MOU with Alberta puts Canada’s commitment to net zero emissions by 2050 firmly out of reach

OTTAWA—Rick Smith, President of the Canadian Climate Institute, made the following statement in response to the Implementation Agreement for the Canada-Alberta Memorandum of Understanding on industrial carbon pricing and clean electricity policy:

“The final Canada-Alberta MOU implementation agreement will put Canada’s target of net zero by 2050 well out of reach. It also means that Canada will be on path to achieve its 2030 target at a much later date, creating more than a decade of delay for needed progress. 

“Alberta is home to the biggest carbon market in the country, covering roughly a quarter of all national emissions. While the changes to the province’s industrial carbon market may improve on the status quo there, this is the lowest of bars. The MOU agreement’s unreasonable compromises on industrial carbon markets and clean electricity regulations, and the implications for weakening policies in other provinces, will undermine emissions reductions and Canada’s low-carbon competitiveness. 

“While the MOU agreement promises to make improvements to how the carbon market functions, the announced design changes will not be strong enough to fix market fundamentals and reach the intended effective market credit price by 2040. That undermines the credibility of the deal. Financial mechanisms such as carbon contracts for difference could improve long-term certainty but the design details leave a number of questions unanswered.  

“Ultimately, 2040 is too late to reach a market carbon credit price of $130 a tonne in Alberta. That is especially true given the cost to oil sands producers is cents per barrel on average. The deferred timeline on carbon pricing risks watering down industrial carbon pricing systems in other provinces, like B.C., which would otherwise be at a significant competitive disadvantage. 

“Further, the federal government’s plan to put the Clean Electricity Regulations in abeyance without any credible path forward increases policy uncertainty in Alberta and opens the door for more provinces to seek special treatment. That risks locking in more long-lived, high-emissions gas-fired power, exposing ratepayers to more volatile energy costs, and further stifling growth in Alberta’s previously thriving renewable energy sector.

“In response to the global energy shock underway, our international peers are leaning into the clean energy transition as the key to their future competitiveness, energy sovereignty, and affordability; Canada meanwhile is backing off, despite the long-term vision of growth fuelled by abundant and affordable clean electricity outlined in yesterday’s electricity strategy. 

“The Canadian Climate Institute will conduct comprehensive new modelling to assess the emissions-related implications of the full MOU agreement package in the days ahead, and we look forward to publishing that analysis to provide an informed basis for future policy development.”

RESOURCES

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

ABOUT US

The Canadian Climate Institute is an independent climate policy research organization that produces rigorous research, analysis, and economic modelling, drawing on experts and leaders across the country. Our work focuses on: accelerating clean growth and low-carbon competitiveness; measuring progress in Canada’s clean energy transition; amplifying Indigenous perspectives and climate solutions; unlocking sustainable investment; and making our economy and infrastructure more resilient to a warming climate.

Canada’s new electricity strategy points in the right direction, but sidesteps critical issues

OTTAWA—Dale Beugin, Executive Vice President of the Canadian Climate Institute, made the following statement in response to the release of the federal government’s Powering Canada Strong: A National Strategy for an Electrified Canadian Economy:  

“Canada’s new national electrification strategy is pointing in the right direction, but sidesteps critical issues about the future of the country’s electricity system. While it recognizes the need to double the size of the country’s electricity grids to shore up national competitiveness, affordability, and energy security, it offers little clarity on the role of gas power in the future. It focuses on supporting electrification across the economy, which will be essential for achieving net zero emissions, but raises more questions about the role of the Clean Electricity Regulations.

“Ultimately, the success of the strategy will depend on details of how—and how swiftly—the government follows through on expanding clean power generation, transmission, and widespread electrification. 

“Several important issues remain ambiguous or missing in the strategy: 

  • Connections to the Canada-Alberta Memorandum of Understanding are unclear. How the federal Clean Electricity Regulations will apply in Alberta will have implications for the policy across the country. 
  • Changes to the Clean Electricity Regulations could allow additional emissions-intensive gas-powered generation that delivers reliability via peaking power, but also opens the door to long-lived, high-emissions baseload power, undermining Canada’s climate objectives. 
  • The strategy emphasizes the role of gas in affordability but underplays the growing opportunity from cleaner sources of system flexibility (such as storage, demand response, and interties) to help deliver affordable electricity rates.
  • The strategy overemphasizes nuclear power, which risks higher costs and delays in scaling up urgently-needed new power, compared to falling costs of renewables and storage. 
  • It’s unclear how the federal government will create incentives for provinces and territories to create the market conditions to scale-up electricity systems. Many important electricity policy levers are squarely in provincial jurisdiction.  
  • The strategy is silent on Saskatchewan’s efforts to bring back coal power, in opposition to federal law and despite the emissions implications and negative impacts on affordability 
  • Indigenous leadership and partnerships are critical to successful development of cleaner, bigger grids. While the strategy recognizes the importance of Indigenous rights and participation in the North, it’s imperative for governments to support and work with Indigenous partners across the country to advance reconciliation and realize the ambitions outlined in this strategy. 

“The new strategy offers a path forward to fix some persistent issues. Prioritizing the construction of ‘nation building’ grid infrastructure to connect provincial grids and grow electricity capacity is the necessary first step to keep up with existing and future demand. Investing in building skills and bolstering Canada’s ability to produce the hardware, grid components, and services this expansion would require could offer economic and local employment benefits.  

“The plan also recognizes the federal government has a constructive role to play in expanding and connecting Canada’s electricity systems: by providing policy certainty, facilitating co-ordination between provinces and territories, and leveraging federal resources and funding to support grid expansion and modernization, among other things. 

“The recent spike in prices at the pump is a timely reminder of how volatile oil prices can be. With targeted government support and careful planning, switching from fossil fuels to clean electricity in our homes, vehicles, and industries can have real affordability and energy security benefits. 

“Clean electricity resources already give Canada a competitive edge internationally—and that advantage will only grow as global markets continue shifting toward lower-carbon energy. Investing in maintaining and growing that edge is smart fiscal and energy policy, and is essential for Canada to make progress toward its international climate commitments. Realizing the full transformative potential of this new strategy will require meeting some of the hardest and most important policy challenges head-on. The Climate Institute will be releasing new research to help answer some of these questions in the months ahead.”

RESOURCES

MEDIA CONTACTS

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

ABOUT US

The Canadian Climate Institute is an independent climate policy research organization that produces rigorous research, analysis, and economic modelling, drawing on experts and leaders across the country. Our work focuses on: accelerating clean growth and low-carbon competitiveness; measuring progress in Canada’s clean energy transition; amplifying Indigenous perspectives and climate solutions; unlocking sustainable investment; and making our economy and infrastructure more resilient to a warming climate.

FACT SHEET: Climate change and wildfires

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Accelerating climate change, largely from the burning of fossil fuels, makes wildfires bigger, hotter, and more destructive (Climate Atlas of Canada n.d.). With Canada warming twice as fast as the global average (Government of Canada 2019), and home to more than a quarter of the world’s boreal forests, the country is experiencing this consequence of global heating firsthand.

The last three fire seasons have been among the 10 worst on record. Canada experienced its most destructive wildfire season ever in 2023, with fires consuming 16.5 million hectares—more than double the previous record and nearly seven times more than the historical average (Natural Resources Canada 2024). 

