reliance on fossil-fuel generation (Statistics Canada 2024), and making electricity more expensive for consumers (CBC News 2023).
  • In January 2024, drought conditions in both B.C. and Manitoba meant lower reservoir levels at hydroelectric facilities, forcing the two provinces to import power from other jurisdictions (Canadian Press 2024).
  • Water shortage in its reservoirs forced Hydro-Québec to halve its electricity exports in 2023 and 2024, resulting in a $866 million drop in revenue for the utility in 2024 alone (Hydro-Québec 2024). Similarly, a drought in Manitoba in 2021 limited power production, resulting in a $248-million loss for Manitoba Hydro (Manitoba Hydro 2022).

Explore the climate costs tracker to visualize climate-fuelled weather events in Canada.

Droughts threaten the health of Canadians

  • Droughts can degrade drinking water quality and increase the risk of water-borne diseases, as sluggish flows and more evaporation concentrate contaminants in water bodies and promote toxic algal blooms (Yusa et al. 2015).
  • Droughts can contribute to respiratory issues (Yusa et al. 2015) due to windblown dust from dried-out soils, exacerbating conditions such as asthma. 
  • Droughts can increase the likelihood of infection among recreational water users at times when warm weather drives engagement in water activities (Yusa et al. 2015).
  • Drought is associated with mental health issues, such as anxiety, depression, and increased risk of suicide, especially for farmers, who can experience financial and emotional stress during droughts (Ellis and Albrecht 2017).

Droughts worsen the risk of floods, wildfires and ecosystem damage

  • Droughts fuel wildfires by drying out vegetation and soils, creating highly flammable conditions. Prolonged water stress weakens trees and plants, causing them to shed leaves and needles, lose moisture, and eventually die, adding to the amount of available fuel. At the same time, hot, dry conditions lower humidity and increase the likelihood that sparks from lightning, equipment, or human activity will ignite a fire. Once fires start, low moisture allows them to spread quickly and burn more intensely, increasing the risk to communities, ecosystems, and critical infrastructure. 
  • Attribution studies show that the increase in drought-like hot and dry weather behind the exceptional wildfires in Eastern Canada in 2023 was made more than twice as likely by climate change.
  • July was exceptionally hot and dry in Jasper National Park, with drought conditions exacerbating fire risk and making forests more prone to ignite ahead of the 2024 wildfire that destroyed much of the Jasper townsite.
  • Drought can increase the risk of flooding. Dry conditions hurt soil quality and kill off vegetation, making soil less able to absorb water. If heavy rainfall follows a drought, water can run off more easily, which increases the risk of flooding (Bonsal et al. 2019).  
  • Droughts in northwest British Columbia, particularly during July and August when salmon are migrating to their upstream spawning areas, can cause severe and lasting damage to their populations, to ecosystems, and to the Indigenous Peoples that rely on them (Curran and Marsden 2021).

Governments can do a lot to protect Canadians from the worsening risk of droughts

Scientists have warned that the consequences of climate change will only get worse as the concentration of heat-trapping gases in the atmosphere increases (IPCC 2022). Governments around the world, including Canada’s, must act immediately to reduce greenhouse gas emissions and limit global warming.

Because the impacts of climate change are already here and getting worse, communities and governments must work together to adapt and prepare for the increased risk of drought today. Specific measures governments can take include:

  • Plan proactively: All orders of governments can prepare for shortages by developing and implementing proactive drought response plans, such as Alberta’s comprehensive Drought Response Plan. These plans include clear strategies for managing water resources, coordinating across sectors, and protecting vulnerable communities (Government of Alberta 2024).
  • Conserve water: Water conservation can reduce the adverse impacts of droughts when supplies are low. This can include voluntary or mandatory restrictions on water use during dry periods. Governments may need to implement stronger policies to prevent waste, such as universal water metering. 
  • Protect water quality:  Increased water quality monitoring during droughts helps safeguard drinking water and protect recreational water users from adverse health effects, such as parasites and toxins (Yusa et al. 2015).
  • Strengthen agricultural resilience: Governments can increase drought resilience by improving early warning systems, such as the Canadian Drought Monitor (Agriculture and Agri Food Canada 2024), supporting investment in irrigation and water storage, and incentivizing the use of drought-tolerant crop varieties. 
  • Support farming communities: Strong crop insurance, disaster relief programs, and mental health supports are vital for farming families and agricultural communities coping with financial and emotional stress during droughts (Bonsal et al. 2011; Hart et al. 2011). 
  • Invest in structural measures for hydroelectricity: The hydroelectricity sector could adapt to drought by continuing to invest in water management infrastructure, such as reservoirs, to ensure that energy production can continue during low water levels (BC Hydro 2024).

Resources

Experts available for comment and background information on this topic:

  • Ryan Ness is Director of Adaptation Research at the Canadian Climate Institute and the lead researcher on the Institute’s Costs of Climate Change series (Eastern Time, English and French).

For more information or to interview an expert, please contact: 

Claudine Brulé
Lead, Communications and External Affairs
cbrule@climateinstitute.ca
(226) 212-9883  (Eastern Time, French & English)

Krystal Northey 
Lead, Public Affairs 
knorthey@climateinstitute.ca
(226) 212-9883 (Mountain Time, English)

References 

Agriculture and Agri Food Canada. 2024. Canadian Drought Monitor. https://agriculture.canada.ca/en/agricultural-production/weather/canadian-drought-monitor 

Arnason, Robert. 2024. “Crop Insurance Costs Explode.” The Western Producer, February 29. https://www.producer.com/news/crop-insurance-costs-explode/  

BC Hydro. 2024. “How we manage drought conditions.” https://www.bchydro.com/energy-in-bc/operations/transmission-reservoir-data/drought-management.html 

Bonsal, B.R., D.L. Peters, et al. 2019. “Changes in freshwater availability across Canada; Chapter 6 in Canada’s Changing Climate Report.” Government of Canada. https://changingclimate.ca/CCCR2019/chapter/6-0/ 

Bonsal, Barrie, Rajesh R. Shrestha, Yonas Dibike, et al. “Western Canadian Freshwater Availability: Current and Future Vulnerabilities.” Environmental Reviews 28, no. 4 (2020): 528–45. https://doi.org/10.1139/er-2020-0040

Cameron, Daphné. 2024. “Compensations pour Pertes Agricoles: Un Milliard pour les Agriculteurs après une Année Désastreuse.” La Presse, March 21. https://www.lapresse.ca/actualites/2024-03-21/compensations-pour-pertes-agricoles/un-milliard-pour-les-agriculteurs-apres-une-annee-desastreuse.php.  

