Nine ways to level-up federal climate action

Addressing climate change will help accelerate the country’s economic reboot and improve resilience in the face of profound changes ahead. 

As summer marches on, speculation about the timing of the next federal election is a favourite national pastime. But regardless of whether Canadians head to the polls this fall, the federal government needs to move forward with robust measures to build resilience to climate-related disasters and damages, reduce greenhouse gas emissions, and keep up with international competitors in the global shift to clean energy and technology.

Canada’s new Net-Zero Emissions Accountability Act, which received royal assent in June, provides a solid foundation to build on. It is designed to keep the spotlight on Canada’s progress in addressing climate change. Among other things, the Act enshrines Canada’s 2030 and 2050 climate goals in law and requires the federal government to set five-year emissions reduction milestones en route to achieving net zero by 2050, publishing progress updates along the way. 

Yet, while the Act helps bring the goalposts firmly into view, achieving Canada’s climate goals will require a dedicated and sustained effort federally and significant cooperation with provincial, territorial, Indigenous, and municipal governments across the country. 

Success also requires going beyond simply reducing Canada’s greenhouse gas emissions. It’s been a summer of unprecedented heatwaves, raging wildfires, and devastating droughts, both at home and worldwide. Two recent polls, one we commissioned from Abacus Data and one by Ipsos, have revealed that Canadians are growing increasingly concerned about how climate change is affecting their lives, livelihoods, and communities. At the same time, the transition to a global low-carbon economy is accelerating, posing new competitive risks—and opportunities—to Canada’s economic prosperity. 

To that end, our research team has identified nine big ways to take federal action on climate change to the next level, drawing on our recent research and analysis in four priority areas.

Make Canada more resilient

  1. Incorporate climate adaptation and resilience considerations into government decisions and cost-benefit analyses. Current decision-making processes tend to take an ad-hoc approach to incorporating adaptation considerations, missing strategic opportunities to build climate resilience through the design of policies and programs. Departments not typically associated with climate change adaptation—including those responsible for infrastructure, finance, health, and social development—need a stronger focus on opportunities to build resilience.
  2. Improve how information about climate change risks is produced and shared to guide private and public decision making. Most of the information the federal government currently offers about climate change risks, such as flood mapping or future climate modelling, is either incomplete or not designed to help individuals and organizations understand and address their climate risk. This information gap leaves decision makers operating in the dark when it comes to understanding and adjusting for present and future climate risk.  

Cut carbon emissions

  1. Double down on “safe bets” to achieve net zero emissions by 2050. Our report Canada’s Net Zero Future identifies several safe bet solutions governments can and should be advancing now, including improving energy efficiency, generating cleaner electricity, and using this clean electricity to replace fossil fuels in everyday applications (like switching from gas-powered cars to electric ones). These solutions will play a critical role across all potential pathways to net zero for Canada, especially in the next decade.
  2. Implement a national zero-emissions vehicle (ZEV) mandate to help achieve the planned 2035 phase-out of sales of internal combustion engine vehicles. The current subsidy-based approach comes at a high cost: many people would buy zero-emissions vehicles without government subsidies, especially as technologies get cheaper. Compared to a ZEV sales mandate, subsidies are not a fiscally viable model for driving electric vehicle uptake at scale.  
  3. Move forward with tightening the federal carbon pricing benchmark as planned— and specifically, improve the alignment of large-emitter programs across jurisdictions and increase their overall stringency

Drive clean growth  

  1. Provide targeted support to improve the competitiveness of companies and sectors poised for growth in the transition to a net zero economy. Budget 2021 included several initiatives aimed at supporting competitiveness through the transition to a net zero economy, including $5 billion for the Net Zero Accelerator fund. Successful, and carefully targeted, implementation of these initiatives is critical to channeling and mobilizing the private sector investment needed to position Canada’s industrial, clean energy, and clean technology exporters to thrive through the global low-carbon transition.
  2. Implement regional strategies to help communities transition as global markets shift. The Government of Canada published a Just Transition discussion paper in July, seeking input from Canadians on how to ensure workers and communities succeed through the coming economic transformation. Achieving this goal will require place-based approaches to policy development and investment, and adjustments to skills and education programming to build a resilient, future-ready workforce. There needs to be at least as much emphasis on empowering people and communities to capture new opportunities as there is on managing risks. 

Mobilize investment in climate solutions

  1. Require public and private entities to disclose climate-related risks. Public and private-sector actors in Canada—including financial system regulators and federal departments, agencies and Crown corporations—are not assessing or preparing for the potential impacts of climate change on their assets and investments, leading to an accumulation of physical and transition risk that threatens financial stability at both organizational and systemic scales. 
  2. Play a strong leadership role in shaping the evolving international rules and definitions around climate-related disclosures, and ensure Canadian companies are leading rather than falling behind. Investors need clear and consistent quantitative metrics to compare climate-related risks and opportunities across companies and their products. The newly named Sustainable Finance Action Council is well poised to help tackle these challenges. 

In the wake of the COVID-19 pandemic, economic concerns will likely be front of mind for many Canadian voters in the next election (whenever it may occur). Yet climate policy cannot be disentangled from Canada’s economic recovery.

New and expanded climate policy in the United States, the European Union, China, and elsewhere is driving increased demand for renewable energy, electric vehicles, and other low-carbon products and services. Investor sentiment has also shifted, with an explosion of interest in sustainable, climate-compatible options. Many Canadian businesses are pivoting to get ahead of where markets are moving. Federal investments in electric bus and car manufacturing, low-carbon steel, and waste-generated biofuels have shown a growing willingness to kickstart the type of projects needed for Canada to compete, but there is a long way to go before Canada’s economy is truly transition-ready. 

A robust, government-wide federal focus on addressing climate change can help accelerate the country’s economic reboot and improve resilience in the face of profound changes ahead. Making progress on the nine measures identified here would take Canada’s federal climate policy to the next level – to the benefit of all Canadians.