In 2024, the Jasper wildfire in Alberta destroyed one-third of the town’s structures and was among the most expensive natural disasters in Canadian history, with insured damages estimated to be $1.23 billion (Insurance Bureau of Canada, 2025). 2025 was the second worst wildfire season in Canadian history, with over 8.3 million hectares burned, and fires impacting nearly every province and territory (Public Safety Canada, 2025).

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

Our research finds that to keep Canadians safe from wildfires and other worsening climate hazards, governments must play both defence and offence—protecting people and ecosystems while accelerating the transition away from fossil fuels to limit climate heating (Sawyer et al. 2022).

Climate change makes wildfires worse

  • While forest fires are naturally occurring disturbances that contribute to the health and renewal of many forest ecosystems (Canadian Council of Forest Ministers 2019), fires are burning hotter and wilder as the climate warms, causing much greater destruction. 
  • Canadian forests are more susceptible to high-severity fires in a warming climate (Wang et. al 2025). While there is no increase in the overall number of wildfires, the number and size of large and very large fires is increasing, along with the annual area burned (Hanes et. al. 2025).
  • Climate change more than doubled the likelihood of extreme fire weather conditions in Eastern Canada in 2023 (World Weather Attribution 2023). 
  • An overheating climate is making Canadian summers hotter and drier, with more erratic rainfall, including less summer rain in some regions (Bush and Lemmen 2019; Gifford et al. 2022). Wildfires are more likely to spread rapidly, with dry, windy days increasing by up to 50% in western Canada and doubling or tripling in eastern Canada (Wang et. al 2017).
  • Research has shown that climate change is extending ‘burning hours’ by weakening the natural day-night temperature cycle that once slowed wildfires, allowing them to burn more intensely overnight and spread faster (Luo 2026).
  • A warming climate is leading to decreased annual snow cover across Canada’s north in May and June, leading to drier conditions which increase wildfire risk (Environment and Climate Change Canada, 2025).
  • Fire season is starting earlier, is lasting longer, and is harder to contain (Climate Atlas of Canada n.d.; Natural Resources Canada 2024b; Natural Resources Canada 2022). Zombie fires are even beginning to smoulder through the winter (Shingler 2024).
  • Lighting strikes become more frequent as the climate warms (McKabe 2023). Ninety-three per cent of the area burned in Canada in 2023 was from fires ignited by lightning; only 7 per cent by human-ignition (Jain et al. 2024).
  • Elevated wildfire risk from climate change means that, whatever the cause, fires catch, spread, and get out of control much more easily.

Wildfires are damaging people’s health and wellbeing 

  • The smoke from wildfires can spread thousands of kilometres (NASA Earth Observatory 2015), requiring school closures and causing other disruptions while threatening the health of millions of people (Lin 2023), particularly children, seniors, and people with heart or lung disease. 
  • Hot-burning wildfires release dangerous levels of particulate matter into the air, which is associated with an increased risk of issues like heart disease, cardiovascular disease, lung cancer, and brain cancer (Egyed et al. 2022; Korsiak et al. 2022).
  • Between 2020-2024, increased wildfire smoke was responsible for an annual average of 1,400 deaths in Canada (Romanello et. al 2025). Smoke from Canada’s 2023 wildfires is estimated to have caused more than 80,000 premature deaths globally (Zhang et. al 2025).
  • Heavy smoke takes a significant toll on the Canadian healthcare system. A single week of wildfire smoke in June 2023 was estimated to have cost Ontario over $1.2 billion (Sawyer et al. 2023) in health impacts such as premature deaths, increased hospital visits, and health emergencies.
  • Poor air quality from smoke hits the most vulnerable the hardest (Government of Canada, 2022). The impacts of smoke are even more serious for groups like children, seniors, pregnant people, and those who work outdoors. 
  • Smoke from larger wildfires is exacerbating asthma across parts of Western Canada (Matz et al. 2020), and the aftermath of climate-related fires and floods takes a significant toll on mental health (Belleville et al. 2019). 
  • Wildfires can destroy homes and communities, devastate fragile ecosystems, and threaten economic security. These effects have been linked to post-traumatic stress disorder, depression, anxiety, and suicidal thoughts (Hayes et al. 2022).

Worsening wildfires are making life more expensive

  • Wildfires can destroy property, homes, and entire communities, driving up insurance costs and making life more expensive (Gerety 2024; Vaillant 2024). 
  • The cost of wildfire protection has risen by about $150 million per decade since the 1970s (Government of Canada 2024). These costs exceeded $1 billion for six of the last 10 years.
  • The 2016 wildfire in Fort McMurray, Alberta, cost an estimated $9 billion in direct and indirect physical, financial, health, and environmental impacts (Alam et al. 2019). It triggered the largest evacuation in Canadian history, destroying more than 2,400 structures and displacing 85,000 people.
  • Wildfires impact key sectors of the economy, including the forest industry, one of Canada’s largest employers (Lindsay and Pelai 2024). Wildfires can disrupt forestry operations and reduce the amount of timber available, hurting workers and forest-dependent communities in the process. During the 2017 wildfires in British Columbia, 40 forestry companies were temporarily shut down (Ministry of Environment and Climate Change Strategy 2019).
  • The accumulating impacts of global heating, including bigger and more frequent wildfires, are raising the cost of living in Canada from lost jobs, reduced economic activity, and tax hikes to pay for disaster recovery and infrastructure repairs. The additional climate change impacts between 2015 and 2025 alone will cost the average household $700 per year, and will continue to increase moving forward (Sawyer et al. 2022).

Governments can act to protect communities and slow further heating

  • 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 increased fire risks today.
  • Federal and provincial governments can promote fire resilience by limiting development in areas at high risk of wildfires, strengthening building codes and regulations (for example, building with fire-resistant materials), and improving forest and vegetation management through prescribed burns and other measures to help reduce fuel available to burn near at-risk communities (Bénichou et al. 2021).
  • Alberta and British Columbia’s FireSmart programs are examples of initiatives that help communities and individuals reduce their fire risk (FireSmart Alberta 2024; FireSmart B.C. 2024).

Indigenous Peoples are disproportionately impacted, and leading on solutions

  • Indigenous communities in Canada have used controlled fire as traditional land management practice since time immemorial. Supporting these cultural burning practices can help reduce the risk of out-of-control wildfires (BC Wildfire Service 2022). 
  • Eighty per cent of majority-Indigenous communities in Canada are located in fire-prone regions (Asfaw et al. 2019).
  • More than 42 per cent of wildfire evacuations have been from majority-Indigenous communities (Webber and Berger 2023).
  • Between 1980 and 2021 in Canada, 16 communities (Christianson et al. 2024) were evacuated five or more times, and all but two of those were First Nations reserves.