Canadian Press. 2024. “Drought in Western Canada Impacting Hydropower Production as Reservoirs Run Low.” Business in Vancouver, January 29. https://www.biv.com/news/resources-agriculture/drought-western-canada-impacting-hydropower-production-reservoirs-run-low-8295183  

CBC News. 2023. “Drought is causing B.C. utilities to import more power — and that will affect your bills in 2024.” December 21. https://www.cbc.ca/news/canada/british-columbia/bc-electric-rate-changes-as-province-imports-power-1.7065802

Chiang, Felicia, Omid Mazdiyasni, and Amir AghaKouchak. 2021. “Evidence of Anthropogenic Impacts on Global Drought Frequency, Duration, and Intensity.” Nature Communications 12(1). https://doi.org/10.1038/s41467-021-22314-w

Cook, Benjamin I., Justin S. Mankin, Kate Marvel, A. Park Williams, Jason E. Smerdon, and Kevin J. Anchukaitis. 2020.  “Twenty-First Century Drought Projections in the CMIP6 Forcing Scenarios”. Earth Future 8 (6).  https://agupubs.onlinelibrary.wiley.com/doi/full/10.1029/2019EF001461 

Curran, Deborah, and Tara Marsden. 2021. Ayookxw responding to climate change. Canadian Climate Institute. June 21. https://climateinstitute.ca/publications/ayookxw-responding-to-climate-change/ 

Dai, A. 2012. “Increasing Drought under Global Warming in Observations and Models”. Nature Climate Change 3, 52–58.

Ellis, Neville R., Albrecht, Glenn A. 2017. “Climate change threats to family farmers’ sense of place and mental well-being: A case study from the Western Australian Wheatbelt”. Social Science and Medicine 175, 161-168. https://doi.org/10.1016/j.socscimed.2017.01.009 

Government of Alberta. 2024. Alberta Drought Response Plan. Environment and Protected Areas. August 14. https://www.alberta.ca/system/files/epa-alberta-drought-response-plan.pdf 

Hart, Craig Richard, Helen Louise Berry, and Anne Maree Tonna. 2011. “Improving the mental health of rural New South Wales communities facing drought and other adversities”. The Australian Journal of Rural Health 19 (5). https://onlinelibrary.wiley.com/doi/full/10.1111/j.1440-1584.2011.01225.x

Hydro-Québec. 2024. Une transition ambitieuse: Rapport Annuel 2024. https://www.hydroquebec.com/a-propos/publications-rapports/rapport-annuel.html 

IPCC (Intergovernmental Panel on Climate Change). 2023. Climate Change 2021 – The Physical Science Basis: Working Group I Contribution to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge: Cambridge University Press.

Manitoba Hydro. 2022. “Manitoba Hydro posts $248 million consolidated net loss due to drought: 2021-22 annual report.”  September 29. https://www.hydro.mb.ca/articles/2022/09/manitoba_hydro_posts_248_million_consolidated_net_loss_due_to_drought_2021_22_annual_report/

Natural Resources Canada. 2024. “Drought.” Natural Resources Canada, April 12. https://natural-resources.canada.ca/climate-change/climate-change-impacts-forests/forest-change-indicators/drought/17772.

Overpeck, Jonathan T., and Bradley Udall. 2020. “Climate Change and the Aridification of North America.” Proceedings of the National Academy of Sciences 117(22): 11856–11858. https://doi.org/10.1073/pnas.2006323117   

Smith, Madeline. 2024. “Farmers, Ranchers Worry About Coming Season Amid Drought, High Pasture Insurance Payouts.” CBC, February 26. https://www.cbc.ca/news/canada/edmonton/alberta-farmer-rancher-drought-insurance-1.7124671.  

Statistics Canada. 2022. “Drought drags down Saskatchewan Economy in 2021”. Statistics Canada. September 23. https://www.statcan.gc.ca/o1/en/plus/1852-drought-drags-down-saskatchewan-economy-2021  

Statistics Canada. 2024. An energy snapshot: First quarter of 2024 review. https://www.statcan.gc.ca/o1/en/plus/6447-energy-snapshot-first-quarter-2024-review

Tam, Benita Y.; Szeto, Kit; Bonsal, Barrie; Flato, Greg; Cannon, Alex J.;  & Rong, Robin. 2019. “CMIP5 drought projections in Canada based on the Standardized Precipitation Evapotranspiration Index”. Canadian Water Resources Journal / Revue canadienne des ressources hydriques, 44 (1), 90-107. https://doi.org/10.1080/07011784.2018.1537812

United Nations. n.d. “Water – At the Center of the Climate Crisis.” United Nations. https://www.un.org/en/climatechange/science/climate-issues/water

Walker, David, and Anne F. Van Loon. 2023. “Droughts Are Coming on Faster.” Science 380(6641): 130–132. https://doi.org/10.1126/science.adh3097 

World Weather Attribution. 2023. “Climate change more than doubled the likelihood of extreme fire weather conditions in Eastern Canada.” August 22. https://www.worldweatherattribution.org/climate-change-more-than-doubled-the-likelihood-of-extreme-fire-weather-conditions-in-eastern-canada/   

Yuan, Xing, Yumiao Wang, Peng Ji, Peili Wu, Justin Sheffield, and Jason A. Otkin. 2023. “A Global Transition to Flash Droughts under Climate Change.” Science, 380(6641), 187–191. https://doi.org/10.1126/science.abn6301 

Yusa, Anna, Peter Berry, June J. Cheng, Nicholas Ogden, Barrie Bonsal, Ronald Stewart, and Ruth Waldick. 2015. “Climate Change, Drought and Human Health in Canada.” International Journal of Environmental Research and Public Health 12(7): 8359–8412. https://doi.org/10.3390/ijerph120708359  

Zhang, Xuebin, Greg Flato, Megan Kirchmeier-Young, Lucie Vincent, Hui Wan, Xiaolan L. Wang, Robin Rong, John Fyfe, Guilong Li, and Viatchelsav V. Kharin. 2019. “Changes in Temperature and Precipitation Across Canada.” In Canada’s Changing Climate Report, edited by E. Bush and D. S. Lemmen, 112–193. Government of Canada. https://changingclimate.ca/CCCR2019/chapter/4-0/4-3/summary/

Zhao, T. and Dai, A. 2015. “The magnitude and causes of global drought changes in the twenty-first century under a low-moderate emissions scenario”. Journal of Climate 28, 4490–4512.

New research spotlights Indigenous perspectives on energy and climate issues across Canada

June 16, 2025 | TORONTO—New research released today highlights Indigenous perspectives on building a cleaner economy and addressing climate change policies in communities across the country.

The research includes five original case studies from Indigenous scholars and authors, presented by the Canadian Climate Institute and the Centre for Indigenous Environmental Resources (CIER) as part of the Indigenous Perspectives program. Now in its fifth year, the annual program profiles Indigenous expertise and solutions in responding to climate change and clean energy issues.

