Fueling the oil and gas transition with Canada’s climate investment taxonomy

Achieving Canada’s climate targets requires transformational emissions reductions in its historically emissions-intensive sectors including oil and gas. Canada also needs to increase private and public investments in clean growth projects by $80 – $110 billion annually to meet its climate targets. In March 2023, the federally appointed Sustainable Finance Action Council recommended that Canadian governments establish a Climate Investment Taxonomy to help support the needed investments. In effect, the taxonomy would serve as a standardized framework to help financial markets assess which projects and investments can help reduce fossil fuel emissions from hard-to-decarbonize sectors in line with Canada’s climate goals and global 1.5°C scenarios.

How should Canada fuel the transition of oil and gas projects in its taxonomy? We looked at the taxonomy framework proposed in the SFAC’s Taxonomy Roadmap Report, and developed an approach to categorize emissions-reducing oil and gas projects.

How can oil and gas projects fit in Canada’s Climate Investment Taxonomy?

A big part of the taxonomy framework developed by the Canadian Climate Institute is about defining “green” investments and projects. Almost all of the 30+ countries that have developed or are developing taxonomies focus on defining this green label. It typically includes activities and projects that are already aligned with a net zero future such as renewable electricity, batteries and storage, electric vehicles, and low-carbon hydrogen. For these types of projects SFAC recommends mirroring the frameworks and leading practices from elsewhere, such as the European Union.

Unlike other countries and regions, the taxonomy framework developed by the Canadian Climate Institute establishes a “transition” category. The role of this label is to identify, and unlock funding for, credible pathways to rapidly decarbonize Canada’s emissions-intensive sectors including oil and gas. 

Why include oil and gas projects in a Climate Investment Taxonomy

Including any oil and gas activities in the taxonomy raises legitimate concerns about preserving the taxonomy’s credibility. Climate science is clear that the production and consumption of fossil fuels must decrease significantly and rapidly if the world is to keep global average temperature rise to below 1.5°C.

But it is exactly because of the oil and gas sector’s high emissions profile that it is essential to have a transition label that can evaluate oil and gas decarbonization projects. As global demand for fossil fuels starts to decrease this decade, large-scale investments to decarbonize the upstream production of oil and gas will be necessary to achieve Canada’s climate targets and maintain industry competitiveness. 

Figure 1 summarizes the specific requirements for projects to be eligible for the transition label category within SFAC’s taxonomy. Taken as a package, these requirements provide a credible path for determining which pollution-reducing projects in the oil and gas sector could qualify for the taxonomy’s transition label and therefore be eligible for preferential lending terms.

This image shows the specific requirements to be eligible for the transition label, alongside the general requirements and the do-no-significant-harm requirements.

Categorizing oil and gas investments in the taxonomy

To determine whether existing oil and gas projects are eligible for the proposed transition label in SFAC’s taxonomy, we focused on three main questions:

  1. When are downstream Scope 3 emissions from a particular project considered the dominant transition risk?
  2. What is the definition of new vs. existing oil and gas facilities? 
  3. How can the taxonomy determine whether project lifespans and emissions reductions align with 1.5°C pathways?
This figure represents the categorization framework from the SFAC Taxonomy Roadmap Report.

Fueling the transition outlines how these questions can be used to confirm which projects are eligible for the transition label. It details the strengths and challenges of this approach. 

Overall, this paper suggests setting a high bar for what types of oil and gas projects could become eligible for the taxonomy’s transition label with a focus on keeping Canada on a pathway to meet its climate targets. Using detailed criteria and metrics, the transition label strikes a balance between promoting transformative investments and preventing carbon lock-in. 

An effective and credible climate taxonomy must aim high and reach far. With the proposed transition label, Canada has a unique opportunity to become a global leader on Climate Investment Taxonomies. It is positioned to provide guidance to other countries on how a taxonomy can help to transition hard-to-abate sectors. It can also help position Canada’s economy to remain  competitive in a low-carbon world.

Turning the tide on flood risks

Improving flood risk transparency practices can drive equitable outcomes across Canada.

As climate change continues to increase the risk of floods, communities need support to build resilience to flooding. Improved flood risk transparency, which entails the mapping, disclosure, and pricing of flood risk, has a crucial role to play in Canada’s efforts to protect people and communities from flood risks. It can help individuals and communities decide how best to avoid, mitigate, or absorb damages and losses due to flooding. 

Table 1 shows different examples of flood risk mapping, disclosure, and pricing.

However, in many instances, flood risk transparency practices can have disproportionately negative impacts, especially on equity-deserving groups. These groups are more likely to live in flood prone areas and are less able to access flood risk information. Equity-deserving groups are also more likely to be disadvantaged by costs related to flood risk and are often unable to afford housing in less risky areas.

What can governments do to help ease the disproportionate and inequitable impacts of flood risk transparency on equity-deserving people?

Flood risk mapping

Flood risk maps are a critical tool for understanding and mitigating flood risk. They provide valuable data on current and future flood risks for a certain area which can then inform purchasing, investment, and adaptation decisions.

But flood risk maps are not widely available, particularly in areas where equity-deserving groups are overrepresented. When they do exist, they may be 25 years or more out of date, physically hard to access, or difficult to read for audiences without technical skills.

In 2020, the federal government announced it would begin updating available maps, and committed to updating flood maps nationwide in the National Adaptation Action Plan, under the Flood Hazard Identification and Mapping Program. That is a good step, but there is no indication that the updated maps will reflect the influence of climate change.

Inaccurate or unavailable flood risk maps are an issue for any community. Those where  equity-deserving groups are disproportionately represented can face a more difficult path to recovery if they are impacted by flooding. Individuals in these communities are generally less able to rely on savings to smooth over the impacts and tend to lose a greater share of their overall wealth.

​​To effectively build equity considerations into mapping, we need public engagement processes, including engagement with stakeholders and right holders to understand the local context and disproportionate impacts.

Flood risk disclosure

For flood mapping to support risk mitigation, property information must be disclosed in a timely, complete and accessible way.

The main mechanism for flood risk disclosure during real-estate transactions is the Property Disclosure Statement (or equivalent). It is a means for communicating to the buyer any risks related to the property. But the details of what needs to be communicated to buyers varies across jurisdictions. Inconsistencies can result in the inability for buyers to make educated decisions about the risks, including the flood risk.

Landlords in Canada are not currently required to disclose hazard or risk information about their properties during rental transactions. Renting a basement suite or in a neighbourhood with inadequate stormwater and wastewater infrastructure may be particularly risky given the higher likelihood of flooding. This significantly impacts equity-deserving communities, who are disproportionately represented among renters.

To date, property and tenant insurance transactions have yet to be used effectively to alert prospective buyers and renters about the flood risks associated with properties they plan to purchase or rent, with more severe impacts for equity-deserving communities who disproportionately live in flood-prone areas. As the flood insurance market grows, insurance agents should be required to inform their clients about the flood hazard and risk profiles of their properties. Local agencies responsible for flood management could also be supplied with flood models used by the insurance industry to underwrite flood coverage and become more active in informing residents of the potential impacts of flood hazards on their property and insurance.

Flood risk pricing

Flood risk pricing can affect real estate, insurance, and rental costs, all of which can disproportionately impact members of equity-deserving groups located. 

Insurers’ understanding of risk and competitive pricing shapes the cost of property insurance. As insurers better understand flood-related risks under worsening climate impacts, the cost of insurance is rising. Across Canada, home insurance premiums increased by 20 to 25 per cent between 2015-2019. More than half of this increase is attributable to flood damage. Absent government intervention, insurance coverage may become unaffordable for members of equity-deserving groups living in flood-prone areas.

For those who already own properties, flood risk disclosure can trigger changes in property values. Catastrophic floods can significantly drop the price of real estate and reduced home values can impact savings and retirement options. 

Flood risk pricing can also increase the cost of renting, as landlords pass the increased insurance cost to tenants. This disproportionately affects equity-deserving groups who are more likely to rent than others. Renters could be forced to either relocate away from their current communities or pay substantially higher rents. By reducing the relative cost of housing in flood-prone areas and increasing the cost in less flood-prone areas, flood risk pricing may lead to a cycle that disproportionately traps equity-deserving groups in higher-risk neighbourhoods. 

A transformational flood risk transparency approach

The federal government, as well as many provincial, territorial, and Indigenous governments, are investing in flood mapping programs, but major gaps remain.To address these gaps, programs and strategies should engage equity-deserving groups and reflect social vulnerability. A short-term step could be to create knowledge-sharing committees that would incorporate diverse perspectives in mapping initiatives. In the longer term, governments should move towards co-development of flood mapping programs. Meaningfully including members of equity-deserving groups in the design and implementation of flood mapping programs can help ensure that the values, concerns, and priorities reflect the diversity of the communities they map. 

Flood risk maps should also be designed to be accessible to the public, including equity-deserving groups. This includes making sure that the data is easy to understand so people can make informed decisions on how to prepare for and be more resilient to the impacts of flooding.

Finally, strengthening and standardizing flood-related real estate and rental disclosure requirements and guidelines could help address some of the disproportionate impacts of flood-related risks on equity-deserving communities.

Building resilience to flood risk

Building resilience to flood risk is an important step in protecting people in Canada from some of the increasingly severe impacts of climate change. A step in the right direction is better flood risk transparency so people and communities can make more informed decisions.

Read more about how policy responses can address some of the equity-related challenges related to flood risk transparency. 

Recommendations for a more practical Standardized Climate Scenario Exercise

The Office of the Superintendent of Financial Institutions (OSFI) works to maintain confidence in Canada’s financial system. As part of its strategy for guarding against climate-related risks, OSFI has released a draft Standardized Climate Scenario Exercise (SCSE) for public comment. The SCSE looks at the financial consequences of transitioning to an economy powered by clean energy, known as transition risk, and the financial consequences of extreme weather and other physical effects of climate change, known as physical risk. The SCSE identifies four different ways these financial consequences will affect Canadian financial institutions: market financial risk, credit financial risk, physical financial exposure, and real estate financial exposure. In its submission to OSFI, the Canadian Climate Institute identifies the SCSE as an important step forward for aligning Canadian financial institutions with an accelerating clean energy transition and an increasingly volatile climate, and shares recommendations for better optimizing the SCSE’s approach to transition risk and physical risk.

Public submission from the Canadian Climate Institute

The Canadian Climate Institute is an independent research institute that informs and shapes climate change policy in Canada. We have previously analyzed the economic impacts of the global clean energy transition in Sink or Swim: Transforming Canada’s economy for a global low-carbon future and have analyzed the threat presented by a warming climate and the costs and benefits of adaptation in our The Costs of Climate Change series. We appreciate this opportunity to comment on the Office of the Superintendent of Financial Institutions (OSFI)’s proposed approach to climate-related risk management in its Standardized Climate Scenario Exercise (SCSE). 