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 Relations (French, English / Eastern Time)
cbrule@climateinstitute.ca
(226) 212-9883

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

References

Alam, Rafat, Shahidul Islam, Eric Mosely, Sean Thomas, Virginia Dowdell, Dawn Doel. 2019. Rapid Impact Assessment of Fort McMurray Wildfire. Institute for Catastrophic Loss Reduction and MacEwan University. https://www.iclr.org/wp-content/uploads/2019/08/Rapid-Impact-Assessment-of-Fort-McMurray-Wildfire.pdf

Asfaw, Henok Workeye, Sandy Lake First Nation, Tara K. McGee, and Amy Cardinal Christianson. 2019. “A qualitative study exploring barriers and facilitators of effective service delivery for Indigenous wildfire hazard evacuees during their stay in host communities.” International Journal of Disaster Risk Reduction, 41, 101300. https://doi.org/10.1016/j.ijdrr.2019.101300

BC Wildfire Service. 2022. “How cultural burning enhances landscapes and lives.” May 5. https://blog.gov.bc.ca/bcwildfire/how-cultural-burning-enhances-landscapes-and-lives/ 

Bénichou, Noureddine, Masoud Adelzadeh, Jitender Singh, Islam Gomaa, Nour Elsagan, Max Kinateder, Chunyun Ma, Abhishek Gaur, Alex Bwalya, and Mohamed Sultan. 2021. National Guide for Wildland-Urban Interface Fires. National Research Council Canada. https://doi.org/10.4224/40002647

Belleville, Genevieve, Marie-Christine Ouellet, and Charles M. Morin. 2019. “Post-traumatic stress among evacuees from the 2016 Fort McMurray wildfires: exploration of psychological and sleep symptoms three months after the evacuation.” International Journal of Environmental Research and Public Health, 16(9), 1604. https://doi.org/10.3390/ijerph16091604

Bush, E., and D. S. Lemmen, editors. 2019. Canada’s Changing Climate Report. Government of Canada. https://changingclimate.ca/CCCR2019/chapter/4-0/ 

Canadian Council of Forest Ministers. 2019. “Natural Disturbances.” https://www.ccfm.org/healthy-forests/natural-disturbances/ 

Canadian Interagency Forest Fire Centre. 2024. “Wildfire Graphs: Annual area burned in Canada.” https://ciffc.net/statistics 

Canadian Wildland Fire Information System. 2024. “Monthly and Seasonal Forecasts.” Natural Resources Canada. https://cwfis.cfs.nrcan.gc.ca/maps/forecasts 

Christianson, Amy Cardinal, Lynn M. Johnston, Jacqueline A. Oliver, David Watson, David Young, Heather MacDonald, John Little, Bruce Macnab, and Noemie Gonzalez Bautista. 2024. “Wildland fire evacuations in Canada from 1980 to 2021.” International Journal of Wildland Fire, 33(7). https://doi.org/10.1071/WF23097

Clarke, Ben, and Friederike Otto. 2024. “Reporting extreme weather and climate change: A guide of journalists.” World Weather Attribution. https://www.worldweatherattribution.org/reporting-extreme-weather-and-climate-change-a-guide-for-journalists/ 

Climate Action Against Disinformation. Flame Wars: Misinformation and Wildfire in Canada’s Climate Conversation. June 11. https://caad.info/analysis/reports/flame-wars-misinformation-and-wildfire-in-canadas-climate-conversation/ 

Climate Atlas of Canada. n.d. “Forest Fires and Climate Change.” https://climateatlas.ca/forest-fires-and-climate-change 

Egyed, Marika, Phil Blagden, et al. 2022. “Air Quality.” In P. Berry & R. Schnitter (Eds.), Health of Canadians in a Changing Climate: Advancing our Knowledge for Action. Government of Canada.

Environment and Climate Change Canada. 2026. “Snow Cover.” March 26.
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FireSmart Alberta. 2024. “About FireSmart Alberta.” https://firesmartalberta.ca/about/

FireSmart B.C. 2024. “About FireSmart B.C.” https://firesmartbc.ca/

Gerety, Rowan Moore. “How does a tiny mountain town, burned to the ground, come back.” New York Times, March 12. https://www.nytimes.com/2024/03/12/travel/lytton-fire-canada.html 

Gifford, Robert, Craig Brown, Carrie Baron, Denni Clement, Natalya Melnychuk, Harry Nelson, Luke Sales, and Dave Spittlehouse. 2022. British Columbia Chapter in Canada in a Changing Climate: Regional Perspectives Report. Government of Canada. https://changingclimate.ca/regional-perspectives/chapter/5-0/ 

Government of Canada. 2019. “Canada’s climate is warming twice as fast as global average.” Press release. April 2. https://www.canada.ca/en/environment-climate-change/news/2019/04/canadas-climate-is-warming-twice-as-fast-as-global-average.html 

Government of Canada. 2024. “Cost of Wildland Fire Protection.” May 13. https://natural-resources.canada.ca/climate-change/climate-change-impacts-forests/forest-change-indicators/cost-fire-protection/17783 

Hanes, Chelene C., Piyush Jain, Weiwei Wang, Xianli Wang, Marc-André Parisien, John M. Little, and Mike D. Flannigan. 2025. “Fire Regime Changes in Canada: An Update.” Canadian Journal of Forest Research 55: 1–11. doi:10.1139/cjfr-2025-0209.

Hayes, Katie, Ashley Cunsolo, et al. 2022. “Mental Health and Well-Being.” In P. Berry & R. Schnitter (Eds.), Health of Canadians in a Changing Climate: Advancing our Knowledge for Action. Government of Canada.

IPCC, 2022. Climate Change 2022: Impacts, Adaptation, and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change Cambridge University Press. https://dx.doi.org/10.1017/9781009325844 

Jain, Piyush, Quinn E. Barber, Steve Taylor, et al. 2024. Canada Under Fire: Drivers and Impacts of the Record-Breaking 2023 Wildfire Season. ESS Open Archive, February 28.

Jones, Alexandra Mae. 2025. “This is our second-worst wildfire season on record – and could be the new normal.” CBC, August 12. https://www.cbc.ca/news/climate/wildfire-season-2025-1.7606371

Korsiak, Jill, Lauren Pinault, et al. 2022. “Long-term exposure to wildfires and cancer incidence in Canada: A population-based observational cohort study.” The Lancet, May. https://doi.org/10.1016/S2542-5196(22)00067-5 

Lin, Elizabeth Ziying. 2023. “Canadian Wildfire Smoke Associated with Increased Asthma Cases in NYC.” Yale School of Public Health, October 5. https://ysph.yale.edu/news-article/canadian-wildfire-smoke-associated-with-increased-asthma-cases-in-nyc/

Lindsay, Kate, and Ricardo Pelai. 2024. “Canada needs to get ready for a future fraught with fire: How can the forest sector respond?” Canadian Climate Institute, January 31. https://climateinstitute.ca/canada-fires-forest-sector/ 

Luo, Kaiwei, Xianli Wang, Dante Castellanos-Acuna, and Mike Flannigan. 2026. “A Weakened Diurnal Weather Constraint Leads to Longer Burning Hours in North America.” Science Advances 12(16): eaed0725. doi:10.1126/sciadv.aed0725.