This year’s case studies focus on:

  • Why Indigenous-inclusive electricity transmission projects are essential to unlocking Canada’s renewable energy potential (authors Frank Busch, Joel Krupa, and Kevin Hanna)
  • How First Nations are uniquely positioned to achieve energy sovereignty while solving energy security for all New Brunswickers (authors Kevin Woods, Tracy Primeau, and Claire Harris)
  • Why Anishnabe governance is essential to restoring healthy moose populations and a healthy climate (authors Shannon Chief and Jaimie Vincent)
  • How Indigenous economic ecosystems are essential for climate adaptation and fisheries management (authors Tasha Brooks and Leighton Gall)
  • How the Friends of The Attawapiskat River are working to ensure Indigenous communities, lands, water, and culture are protected in the Ring of Fire region (authors Michel Koostachin, Rick Cheechoo, and Kerrie Blaise)

Case study authors will discuss their work in two online roundtables happening on June 18 and 19. The first gathering will focus on how Indigenous governance and worldviews are essential to climate policies. The second will highlight the potential of expanded Indigenous participation in the development, delivery, and security of clean electricity.

Register now to attend the 2025 Indigenous Perspectives roundtables on June 18 and 19, or read this year’s case studies online.

ABOUT THE INDIGENOUS PERSPECTIVES PROGRAM

Since 2020, the Canadian Climate Institute and Centre for Indigenous Environmental Resources have collaboratively led the Indigenous Perspectives program to centre Indigenous-led research in climate policy and amplify Indigenous perspectives on solutions, barriers, and lessons learned about addressing climate change and participating in the global energy transition. The program aims to advance and support the Truth and Reconciliation Calls to Action and the implementation of the United Nations Declaration on the Rights of Indigenous People.

The case studies explore a wide range of issues, recognizing the diversity of Indigenous perspectives in Canada. Featured case studies are selected through a competitive application process, and developed and presented through research funding and mentorship support from the presenting organizations. Program participants retain full ownership of their research, conclusions, and materials published, and the views and policy recommendations presented reflect the research and conclusions of the individual case study authors.  

QUOTES

“Indigenous perspectives and research are a critical part of effective climate action and economic decision-making that affects all Canadians. We’re thrilled to be celebrating five years of working with the Centre for Indigenous Environmental Resources to amplify Indigenous knowledge, research, and leadership on critical climate-related issues.”

— Rick Smith, President, Canadian Climate Institute

“These new Indigenous Perspectives case studies have important implications for people, ecosystems, and policy across Canada—from energy security in New Brunswick to adaptive strategies for community-centered commercial fisheries in British Columbia. Anyone who is focused on climate mitigation, adaptation, and the transition to a clean economy can benefit from learning from the authors who have led this research.”

— Maria Shallard, Director, Indigenous Research, Canadian Climate Institute

“The voices for Indigenous-led climate policy recommendations need to be heard. Much like the drum carries medicines to all that hear its song, the Indigenous Perspectives case studies carry messages of hope for a more sustainable future that respects culture, language, knowledge, and the spirit of collaboration.”

— Shianne McKay, Senior Project Manager, CIER

RESOURCES

CONTACT

To arrange an interview with the Institute or CIER about the Indigenous Perspectives program, or to speak with the authors of this year’s case studies, please contact:

Claudine Brulé (Eastern Time)
Lead, Communications and External Affairs
Canadian Climate Institute
(226) 212-9883

Krystal Northey (Pacific Time)
Public Affairs Lead
Canadian Climate Institute
(250)-818-3748

About the Canadian Climate Institute

The Canadian Climate Institute is Canada’s leading climate change policy research organization. The Institute produces rigorous analysis, economic modelling, and in-depth research focused on incentivizing clean economic growth and low-carbon competitiveness, reducing emissions and accelerating Canada’s net zero energy transition, and making our economy and infrastructure more resilient to a warming climate.
climateinstitute.ca

About the Centre for Indigenous Environmental Resources

Centre for Indigenous Environmental Resources (CIER) is a national Indigenous-led charitable organization that embraces diversity and collaboration for capacity building with Indigenous Nations to strengthen and support sustainable communities and a healthy environment.
yourcier.org

Canada risks missing out on billions in critical mineral investment without swift policy changes: report

OTTAWA—New research from the Canadian Climate Institute finds governments should act swiftly to de-risk critical minerals investment and accelerate project timelines—without cutting corners on Indigenous rights and environmental protections—to avoid missing out on a multi-billion dollar economic opportunity.  

Six priority critical minerals—copper, nickel, lithium, graphite, cobalt, and rare earth elements—form the building blocks of clean technologies like renewable energy and electric vehicles, among others. Canada’s current production levels have barely scratched the surface of existing reserves, and demand is growing for these minerals that are essential to enhancing Canada’s energy security and enabling the global transition to clean technologies. 

A report published today by the Canadian Climate Institute, Critical Path: Securing Canada’s place in the global critical minerals race, finds that investment in these six priority critical minerals in Canada would have to grow substantially to keep pace with domestic and global demand. In fact, by 2040, Canada risks losing out on $12 billion a year in critical minerals production unless mining ramps up to meet demand from domestic industry alone. 

Amid increased competition for critical minerals, geopolitical turmoil, and rapidly evolving trade relationships, new investment of $30 billion would have to flow into Canada over the next 15 years to fully meet domestic critical minerals potential. To meet the growth in global demand—which is expected to double by 2040—investment in Canadian critical minerals would have to increase to $65 billion in that time frame. 

Yet investment into critical mineral projects hinges on expectations about future market prices—some of which are extremely volatile and can be overly affected by the actions of a few powerful players. To give investors more certainty, governments should act swiftly to share risks through targeted policies and programs, such as equity investments, offtake agreements, or contracts for difference.  

The report underscores that successful critical mineral projects require strong partnerships with Indigenous nations and communities, ongoing respect and recognition of Indigenous rights and self-determination, and robust environmental protections. It recommends governments streamline and accelerate project review processes by reducing inefficiencies, but warns that cutting corners when it comes to Indigenous rights and protecting the environment has been proven to backfire and lead to further delays.

Specifically, the report recommends the federal, provincial, and territorial governments de-risk critical mineral mining projects by:

  • Developing agreements between government and private companies to share the financial risk of investment in critical mineral projects.
  • Providing more funding for Indigenous communities to participate and partner on mining projects and enhance access to capital for ownership opportunities.
  • Strengthening mining regulations to reduce environmental risks and liabilities for communities that build on existing voluntary standards. 
  • Improving the efficiency of project reviews and decision making processes across multiple jurisdictions, without cutting back environmental safeguards or Indigenous consultation. 