Climate change threatens Canada’s financial health. Over 70 per cent of the country’s goods exports are vulnerable to transition-driven market disruptions. Meanwhile, the physical impacts of accelerating climate change between 2015 and 2025 alone will slow Canada’s economic growth by $25 billion annually, which is equal to 50 per cent of projected GDP growth. Overall, the SCSE is a positive and important step towards standardizing how federally regulated financial institutions respond to climate-related risk.

This comment letter shares several suggestions for how OSFI can better optimize the SCSE by being more upfront about its assumptions and limitations. While we appreciate that the Exercise is necessarily abstract and aggregated, more clarity is needed to avoid negative unintended consequences.

The SCSE would benefit from additional key assumptions and limitations

Although the SCSE’s existing list of assumptions and limitations is not meant to be exhaustive, it needs further clarifications to how it conceptualizes both transition risk from a changing economy and physical risk from a warming planet. Additional transition risk qualifiers should be acknowledged in the SCSE’s market and credit modules, while in its physical module, additional physical risk qualifiers should be recognized and actively addressed. The same goes for transition risk in the real estate module. We discuss each in turn.

The SCSE’s market and credit modules use an approach similar to the Canadian Climate Institute’s Sink or Swim report for analyzing transition risk. Assuming that OSFI will apply the same transition risk factors as used in the Bank of Canada/OSFI Pilot Project, we broadly support the proposed process. There are additional key assumptions and limitations that the Exercise should disclose, however. 

  • The SCSE should acknowledge that it does not actively analyze opportunities from the clean energy transition and only focuses on transition risk. While opportunities from the clean energy transition are more difficult to quantify than risks in these types of stress-testing analyses, they can give federally regulated financial institutions important insights on strategically managing risks in the transition. We addressed the same limitation in our own analysis of transition risk by complementing the Sink or Swim report with a study of opportunities at the provincial level
  • The SCSE should acknowledge that it does not account for regional differences within Canada. We assume that the SCSE will follow the Bank of Canada/OSFI Pilot Project, and not conduct analysis at the subnational or local level. This limitation is understandable, but its implications should be disclosed and assessed.
  • The SCSE should standardize more assumptions when it comes to mapping counterparties to sectors. The amount of autonomy currently devolved to federally regulated financial institutions may result in fragmented and inconsistent counterparty mapping, particularly for the mapping of “support” counterparties. Clarifying boundaries around the oil and gas sector and its supporting activities has been a major component of our work on Canada’s green and transition finance taxonomy. The European Union sustainable activities taxonomy similarly distinguishes and discloses criteria for activities that enable other activities.

Turning to the physical module, the SCSE may be interpreted as using physical risk to identify financial exposure. However, in its current form, the module only captures physical exposure to hazards, not physical risk. The SCSE should address several key assumptions and limitations to elevate its physical exposure analysis to physical risk analysis.

  • The SCSE should disclose challenges and limitations for translating Representative Carbon Pathways into physical hazards and physical exposure. Current publicly available data, such as that available from Climate Data Canada, is inadequate for assessing physical exposure to important physical hazards such as flooding and wildfires. Translating the warming and climate projections associated with the Intergovernmental Panel on Climate Change’s Representative Carbon Pathways into localized physical hazard and exposure data would be a significant improvement but a major undertaking.  The current limitations of physical hazard data and the challenges involved in conducting robust physical exposure analysis should be clearly explained. 
  • To capture physical risk, the SCSE would have to go beyond physical exposure by also incorporating physical vulnerability to physical hazards. Physical risk is determined by both the physical exposure of assets to physical hazards as well as the physical vulnerability of those assets to the physical hazards to which they are exposed. Currently the SCSE does not address the latter. In order to paint a useful picture of the physical risks facing financial institutions, the SCSE will need to provide guidance on how to analyze the vulnerability of exposed assets and how to incorporate that vulnerability in assessments of physical risk. 
  • The SCSE should pilot a risk assessment approach for a small number of highly material physical risks, rather than to require broad hazard exposure assessment with limited value. Investing in extensive physical hazard mapping and broadly assessing exposure to physical hazards may have little value, as described above. We recommend that the SCSE instead focus on assessing a small number of highly material risks or a single risk, such as that associated with flooding, with a methodology that also incorporates asset characteristics. This will be a challenging undertaking but the results will be much more valuable and there will be important lessons learned about how to, over time, design and implement an effective physical risk assessment methodology that addresses a broad spectrum of risks.

Finally, the SCSE’s real estate module aims to analyze transition risk, similar to the market and credit modules. It has a similar flaw to the physical module, however, as it also presents exposure as risk.

  • To capture transition risk, the SCSE should go beyond power sources and greenhouse gas emissions intensities. It is understandable why the SCSE would need to start with power sources and emissions intensities, given the lack of relevant granular real estate data available in Canada. However, we see these metrics more as fundamentals for having usable data, rather than as indicators of transition risk. The real estate module should at least include scenario pathways for power and building sector emissions (e.g. energy efficiency standards, carbon pricing increases).
  • The SCSE’s understanding of transition risk for real estate should incorporate climate policy as a whole. Policies that increase transition risk for real estate should be balanced against policies that mitigate risks, such as carbon pricing rebates and labour market retraining. This is particularly important for real estate assets because they are sensitive to domestic policy change as a transition risk driver. By contrast, assets that are more trade exposed tend to be more sensitive to transition risk drivers that alter competitiveness, like changes in global policy, technology, and consumer preferences.

Without more context, the SCSE could misrepresent climate-related risks

Focusing on the risks from the clean energy transition without an analysis of the opportunities can exaggerate anticipated harm from the shift. Commercial investments into activities like carbon capture, hydrogen, bioproducts, and mining may come with transition risk, but the risk may be contrasted with significant market growth. The exaggeration of harm would be more pronounced if the SCSE proceeded with only national-level data. The risks and opportunities in the clean energy transition vary widely among provinces, with British Columbia, Manitoba, and Quebec having a significant clean electricity headstart thanks to existing hydro resources.

Conversely, focusing on risks without accounting for the distribution of opportunities can underestimate harm to Canada’s competitiveness. The SCSE suggests that transition risk is negligible in its baseline current policy scenario because it assumes no new climate policies. This overlooks how technology and consumer preferences may continue to evolve towards cleaner energy sources, driving transition risk in markets. It also overlooks how the current policy environment may put other countries on trajectories to outcompete Canada in clean energy-related markets, even if no new policies were to be added.

Equating exposure with risk in the physical and real estate modules without clarifying the limitations of this assumption may also misrepresent risk. Without accounting for physical vulnerability to physical hazards, the SCSE may drastically mischaracterize physical risk. For example, an assessment of physical exposure alone might flag a commercial building in a flood zone as being at risk, but further investigation of physical vulnerability could reveal that the building is only exposed to a minor depth of flooding and has floodproofed to that depth, and therefore is not at risk of flood-related damage. In a similar vein, the Exercise may mischaracterize transition risk for real estate by basing it only on power sources and emissions intensities, which are more reflections of exposure than of risk. For instance, some emissions-intensive households may receive support to help them navigate the clean energy transition.

The SCSE should refine its approach towards transition risk and physical risk to avoid negative, unintended consequences for the financial system

We understand that OSFI will add more detail to the SCSE as it evolves; this letter is intended to draw attention to specific details that should be included in these future iterations. Ideally, the Exercise should provide a more sophisticated analysis of transition risk and physical risk. In the meantime, it should be careful not to overrepresent its current level of sophistication. 

Even though the SCSE cautions that it is not a sizing of climate-related risks, the way it frames these risks could still influence policy and capital allocation. Market and credit risk decision makers may use it to inform their climate-related analysis, without noting the importance of opportunities or subnational differences in the clean energy transition. The Exercise’s physical exposure analysis may also encourage physical risk decision making without adequate consideration of other factors that interact with physical exposure to determine risk level, including characteristics of the asset (e.g. presence or absence of a basement, building materials used) and measures already taken to mitigate risk. Similar concerns also apply to the SCSE’s real estate transition exposure analysis potentially being used to assess transition risk without a fuller accounting of risk factors.

The SCSE is ultimately an important step toward standardizing the identification and management of climate-related risks. It is also a step that would be expected from OSFI, as other financial regulators are taking similar actions. For instance, the European Banking Authority is in the process of developing templates and guidance for climate scenario analysis. As currently written, however, the SCSE is oversimplified, making its use a major undertaking without clear practical value for federally regulated financial institutions—particularly for institutions that already have experience with basic scenario analysis. Going forwards, we recommend that OSFI be clearer about the assumptions and limitations that its Exercise contains and how it intends to improve its accuracy and applicability over time.

Expediting clean energy facilities in Canada: A framework for new fast-track permitting 

Executive summary

Canada requires a massive transformation of its electricity systems to reach net zero electricity generation by 2035 and economy-wide net zero by 2050. Current forecasts show that more than 10 gigawatts of new zero-emission electricity will need to be added to the grid each and every year from now to 2050. 

Meeting this target requires a dramatic acceleration in the permitting, construction, and integration of clean electricity facilities – generation, transmission, distribution, and storage. This paper focuses on permitting. It proposes a two-track permitting framework for implementation by governments at every level. The first track would be the existing approvals track, which would remain in place for major facilities or facilities involving unproven technologies or large zones of impact. The new, second track would be an expedited permitting process for proven, small-scale, zero-emission facilities.

This paper sets out the policy framework for the new second track of expedited electricity facility approvals, encompassing eligible technologies, location, and timelines. 

All five orders of government authority in Canada—federal, provincial, territorial, municipal, and Indigenous—could implement this framework for expediting permitting. Based on this conclusion, this paper recommends that the most locally rooted authorities—municipal and Indigenous—have the opportunity to lead the fast-track approvals. This paper also recommends that Canada, the provinces, and perhaps the territorial governments, work together to develop a common framework for fast-track permitting, including acceptable technologies, permitting criteria, and timelines. Appendix B provides a preliminary framework for consideration.

Introduction 

Canada’s electricity system will require major reform to achieve the targets of net zero generation by 2035 and economy-wide net zero greenhouse gas emissions by 2050 (Kanduth and Dion 2022; Lee et al. 2022). The further challenge is increasing the generation, storage, and transmission of clean electricity without adverse local impacts. 

Annual new build required to achieve the 2050 net zero target

A credible estimate is that, for every year from now to 2050, Canada will need to build over 10 gigawatts (10,000 megawatts) of new zero emission electricity generation facilities (Thomas and Green 2022). In concrete terms, this means Canada’s electricity generation capacity needs to grow up to six times faster than it did over the last decade (Lee al. 2022). This pace of growth makes clear the breadth and urgency of the challenge. The focus of this paper is on fast-tracking permitting for new clean electricity generation, transmission, distribution, and storage facilities. 