Matz, Carlyn J., Marika Egyed, Guoliang Xi, Jacinthe Racine, Radenko Pavlovic, Robyn Rittmaster, Sarah B. Henderson, and David M. Stieb. 2020. “Health impact analysis of PM2. 5 from wildfire smoke in Canada (2013–2015, 2017–2018).” Science of The Total Environment, 725, 138506. https://doi.org/10.1016/j.scitotenv.2020.138506

McKabe, Kirsty. 2023. “How does climate change affect thunderstorms?” Royal Meteorological Society, July 20. https://www.rmets.org/metmatters/how-does-climate-change-affect-thunderstorms 

Ministry of Environment and Climate Change Strategy. 2019. Preliminary Strategic Climate Risk Assessment for British Columbia. Report prepared for the Government of British Columbia. https://www2.gov.bc.ca/gov/content/environment/climate-change/adaptation/riskassessment 

NASA Earth Observatory. 2015. “Canadian Wildfires Produce River of Smoke.” June 29. https://earthobservatory.nasa.gov/images/86151/canadian-wildfires-produce-river-of-smoke 

Natural Resources Canada. 2022. “Climate Change and Fire.” https://natural-resources.canada.ca/our-natural-resources/forests/wildland-fires-insects-disturbances/climate-change-fire/13155 

Natural Resources Canada. 2024a. “Canada’s record-breaking wildfires in 2023: A fiery wake-up call.” April 21. https://natural-resources.canada.ca/simply-science/canadas-record-breaking-wildfires-2023-fiery-wake-call/25303 

Natural Resources Canada. 2024b. “Fire Weather.” https://natural-resources.canada.ca/climate-change/climate-change-impacts-forests/forest-change-indicators/fire-weather/17776 

Natural Resources Canada. 2024c. “Cost of WIldland Fire Protection.” May 13. https://natural-resources.canada.ca/climate-change/climate-change-impacts-forests/forest-change-indicators/cost-fire-protection/17783 

Owen, Brenna. 2025. “Study estimates 2023 Canadian wildfire smoke caused more than 80,000 deaths globally.” The Canadian Press, September 10. https://www.thecanadianpressnews.ca/environment/study-estimates-2023-canadian-wildfire-smoke-caused-82-000-premature-deaths-globally/article_437ae58b-a1a6-5ac4-b02a-25aa40c1b425.html

Public Health Agency of Canada. 2023. “Public Health Risk Profile: Wildfires in Canada, 2023.” July 23. https://www.canada.ca/en/public-health/services/emergency-preparedness-response/rapid-risk-assessments-public-health-professionals/risk-profile-wildfires-2023.html 

Public Safety Canada. 2025. “Government of Canada provides update on 2025 wildfires as support continues.” October 30.
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Romanello, Marina, Maria Walawender, Shih-Che Hsu, Annalyse Moskeland, Yasna Palmeiro-Silva, Daniel Scamman, James W Smallcombe, et al. 2025. “The 2025 Report of the Lancet Countdown on Health and Climate Change: Climate Change Action Offers a Lifeline.” The Lancet 406(10521): 2804–57. doi:10.1016/S0140-6736(25)01919-1.

Sawyer, Dave, Ryan Ness, Caroline Lee, and Sarah Miller. 2022. Damage Control: Reducing the costs of climate impacts in Canada. Canadian Climate Institute. https://climateinstitute.ca/reports/ damage-control 

Sawyer, Dave, Seton Stiebert, and Colin Welburn. 2023. “With the Forest Ablaze, the Health Costs Hit Home”. Canadian Climate Institute, June 26. https://climateinstitute.ca/with-the-forest-ablaze-the-health-costs-hit-home/

Shingler, Benjamin. 2024. “It’s the middle of winter, and more than 100 wildfires are still smouldering.” CBC, February 21. https://www.cbc.ca/news/climate/wildfires-zombie-fires-canada-bc-alberta-1.7119851 

Vaillant, John. 2024. Fire Weather: The Making of a Beast. Vintage Canada. 

Wang, Weiwei, Xianli Wang, Mike D. Flannigan, Luc Guindon, Tom Swystun, Dante Castellanos-Acuna, Wanli Wu, and Guangyu Wang. 2025. “Canadian Forests Are More Conducive to High-Severity Fires in Recent Decades.” Science 387(6729): 91–97. doi:10.1126/science.ado1006.

Wang, Xianli, Marc-André Parisien, Steve W Taylor, Jean-Noël Candau, Diana Stralberg, Ginny A Marshall, John M Little, and Mike D Flannigan. 2017. “Projected Changes in Daily Fire Spread across Canada over the next Century.” Environmental Research Letters 12(2): 025005. doi:10.1088/1748-9326/aa5835.

Webber, Tammy, and Noah Berger. “Canadian wildfires hit Indigenous communities hard, threatening their land and culture.” Associated Press, July 19. https://apnews.com/article/canada-wildfire-indigenous-land-first-nations-impact-3faabbfadfe434d0bd9ecafb8770afce 

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/ 

Zhang, Qiang, Yuexuanzi Wang, Qingyang Xiao, Guannan Geng, Steven J. Davis, Xiaodong Liu, Jin Yang, et al. 2025. “Long-Range PM2.5 Pollution and Health Impacts from the 2023 Canadian Wildfires.” Nature 645(8081): 672–78. doi:10.1038/s41586-025-09482-1.

2026 Spring Economic Update confirms Canada’s commitment to climate competitiveness, with important work ahead

OTTAWA— Rick Smith, President of  the Canadian Climate Institute, made the following statement in response to the federal government’s 2026 Spring Economic Update: 

“Decarbonization is an enormous driver of global market trends as countries pursue economic security and stability. An historic buildout of clean electricity, and increased consumer uptake of low-emitting technologies such as electric vehicles and heat pumps, has been accelerated by the blockade of the Strait of Hormuz and the resulting volatility of oil and gas prices.

“This is the backdrop for the Spring Economic Update’s focus on building economic competitiveness and increasing trade. The Update’s recognition of the continuing importance of Budget 2025’s Climate Competitiveness Strategy is welcome. Following through with implementation remains the urgent priority.  

“The Climate Competitiveness Strategy explicitly committed, for example, to strengthening industrial carbon pricing. This remains critical to ensure Canada is positioned to compete and win in a global economy increasingly focused on low-carbon pathways. Stronger industrial carbon pricing can deliver coherent, robust, and co-ordinated carbon markets across Canada, aligning with the government’s goal of a unified Canadian economy. 

“Additional commitments to develop a post-2030 carbon pricing trajectory, fix the carbon pricing benchmark, and improve the backstop are all critically important as the federal government works to finalize its memorandum of understanding (MOU) with Alberta. As the Institute’s research has shown, getting industrial carbon market design right will make or break the emission outcome of the Canada-Alberta MOU.  

“The federal government has also yet to launch its promised national electricity strategy to make good on the Prime Minister’s commitment of doubling clean electricity supply and better connecting and aligning provincial electricity grids.

“Some additional commitments, including a new electric vehicle strategy, have moved forward. The Climate Institute awaits the details of the new policy package to put Canada on a path to what the Prime Minister has promised as a goal of the equivalent of 75 per cent new car sales being electric vehicles by 2035.

“The federal government’s support for a sustainable investment taxonomy and sustainable finance conference are important contributions to ensuring Canada succeeds in attracting new investment for green and transition projects. 

“In addition, the government’s move to scale up and reorient $13 billion in international climate finance is also welcome, helping emerging economies cut emissions while opening markets for Canadian clean technologies and crowding in private investment.

“Finally, investing $6 billion over 10 years to support climate change adaptation for infrastructure and buildings, among other priorities, is a necessary and overdue measure to improve communities’ resilience. Yet a more comprehensive and sustained approach will be required in the years ahead to manage the rising costs of extreme weather and climate disruption.”

RESOURCES

CONTACT

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

About the Canadian Climate Institute 

The Canadian Climate Institute is an independent climate policy research organization that produces rigorous research, analysis, and economic modelling, drawing on experts and leaders across the country. Our work focuses on: accelerating clean growth and low-carbon competitiveness; measuring progress in Canada’s clean energy transition; amplifying Indigenous perspectives and climate solutions; unlocking sustainable investment; and making our economy and infrastructure more resilient to a warming climate.