The Climate Institute also commissioned three companion papers exploring related topics, including: Indigenous participation in the critical minerals sector, the emissions impact of ramping up critical minerals mining in Canada, and measures to reduce the environmental risks of increased mining activities. 

QUOTES

“Critical minerals represent a multi-billion dollar opportunity for Canada in a global energy transition that continues to pick up pace. But Canada’s critical minerals sector is struggling to attract enough investment to keep up with demand. As competition heats up and trade relationships evolve, Canadian governments should make haste to adopt policies to unlock private investment and bring resources to market faster—all while forming respectful partnerships with Indigenous communities and reducing environmental risks.” 

— Rick Smith, President, Canadian Climate Institute 

“Securing Canada’s place in the global critical minerals race requires swift action to unlock public and private investment that can power Canada’s energy transition with the building blocks of clean technologies. Our Critical Path report offers a clear blueprint for the steps governments can take to seize this opportunity.”

— Marisa Beck, Director, Clean Growth, Canadian Climate Institute

“All clean growth projects will be built on treaty lands, land claim areas, traditional territories, or within close proximity to an Indigenous community. This unique moment in time can affirm Indigenous rights to land and self-determination and encourage meaningful partnership between Indigenous nations, industry, and government. The Canadian Climate Institute’s report provides a clear path on how Canada can grow its critical minerals sector in full partnership with Indigenous Peoples.”

—JP Gladu, Founder and Principal, Mokwateh

“Canada has an opportunity to lead the transition to cleaner energy sources, but seizing that opportunity requires accelerating the development of a secure and circular domestic value chain for Canada’s battery industry, from mine to market to recovery. Investing in Canadian critical minerals mining and processing will create jobs, grow the economy, and ensure Canada secures its place as a global leader in the battery value chain.”

— Sean de Vries, Executive Director, Battery Metals Association of Canada

“Canada has a significant opportunity at hand to develop our critical mineral reserves, which among other imperatives are critical for a lower-emissions economy. This report clearly demonstrates the importance of making it easier for mining projects to secure financing to make this happen. By deploying loan guarantees and other financial risk-sharing instruments to de-risk projects, federal and provincial governments in Canada can crowd-in private capital, and keep projects on track despite market uncertainty.”

— John Stackhouse, Senior Vice President, Office of the CEO, Royal Bank of Canada

RESOURCES

CONTACTS

Claudine Brulé (Eastern Time)
Lead, Communications and External Affairs
Canadian Climate Institute
(226) 212-9883

Krystal Northey (Pacific Time)
Public Affairs Lead
Canadian Climate Institute
(226) 212-9883

About the Canadian Climate Institute 

The Canadian Climate Institute is Canada’s leading climate change policy research organization. The Institute produces rigorous analysis, economic modelling, and in-depth research focused on incentivizing clean economic growth and low-carbon competitiveness, reducing emissions and accelerating Canada’s net zero energy transition, and making our economy and infrastructure more resilient to a warming climate.
climateinstitute.ca

Climate action is critical to building a strong, secure economy

OTTAWA—Rick Smith, President of the Canadian Climate Institute, issued the following statement in response to today’s Speech from the Throne, delivered by His Majesty King Charles III on behalf of the government of Prime Minister Mark Carney: 

“Today’s Speech from the Throne underscored the Carney government’s commitments to prioritize measures that build Canada’s economy, diversify trading relationships, and fight climate change. The Canadian Climate Institute applauds the government’s focus on expediting nation-building projects and infrastructure, working to make Canada a clean energy superpower and a world-leading hub for science and innovation, and ensuring new homes are both affordable and resilient. 

“Any robust economic strategy must include effective action to fight climate change, make life more affordable, and invest in low-carbon innovation. To deliver on the economy-building commitments outlined in the Throne Speech, we urge the federal government to act decisively on five specific, critical priorities: strengthening industrial carbon pricing systems, finalizing methane regulations for the oil and gas sector, enacting Canada’s Clean Electricity Tax Credit, establishing a made-in-Canada climate taxonomy for Canada’s financial sector, and applying clear flood and fire resilience criteria for federally supported housing.

“Climate change is already making life in Canada less affordable. Climate-related damages increase the average household’s cost of living by more than $700 each year, in the form of higher grocery bills due to supply-chain disruptions, rising home insurance premiums, and tax hikes to pay for disaster recovery and infrastructure repairs. Building a strong and resilient Canadian economy requires limiting the costs of climate change by protecting homes and communities, while also moving swiftly on policy solutions that reduce emissions and spur innovation. 

“As His Majesty King Charles III stated in the Speech from the Throne, speed is of the essence. Acting swiftly on these policy priorities will strengthen Canada’s competitive advantage in an increasingly unpredictable global economy, while enhancing Canadian sovereignty, resilience and energy security.” 

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CONTACT

Claudine Brulé (Eastern Time)
(226) 212-9883
cbrule@climateinstitute.ca

Krystal Northey (Mountain Time)
(226) 212-9883
knorthey@climateinstitute.ca

Freezing Alberta’s industrial carbon price will undermine investment and certainty for business

OTTAWA—Dale Beugin, Executive Vice President with the Canadian Climate Institute, made the following statement on the Government of Alberta’s decision to freeze industrial carbon pricing: 

“Today’s decision from the Government of Alberta is a step backwards. Freezing industrial carbon pricing will undermine investor certainty, hurt provincial competitiveness in the long run, and kneecap Alberta’s ability to reduce emissions. 

“Industrial carbon pricing works. According to research from the Canadian Climate Institute’s 440 Megatonnes project, these carbon pricing systems can do more to cut climate pollution between now and 2030 than any other policy. They create credit markets that can drive investment in low-carbon projects, such as carbon capture and storage and renewable electricity projects, while also creating incentives for big emitters to improve their emissions performance to avoid carbon costs. 

“But industrial carbon pricing systems are only effective when investors and markets have certainty. Alberta is home to billions of dollars of decarbonization projects that are banking on the existing system, and up to another $5 billion in carbon credits. A frozen price undermines the assumptions on which all these investments were made. That’s costly for existing projects and also undermines confidence and investment in future low-carbon projects. 

“Crucially, systems like Alberta’s are already designed to minimize costs and competitiveness impacts. Our research shows these costs, at most, amount to the price of just 30 cents per barrel of oil. These systems create incentives to reduce emissions by improving performance, not by reducing investment or production. 

“There are other, better options, for protecting competitiveness, like returning more revenue generated from the policy to industry. Freezing Alberta’s industrial carbon price is a mistake and the government should reconsider.”