Beyond expedited permitting, other related challenges include ensuring that new facilities are financed speedily so that construction can proceed as soon as possible after permitting, and eliminating hurdles to the integration of the facility into the grid. Other nations, particularly Germany, have provided powerful examples of governments using novel regulatory tools to mobilize the private sector in financing massive construction of clean energy facilities. In particular, Germany provided an example of how feed-in tariffs can help accelerate the build-out of wind and solar facilities to contribute to major energy systems (Futurepolicy.org 2023). In 2010, Ontario adapted this international experience to implement its Green Energy Act reforms and a feed-in-tariff program. The essence of this program was to provide a rules-based approach for applicants to obtain a long-term electricity supply contract: if an applicant met the rules, it obtained a government contract to buy its clean energy at an agreed-upon rate for a 20-year period. Holding a long-term energy supply contract, applicants could obtain private financing to build and operate new clean energy generation facilities. Box 1, below, summarizes this very broad reform. 

Direct funding by governments can also help drive the construction of new electricity facilities and mobilize private capital. Federal policies and instruments like the Canada Infrastructure Bank, new federal investment tax credits, and the newly established Canada Growth Fund are designed to mobilize private capital for development of clean energy facilities and technologies (Beck et al. 2023). Some of these federal programs include financing support specifically for Indigenous governments to develop clean energy facilities. Provincial supports include Ontario’s Aboriginal Loan Guarantee Program and Alberta’s Indigenous Opportunities Corporation. While the permitting reforms proposed in this paper focus on reducing the constraints to permitting new facilities, both permitting and financing reforms are essential to drive the actions required to hit Canada’s net zero targets.

Given the scale of the required build-out for new facilities, every month saved or added to the time required to permit and build new facilities counts. 

Types of required facilities

Canada’s clean energy transition cannot be achieved without major reforms to how we approve permitting for all core aspects of our electricity systems—generation, transmission, distribution, and storage. 

Expediting permitting for zero-emission generation of electricity is by far the greatest requirement. It is also the greatest challenge.

Expediting permitting for electricity transmission systems is also necessary to advance Canada’s transition to clean energy. Improved intra-provincial transmission is essential to serve remote areas and connect areas with renewable energy potential to demand centres. In particular, connecting isolated Indigenous communities to the electricity grid will meet at least two needs: it will allow these communities to replace diesel generation with zero-emission electricity generation; and it will also potentially allow high-value wind energy sites in remote areas to connect to the grid—benefitting any nearby community and contributing to the national target (Natural Resources Canada 2023). An interprovincial electricity system is not strictly necessary to meet the target—Canada could meet the national target by the required timeline without expanding its interprovincial transmission lines. However, it will be a significant advantage and likely less costly to have greater interprovincial connections to move electricity around and realize complementarities between systems (Dolter and Rivers 2018).

Expediting permitting for energy storage facilities is required to support zero emission energy generation. For wind and solar facilities, natural forces beyond human control determine the time and duration of daily wind and solar inputs. These do not always overlap with the time and duration of community energy needs. To avoid losing electricity generated during off-peak hours, there is a need for facilities that store generated electricity. Electricity storage technologies are now viable. In particular, short duration, lithium-ion batteries are now a viable storage option (Lee et al. 2022). Over time, availability of viable storage technologies is expected to increase.

Existing law and policy to permit new clean energy facilities 

Every order of government in Canada has laws that govern the permitting of new electricity generation, transmission, distribution, and storage facilities (see Appendix C). The federal Impact Assessment Act addresses the permitting of major projects listed as designated projects as well as a wide range of projects on federal lands. While a decision by the Supreme Court of Canada in October 2023 will likely narrow the scope of designated projects that are subject to assessments under the Act (Langen et al. 2023), it has upheld its application to projects on federal lands (ss.81-91) and does not likely imperil its application to designated offshore clean energy projects (Reference re Impact Assessment Act, 2023 SCC 23). Federal laws also include sector-specific laws and effects-based federal approvals that govern or restrict the permitting of projects. 

Provincial governments, meanwhile, have laws governing the permitting of facilities on private lands and other laws for facilities on Crown lands. Indigenous governments have laws ranging from broad land claim agreements, particularly in northern Canada, and Land Laws under the First Nations Land Management Act or bylaws under the Indian Act. Municipalities address permitting through zoning bylaws.

Most of these laws have broad application. This breadth reflects the longstanding intent of most jurisdictions to subject energy generation projects to the same legal framework as other facilities in other sectors that may have environmental effects. As such, existing laws address a broad array of circumstances, including major and minor facilities, new and existing technologies, narrow and broad effects, limited and extensive affected areas, and general and sensitive locations. 

Many governments have also made efforts to set timelines for their approval processes. However, most of these timelines are partial, not comprehensive. No existing timelines encompass the time required to move from facility planning through permitting and construction to facility operation. 

In Canada, Ontario has recent experience with clean energy reforms that linked shortened timelines with an innovative approach to permitting and financing new facilities. 

Box 1: Ontario’s Green Energy Program (2009-2014)
In Canada, for the years 2010 to 2014, the Province of Ontario implemented the largest program of clean energy development in Canadian history under the Green Energy Act, 2009. This program illustrates the importance of providing an integrated approach to developing clean energy. The Ontario program had three main components: 

-A 20-year feed-in-tariff contract from the Ontario Power Authority (OPA) gave private sector investors security for financing;

-A Renewable Energy Approval from the Ministry of the Environment and Climate Change gave proponents a single, consolidated approval and approval process; and

-A Grid Access Approval from the Ontario Electricity System Operator gave proponents access to Ontario’s transmission and distribution system.

The Green Energy Act also included provincial funding and a requests-for-proposals approach to expand Ontario’s transmission system.

In other ways, the Green Energy Act reform illustrates the challenges of seeking to implement major reform across a large jurisdiction. The feed-in-tariff provided above-market pricing of wind and solar facilities, and was later criticized for this cost to the public. In addition, the Renewable Energy Approval process took more time than anticipated because provincial efforts to consolidate approvals resulted in municipal and neighbourhood resistance. The Grid Access Approval process was complicated by the absence of adequate transmission capacity in many parts of Ontario, thereby delaying construction and implementation of new facilities. Furthermore, the Green Energy Act reform to exclude municipal decision-making for permitting approvals triggered a backlash against clean energy projects in rural Ontario that led, ultimately, to the repeal of this Act by a new provincial government in 2019. Despite this repeal, the policy has provided valuable information and experience to other jurisdictions. 

Building on Ontario’s experience, there is room to further expedite timelines to approve, build and operate new energy generation facilities where the facilities use proven technologies and have a limited zone and number of off-site effects.

Proposed framework to reform facility permitting 

The framework to establish a new fast-track permitting process for selected facilities has three components: technology, location, and timeline. 

Technology

A suitable technology for fast-track facility permitting should have five attributes: 

  1. It is a proven technology, not an experimental one;
  2. It has demonstrably few off-site environmental effects and no human health effects; 
  3. It has a demonstrably limited zone of off-site environmental effects;
  4. It is readily available to be procured for construction; and
  5. It has a demonstrably rapid path to construction and operation. 

At this time, wind and solar facilities are obvious candidates for fast-track permitting for electricity generation. Electricity transmission and distribution facilities are also obvious candidates for fast-track permitting. There are also viable energy storage options, for example, short duration lithium-ion batteries (Lee et al. 2022) Over time, perhaps quickly, other technologies will come to have these five attributes.

Proven technology

Zero emission technologies are evolving rapidly; however, a proven technology should be easier to approve than an experimental technology. Right now, no permitting regime recognizes this distinction, but, all else being equal, an unknown technology will involve more uncertainty about the range of effects and therefore require greater study and regulatory and public review than a well-established, proven technology. Thus, the preferred technology is one that is well established and commercially viable.

Demonstrably few environmental effects and no human health effects

 To be eligible for fast-track permitting, a given technology must of course generate or transmit electricity without emitting greenhouse gases. Yet one must also consider all other potential adverse effects, like other forms of pollution, harm to ecosystems, or the opportunity costs for land use (e.g., agriculture). To be considered for fast-track approval, the technology should have no serious effects on air, water, soil quality, or biodiversity. 

Demonstrably limited zone of off-site environmental effects

Where technology is well understood, it is possible to readily assess the zone of influence of possible off-site effects (that is, how far facility effects extend onto neighbouring properties). The smaller the zone of off-site effects, the less impact there will be on residents or wildlife. Thus, the preferred technology will have either no off-site effects or only a limited zone of off-site effects. Noise from a facility, for example, may not extend beyond the boundary of a site, or may only extend beyond a site boundary at low levels. This preference contrasts with technologies that may have adverse effects far from the site—for example, technologies emitting fine particulate matter.

Notably, the smaller the zone of off-site effects, the greater the number of potentially available sites.

Ready availability for construction

The preferred technology will be readily available for procurement and construction. All orders of governments certainly have the authority to assess the availability of a needed technology, but this challenge would also benefit from coordination among all or most orders of government and the private sector. Although some aspects of supply are beyond Canada’s control, a delay in technology delivery at the end of a permitting process is just as problematic as delay at the start of the process. 

Demonstrably rapid path to construction and operation 

The technology must enable rapid construction. Construction times are as important as approval timelines. Months gained or lost in construction are significant. Eligible technologies will be those that use an easily replicable design, and few site-specific accommodations. 

Location 

Canada’s current permitting processes are inclusive: they apply to a broad range of possible facilities. For example, in the energy sector, legislation and regulations within each major jurisdiction in Canada prescribe that jurisdiction’s permitting processes, such as environmental or impact assessment. These existing permitting processes have general application across the jurisdiction and are designed to respond to every type and scale of facility that provides energy—including the full range of possible energy generation technologies. For instance, the 2019 federal Impact Assessment Act provides a clear example of a broadly applicable assessment process, as illustrated through the list of “designated projects” set out in its Physical Activities Regulations (Physical Activities Regulations 2019). Notably, this aspect of this Act was not considered unconstitutional in the recent 2023 decision of the Supreme Court of Canada.

The inclusive nature of current permitting processes means that they are complex and lengthy. Each time they are triggered, there must be time, expertise, and resources available to understand initial facility details, and the type and range of effects, and then craft a facility-specific regulatory process. For example, current permitting processes under the Impact Assessment Act include an early scoping component to identify and assess the full range of effects (s.18(1)). While early scoping is intended to narrow issues and therefore shorten the overall process and render it more predictable, scoping itself adds time and unpredictability to the front-end of the approvals process. Similarly, where a proposed facility uses an unproven technology, the permitting process requires additional time for government and participant experts to fully understand and evaluate the innovations, and the range of possible effects on and off the facility site. All of these location-specific issues are necessary in existing processes to fully address the type and geographic extent of potential effects on air and water quality, sensitive ecological features, human health, and community well-being. 

Some zero emission technologies may still cause serious adverse environmental effects related to their location. These technologies should remain subject to existing provisions for environmental or impact assessment. 