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FACT SHEET: Climate change and flooding

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In August 2024, the remnants of Hurricane Debby brought record-breaking floods to Quebec, inundating 55 communities. Just a month before, nearly 10 centimetres of rain fell in Toronto in three hours, overwhelming the city’s infrastructure and flooding many homes and businesses. In November 2021, an atmospheric river unleashed record-breaking rain in British Columbia, triggering landslides and floods that caused extensive damage, cutting off main access routes to several areas of the province, severely impairing the economy.

As climate change worsens, Canadians will experience a significant increase in the frequency and intensity of these kinds of flood events. Warmer air, caused by increasing concentrations of heat-trapping gases in the atmosphere, holds more moisture, leading to heavier rainfall and more intense storms. This, combined with melting snow packs, rising sea levels, and changing weather patterns, has created the conditions for more severe and unpredictable flooding. These floods are devastating for communities, economies, and livelihoods.

Climate change is driving increasingly severe and frequent floods

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

  • Parts of southern British Columbia, Ontario, Quebec, and the Atlantic provinces have seen an increase of two to three heavy rainfall days per year on average (Vincent et al. 2018; Zhang et al. 2019).
  • Climate models project that by the end of the century, an extreme rainfall event that now occurs once every 20 years in Canada could happen every five years, and the amount of 24-hour extreme precipitation that occurs once in 20 years, on average, is projected to increase by 12 per cent (Zhang et al. 2019).

Floods can severely damage homes and infrastructure, costing billions of dollars

More frequent and intense floods put people and communities at risk

  • Heavy rainfall events can overwhelm small drinking water treatment systems, degrading water quality and increasing the risk of waterborne disease outbreaks (Wang et al. 2018).  
  • Over half of the waterborne disease outbreaks in the past 50 years in the United States occurred after episodes of extreme rainfall (Charron et al. 2011).
  • Floods can be fatal, as people drown while wading or driving through flood waters or are trapped in flooded buildings (Government of Canada 2021).
  • Injuries are common during and after floods due to swiftly moving heavy objects, damaged electrical wiring and appliances, and the risk of hypothermia from cold floodwater (Government of Canada 2021).
  • The psychosocial impacts of flooding are significant, increasing family conflicts, financial stress, and feelings of isolation. In some cases, flooding can trigger or exacerbate mental health conditions such as depression and post-traumatic stress disorder (Glenn and Myre 2022).
  • A few months after the Quebec floods of 2019, 44 per cent of those affected had moderate to high symptoms of post-traumatic stress, 21 per cent had symptoms of anxiety disorders, and 20 per cent had developed mood disorders (Institut national de santé publique du Québec 2024).
  • Flooded buildings are quickly colonized by mold, fungi, and bacteria, which can cause or aggravate skin, allergy, eye, respiratory, and gastrointestinal problems such as asthma, conjunctivitis, and otitis (Institut national de santé publique du Québec 2024).

Governments can act to protect communities from worsening flood risk

  • Flooding will only get worse as the concentration of heat-trapping gases in the atmosphere continues to increase. Government action to manage this growing risk and limit further emissions is essential.
  • Because the impacts of climate change on flooding are already here and getting worse from the emissions that have already occurred, communities and governments must work together to adapt and prepare for increased risk of floods today and into the future.
  • Some of the key adaptation actions governments can take to reduce flood risk and protect communities include:
    • Shifting development away from high-risk flood zones: To prevent placing more homes in harm’s way, provincial and municipal governments could restrict building in areas with high flood risk. Research from the Canadian Climate Institute shows that steering development away from high-hazard areas in the next decade can prevent between $340 million and $2 billion per year in new flood losses without limiting housing growth (Ness et. al 2025).  
    • Enhancing flood protection infrastructure at the community level: Investing in new and improved flood protection infrastructure, such as levees, floodwalls, and nature-based solutions, can cost-effectively safeguard communities at risk of flooding (Ness et al. 2021).
    • Support proactive relocation from high-risk areas: In a few areas where flood risk is too high to provide adequate protection, governments should engage with homeowners and communities to consider proactive relocation, offering appropriate assistance and incentives for moving to safer areas (Public Safety Canada 2022).

References and 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).
  • Zach Carriere is Research Associate in Adaptation at the Canadian Climate Institute (Eastern Time, English).

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

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

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

References

Bourque, Julien. 2021. “Three things governments need to do to protect homeowners and renters from the insurance industry’s perfect storm.” December 13. Canadian Climate Institute. https://climateinstitute.ca/three-things-governments-need-to-do/ 

Brown, Craig, Ewa Jackson, Deborah Harford, and David Bristow. 2021. “Cities and Towns” Chapter 2. In Canada in a Changing Climate: National Issues Report, F.J. Warren and N. Lulham (Eds). Government of Canada. p. 26

Catastrophic Indices and Quantification Inc.. 2025. “CAD 2.806 B – CatIQ Discloses Updated Industry Loss for the Flooding from the Remnants of Hurricane Debby in August 2024” CatIQ. https://public.catiq.com/2025/08/12/cad-2-806-b-catiq-discloses-updated-industry-loss-for-the-flooding-from-the-remnants-of-hurricane-debby-in-august-2024/

Charron, Dominique F., M. Kathleen Thomas, David Waltner-Toews, Jeffery J. Aramini, Tom Edge, Robert A. Kent, Abdel R. Maarouf, and Jeff Wilson. 2004. “Vulnerability of waterborne diseases to climate change in Canada: A review.” Journal of Toxicology and Environmental Health, Part A 67(20–22): 1667–1677. https://www.tandfonline.com/doi/10.1080/15287390490492313 

Clarke, Ben, and Friederike Otto. 2024. “Reporting extreme weather and climate change: A guide of journalists.” World Weather Attribution. https://www.worldweatherattribution.org/reporting-extreme-weather-and-climate-change-a-guide-for-journalists/ 

Denchak, Melissa. 2023. “Flooding and Climate Change: Everything You Need to Know.” Natural Resources Defense Council, November 3. https://www.nrdc.org/stories/flooding-and-climate-change-everything-you-need-know#facts 

Glenn, Nicole, and Maxine Myre. 2022. “Post-Flooding Community-Level Psychosocial Impacts and Priorities in Canada: A Preliminary Report.” National Collaborating Centre for Environmental Health, November 22. https://ncceh.ca/resources/evidence-reviews/post-flooding-community-level-psychosocial-impacts-and-priorities-canada 

Government of Canada. 2021. “Climate Change and Public Health Factsheets.” Public Health Agency of Canada, February 1. https://www.canada.ca/en/public-health/services/health-promotion/environmental-public-health-climate-change/climate-change-public-health-factsheets-floods.html 

Greenan, Blair J. W., Thomas S. James, John W. Loder, Pierre Pepin, Kumiko Azetsu-Scott, Debby Ianson, Roberta C. Hamme, Denis Gilbert, Jean-Éric Tremblay, Xiaolan L. Wang, and Will Perrie. 2019. “Changes in oceans surrounding Canada”; Chapter 7 in E. Bush and D. S. Lemmen (Eds.) Canada’s Changing Climate Report. Government of Canada. p. 343-423. https://changingclimate.ca/CCCR2019/chapter/7-0/ 