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RESOURCES

MEDIA CONTACTS

Claudine Brulé (Eastern Time)
(226) 212-9883
cbrule@climateinstitute.ca

Krystal Northey (Mountain Time)
(226) 212-9883
knorthey@climateinstitute.ca

The Canadian Climate Institute is Canada’s leading climate change policy research organization. We produce rigorous analysis, economic modelling, and in-depth research, and have experts available to comment on topics including: carbon pricing, the costs of climate-related disasters in Canada, and Canada’s progress in reducing emissions, and policy priorities for the incoming federal government. 

Canadian Climate Institute congratulates Prime Minister Mark Carney and his newly elected government

TORONTO—Rick Smith, President of the Canadian Climate Institute, issued the following statement on the results of the 2025 federal election: 

“The Canadian Climate Institute congratulates Mark Carney and the Liberal Party of Canada on their success in the federal election. The Institute looks forward to working with the Carney government on policy solutions that will enhance Canada’s sovereignty and energy security, while also reducing emissions, enabling low-carbon economic growth, and building more resilient homes and infrastructure. 

“Accelerating Canada’s progress on climate change is an economic imperative in this time of global economic upheaval and uncertainty. Canada has an opportunity to act on climate change in ways that grow our economy and support Canadian innovation, invest in our communities, capitalize on our competitive advantages, and expand our trade horizons. Faced with ongoing aggression from the U.S. and efforts to hobble U.S. clean energy innovation and climate research, implementing cost-effective, Canadian-made climate solutions are an important tool to support Canadian workers, protect communities, and strengthen our economy. 

“We urge the new federal government to act swiftly to strengthen industrial carbon pricing, implement methane regulations for the oil and gas sector, enact Canada’s Clean Electricity Tax Credit, and establish a made-in-Canada climate taxonomy for Canada’s financial sector. Decisive action on these priorities will accelerate low-carbon growth while enhancing Canada’s competitiveness and economic resilience. 

“Although the costs of climate-related damages are already driving up the cost of living for Canadians, our homes, communities and businesses are ill-equipped for a future of increasingly extreme weather. Smart action to address climate-related threats can help limit future damages, while keeping the cost of living down and supporting jobs and economic diversification. 

“The Institute’s research has found that climate change-related damages in 2025 could already be worth half a year of Canada’s economic growth. Meanwhile, despite the Trump Administration’s efforts to block investments in clean energy and innovation, the costs of low-carbon technologies continue to decline, and over 40 per cent of global electricity generation was produced by non-emitting sources last year. For Canada, acting now to limit damage from climate change and capitalize on the global energy transition represents a generational opportunity we can’t afford to pass up.” 

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The Canadian Climate Institute is Canada’s leading climate change policy research organization. We produce rigorous analysis, economic modelling, and in-depth research, and have experts available to comment on topics including: carbon pricing, the costs of climate-related disasters in Canada, and Canada’s progress in reducing emissions, and policy priorities for the incoming federal government. 

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FACT SHEET: Climate change and storms

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Climate change is increasing the intensity of extreme weather across the globe—including storms. Warmer global temperatures provide more energy to fuel storms, making them more powerful and less predictable. As a result, storm-related hazards such as hail, damaging winds, and flash floods are becoming more frequent and severe in many parts of Canada. Ongoing scientific research continues to clarify the links between human-caused climate change and the intensification of storms (Smith & Malena-Chan 2024).

Projecting the future effects of climate change on storms in Canada is challenging due to their complex, localized nature. In Canada, changes to the factors that drive storms can differ significantly by region and the smaller scale and short duration of many convective storms make them difficult to model accurately with global climate models. While warming is expected to increase the frequency and intensity of convective storms in Canada, the exact timing, location, and severity remain uncertain. More research specific to Canada is needed to improve projections and better understand local variations (Smith & Malena-Chan 2024).

Climate change is making storms stronger and more frequent

  • Convective storms—including thunderstorms, hailstorms, tornados and hurricanes—occur when warm and moist air rises in the atmosphere. As the atmosphere warms with climate change, it can hold more moisture (NASA 2022).
  • Over land, warming surface temperatures make moist air rise more quickly, providing more fuel for severe thunderstorms (Smith & Malena-Chan 2024). Similarly, rising ocean temperatures due to global warming allow surface water to evaporate and rise more quickly, fuelling more powerful and intense hurricanes (Madge & Smith 2024). 
  • Favourable conditions for the development of severe convective storms are expected to increase by 5 to 20 per cent for each degree °C of global warming (Lepore et. al 2021).

Storms are racking up damages in parts of Canada

  • Storm hazards—such as strong winds, hail, and lightning—pose serious risks to infrastructure, agriculture, and communities and are a major driver of catastrophic losses in Canada (Ouranos, n.d.). 
  • Large hail is one of the most costly severe storm-related hazards in North America, with annual insured losses routinely exceeding $10 billion across the continent (Loomis 2018). 
  • In August 2024, a hailstorm in Calgary became the second costliest extreme weather event in Canadian history, with over $3.2 billion in insured losses (IBC 2025).
  • Straightline winds—winds that blow in a straight path, usually from thunderstorms or severe weather systems—are one type of extreme weather growing more frequent and destructive due to climate change (Prein 2023). Between 2008 and 2021, roughly two thirds of catastrophic insured losses in Ontario and Quebec were caused by windstorms (Hadavi et. al, 2022).
  • The 2022 Derecho—a powerful, fast-moving line of wind and thunderstorms—caused about $1 billion in insured losses across Ontario and Quebec (IBC 2023). 

Many regions of Canada will likely experience more frequent and severe storms  as climate change accelerates

  • Climate models project more severe thunderstorms and heavy rainfall in Canada, particularly in the Prairies and eastern regions (Kirchmeier-Young & Zhang 2020; Loxley 2022; Ouranos, n.d.). 
  • In southern Quebec, rising temperatures are expected to increase atmospheric instability, leading to more thunderstorms and more frequent short bursts of intense rainfall (Ouranos, n.d.). In central Alberta, climate modelling also projects increased storm intensity in the coming decades (Gan et. al, 2022).
  • In Atlantic Canada, climate change is  making hurricanes more frequent and more powerful (Madge & Smith 2024). 
  • On the Pacific coast, climate change is increasing the intensity and frequency of atmospheric rivers that bring extreme rainfall, increasing the likelihood of events, like the one which brought severe flooding and landslides to B.C. in 2021, by 45 to 60 per cent (Gillett et. al 2022). 