Existing permitting processes also give rise to further location-specific issues by using different criteria to guide the location-specific effects that must be studied compared to the location-specific effects that govern decision making. For example, considering existing environmental assessment processes, the model of environmental assessment that has prevailed in Ontario for almost 50 years under its Environmental Assessment Act has required the study of alternatives and relied on criteria to first screen out and then evaluate alternatives, but its decision-making test makes no reference to alternatives (see sections 6.1 and 9). Similarly, the federal Impact Assessment Act requires study of 19 factors as part of information gathering for the impact assessment of a designated project (s.22), but identifies only five factors to consider in the decision about whether a project is in the public interest and should therefore be approved (Impact Assessment Act 2019, s.63). Importantly, the Supreme Court of Canada’s recent Reference Decision on the Impact Assessment Act distinguishes between these two different sets of factors. The Court did not criticize the factors within information gathering (i.e., s.19), but did criticize the factors within decision making (s.63). Needless to say, use of different criteria and broad discretion for information-gathering and decision-making does not provide an efficient process or predictable results.

An innovative approach to permitting is to be focused, not inclusive. The first point of focus was addressed above: facilities that propose use of eligible technologies—those technologies that satisfy the five criteria set out above—should trigger the fast-track permitting process. Notably, several attributes of eligible technologies directly limit the type and geographic extent of adverse effects. This should enable a second point of focus – these facilities should require only a focused study of their location effects. 

Here, focus can enable streamlining. Streamlining occurs at the front end of the fast-track permitting process by focusing on eligible technologies. Additional streamlining may also occur throughout the permitting process because the eligible technologies will have limited location effects.

In particular, where a proposed facility uses an eligible technology, the location of this facility can be guided by a limited number of clear and binding criteria. These criteria should meet three demands: 

  1. Binding rules: Every criterion to be applied should be set out as a binding rule. 
  2. Yes/no answers: The rules must be yes/no rules. No discretion1.
  3. Objective application: The rules must have objective application. No subjective standards.

If a facility meets all the rules, it gets approved. Permitting approval alone may not be sufficient to start construction, but this would be desirable; regardless, meeting all permitting criteria must be necessary—universally. 

Here are examples of good and bad permitting criteria:

Good: Noise level must be lower than 40 dBA at property line.

Bad: Noise levels must avoid adverse impacts on neighbours.

The number of required criteria should also be limited. Based on the location issues eliminated or narrowed by the attributes of eligible technologies, it should be possible to simplify the number of required permitting criteria to address three core questions: 

  1. Community impact: Does the facility have the support of local government? 
  2. On-site impacts: Does the facility avoid harm to key ecological features? 
  3. Off-site impacts: Does the facility avoid adverse impact on nearby uncompensated residents? 

1. Community impact: Does the facility have the support of local government?

Current permitting regimes for new energy facilities assign a lead role to federal or provincial approvals. The framework outlined in this paper for a new fast-track approach to projects does not propose to amend existing permitting regimes. These would remain in place for clean energy projects that do not meet the fast-track criteria. 

For proposed facilities to be subject to fast-track approval, however, local municipal and Indigenous governments would play crucial roles. In particular, local governments will need to champion clean energy facilities. 

The need for new clean electricity facilities applies to virtually every community across Canada. This paper recommends that fast-track permitting focus on communities where there is local government support. Recent experience shows that new facilities that lack local government support give rise to long-term problems, including public backlash and litigation (Cleland et al. 2016). Stated bluntly, Canada will not meet the net zero challenge where, for example, approvals create or foment a rural-urban divide or violate Indigenous treaty and inherent rights. Empowering and resourcing supportive local and Indigenous governments to meet the net zero challenge is ultimately the best remedy for softening or sidestepping local resistance.

Basic support from municipal and Indigenous governments not only presents the greatest opportunity for long-term clean electricity benefits, it present similar long-term benefits for local democracy and promotion of Indigenous rights.

For many municipal governments, the powers and processes to approve new facilities are generally well-established in municipal laws. Here, the reforms to provide fast-track permitting may not be significant, but there must be clear attention paid to achieving local support—locality by locality. Each local government may require different reforms to attract and maintain support.

Indigenous governments may in some cases have well-established laws and procedures to support and provide fast-track permitting; however, many such governments may not have established laws or permitting processes. Respect for Indigenous traditions and rights is an essential starting point for any of the permitting reforms proposed in this paper. There may also be some benefit to communities and Indigenous organizations getting together and strategizing about sharing and building upon best practices that align with community and cultural values. 

The scale of what is required means that many if not most local governments engaged in this net zero challenge will be very active, processing multiple applications year after year. This will require new dedicated staffing and expertise to apply the fast-tracking criteria consistently across the local territory.

Supportive local governments will also require additional resources to set and administer the appropriate array of (a) incentives to maximize direct employment in construction and maintenance and indirect spinoff employment, and (b) compensation to affected but non-participating landowners through, for example, discounts in electricity rates and/or property taxes. Within every community, there will be overall benefit if these aspects of approval are standardized, not individually negotiated. Otherwise, there are likely to be bottlenecks at the approvals process. Every facility proponent will hold up approval processes to seek the best deal for their facility. Among different local authorities, there should be some authority to vary some measures, but there should be care taken to ensure that any variance is applied consistently. 

The importance of community engagement cannot be overstated, but facilities that meet the fast-track criteria outlined here should be able to earn community support. The use of the right technology should allow all members of a community to accept that the new facility involves no serious adverse effects on the environment or human health. The use of clear and binding permitting criteria should allow a community to understand the limited impacts the facility will entail. Where the local government also provides clear terms for local benefits to support community acceptance, facilities that meet these terms should be readily approved at the local level. 

There is a role for every jurisdiction to develop and apply its own specific criteria so long as the criteria are consistent with the general framework. For example, there may be a certain ecological feature or species of flora and fauna that merits explicit attention because of its rarity and/or cultural importance. So long as the local jurisdiction ensures that every facility is subject to the same decision-making criteria, this kind of adaptation should increase, not diminish community support. 

Taken together, the fast-track permitting reforms to address eligible technologies and facility siting should allow community engagement on a specific facility to be uncontroversial. For every facility, there must be clear notice to any affected resident and provision for notice to any interested resident. There must also be opportunity for the public to provide additional information that challenges the application of any permitting criteria. However, such challenges should be rare and easily resolved: if the additional information is relevant to applying any of the criteria, it should be used and the criteria applied anew to ensure that decision making is consistent with all criteria. 

2. On-site impacts: Does the facility avoid harm to key ecological features? 

This criterion addresses the facility site. Its purpose is to identify the ideal on-site conditions. Ideally, establishing a new zero emission facility will have no serious negative impacts on-site and only trigger a limited number of negative physical changes. 

Based on recent experience, the most important topic to consider for on-site impacts is natural heritage. In Ontario, wind farms and solar farms triggered issues with on-site endangered species (Semeniuk and Stueck 2023). Many orders of government have authority over endangered species and/or their habitat, led by different provincial and federal laws that apply according to ownership or jurisdiction over the lands where species are located (Kauffman 2023). The climate crisis is no excuse to worsen the biodiversity crisis. Canada’s natural heritage needs greater protection, not increasing harm. 

Many jurisdictions currently protect natural heritage by avoiding harm to key ecological features. The proposed fast-track criterion for this topic is to require explicit consideration and protection of natural heritage features and functions. The focus will be on key ecological features as some features and impacts have greater ecological significance than others. Thus, for example, highest priority must be given to avoiding harm to endangered species and their critical habitat. 

Ontario’s Green Energy Act reform illustrates the problem with allowing endangered species issues to be regulated separately from renewable energy facility approvals. Although Ontario sought to make its renewable energy approval a consolidated approval, it failed to consolidate endangered species issues into this approval. The Renewable Energy Approval process mandated more than one dozen reports, but none required express avoidance or even consideration of endangered species habitat. However, in decision-making, Ontario provided that statutory appeals to a tribunal would be successful if an opponent established “serious and irreversible harm to plant life, animal life or the natural environment” (Environmental Protection Act 1990, s.145.2.1). This test did not reference, but clearly encompassed endangered species issues. Thus, Ontario had a disconnect between the information required to obtain approval and the impacts that could overturn an approval. This disconnect became prominent in wind farm litigation that involved an endangered species—the Blanding’s Turtle—and its habitat (Prince Edward County Field Naturalists v. Ostrander Point GP Inc. 2015 ONCA 269). The result was a tribunal overturning a Renewable Energy Approval on appeal and, after court litigation, the Court upholding the Tribunal result. Ultimately, the Approval was remanded to the Tribunal for a further hearing where the Tribunal affirmed its initial conclusion to set aside the Approval. 

Overall, serious efforts should be undertaken by each order of government that implements expedited permitting to make clear where and how to site new facilities to avoid key natural heritage features, particularly endangered species and habitat.

Current experience also suggests that the term key ecological feature should have specific definition and application. For example, Ontario’s Greenbelt Plan (2017) identifies 12 types of key natural heritage features and 4 types of key hydrologic features: (Government of Ontario 2017). There should be provision for some variation in the types of key features. This provision would provide room to reflect provincial or local circumstances. On the other hand, there should be a core list of key features that cannot be ignored, i.e., the critical habitat of endangered species. 

Additionally, there must be regulatory checks to ensure that the information on this habitat remains current. Current experience shows a patchwork of largely unsatisfactory efforts to ensure that current natural heritage information is readily available. For its Renewable Energy Approvals under the Green Energy Act reforms, Ontario sought to address an existing patchwork of inconsistent information by requiring that facility proponents carry out site-specific investigations to identify existing information and supplement this information as required. This approach is expensive and time-consuming. It would be preferable for local authorities to have the resources to gather most of the required information and then map and make available such information in electronic form. This preferred approach will likely require financial and/or technical support from federal or provincial governments to local governments to ensure that all participating orders of government have the most current information relevant to assessing key ecological features. 

3. Off-site impacts: Does the facility avoid adverse impact on nearby uncompensated residents?

This criterion would not apply to every proposed facility. The ideal facility location will have no residents within the zone of off-site impacts or, alternatively, no residents within the zone of off-site impacts who do not support the facility. Indeed, many or most of the technologies suitable for fast-tracking produce little to no off-site impacts.

Thus, this criterion would apply only where there are residents within the zone of off-site impacts for a proposed facility and the impacted residents do not support the facility.

Where it does apply, this third criterion has three required components. These arise from recent experience with clean energy facilities. This experience highlights the importance of addressing social impacts. Problems with long-term community support arise where neighbours have impacts imposed on them without any identified benefit. This problem was particularly apparent regarding wind farms where a patchwork of turbine locations created a patchwork of participating and non-participating landowners. In this context, a participating landowner was a landowner that received some economic benefit from the facility and thus supported it—usually, the economic benefit arose from having a component of a proposed facility on that landowner’s land. This patchwork created neighbourhood conflict as the non-participating landowners believed they were burdened with one or more impacts (e.g., noise, visual) without any benefit (Comeau et al. 2022). 

The first required component of this criterion is to define an impact zone around a facility or a specific component of a facility (e.g., a wind turbine). The size of the zone will vary according to the technology involved. Different sizes of wind turbine, for example, will have different zones of impact. Based on existing experience, it is essential to provide clear guidance on this topic for all permitting decisions. The requirements that govern applicable technologies should mean that impact zones can be defined for each relevant typeof technology and scale of facility. 