Honegger, Caspar, and Christoph Oehy. 2016. The road to flood resilience in Canada. Swiss Re. https://www.preventionweb.net/files/49295_theroadtofloodresilienceincanada.pdf 

Institut national de santé publique du Québec. 2024. “Inondations.” Institut national de santé publique du Québec, April 3. https://www.inspq.qc.ca/changements-climatiques/menaces/inondations 

Insurance Bureau of Canada. 2024. “Severe Weather in 2023 Caused Over $3.1 Billion in Insured Damage”. January 8. https://www.ibc.ca/news-insights/news/severe-weather-in-2023-caused-over-3-1-billion-in-insured-damage 

Musselwhite, Beth. 2025. “CatIQ reduces 2024 Ontario flash flooding loss estimate by 9% to CAD 899m” Reinsurance news, July 16. https://www.reinsurancene.ws/catiq-reduces-2024-ontario-flash-flooding-loss-estimate-by-9-to-cad-899m/

Ness, Ryan, Dylan G. Clark, Julien Bourque, Dena Coffman, and Dale Beugin. 2021. Under Water: The Cost of Climate Change for Canada’s Infrastructure. Canadian Climate Institute, September. https://climatechoices.ca/wp-content/uploads/2021/09/Infrastructure-English-FINAL-jan17-2022.pdf 

Ness, Ryan, and Camila Florez Bossio. 2024. “High and dry: The rising tide of flood risks and the insurance dilemma.” Canadian Climate Institute. March 18. https://climateinstitute.ca/flood-insurance-risks-canada/ 

Ness, Ryan, Sarah Miller, Camila Flórez Bossio, Ricardo Pelai and Zacharie Carriere. 2025. Close to Home: How to build more housing in a changing climate.  Canadian Climate Institute. https://climateinstitute.ca/reports/close-to-home/

Pereira, Ana. 2024. “Toronto’s ‘After’ Math: Total Damage from Flash Flood Could Surpass $1 Billion. Here’s How Much Floods Cost Homeowners Every Year.” Toronto Star, July 17. https://www.thestar.com/business/toronto-s-after-math-total-damage-from-flash-flood-could-surpass-1-billion-here-s/article_091766d4-4447-11ef-a1ea-eb24413392a4.html 

Posadzki, Alexandra. 2017. “Majority of Canadian homeowners not insured for flooding: experts.” The Globe and Mail, May 8. https://www.theglobeandmail.com/news/national/majority-of-canadian-homeowners-not-insured-for-flooding-experts/article34925679/ 

Public Safety Canada. 2022. Adapting to Rising Flood Risk: An Analysis of Insurance Solutions for Canada. Public Safety Canada, November 10. https://www.publicsafety.gc.ca/cnt/rsrcs/pblctns/dptng-rsng-fld-rsk-2022/index-en.aspx#s3.2 

Sandink, Dan. 2015. “Urban Flooding and Ground‐related Homes in Canada: An Overview.” Journal of Flood Risk Management 9(3): 208–23. https://onlinelibrary.wiley.com/doi/epdf/10.1111/jfr3.12168 

Vasseur, Liette, Mary Thornbush, and Steve Plante. 2017. “Climatic and Environmental Changes Affecting Communities in Atlantic Canada.” Sustainability 9(8): 1293. https://www.mdpi.com/2071-1050/9/8/1293 

Vincent, L.A. X. Zhang, É. Mekis, H Wan, and E.J. Bush. 2018. “Changes in Canada’s Climate: Trends in Indices Based on Daily Temperature and Precipitation Data.” Atmosphere-Ocean 56(5): 332–49. https://www.tandfonline.com/doi/full/10.1080/07055900.2018.1514579#abstract 

Wang, Yi, Edward McBean, and Bahram Gharabaghi. 2018. “Increased Risks of Waterborne Disease Outbreaks in Northern Ontario Due to Climate Change.” Journal of Water Management Modeling. https://doi.org/10.14796/jwmm.c436  

Westra, Seth., 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: 522–555. doi:10.1002/2014RG000464. https://agupubs.onlinelibrary.wiley.com/doi/10.1002/2014RG000464 

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/ 

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”. Chapter 4.  in E. Bush, and D. S. Lemmen (Eds.) Canada’s Changing Climate Report. Government of Canada. pp 112-193. https://changingclimate.ca/CCCR2019/chapter/4-0/

Canada-Alberta methane agreement shows promise, with success riding on equivalency details and transparency

OTTAWA—Rick Smith, President of the Canadian Climate Institute, made the following statement about the agreement-in-principle on the Canada-Alberta methane equivalency agreement:

“Today’s announcement that Canada and Alberta have reached an agreement-in-principle on reducing methane emissions is a positive step forward. The final details of the equivalency agreement, and follow-through on the commitment to independent and transparent verification of outcomes, will be critical to determine the agreement’s success. 

“Reducing methane is one of the lowest-cost emission-reduction options for the oil and gas sector and can support Canadian companies that find innovative solutions to market beyond national borders. In fact, the industry has already shown encouraging progress reducing these emissions, thanks in large part to joint federal-provincial action. 

“Today’s commitment to jointly select an independent third party to model and assess emissions reductions is an important approach to reinforce policy ambition and integrity, and help ensure the regulations cover the true extent of methane pollution levels from Alberta’s oil and gas sector.

“While this agreement-in-principle matches the commitment in the Canada-Alberta MOU, that commitment is a step back from Canada’s stated goal of reducing methane emissions by 75 per cent below 2012 levels by 2030. By delaying this target, Canada is giving up an estimated 53 Mt of carbon dioxide equivalent of feasible and cost-effective emissions reductions over the next decade. This agreement leaves many important details to be decided, including the role of offsets, which must be carefully defined to avoid double counting.” 

“We look forward to providing further comment on the details of the equivalency agreement once it is posted for public consultation, and will work to ensure the final equivalency agreement between the two parties is rigorous, transparent and aligned with evidence and best practices to be as effective as possible.” 

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

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

ABOUT US

The Canadian Climate Institute is an independent climate policy research organization that produces rigorous research, analysis, and economic modelling, drawing on experts and leaders across the country. Our work focuses on: accelerating clean growth and low-carbon competitiveness; measuring progress in Canada’s clean energy transition; amplifying Indigenous perspectives and climate solutions; unlocking sustainable investment; and making our economy and infrastructure more resilient to a warming climate.

Data show stronger industrial carbon pricing would cost oil sands producers just a Timbit a barrel in 2030 on average

OTTAWA — Strengthening industrial carbon markets to meet the terms of the Canada-Alberta Memorandum of Understanding (MOU) would have minimal cost impact on the oil sands sector’s bottom line, according to new research from the Canadian Climate Institute. 

Specifically, the Institute’s latest analysis of project-by-project compliance costs and profits found that oil sands producers would pay on average less than 50 cents a barrel in 2030, up from 9 cents a barrel today, if the minimum price of carbon credits rose to $130 a tonne by the end of the decade. That’s roughly equivalent to the cost of a Timbit, after accounting for inflation. 

The Institute’s 440 Megatonnes project released a new cost calculator that allows users to explore the costs or benefits that specific oil sands projects are estimated to face under current and future industrial carbon prices. It shows that the cost of industrial carbon pricing today represents less than 1 per cent of the value of a barrel of oil—0.5 per cent of the price of Western Canadian Select at C$100 per barrel. 