Climate change is altering patterns of damaging winds, tornadoes, and hail

  • While atmospheric warming will likely alter the frequency, severity, and areas affected by tornadoes across Canada, more research is needed to fully understand the nature of the changes anticipated (Jafarpur & Smith 2024). 
  • Some evidence has suggested that Canadian tornados and severe wind hotspots are shifting eastwards—a worrying trend that would increase risks for densely populated parts of Ontario and Quebec (Zadorsky 2024).
  • Atmospheric warming from greenhouse gas emissions makes larger and more damaging hailstones more likely to develop (Gensisni et. al, 2024). In southern Alberta, hailstorms are expected to become more frequent and severe due to climate change (Zhao 2024).

Climate change is increasing the frequency, strength, and rapid intensification of tropical cyclones and hurricanes, particularly in the Atlantic

  • Most of the heat energy captured by greenhouse gas emissions is absorbed by the oceans, providing fuel for increasingly powerful tropical cyclones and hurricanes (Climate Central, 2024). Human-driven increases in sea surface temperature made 84 per cent of hurricanes from 2019-2023 more powerful than they would have otherwise been (Gilford et. al 2024). Every hurricane in 2024 had higher wind speeds because of climate change (Climate Central 2024).
  • Hurricanes are forming more frequently in the Atlantic Ocean due to human-caused warming (Emanuel 2021). The proportion of very intense tropical cyclones is projected to increase worldwide, and their destructive power is enhanced by rising sea levels and increased precipitation rates associated with anthropogenic climate change (Knutson et. al 2021).
  • Hurricanes in the Atlantic are intensifying more rapidly, leaving communities less time to prepare. It is now twice as likely for hurricanes in the Atlantic to develop from a category 1 to a major hurricane (category 3 or higher) within 24 hours compared to the 1970s and 80s (Garner, 2023).
  • Sea-level rise fuelled by climate change leads to more powerful storm surges,  increasing the extent of coastal flooding and damage from hurricanes (Madge & Smith 2024). 
  • Hurricanes pose growing economic and safety risks for communities in Atlantic Canada, with high winds, flooding, and storm surges destroying homes and coastal infrastructure. Hurricanes are projected to form and intensify at higher latitudes in a warming climate, increasing the probability that more dangerous storms will reach Canadian coasts (Studholme et. al 2022). 

Canada needs to adapt to changing and intensifying storm patterns

  • More research is needed to understand changing storm patterns and regional differences with more certainty. Forecasting and alert systems for extreme weather need to be improved to allow communities to better prepare and respond to dangerous events (Bongiorno 2024; MacDonald 2024).
  • Building codes must be enhanced to favour more resilient materials, designs and constructions in high risk areas, including wind and hail-resilient roofing.
  • Government supported grants, rebates, and retrofit programs can expedite more resilient construction and renovation (Porter 2023; Wawanesa 2021).
  • Land use regulations and infrastructure can be deployed to better protect coastal communities from storms and hurricanes. For example, communities can ensure buildings are located far enough from coastal areas prone to storm surge and erosion through minimum setback standards, or by using nature-based solutions to stabilize shorelines and increase coastal resilience (Richardson & Otero 2012; Halifax Regional Municipality 2024). 
  • Updating land use policies and incentives can help to direct new housing development away from areas prone to hail and tornadoes and other storm hazards (Strader et al. 2018). 

Resources

Experts available for comment and background information on this topic

  • Ryan Ness is Director of Adaptation Research at the Canadian Climate Institute and the lead researcher on the Institute’s Costs of Climate Change series (Eastern Time, English and French).

For more information or to interview an expert, please contact

Claudine Brulé
Lead, Communications and External Affairs
cbrule@climateinstitute.ca
(514) 358-8525 (Eastern Time, French/English)

Krystal Northey 
Lead, Public Affairs 
knorthey@climateinstitute.ca
(226) 212-9883 (Mountain Time, English)

References (click to expand)

Bongiorno, Joe. 2024. “Researchers Say Canada Must Improve Its Tornado Warning System to Save Lives.” CBC News. https://www.cbc.ca/news/canada/montreal/tornado-warnings-canada-quebec-1.7286546.

Calvin, Katherine, Dipak Dasgupta, Gerhard Krinner, Aditi Mukherji, Peter W. Thorne, Christopher Trisos, José Romero, et al. 2023. IPCC, 2023: Climate Change 2023: Synthesis Report. Contribution of Working Groups I, II and III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [Core Writing Team, H. Lee and J. Romero (Eds.)]. IPCC, Geneva, Switzerland. Intergovernmental Panel on Climate Change (IPCC). doi:10.59327/IPCC/AR6-9789291691647.

Contant, Jason. 2024. “Calgary Hailstorm: Should City Reinstate Resilient Roofing Program?” Canadian Underwriter. https://beta.canadianunderwriter.ca/news/claims/calgary-hailstorm-should-city-reinstate-resilient-roofing-program/.

“Cost of Historic Calgary Hailstorm Continues to Rise.” 2025. Insurance Bureau of Canada. https://www.ibc.ca/news-insights/news/cost-of-historic-calgary-hailstorm-continues-to-rise.

Emanuel, Kerry. 2021. “Atlantic Tropical Cyclones Downscaled from Climate Reanalyses Show Increasing Activity over Past 150 Years.” Nature Communications 12(1): 7027. doi:10.1038/s41467-021-27364-8.

Gan, Kai Ernn, Chun Chao Kuo, Thian Yew Gan, Holger Schüttrumpf, Vijay Singh, and Harri Koivusalo. 2023. “Coupled and Stand-Alone Regional Climate Modeling of Intensive Storms in Western Canada.” Journal of Hydrologic Engineering 28(3): 05022023. doi:10.1061/JHYEFF.HEENG-5872.

Garner, Andra J. 2023. “Observed Increases in North Atlantic Tropical Cyclone Peak Intensification Rates.” Scientific Reports 13(1): 16299. doi:10.1038/s41598-023-42669-y.

Gensini, Vittorio A., Walker S. Ashley, Allison C. Michaelis, Alex M. Haberlie, Jillian Goodin, and Brendan C. Wallace. 2024. “Hailstone Size Dichotomy in a Warming Climate.” npj Climate and Atmospheric Science 7(1): 185. doi:10.1038/s41612-024-00728-9.

Gilford, Daniel, and Joseph Giguere. 2024. Climate Change Increased Wind Speeds for Every 2024 Atlantic Hurricane: Analysis. Climate Central. https://www.climatecentral.org/report/2024-hurricane-attribution.

Gilford, Daniel M, Joseph Giguere, and Andrew J Pershing. 2024. “Human-Caused Ocean Warming Has Intensified Recent Hurricanes.” Environmental Research: Climate 3(4): 045019. doi:10.1088/2752-5295/ad8d02.