The second required component is to address negative impacts according to their intensity. For example, it should be possible to require that no facility will produce noise at the property line for any residential neighbour that is greater than 40 dBA or existing levels. The basis for this precise technical standard of a 40dBA limit is an international World Health Organization standard for night-time noise.

Once there is information on the applicable zone of impact and the intensity of the impact, it should also be straightforward to determine whether the third component applies to a given facility. Where compensation for adverse impacts is warranted, this will involve a government—any order of government—or a proponent providing some monetary benefit to any landowner within the zone of impact who is not leasing land or otherwise benefiting from the facility. 

These community benefits can be shared in multiple ways. One way is for local municipal governments to reduce assessed local property taxes or utility bill rebates for a non-participating but affected landowner (Comeau et al., p. 36). Recent regulatory reforms in New York State and California, for example, require all new renewable energy facilities to provide a benefit package for the host community of the facility, which can include utility bill credits (Arnold and Beck 2023). A second way is the availability of a renewable energy credit for sale to local residents only (Comeau et al., p. 20). A third is to distribute a portion of annual revenues to the local community for re-investment (Comeau et al., p.29). Here again, reforms in New York State and California show how Canadian jurisdictions can include these types of provisions within community benefit packages.

Whatever the details of these components, this third criterion on off-site impacts must adhere to the three tests for criteria set out above, namely a binding rule, in yes/no terms, that has objective application. 

Appendix A provides examples of proposed permitting criteria.

Timelines 

To reach Canada’s net zero goal by 2020, each clean energy facility that meets the fast-track criteria should have an expedited timeline for permitting and getting the facility constructed and operating. 

Coupling a commitment to new energy output with an expedited timeline is not new. Within established permitting processes, such as federal and provincial environmental assessments, there is a well-recognized trade-off between the size of a facility and the time required for approvals: the larger the facility, the longer the timeline. Unfortunately, despite best efforts, the existence of a regulatory timeline does not guarantee a predictable date of facility operation. Canada has several on-going examples of major energy generation projects exceeding their predicted timelines significantly—by factors, not percentages. For example, the actual timelines of major hydroelectric dam projects in British Columbia (Site C) and Labrador (Lower Churchill) were more than double the predicted time frame (BC Hydro 2023). Furthermore, time is money: these timeframe exceedances have also resulted in major budget overruns (CBC News 2022). These examples point to the importance of limiting the types of technologies and scales of facility that are suitable for rapid permitting. 

It may also be appropriate to include time limits for each crucial step in facility development. Every month counts. Examples of crucial steps include: (1) the time from initial notice of interest from a proponent to filing of a complete application; (2) the time for all regulators to review and decide whether or not to approve the application; (3) the time from facility approval to the commencement of facility construction; (4) the time required to complete all facility construction; (5) the time from the completion of construction to facility operation; and (6) the time from facility approval to grid connection.

There are many means to make a time limit enforceable. They can be made enforceable by governments against proponents and also by proponents against governments and third-party suppliers and contractors. For example, in Ontario, overall timelines were set out under the feed-in-tariff terms and conditions (see, for example, Ontario’s Feed-In-Tariff FIT 2.0 released in August 2012). These set out a required date for commencement of operations that was binding absent a specific waiver agreement. Similarly, the reforms in New York State now establish statutory time limits for issuing building permits, ranging from a maximum of six months for projects located on pre-approved brownfield sites to one year for all other projects (Arnold and Beck 2023).

Who can do what to implement the proposed reforms 

Canada’s Constitution and legal framework gives rise to five orders of government authority with jurisdiction to pass laws governing facility permitting: federal, provincial, territorial, municipal, and Indigenous. When looking at what each authority can do to achieve net zero emissions, there are two sources of legal authority: (1) existing laws, and (2) legal and constitutional powers to amend existing laws or pass new laws. 

Appendix C examines each of these five orders of government authority to assess their jurisdiction and opportunity to implement reforms to permit new clean energy facilities. It concludes that all orders of government—federal, provincial, territorial, municipal and Indigenous—could implement all aspects of expedited facility approvals. 

Building on this legal conclusion that all orders of government could implement all aspects of the fast-track permitting proposed in this paper, this paper advances two policy recommendations. 

First, this paper recommends that the most locally rooted authorities—municipal and Indigenous—lead project decisions for fast-track approvals. 

Second, this paper recommends that the Federal Government and the provinces work with other orders of government to develop a common framework to implement fast track approvals. This common framework should specify eligible technologies, permitting criteria, qualifications for local reviewers, and timelines. Appendix B describes this common framework. 

Imagining the future—permitting reforms in action 

To assist understanding, this paper provides two hypothetical examples of how proponents and local governments could act to advance clean energy facilities if the proposed reforms were implemented. 

Example 1: Solar farm in rural municipality

Saul R. Plexis owns a 100-hectare parcel of farmland in rural Ontario and is interested in using some of that land to generate electricity as a new income stream. Saul was aware that his local municipality had taken an active role in promoting solar farms. His town council did so to seek the annual rate subsidy available to its local utility for all ratepayers, gain new tax revenues from constructing and operating the new facility, and obtain the complete rebate available to local governments who had developed a long-term energy plan setting out annual targets for constructing new facilities by 2035 and 2050. 

Using a model program developed by the province, municipal staff had loaded their existing GPS information on a new website and quickly retained a local consultant to address a small number of gaps in the local data. On completion, the website enabled any interested landowner to determine immediately if their land was eligible for consideration as a future solar farm of between 1 and 15 megawatts. This determination would involve review of the three criteria on facility location and consideration of where the site fits under the local utility’s connection capacity across the municipality, as set out in the municipality’s long-term energy plan.

Saul went on the municipal website and quickly determined that a 30-hectare parcel on his lands met the three permitting criteria and was within the 5-year capacity of the energy plan for utility connection. He then went onto the municipal register to place his lands in the first tier of the public queue for immediate consideration by the municipality. As a first-tier site, the municipality and local utility would act in the next 30 days to visit his site to verify permitting criteria and connection capacity, commission a survey, and move it up to the second tier in the municipal register—which would be visible on public-facing elements of the municipal site and trigger municipal notice to all property owners abutting Saul’s site or within 120 metres along road access. The utility would also send to Saul a feed-in-tariff contract and construction agreement and schedule. As soon as Saul completed these contracts, his site would be listed on the third and final tier in the municipal register. This would complete the planning phase of the facility. The municipal register also contained further listings to identify completion of construction and utility connection. Once the facility was built and operating, the municipality would update its energy plan on its annual and long-term targets. 

Example 2: Wind farm on Reserve Lands

A First Nation in a remote area of western Canada relies on diesel generators for its electricity. Recently, seeking energy independence from costly diesel fuel imports, the Council of this First Nation completed the steps to allow it to pass laws, lease lands and enter contracts under the Framework Agreement on First Nation Land ManagementAct redressing the constraints of the Indian Act. 

The Band Council identified that its current and future energy needs could be met by a two-megawatt, zero-emission electricity generating facility. Recognizing that the Reserve includes highlands of barren Canadian Shield, the Band Council created a new staff position to explore wind energy options. Band staff then retained consultants to take wind measurements and assess the area’s wind energy potential. This work identified that the area had potential to generate up to 100 megawatts of wind energy. This led Band staff to go to the Canadian Energy Regulator website to identify potential energy options. The site informed the Band about the option to develop a long-term energy plan setting out annual targets for constructing new facilities and connecting to the electricity grid. 

To develop an energy plan for new generation facilities, Band staff used a model program developed by the province with Indigenous government input. Band staff trained on use of GPS technology downloaded available digital mapping information to apply the newly established Canada-wide permitting criteria to identify the best possible turbine locations and configurations. Band staff identified gaps in the existing information, but took advantage of the new Canadian Energy Regulator program to fund the required GPS work. Staff retained a team of Band members who had obtained the required training. Band staff also created a new dedicated web site so that all members of the First Nation could access existing information and add their local and traditional knowledge. Staff quickly determined that at least three blocks of Reserve lands met the three permitting criteria. Under its new program, the Canadian Energy Regulator provided guidance on passing a land law that would incorporate the permitting criteria into a Band Council approval process that included community-wide consultation. Once Band Council approved its land law and confirmed that Band staff had completed the initial steps of required consultation, Band Council authorized staff to go onto the Canadian Energy Regulator register to place all three blocks in the first tier of the queue for immediate consideration by this Regulator. 

To address connection issues required for the long-term energy plan, Band staff went to the Canadian Energy Regulator web site to obtain required information on the proximity of each site to the nearest transmission line. Using GPS tools and digital mapping, Band staff identified that their Reserve was more than 100 kilometres from the nearest transmission line. Plugging this information into the Canadian Energy Regulator website, Band staff saw that the Canadian Energy Regulator made provision to approve new transmission lines to remote communities in two circumstances—where the energy generated could produce energy for the grid greater than 10 megawatts per 20 kilometre distance or where a new line might connect more than one remote community that was on diesel fuel. The Band Council liked both options and reached out to two other remote communities to identify possible interest in making a joint application to the Canadian Energy Regulator.

For each first-tier site in a remote Indigenous community that completed the transmission line information, the Canadian Energy Regulator would act in the next 30 days to visit each site to verify permitting criteria, commission a survey, and move each verified block up to the second tier in its register—which would be visible on public-facing elements of the federal website and trigger public notice. The Canadian Energy Regulator also required that the Band confirm issuance of community notice to all residents of the Reserve. 

The next step required the Canadian Energy Regulator to work with the Band and any other identified community to address a transmission line connection plan including the proposed location of the on-Reserve portion of the transmission line and the proposed location of the off-Reserve portion of the line. Within 60 days of Band sites obtaining second-tier status, the Canadian Energy Regulator completed a transmission line plan. 

By the terms of the Regulator’s mandate, the completion of a transmission plan required further actions by the Band Council. First, the Band Council confirmed that its staff had completed required community consultation on the transmission line plan. Next, the Band Council passed a second Land Law that acknowledged the completion of its long-term energy plan and accepted the location and timing details of the Canadian Energy Regulator transmission line plan. This Land Law approved the plan to connect the community to the grid within two years for the first site for 10 megawatts and committed the Band to support future development of the other two sites that would add 40 megawatts to the grid within five years. 

Conclusions 

This scoping paper sets out a framework to reform Canada’s permitting processes by establishing a two-track framework including a new fast track permitting process to provide expedited approval for new clean energy facilities. There is opportunity for participation by all Canadian jurisdictions—federal, Indigenous, provincial, territorial, and municipal—and all residents of local communities, however urban or remote. 

The scale of this needed build-out has no precedent. This need is long-term—from now to 2050. Short-term reforms will not be sufficient. Reforms must be sustainable financially and able to be implemented in communities across Canada.

Appendix A: Applying the proposed permitting criteria

1. Electricity generation facilities

Applying the three location criteria set out in the Paper:

Support by the local government. The basic standard may be stated as follows:

  • Facility location is supported by the Council of the local municipal or Indigenous government.