The new research comes in the wake of recent public comments and media reports stating that industrial carbon pricing hurts the competitiveness of Canada’s oil and gas sector—which is not supported by evidence. 

On the contrary, carbon pricing protects competitiveness by design. Programs such as Alberta’s Technology Innovation and Emissions Reduction (TIER) system rely on emissions thresholds that limit costs for trade-exposed industries while still encouraging emissions reductions. Firms only pay the carbon price on the portion of emissions that exceed a performance benchmark, and can make money if their emissions are below that mark by selling carbon credits on the market or banking them for future use.

The Climate Institute also examined nearly two decades of data to assess how industrial carbon pricing has impacted the competitiveness of oil sands facilities. The analysis found no statistically significant evidence of export contraction linked to carbon pricing using 17 years of provincial trade data covering 10 provinces and 19 industrial sectors, and after accounting for commodity cycles and U.S. demand, oil prices, and provincial trends. The average estimated effect was essentially zero. 

Industrial carbon pricing is the most important climate policy in Canada to reduce emissions, drive innovation, and maintain economic competitiveness, all while costing consumers next to nothing. Maintaining the planned trajectory to $130 per tonne for minimum carbon credit prices by 2030 will provide long-term certainty to the business community and help reduce carbon pollution across diverse industries. 

QUOTES 

“The evidence shows stronger industrial carbon pricing will cost oil sands companies just a Timbit a barrel by the end of the decade. It’s unclear how any project could claim to be uneconomical as a result of such a negligible cost—especially considering it makes up less than one per cent of the cost of a barrel of oil. Alberta and Canada have committed to strengthen industrial carbon markets; closing loopholes and raising the price of carbon credits are non-negotiable if this important policy aims to reduce emissions, while keeping costs low for industry.”

— Rick Smith, President, Canadian Climate Institute 

“Our new analysis and online calculator show how low the costs are for oil sands producers  from industrial carbon pricing. If carbon markets are strengthened in line with what Alberta and Canada have committed to in the MOU, industrial carbon pricing would add less than 50 cents to a barrel of oil. That’s a rounding error on balance sheets, not a competitiveness threat. If Canadian oil sands producers are truly so vulnerable to such minor costs, then they have much bigger structural competitiveness problems.” 

— Dale Beugin, Executive Vice President, Canadian Climate Institute

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CONTACTS

Krystal Northey 
Lead, Public Affairs
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.

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FACT SHEET: How industrial carbon pricing reduces emissions at minimal cost

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Industrial carbon pricing systems are Canada’s most important policy lever for cutting carbon pollution and creating a competitive clean economy with low costs for businesses and big incentives for investment in low-carbon projects. These systems are also designed to cost next to nothing for Canadian consumers. 

The Canadian Climate Institute has done extensive research and modelling quantifying the effects of this policy. This fact sheet outlines how and why industrial carbon pricing has virtually no impact on the day-to-day expenses of average Canadians and keeps costs low for businesses: 

  1. Industrial carbon pricing costs Canadian consumers next to nothing—and in some cases even provides benefits.
    • Our research shows that industrial carbon pricing systems have an impact of around zero per cent on household consumption, a measure of income, in 2025. These costs are projected to remain very low and reduce consumption by just a tenth of one per cent by 2030.
    • In some cases, industrial carbon pricing—also called large-emitter trading systems—provides small net benefits for consumers, largely because of provisions in Alberta’s system that can reduce the cost of electricity.
This graph shows that industrial carbon pricing systems have negligible or even positive effects on household consumption.
  1. Industrial carbon pricing applies to goods sold on international markets where most price increases aren’t passed on to consumers.
    • Most companies that participate in industrial carbon pricing systems sell a significant portion of their products in other countries. 
    • About 50 per cent of the output of Canada’s large emitters is exported, and some industries export much more, which lowers costs on consumers. For example, the oil sands send closer to 80 per cent of production abroad. 
    • In addition, these exported products are sold on global commodity markets, which set the price paid and further limits the amount passed on to consumers.
  2. Industrial carbon pricing has essentially no impact on the price of food and the agricultural sector. 
    • Our modelling, done in partnership with Navius Research for the Independent Assessment of Carbon Pricing Systems shows that industrial carbon pricing has near zero overall impact on households’ spending on food. 
    • The same analysis projects that the cumulative GDP impact on the agricultural sector would be 0.08 per cent by 2030.
    • Farmers don’t directly pay the industrial carbon price and there are almost no costs to pass through the supply chain on to consumers. 
  3. Costs for consumers are virtually nothing because industrial goods have only a small impact on the price of finished consumer products.
    • Industrial carbon pricing does not apply directly to individual consumers—only to the largest emitters of greenhouse gases in the country, like oil sands facilities, steel mills, and cement plants. 
    • Industrial carbon pricing has modest or negligible increases in the cost of industrial goods such as steel, which represent only a small portion of the final cost of consumer products people buy in Canada.
    • For example, research finds that industrial carbon pricing that applies to the highest emitting steel plants in the country would still only add $0.12 to the cost of a refrigerator, and under $3 to the cost of a pickup truck.  
  4. Industrial carbon pricing is low-cost for businesses, which also limits costs passed on to consumers.
    • Industrial carbon pricing is designed to contain costs because industries only pay for emissions that exceed a specified limit, and if they outperform the limit they make money by selling credits for cash.
    • Data shows that industrial carbon pricing currently only adds an average of 9 cents per barrel to oil sands producer costs. 
    • Our research shows that if industrial carbon pricing is strengthened in line with the Canada-Alberta MOU, oil sands producers would still only be paying 50 cents per barrel in 2030—roughly the cost of a Timbit, after inflation is factored in.
    • Industrial carbon pricing imposes much lower costs on total emissions than consumer carbon pricing, around $10 or less per tonne of emissions against a carbon price of $95 per tonne.

Additional Resources

Canada off course for climate targets, with more riding on fewer policies: expert report

OTTAWA — An independent review of the federal government’s progress report on its climate plan confirms that the country requires policy reform and provincial co-operation to get closer to its climate goals while spurring innovation and building a more affordable, competitive economy. 

The Canadian Climate Institute released its independent assessment of the 2025 Progress Report on the 2030 Emissions Reduction Plan, which the federal government was legally required to publish, outlining progress made on the country’s emissions goals. The Institute finds that the federal report offers a credible picture of Canada’s progress, but does not offer an adequate policy response to the growing gap between the country’s emissions and its climate targets. 

While Canada has policies to reduce emissions, the country is not on track to meet any of its climate goals, including its 2035 target and net zero emissions by 2050, according to modelling the Institute conducted with Navius Research. Instead, national emissions are on course to be roughly half way to the 2030 emissions goal. 

The report also recommends ways to accelerate Canada’s progress. Much depends on how the federal government follows through on commitments from its budget and the Canada-Alberta Memorandum of Understanding (MOU), particularly those concerning co-operative action with the provinces including industrial carbon pricing and oil and gas methane regulations.

Crucially, the Institute’s analysis shows that if the federal government gets the details right on industrial carbon pricing, and the provinces implement strengthened systems, it can roughly double the additional emissions reductions from this policy, compared to a scenario where systems largely continue as they stand today.