Gillett, Nathan P., Alex J. Cannon, Elizaveta Malinina, Markus Schnorbus, Faron Anslow, Qiaohong Sun, Megan Kirchmeier-Young, et al. 2022. “Human Influence on the 2021 British Columbia Floods.” Weather and Climate Extremes 36: 100441. doi:10.1016/j.wace.2022.100441.

Greenan, Blair J. W., Thomas S. James, John W. Loder, Pierre Pepin, Kumiko Azetsu-Scott, Debby Ianson, Roberta C. Hamme, et al. 2019. Chapter 7 — Canada’s Changing Climate Report. Ottawa, Ontario: Government of Canada. https://changingclimate.ca/CCCR2019/chapter/7-0/ (March 25, 2025).

Hadavi, Mohammad, Lutong Sun, and Djordje Romanic. 2022. “Normalized Insured Losses Caused by Windstorms in Quebec and Ontario, Canada, in the Period 2008–2021.” International Journal of Disaster Risk Reduction 80: 103222. doi:10.1016/j.ijdrr.2022.103222.

Hosansky, David. 2023. “Damaging Thunderstorm Winds Increasing in Central U.S.” University Corporation for Atmospheric Research. https://news.ucar.edu/132927/damaging-thunderstorm-winds-increasing-central-us.

Jafarpur, Pouriya, and Ryan Smith. 2024. “Tornadoes and Climate Change in Canada.” ClimateData.ca. https://climatedata.ca/tornadoes-and-climate-change-in-canada/.

Kirchmeier-Young, Megan C., and Xuebin Zhang. 2020. “Human Influence Has Intensified Extreme Precipitation in North America.” Proceedings of the National Academy of Sciences 117(24): 13308–13. doi:10.1073/pnas.1921628117.

Knutson, Thomas R., Maya V. Chung, Gabriel Vecchi, Jingru Sun, Tsung-Lin Hsieh, and Adam J. P. Smith. 2021. Climate Change Is Probably Increasing the Intensity of Tropical Cyclones. Zenodo. doi:10.5281/ZENODO.4570334.

Lepore, Chiara, Ryan Abernathey, Naomi Henderson, John T. Allen, and Michael K. Tippett. 2021. “Future Global Convective Environments in CMIP6 Models.” Earth’s Future 9(12): e2021EF002277. doi:10.1029/2021EF002277.

Loomis, Ilima. 2018. “Hail Causes the Most Storm Damage Costs Across North America.” Eos 99. doi:10.1029/2018EO104487.

Loxley, Matthew. 2022. A Snapshot of the Changing Prairie Climate. Winnipeg: ClimateWest. https://climatewest.ca/publications/a-snapshot-of-the-changing-prairie-climate/ 

MacDonald, Michael. 2024. “Use of Alert System Delayed during Deadly Flash Flooding in Nova Scotia: Report.” CBC News. https://www.cbc.ca/news/canada/nova-scotia/alert-system-delayed-deadly-flash-flooding-nova-scotia-1.7204197.

Madge, Carly, and Ryan Smith. 2025. “Hurricanes and Climate Change in Atlantic Canada.” ClimateData.ca. https://climatedata.ca/hurricanes–and-climate-change-in-atlantic-canada/.

Nasa Science Editorial Team. 2022. “Steamy Relationships: How Atmospheric Water Vapor Amplifies Earth’s Greenhouse Effect.” NASA. https://science.nasa.gov/earth/climate-change/steamy-relationships-how-atmospheric-water-vapor-amplifies-earths-greenhouse-effect/.

Porter, Keith. 2023. High-Wind Design of New Woodframe Houses Has an Average Benefit-Cost Ratio of 6:1 in Canada. Toronto, ON: Institute for Catastrophic Loss Reduction. https://scc-ccn.ca/resources/publications/high-wind-design-new-woodframe-houses-has-average-benefit-cost-ratio-61

Prein, Andreas F. 2023. “Thunderstorm Straight Line Winds Intensify with Climate Change.” Nature Climate Change 13(12): 1353–59. doi:10.1038/s41558-023-01852-9.

“Resiliency Measures to Protect Your Home.” 2025. Natural Resources Canada. https://natural-resources.canada.ca/energy-efficiency/home-energy-efficiency/canada-greener-homes-initiative/resiliency-measures-protect-your-home.

Richardson, Gregory R. A., and José Otero. 2012. Land Use Planning Tools  for Local Adaptation to Climate Change. Ottawa, Ontario: Government  of Canada.

“Severe Weather in 2022 Caused $3.1 Billion in Insured Damage — Making It the 3rd Worst Year for Insured Damage in Canadian History.” 2023. Insurance Bureau of Canada. https://www.ibc.ca/news-insights/news/severe-weather-in-2022-caused-3-1-billion-in-insured-damage-making-it-the-3rd-worst-year-for-insured-damage-in-canadian-history.

“Shore Road: Building with Nature.” 2024. Halifax Regional Municipality. https://www.halifax.ca/about-halifax/environment-climate-change/halifact-acting-climate-together/featured-projects/shore.

Smith, Ryan, and Rachel Malena-Chan. 2024. “Climate Change and Thunderstorms.” ClimateData.ca. https://climatedata.ca/climate-change-and-thunderstorms/.

Strader, Stephen M., Walker S. Ashley, Thomas J. Pingel, and Andrew J. Krmenec. 2018. “How Land Use Alters the Tornado Disaster Landscape.” Applied Geography 94: 18–29. doi:10.1016/j.apgeog.2018.03.005.

Studholme, Joshua, Alexey V. Fedorov, Sergey K. Gulev, Kerry Emanuel, and Kevin Hodges. 2022. “Poleward Expansion of Tropical Cyclone Latitudes in Warming Climates.” Nature Geoscience 15(1): 14–28. doi:10.1038/s41561-021-00859-1.

“Thunderstorms and Lightning – Impacts.” Ouranos. https://www.ouranos.ca/en/climate-phenomena/thunderstorms-lightning-impacts.

“Thunderstorms and Lightning – Projected Changes.” Ouranos. https://www.ouranos.ca/en/climate-phenomena/thunderstorms-lightning-projected-changes.

Wawanesa Insurance. 2021. “10 Ways to Protect the Roof over Your Head.” https://www.wawanesa.com/canada/blog/protect-your-roof.

Westra, S., H. J. Fowler, J. P. Evans, L. V. Alexander, P. Berg, F. Johnson, E. J. Kendon, G. Lenderink, and N. M. Roberts. 2014. “Future Changes to the Intensity and Frequency of Short-Duration Extreme Rainfall.” Reviews of Geophysics 52(3): 522–55. doi:10.1002/2014RG000464.