Avoid harm to key natural heritage features. The basic standard may be stated as follows:

  • Facility will avoid key natural heritage features. 

Provide no uncompensated impact on nearby residences. The basic standard will need to include several components, as set out in the following:

  • Facility will provide no uncompensated impact on nearby residents by
    • Clearly identifying the designated zone of impact of the facility;
    • Providing monetary benefit (tax rebate, rate rebate) to all non-participating property owners within the designated zone of impact; and
    • Ensuring that no existing residence is subject to noise emissions above background levels or recognized standard. 

2. Electricity transmission lines

The permitting criteria that apply to electricity transmission should be very similar to the general criteria. Two of three permitting criteria are relevant:

  • Facility will avoid key natural heritage features. 
  • Facility will provide no uncompensated impact on nearby residences.

The third criterion, local council support, can be applicable where the transmission line is entirely within the boundary of a local municipality or the lands of a single Indigenous government; however, this situation seems unlikely for most transmission lines that cross provincial boundaries. The long-term nature of what is required means that precedents should move beyond constitutional authority to proceed unilaterally and instead make every effort to obtain the support of local governments. 

Regarding the situation of multiple local governments—which seems likely in the case of transmission lines—it may better promote cooperation to relate the scale of benefits to the scale of local impact. As such, a local municipal or Indigenous government affected by 50 kilometres of proposed facility gets greater recognition than a local government affected by 2 kilometres. Also, the benefits identified above as part of obtaining local support appear relevant here—e.g., employment (construction, maintenance, spin-off) and financial (electricity rates, taxes).

Proposed criterion:

  • Transmission line will provide no uncompensated impact on affected local governments.

3. Electricity storage facilities

There are now viable electricity storage technologies, and the number of suitable storage technologies is clearly going to increase. 

Consistent with the overall clean energy transition, there needs to be a focused effort to ensure that any electricity storage facility meets the requirements for available technologies. 

For such facilities, the three criteria set out in the paper for energy generation facilities should be applicable: 

Support by the local government. The basic standard may be stated as follows:

  • Facility location is supported by the Council of the local government.

Avoid harm to key natural heritage features. The basic standard may be stated as follows:

  • Facility will avoid key natural heritage features. 

Provide no uncompensated impact on nearby residences. Depending on the technology, it seems likely that future zero emission storage facilities will have zero or only a minimal number of off-site effects and zero or small zones of off-site impact. This may allow easy application of this third criterion: 

  • Facility will provide overall benefit, not negative/adverse impact, on nearby residents by
    • Clearly identifying the designated zone of impact of the facility;
    • Providing monetary benefit (tax rebate, rate rebate) to all non-participating property owners within the designated zone of impact; and
    • Ensuring that no existing residence is subject to noise emissions above background levels or recognized standard.

Appendix B: Role of each jurisdiction to implement the fast-track approvals regime

1. Federal government role

(1) Federal government implements the new Clean Electricity System Act, having six components:

  1. Part 1 setting out the federal Program to meet Canada’s zero-emission electricity targets, including
    1. Requirements for the Minister of Environment and Climate Change to prepare for submission to Parliament (a) a science-based summary of current climate crisis threats to rights protected under Canada’s Charter of Rights and Freedoms, (b) a summary of Canada’s current international commitments to address the climate crisis and measurable indicators of Canada’s progress in meeting these commitments, and (c) Canada’s progress in meeting its zero-emission electricity generation commitments; 
    2. Requirement that the Parliamentary Budget Office prepare a summary of the requirement for federal funding, from the present to the year 2050, and 
    3. Minimum national standards for Feed-In Tariff contracts, Zero Emission Approvals, and Connecting Transmission Line Approvals.
  1. Part 2 containing amendments to Part 4 of the Canadian Energy Regulator Act to give the Canadian Energy Regulator exclusive authority over 

(A) (i) Class 1 transmission lines connecting one or more provinces, and

(ii) Class 2 transmission lines connecting transmission lines connecting zero emissions facilities on federal lands to existing transmission systems; and 

(B) administration of a new Federal Connecting Transmission Line Approval (CTLA) regime that 

(i) distinguishes between two classes of lines on the basis of voltage, including for each class (a) permitting criteria, (b) information required to address permitting criteria, and (c) a test for approval based on meeting permitting criteria; and 

(ii) declares all CTLA Class 1 transmission lines to be works for the general advantage of Canada; and

(iii) authorizes the implementation of tolls and tariffs for all electricity transmission lines subject to the CTLA.

  1. Part 3 adding a new Part 4.1 to the Canadian Energy Regulator Act to address Zero Emission Electricity Generation Facilities that covers wind and solar facilities and other designated facilities, including 

(A) provision for the Canadian Energy Regulator to administer a new Federal Zero Emission Approval regime, distinguishing between two classes of facility on the basis of required hectares, including for each class (a) permitting criteria, (b) information required to address permitting criteria, and (c) a test for approval based on meeting permitting criteria; and 

(B) a declaration that all facilities subject to a Zero Emission Approval are works for the general advantage of Canada. 

  1. Part 4 adding a new Part 4.2 to the Canadian Energy Regulator Act to: 

(A) authorize the Canadian Energy Regulator to recognize regimes of other jurisdictions to address one of more requirements of Parts 4 and 4.1 of the Canadian Energy Regulator Act

(B) authorize the Canadian Energy Regulator to recognize plans of other jurisdictions that address that jurisdiction’s implementation of zero emission targets; 

(C) require that the Canadian Energy Regulator prepare an annual report of the effectiveness of the reforms provided by this new regime to provide the required facilities to address the climate crisis by (i) 2035, and (ii) 2050; and 

(D) provide the Canadian Energy Regulator with powers to gather information and redress any shortcomings with providing needed facilities, including shortcomings by other jurisdictions to implement their 5-year plans.

  1. Part 5 amending the federal Impact Assessment Act to exempt from this Act any facility that is subject to the Canadian Energy Regulator Act, Parts 4 or 4.1. 
  1. Part 6 amending the Framework Agreement on First Nation Land Management Act or the Framework Agreement on First Nation Land Management to authorize participating First Nations to pass Land Laws addressing the location and approval of new zero emission electricity generation facilities and on-Reserve transmission and distribution lines for all Reserve needs. 

(2) Consultation with Indigenous governments on all relevant aspects of the new Act, particularly regarding the means to facilitate the participation of Indigenous Peoples and future approval of zero emission electricity generation facilities on Indigenous lands and the connection of remote communities to the electricity grid. 

(3) Consultation with all interested jurisdictions in all relevant aspects of the new Act, particularly regarding the components of minimum national standards for Feed-In Tariff contracts, Zero Emission Approvals, and Connecting Transmission Line Approvals.

2. Indigenous government role

(1) Indigenous Government Council passes a new Land Law pursuant to the Framework Agreement on First Nation Land Management Act to implement the First Nation Zero Emission Response to the climate crisis, having three components:

  1. Part 1 to approve Zero Emission Electricity Generation Facilities to include wind and solar facilities and other designated facilities, including for each class of facility 

(a) permitting criteria, 

(b) information required to address permitting criteria, and 

(c) a test for approval based on meeting permitting criteria.

  1. Part 2 to approve new transmission and distribution lines on the Reserve, including for both types of line

(a) permitting criteria, 

(b) information required to address permitting criteria, and 

(c) a test for approval based on meeting permitting criteria.

  1. Part 3 to require staff to prepare for submission to Council an annual summary of progress under the Land Law to meeting First Nation targets for zero-emission facilities on the Reserve.

3. Provincial government role

(1) Province implements a new Provincial Zero Emissions Electricity System Act, having five components:

  1. Part 1 to provide for the provincial electricity regulator or utility to (a) administer a provincial feed-in-tariff contract for all new wind and solar energy facilities located in the province, and (b) prepare a summary of requirements and options for provincial and/or utility funding, from the present to the year 2050.
  1. Part 2 to require the appropriate Minister to administer a new Provincial Zero Emission Approval regime, distinguishing between two classes of facility on the basis of required hectares, including for each class (i) permitting criteria, (ii) information required to address permitting criteria, and (iii) a test for approval based on meeting permitting criteria. 
  1. Part 3 to amend the existing Municipal Act or equivalent legislation to enable municipal governments to establish local approvals for new zero emission facilities.
  1. Part 4 to amend the existing provincial laws for electricity subsidies and/or utility rate-setting to make provision for a new program for zero emission electricity generation facilities and/or transmission lines related to bringing net zero facilities into the electricity grid.
  1. Part 5 to require the appropriate Minister to prepare for annual submission to the Legislature a detailed summary of the province’s progress in meeting the Zero Emission Targets for that province.

(2) Consultation with Indigenous and municipal governments on all relevant aspects of the new Act, particularly the distribution of benefits to affected landowners. 

4. Municipal government role

  1. Municipal Council passes new Bylaw to Implement the Municipal Zero Emission Response to the climate crisis, having two components:
  1. Part 1 to approve Zero Emission Electricity Generation Facilities that covers wind and solar facilities and other designated facilities, including for each class of facility 

(a) permitting criteria, 

(b) information required to address permitting criteria, and 

(c) a test for approval based on meeting permitting criteria.

  1. Part 2 to require staff to prepare for submission to Council an annual summary of progress under the Bylaw to meeting municipal targets for zero-emission facilities in the municipality.

Appendix C: Legal authority to carry out fast-track permitting across Canada

Canada’s federal Constitution divides the power to pass laws between the federal and provincial governments (Constitution Act 1867). These powers govern every law passed by Parliament and provincial legislatures, although land claim agreements rely on a more complex constitutional structure involving Parliament and Indigenous Peoples.

These powers also govern the laws passed by all local governments, such as the laws and by-laws passed by elected territorial, municipal, and band councils. 

This framework provides the starting point to examine the law-making powers that have the potential to provide fast track permitting. This Appendix focuses upon the constitutional authority of each order of government to expand existing laws or pass new laws that are within these powers. It pays particular attention to existing constitutional powers that are currently unappreciated or underused, such that they may authorize expanded laws or new laws required to meet net zero.

It then examines existing laws for their potential authority to implement reforms required to achieve net zero emissions. Across all orders of government—federal, provincial, territorial, municipal and Indigenous—there are examples of existing laws that provide some authority to advance the building of clean energy facilities. Nationally, for example, the 2019 Impact Assessment Act provides authority to authorize the location and construction of clean energy facilities on federal lands (Impact Assessment Act ss.82, 88), and major wind farms on Canada’s marine lands offshore (see Physical Activities Regulations, SOR/2019-285, and its Schedule at sections 44 and 45). 

Existing laws often also contain powers for cabinets and ministers to pass regulations relevant to achieving net zero emissions. Across Canada, there are many examples of existing provincial laws and regulations that support the location and construction of clean electricity generation, transmission, distribution, and storage facilities.

Nevertheless, existing laws do not establish the scope of legal jurisdiction to implement legal reforms such as those required to achieve net zero emissions. It is also essential to examine Canada’s constitutional framework. 