While better industrial climate policies will speed up Canada’s progress, they are not enough to reach the country’s goals: more policy effort will be needed. The Institute’s report includes recommendations to inform the development of additional policy options to get closer to Canada’s climate and clean economy goals. In the months ahead, the Canadian Climate Institute will be developing a more detailed assessment of potential policy options governments can implement to make deeper emissions reductions and bolster low-carbon growth. 

QUICK FACTS

  • Canada’s emissions reduction targets are: 40 to 45 per cent below 2005 levels by 2030, 45 to 50 per cent by 2035, and net zero emissions by 2050. 
  • Canada’s 2030 target requires reducing emissions to approximately 440 megatonnes by the end of the decade. National emissions were estimated at 694 megatonnes of carbon dioxide-equivalent (Mt) in 2024, or 8.5 per cent below 2005 levels. 
  • The Institute’s analysis shows Canada’s emissions are projected to be between 18 and 22 per cent below 2005 levels by 2030, depending on the final design of key policies—roughly half way to the 2030 target.  
  • Estimates for 2024 show emissions from oil and gas up 9 per cent since 2005, while emissions from transport (+0.2 per cent) and buildings (-3.5 per cent) have been largely flat. Emissions from electricity (-59 per cent) and heavy industry (-11 per cent) have fallen significantly.

QUOTES

“The further Canada veers away from its climate targets, the steeper the path forward. That puts critical economic opportunities at risk—especially as our non-U.S. trading partners are rapidly decarbonizing their economies and looking for solutions. There is no shortage of policy tools that can accelerate climate progress while strengthening Canada’s economy and making life more affordable—but our assessment clearly shows that governments need to work together to put better policies in place for the country to reach its goals.”  

— Rick Smith, President, Canadian Climate Institute

“The data leave no doubt that Canada’s climate progress is off track. Fortunately, governments have options to put well-designed climate policy in place that can reduce emissions, make life more affordable, and unleash economic growth. Smart, cost-effective climate solutions can help Canada diversify trade, attract new investment, and make the economy stronger and more resilient in the face of an uncertain future.”

— Dave Sawyer, Principal Economist, Canadian Climate Institute

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

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

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.

Climate-proofing infrastructure today will save taxpayers billions annually

TORONTO—Climate change is already wreaking havoc on the country’s aging roads, bridges, storm sewers, and water treatment systems—but new research finds that by investing upfront in adapting public infrastructure, governments could limit those impacts and save billions of dollars each year.

A new report by the Canadian Climate Institute, Prepare or Repair: How climate-proofing public infrastructure pays off, finds that taxpayers will pay a steep and growing price if governments delay or fail to adapt public infrastructure to our changing climate. On the other hand, proactive investment in resilience can sharply reduce infrastructure damage and long-term repair bills.

The analysis shows that governments could save between $4 and $9 billion each year to 2100 by preparing public infrastructure for select climate risks. Investing about $4 billion per year in proactive adaptation would prevent most of the infrastructure damage caused by rising heat and heavier rainfall—freeing up public dollars for other priorities.

The true costs of not adapting are likely even higher: the analysis does not account for the impacts of all climate-driven hazards—such as wildfires, certain types of flooding, permafrost thaw, and coastal erosion—or for the broader economic impacts of infrastructure damage, including disruptions to essential services, business, and trade, and damage to private property.

While proactive adaptation minimizes the costs of climate change, it does not eliminate them. Even in a best-case scenario, the analysis finds that total infrastructure costs—of both adaptation investments and unavoidable climate damage—would still increase by $6 billion per year on average until 2100.

Municipalities would bear most of these costs, even though the benefits have a broad reach across the economy. This mismatch between who pays and who benefits underscores the need for stronger financing and revenue tools to support municipal adaptation.

To close this gap and bolster the resiliency of infrastructure in Canada’s changing climate, federal, provincial, and territorial governments should:

  1. Expand funding for infrastructure adaptation and modernize financial tools available to municipalities and other infrastructure owners—including Indigenous governments—to finance resilience upgrades.
  2. Plan, operate, maintain, and renew public infrastructure so it continues to function safely and reliably under future climate conditions.
  3. Strengthen climate hazard data and mapping nationwide to support consistent, risk-informed infrastructure decision-making.
  4. Accelerate updates to infrastructure codes and standards so that new and renewed infrastructure is built to withstand Canada’s changing climate.
  5. Ensure all public infrastructure spending consistently accounts for climate risk and supports infrastructure owners in reducing long-term vulnerability.
  6. Tailor programs to support the most vulnerable communities and critical infrastructure.

The report’s findings are clear: every year of delay increases future costs. Without proactive adaptation investment, the toll of climate change on public infrastructure is expected to rise sharply across the country.

Investing now in resilient roads, bridges, sewers, and water infrastructure will protect families, communities, businesses, and the economy from escalating climate threats.

QUOTES 

“Canadians are caught in a perfect storm of aging infrastructure and rising climate risks that are already disrupting our daily lives. This isn’t a tomorrow problem; it’s happening now. The research leaves no doubt: adapting public infrastructure will save Canadians billions of dollars down the road, limiting the cascading impacts of extreme weather, and building a stronger, safer, more prosperous country.”

— Rick Smith, President, Canadian Climate Institute 

“The evidence is clear: any delay in adapting our roads, bridges, sewers, and water systems to climate-driven extremes will cost Canadians dearly. Our report offers a clear playbook for action. Now it’s up to governments to collaborate and move forward.”

— Ryan Ness, Director, Adaptation, Canadian Climate Institute 

“Severe weather is increasingly impacting Canadians—over the past decade it caused a total of $37 billion in insured damage, up from only $14 billion between 2006 and 2015. Making smart investments in infrastructure ensures our communities can better withstand climate risks. Canada can be a global leader in disaster resilience. Now is the time for concerted action to protect Canadians from the growing risks from a changing climate.”

— Maximilien Roy, Vice President Strategy, Insurance Bureau of Canada

“Local governments are already feeling the strain as climate‑driven floods, heat, and heavy storms wear down the infrastructure Canadians rely on every day. This report reinforces what municipalities have been raising for years: investing early in resilient roads, water systems, and public assets protects families from the effects of climate change, strengthens local economies, and saves taxpayers significant costs in the long run. Through initiatives like the Disaster Mitigation and Adaptation Fund, we have seen how early, targeted investment helps communities put proven solutions in place. With the right tools and strong collaboration across all orders of government, we can help every community build resilience and stay prepared for the climate challenges ahead.”

— Rebecca Bligh, President, Federation of Canadian Municipalities

“The decisions we take today will determine how prepared Canada will be in the face of increasingly severe weather. This research makes it clear that delaying action comes at an enormous cost. Ensuring the infrastructure backbones of our communities—such as roads, public buildings, and water networks—are adapted to our climate should be a top priority for every order of government. Now is the time for concerted action to protect Canadians from the growing risks from a changing climate.”

— Liam McGuinty, Chair, Climate Proof Canada

RESOURCES

CONTACTS

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

Krystal Northey (Mountain Time)
Lead, Public Affairs
Canadian Climate Institute
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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.

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Funding acknowledgement

This work was supported by funding from Insurance Bureau of Canada, the Federation of Canadian Municipalities, and Climate Proof Canada. The Canadian Climate Institute undertook the project in alignment with its core research priorities and maintained full independence over the research design, methods, results, recommendations, and external communications.