Zadorsky, Justin. 2024. “Weather Extremes and Adapting to an Increasingly Dangerous World.” Western News. https://news.westernu.ca/2024/04/our-warming-planet-weather-extremes/.Zhao, Emma. 2024. “Research Team Descends on Alberta to Track Frequency, Severity of Hailstorms.” CBC News. https://www.cbc.ca/news/canada/edmonton/alberta-hail-storms-ontario-climatology-1.7267198.

FACT SHEET: Five things to know about Canada’s industrial carbon pricing systems

Download the fact sheet

Industrial carbon pricing is Canada’s most important policy for cutting carbon pollution and creating a competitive clean economy. According to research from the Canadian Climate Institute, Canada’s carbon pricing systems—also called large-emitter trading systems (LETS)—will do more than any other policy to cut greenhouse gas emissions between now and 2030.  

Under federal law, every province and territory in Canada can develop their own carbon pricing system for large emitters, or have a federal system put in place, known as the backstop. Binding these systems together is a set of minimum national standards for carbon pricing, known as the federal benchmark.

Industrial carbon pricing supports competitiveness. It helps Canadian firms attract investment for emissions-reduction projects. Firms that reduce emissions can generate credits they can trade for cash, helping them compete for international capital at lower cost to governments than subsidies, such as those provided under the Inflation Reduction Act in the United States. 

Here are five things to know about industrial carbon pricing systems in Canada: 

  1. Industrial carbon pricing systems are the single biggest driver of emissions reductions in Canada by 2030. 
  2. Industrial carbon pricing costs Canadian consumers next to nothing.
    • The Institute’s research shows that Canada’s industrial carbon pricing systems have essentially no impact on households. 
    • Specifically, the Institute’s research found that industrial carbon pricing systems have an average impact of around zero per cent on household consumption in 2025 (with even small net benefits for some consumers) and are projected to reach just a tenth of a per cent in 2030.
      • This is because these systems have been designed to keep costs low for industry and largely apply to export products that are purchased by consumers in other countries.
  1. Industrial carbon pricing can deliver big emissions cuts at a low cost to industry—and some can even profit.
    • Industrial carbon pricing is designed to contain costs: industries only pay for emissions that exceed a specified limit, and if they outperform the limit they earn credits that they can sell for cash.
    • On average, industries pay around $8.40 or less per tonne of emissions, even with a carbon price of $80 per tonne). 
    • That works out to roughly 30 cents per barrel—or the cost of a Timbit—on average, which is the highest-impact scenario. Average costs for other industries are even lower, and some can profit from industrial carbon pricing. 
    • Industrial carbon pricing also helps protect Canadian firms from carbon tariffs that some regions impose on countries without carbon pricing systems, as the European Union and the UK are doing.
  1. Cancelling industrial carbon pricing would destroy billions in assets.
    • Companies hold credits that would lose their value if the systems were removed or weakened: in Alberta alone, these credits are worth $5 billion at 2024 carbon prices.
    • Companies have also made investments banking on the existence of industrial carbon pricing. Around $4.3 billion in annual clean energy investment is linked directly to the existence of these systems.
    • The cancellation of large-emitter trading systems would mean emissions-reducing projects that were counting on being able to generate saleable performance credits would be at risk.
      • Among the projects that would generate these credits are a $9 billion carbon-neutral petrochemicals facility outside Edmonton, $2.7 billion worth of upgrades to Ontario steel mills in Algoma and Hamilton, and a $1.4 billion low-carbon cement plant in Alberta.
  2. Provinces and territories have their own systems, but federal standards have made the systems work better together
    • Most provinces have their own industrial carbon pricing systems, but they all have to follow minimum standards set by the federal government
    • The Institute’s research shows that those standards have made the various industrial carbon pricing systems across Canada more effective and better aligned with each other.
    • Greater harmonization between industrial pricing systems helps reduce costs for industry and avoids creating additional interprovincial trade barriers.

Additional Resources

Eliminating industrial carbon pricing would undermine competitiveness and Canada’s climate progress

TORONTO—Rick Smith, President of the Canadian Climate Institute, made the following statement on the critical importance of industrial carbon pricing: 

“Industrial carbon pricing is the most important policy Canada has for cutting carbon pollution and creating a competitive clean economy. Research from the Canadian Climate Institute finds Canada’s industrial carbon pricing systems—if maintained—would do more than any other policy to cut emissions between now and 2030. 

“Industrial carbon pricing (also known as large-emitter trading systems) differs from the consumer carbon price in important ways. It contributes at least three times as many emissions reductions as the consumer carbon tax. And it does not increase costs for consumers. 

“Industrial carbon pricing has been explicitly designed to protect the competitiveness of trade-exposed companies with big carbon footprints, while also giving them economic incentives to invest in cleaner technologies, energy efficiency and pollution-reducing measures. 

“Our analysis shows industrial carbon pricing adds next to nothing to the operating costs of large emitters—for example, it drives low-carbon innovation in the oil and gas sector at less than the cost of a Timbit a barrel. Large-emitter trading systems also create lucrative credit markets that help attract investment to Canada for new, low-carbon projects—from carbon capture and storage to clean steel to low-carbon chemical manufacturing.

“Cancelling large-emitter trading systems would ultimately hurt more than it would help. It would create profound uncertainty for businesses and investors at the worst possible time, and jeopardize upwards of $5 billion in credit values in Alberta alone. It would also undermine Canadian exports to priority trading partners such as the UK and EU, which are introducing carbon tariffs that give low-carbon producers a competitive advantage. 

“Without the signal industrial pricing systems send, other types of incentives—like tax credits for investing in clean technology and manufacturing—will not be enough to meaningfully drive down carbon pollution from big industry or deliver on Canada’s climate goals. Eliminating the federal industrial carbon pricing requirement would ultimately leave Canada without a credible climate plan, making the 2030 climate target impossible to reach, and undermining rather than enhancing Canada’s reputation internationally.

“The Canadian Climate Institute is committed to working with all governments and stakeholders across the country to continue to advance Canada’s climate progress and accelerate evidence-based solutions for low-carbon competitiveness.”

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Resources

Canadian Climate Institute supports strong, united response to U.S. tariffs

TORONTO—Rick Smith, President of the Canadian Climate Institute, made the following statement in response to U.S. tariffs on Canadian exports: 

“The Canadian Climate Institute is in full support of efforts taken by the federal and provincial governments to retaliate against the unprovoked and illegal tariffs imposed by the United States on Canada. 

“Since its launch five years ago, the Institute’s mission has been a fundamentally patriotic one—to develop strong policy research and analysis that builds a cleaner, more secure, and more prosperous future for all Canadians. 

“The Institute’s network is composed of leaders from industry, trade unions, retailers, manufacturers, Indigenous peoples, governments, and many other groups threatened by this U.S. economic aggression. We stand shoulder to shoulder with them, and with all Canadians, in the months ahead.”