To address this challenge, this Appendix concludes that all orders of government could implement all key aspects of fast-track approvals for clean energy facilities. 

1. Federal powers to act—including underused, unappreciated federal powers

Parliament has multiple constitutional powers relevant to expediting approval of clean energy facilities, including: (1) federal lands, (2) federal spending, (3) interprovincial works and undertakings, (4) declared works for the general advantage of Canada, (5) “Lands reserved for Indians,” (6) peace, order and good government, (7) trade and commerce, (8) fisheries, and (9) interprovincial or international effects.

These different constitutional powers apply to different aspects of the clean energy challenge. For example, the power over federal lands is particularly relevant to determining where clean electricity generation facilities could be located, while the power over interprovincial works and undertakings is particularly relevant to expanding inter-provincial electricity transmission facilities, and the power to declare works for the general advantage of Canada is particularly relevant to connecting remote areas to the electricity grid.

(i) Federal power to approve and regulate projects on federal lands

Parliament has exclusive authority to pass legislation governing the use of federal Crown land. Federal Crown land includes ports, airports, national parks, ports, Indian reserves, lands in northern Canada (i.e., outside any province), and lands on Canada’s continental shelf in three oceans (Arctic, Atlantic and Pacific). 

Federal Crown lands are subject to at least two laws of general application relevant to permitting clean energy facilities. The federal Species at Risk Act applies to any facility on federal lands that may affect endangered species, the residences of individual species, or the species’ critical habitat (Species at Risk Act (SARA), sections 73). The Act has application beyond federal lands through, for example, agreements and permits under other federal acts (sections 74-77) and project reviews (section 79). The Impact Assessment Act applies broadly to any project proposed on federal lands (Impact Assessment Act ss.81-91). This Act also provides options to exempt physical activities on federal lands from its requirements, including projects on Indian reserves and subject to land claims.

This power to regulate federal property provides a range of options for permitting new clean energy facilities, including the marine offshore, federal lands assigned to Indigenous Peoples, airports, and defence bases. 

(ii) Federal power to spend money and provide tax breaks to expedite approval and operation of clean energy facilities

The federal power to spend money has no legal limits. However, the spending power is now subject to political limits where the federal government seeks to spend money in matters managed by the provinces, such as health care and education.

The federal spending power provides a range of options and incentives to support local decision-making—such as employment and financial benefits. Employment benefits can include training and hiring incentives, while financial benefits can include tax incentives, connection subsidies, and electricity rate reductions (where they are federally regulated). The spending power may also support the financing of required distribution lines to remote communities.

(iii) Federal power to regulate interprovincial works and undertakings and declare local works to be for the general advantage of Canada

Canada regulates interprovincial works and undertakings in the energy sector through the Canadian Energy Regulator Act (CERA) and the Impact Assessment Act

This constitutional power is underused by existing laws. In particular, the CERA sets out a very different and much broader approach to regulating oil and gas pipelines in comparison to electricity transmission lines. The federal regulation of interprovincial oil and gas pipelines is broad and exclusive, and includes the setting of tariffs. By contrast, the federal regulation of interprovincial transmission lines is narrow, subject to provincial regulation, and does not include tariffs. There is no constitutional basis for the different breadth. 

Achieving net zero goals is likely to require the establishment of new interprovincial electricity transmission lines. As such, the Canadian Energy Regulator Act could be amended to make the federal regime for transmission lines similar to the longstanding federal regime for pipelines (i.e., a regime that facilitates the building and financing of new interprovincial electricity transmission lines). 

Similarly, though regulating different energy markets, the Canadian Energy Regulator has provided decades of experience with national regulation of the long-term supply of oil and gas across Canada and demonstrated that there is capacity for a Canadian regulator to play a significant role in expediting and sustaining new energy facilities across Canada. Thus, the Canadian Energy Regulator Act is a potential legislative source for all federal aspects of the energy permitting reforms, including national standards for generation, transmission, distribution, and storage.

A further constitutional power that has existed since Confederation is the federal power to declare a specific work or class of a work that is, factually, local or provincial to be for the general advantage of Canada (Constitution Act 1867). This power exists today and applies to works such as grain elevators and silos under the Canada Grain Act and facilities using nuclear energy under the Nuclear Safety and Control Act. 

The purpose of this power is to specify that one or many “local” works is declared to be “federal.” Such a declaration has two major implications. First, it means that the specified works are removed from their legal status as local works. This changes the laws applicable to such works from principally being local laws to expressly engage federal laws applicable to federal works. Second, by virtue of having federal legal status, the declared works that are subject to federal regulation will be able to rely on federal paramountcy in the event of conflict with any provincial or local laws. 

Importantly, a federal s.92(10(c) declaration applies to the works, but provides no blanket exemption from local regulation, particularly local regulation of adverse effects from the works. A majority of the Supreme Court of Canada has never endorsed the federal “enclave” theory whereby federal lands or works are subject to complete exemption from local control (R. v. Francis 1988). 

Though sometimes controversial, this declaratory power is relevant to the clean energy challenge. It could allow the federal government to directly enable timely construction of a particularly important new facility—energy generation, transmission, distribution, or storage. One example could be a new transmission line to connect new, small-scale, clean electricity generation facilities in remote areas to the existing electricity grid. 

Use of this declaratory power could be carried out by adding one or more new provisions to the Canadian Energy Regulator Act.

(iv) Federal power to regulate interprovincial and international trade and commerce

The federal government has power to regulate national and international trade and commerce. This power is subject to longstanding limits, but it may be possible to rely on this federal power to set national standards to govern the suitable technologies and permitting criteria for clean energy facilities. 

The Canadian Energy Regulator Act is a potential legislative source for all federal aspects of the energy permitting reforms, including the setting of national standards for all required facilities—generation, transmission, distribution, and storage.

Importantly, there are longstanding examples of Canada-wide standards established cooperatively with provincial governments. A cooperative way to proceed with Canada’s net zero targets seems both possible and preferable.

(v) Federal power to regulate Indigenous reserve lands 

The Constitution provides Indigenous governments with law-making powers under unique Land Claim Agreements and the power to enact laws respecting “Indians and lands reserved for Indians” (Constitution Act 1867). 

This Appendix addresses this topic more fully under Section 2, Indigenous Powers to Act. 

(v) Federal power to pass laws for peace, order and good government 

The federal government’s power to pass laws for the peace, order and good government of Canada is a collection of federal powers to address emergencies, residual matters not assigned to either senior order of government, and matters of national concern. Different tests apply to each type of power. 

The most recent example of a federal law relying on the national concern power arose in relation to federal pricing for greenhouse gas emissions. In 2021, the Supreme Court of Canada upheld the federal Greenhouse Gas Pollution Pricing Act 2021 under this power (References re Greenhouse Gas Pollution Pricing Act 2021 SCC 11). To qualify, (1) the matter must be of sufficient concern to the country as a whole to warrant consideration as a national concern; (2) the matter must have a singleness, distinctiveness and indivisibility; and (3) the proposed impact on provincial jurisdiction must be reconcilable with the division of powers.

The current test to invoke this power for any future matter has three parts. First, the federal government must establish that the matter is of sufficient concern to the country as a whole to be a matter of national concern. Second, the matter must have a singleness, distinctiveness and indivisibility from other matters. Third, the matter must have a scale of impact on provincial jurisdiction that is reconcilable with the division of powers. Overall, the purpose of the national concern test is to identify matters which, by their nature, transcend the provinces.

Given the scale of legal controversy over the use of this power respecting the federal Greenhouse Gas Pollution Pricing Act, it does not seem advisable at this time to rely on this power to address the zero-emission electricity challenge.

(vi) Federal power to regulate fisheries, fish, and fish habitat

The federal power over fisheries is broad, including powers to conserve fish and fish habitat, and most recently, aquatic endangered species in Canada’s internal or marine waters. These powers are relevant to permitting new clean energy facilities as they can prohibit or delay construction wherever they apply. It is therefore prudent to locate new clean energy facilities in places that avoid fisheries issues. 

(vii) Federal power to regulate interprovincial and international effects 

The federal power to address interprovincial and international effects is not stated in the Constitution Act, 1867, but arises through multiple cases, led by the 1976 Supreme Court of Canada case of Interprovincial Co-operatives v. The Queen [1976] 1 SCR 477. The majority of the Court in this case concluded that the matter of regulating “interprovincial effects”—in this case, effects of water pollution—was within exclusive federal authority through the Constitution’s assignment to it of residual power over matters not specifically allocated to either federal or provincial authority. This federal power may also regulate international effects, such as the protection of migratory birds. The federal Migratory Birds Convention Act, 1994 has broad application to migratory birds. To date, this Act prohibits harm to migratory birds and their nests; however, this Act does not regulate the habitat of migratory birds. 

Both aspects of this federal power are relevant to permitting clean energy facilities. It is prudent to address the location of clean energy facilities to avoid locations near any interprovincial or international border. It is also prudent to locate clean energy facilities in places that avoid or minimize effects on migratory birds or their nests. 

2. Indigenous powers to act 

Among Canada’s hundreds of Indigenous governments, many are already pursuing the development of zero-emission electricity generation on their lands. Furthermore, given the scale of the net zero challenge, there is obvious national benefit to supporting interested Indigenous governments to site new clean energy facilities on their lands. 

For most Indigenous lands, federal laws are broadly applicable as Canadian federalism imposes some constraints on the applicability of provincial or municipal laws to Indigenous Reserve lands (Surrey v. Peace Arch Enterprises Ltd. (1970), 74 WWR (ns) 380 (BCCA). 

There are now many categories of lands held by Indigenous governments. There are of course lands set out in modern land claims agreements and ratified in federal laws. Under these laws, Indigenous governments have a large if not lead role over many facilities on their lands. Indigenous lands set out in a land claims agreement would be well-suited to reforms that implement fast track permitting; however, some of these lands are extremely remote and may thereby be isolated for the near term until there is transmission line access.

By statute, the federal government provides Indigenous governments with two Canada-wide sources of legal authority to pass laws governing federal Indigenous Reserves. Under the Indian Act, band councils have narrow authority to pass laws governing the use of reserve lands, and no authority to pass laws on or even agree to lease reserve lands. Thus, absent reform of the Act, this regime seems an unlikely source of authority for Indigenous governments to approve new clean energy facilities on reserve lands, though it may be possible to advance aspects of this reform through new regulations under this Act.

The federal regime best positioned to address fast track permitting is the Framework Agreement on First Nation Land Management Act, S.C. 2022, c.19, s.121 (the “Framework Agreement Act“). It applies to any First Nation government on a Reserve anywhere in Canada that reaches agreement with the federal government to meet this Act’s required terms. This Act currently applies to several dozen First Nation governments in close proximity to existing electricity grids. Further, this Act provides First Nation governments with the independent power to pass laws, make decisions, and implement energy facilities on their lands. These law-making powers for First Nation governments contrast fundamentally with the Indian Act whereby all band leases require federal approval. 

As set out in Box 2 below, an earlier version of the Framework Agreement Act authorized the Henvey Inlet First Nation to pass laws to govern Ontario’s largest wind farm—a 300 megawatt wind farm on Henvey Inlet First Nation Reserve lands on the shore of Georgian Bay north of Parry Sound. 

This power in the Framework Agreement Act is relevant to applying the clean energy permitting reforms to lands reserved for Indigenous peoples across Canada. The fast track permitting reform should thus engage forthwith those Indigenous governments that have independent law-making and contractual powers through the Framework Agreement Act. On the other hand, there should be regulatory reforms to exempt from the new federal Impact Assessment Act any small-scale energy generation facility governed by laws established by a First Nation under the Framework Agreement Act.

Box 2: Henvey Inlet First Nation Wind Farm
Under Ontario’s Green Energy Act reforms described above, the Henvey Inlet First Nation obtained a Feed-In-Tariff contract to establish Ontario’s largest wind farm on a remote Reserve that required a significant transmission line to connect to the Ontario electricity grid. Initially, the First Nation Council sought to establish the wind farm using a lease under the Indian Act; however, after progress was slow in this approach, Council elected to follow the lead of dozens of other First Nations across Canada and sign the Framework Agreement to trigger the application of the First Nations Lands Management Act, S.C. 1999, c.24. Following the process set out under this Act, the First Nation Council obtained law-making powers over environmental assessment, protection and management on its Reserve lands. 
The Band Council then passed a number of laws to address its legal needs. These laws included:An Environmental Assessment and Permitting Land Law; An Environmental Protection Land Law; and An Environmental Permit Land Law.

On-site, further approval was required to address the federal Species at Risk Act, as SARA applies to federal lands such as First Nation Reserves. 

Off-site, further approvals were required to provide the required transmission line connection to Ontario’s electricity grid. The extensive 104 kilometre distance required for this connection crosses the Reserve lands of the Magnetawan and Shawinaga First Nations. Both of these First Nation Reserves also relied on the 1999 First Nations Land Management Act to pass laws regulating the transmission line. Ultimately, the Project was constructed and became operational in 2019.  

Under these new federal regimes, Indigenous governments may have the lead role over many if not all facilites on their lands. 

Notably, the present paper focuses on small facilities, not the major project enacted by the Henvey Inlet First Nation. However, as the Henvey Project involved 90 major turbines and a lengthy 104-kilometre transmission line, it should be readily possible to use the Framework Agreement Act to establish the smaller clean electricity facilities addressed in the present paper.

3. Provincial powers to act

The Constitution provides provincial governments with at least five powers relevant to permitting clean energy facilities: (1) public lands and property, (2) local works and undertakings, (3) property and civil rights; (4) municipal institutions; and (5) matters of a local or private nature. 

(i) Provincial power to establish fast track approvals for clean energy facilities on public and private lands

Provinces have broad authority over lands within their boundaries, including provincial Crown lands, municipal lands, and private lands. 

Additionally, the Constitution presumes that all works and undertakings in a province are local except those located on federal lands (described above) or connect with another province or another country (Consolidated Fastfrate Inc. v. Western Canada Council of Teamsters 2009 SCC 53). 

Therefore, every Province has broad regulatory authority to establish fast-track permitting for clean energy facilities across its boundaries, on public and private lands (though not on federal lands). 

Public lands and property

Provinces have broad authority over their property, with property including provincial financial resources. Thus, provinces have broad power to spend all monies they raise by taxes or otherwise receive through transfers from the federal government. 

As described above, Ontario provides an important example of provincial spending in support of energy facilities through its 2009 Green Energy Act reform and feed-in tariffs program. 

(ii) Provincial power to fund clean energy facilities

Every province has broad power to set laws regarding property and civil rights. Thus, a province may set the terms of property division and sale, and contracts, including contractual terms and conditions. Property in this context also includes financial resources. Provinces have broad power to spend all monies they raise by taxes or otherwise receive through transfers from the federal government. 

(iii) Provincial power to regulate private property and civil rights 

Every province has broad power to set laws regarding property and civil rights. Thus, a province may set the terms of property division and sale, and contracts, including contractual terms and conditions.

This power can authorize the development of any required contracts and property rights to implement required zero-emission facilities, including for example a future feed-in-tariff program such as the program described above that was implemented by Ontario under the Green Energy Act. 

(iv) Provincial power over municipalities

Provinces have constitutional authority over municipal institutions and governments. Additionally, every province has broad constitutional authority over all local works and property and civil rights. These general powers allow a province to establish the broader terms of municipal laws over any kind of facility. For some time, provinces have assigned law-making powers to municipalities through laws that authorize municipal councils to pass local by-laws. 

Municipal powers to act are reviewed in greater detail in Part 4, below. 

(v) Provincial powers over local or private matters 

This provincial power is aligned with several other provincial powers (e.g., local works and undertakings). It authorizes a province to address local matters beyond local works and undertakings.

4. Municipal powers to act

Provinces assign law-making powers to municipalities through legislation that authorizes municipal bylaws. Using the example of Ontario, this Province authorizes municipalities to pass a broad range of bylaws through numerous statutes, principally the Municipal Act, 2001 S.O. 2001, c.25 (“Municipal Act”) and the Planning Act. Ontario modernized the Municipal Act in several stages from 2001 to 2006. The result is a Municipal Act that provides municipal councils with broad powers to pass bylaws through both general “spheres of jurisdiction” and specific provisions (Municipal Act, ss.10, 11). The Planning Act is a specialized statute to address proposed changes to existing land use, including the broad power of municipalities to restrict or permit specific uses of property through zoning bylaws (Planning Act R.S.O. 1990, c.P.13, s.34).

Since 2001, the scope of municipal authority to pass laws relevant to facility approvals has been guided by the decision of the Supreme Court of Canada in 114957 Canada Ltée (Spraytech, Société d’arrosage) v. Hudson (Town) [2001] 2 SCR 241. This decision modernized the judicial review of municipal bylaws. The decision focused on a municipal bylaw passed under other municipal legislation that restricted the use of pesticides for a local facility. This case established that a municipal bylaw can be valid and enforceable even where there are applicable provincial or federal laws and even approvals, so long as the bylaw does not conflict with the other laws. The Court also read the text of conflict narrowly, consistent with modern principles of federalism governing federal-provincial conflict set out in the 1982 case of Multiple Access Ltd. v. McCutcheon [1982] 2 SCR 161. Thus, there is conflict where it is not possible to comply with all applicable laws at the same time—noting that a more restrictive law does not create conflict as it is possible to comply with the less restrictive and the more restrictive law by meeting the requirements of the more restrictive law. There is also conflict where a law frustrates the purpose of another law, but courts have set out parameters that make this a difficult test to meet. 

(i) Municipal zoning powers to locate and approve clean energy facilities

Fast-track permitting reform is likely to be available to municipalities in one of two ways. First, in provinces such as Ontario where municipalities have broad authority to pass bylaws so long as the bylaw is within at least one sphere of municipal jurisdiction, a municipality is likely to have broad powers to implement fast track permitting solely on its own initiative or on the basis of implementing provincial (and/or national) guidance on permitting criteria for new clean energy facilities. 

Second, in provinces where municipal law-making powers are limited to more traditional approaches, municipalities will have some power to implement fast track permitting through zoning or similar land use bylaws. Today, municipal zoning bylaws in some form or another regulate the vast majority of land uses within a municipality. The general approach of zoning bylaws is to prohibit all uses except those that are expressly permitted. Nevertheless, a municipality may choose different ways to make lands available for clean energy facilities. For example, a zoning bylaw could make provision for clean energy facilities in several specific zones and then also provide setback requirements from key natural heritage features and/or residential property lines.

Contrary to broad municipal authority, there are also examples of a province choosing to take overarching control over specific classes of facilities subject to municipal zoning. However, the recent example of Ontario’s Green Energy Act reforms illustrates two of the many problems that arise where a province seeks to apply its overarching authority to restrict municipal authority over zoning. In this example, one problem arose from Ontario amending provincial laws to exempt green energy facilities from municipal bylaws, including zoning bylaws. This aspect of the Ontario reforms created broad rural backlash and triggered the opposition of Councils of numerous municipalities. This opposition led to extensive municipal council efforts to get around these restrictions and extensive litigation over the bylaws passed by municipal council (Suncor Energy Products v. Town of Plympton-Wyoming, 2014 ONSC 2934). 

The second problem that arose with this Ontario reform is that this Province sought but failed to be comprehensive in prescribing the effects to be studied. Though the reform covered the vast majority of effects, it failed to encompass effects on endangered species, requiring that endangered species issues be regulated separately from the broad, renewable energy facility approval. Thus, the Renewable Energy Approval (REA) process mandated more than one dozen reports, but none required avoidance or even consideration of endangered species habitat. Yet Ontario created a statutory test for appeals to a tribunal that such appeals would be successful if an opponent established “serious and irreversible harm to plant life, animal life or the natural environment” (Environmental Protection Act s.142.1(3)). One opponent then relied on this disconnect between what was studied and the test on appeal to successfully appeal an approval that failed to consider endangered species issues (Prince Edward County Field Naturalists v. Ostrander Point GP Inc., 2015 ONCA 269). 

Ultimately, within a decade, this generally successful but flawed provincial approach resulted in a new Ontario government repealing the core of the Green Energy Act and restoring municipal powers.

Learning from this experience in Ontario, it is clearly desirable to consider all reasonable reforms that are likely to provide communities with long-term benefits or incentives to site clean energy facilities so that there is local support, not opposition. A provincial override of local decision-making should thus occur only exceptionally, not as a general policy. 

(ii) Municipal power to regulate local effects 

There are many reasons why a local municipality may be expected to support new clean energy facilities according to the criteria set out in this paper. Municipalities may standardize their approach to facility support by passing municipal bylaws that address the conditions of support—financial or otherwise—that the neighbours of such facilities share the municipal view of overall benefit to burden.
On the other hand, municipalities may wish to ensure that all clean energy facilities in their territory avoid local features of special significance in the municipality. This paper suggests that municipalities may do this by expanding the meaning of key environmental features within the municipality; however, as noted above in this section, it is essential that any bylaw seeking to depart from broadly applicable national or provincial criteria not frustrate the purpose of a fast track permitting by significantly restricting the locations of clean energy facilities in that municipality.

References

Arnold, Jonathan, and Marisa Beck. 2023. “Permitting Reform for Clean Energy Projects in New York and California.” Canadian Climate Institute.

Beck, Marisa, Dale Beugin, and Calvin Trottier-Chi. 2023. Seven recommendations to leverage public investment to help Canada compete in the global energy transition: A made-in-Canada approach to clean growth. Canadian Climate Institute. 

BC Hydro. 2023. “Site C Clean Energy Project—Project Status Dashboard” (2023).

Canada Grain Act, R.S.C. 1985, c. G-10, as amended.

CBC News. 2022. “Final Muskrat commissioning delayed until spring as GE struggles to perfect transmission software.” January 26.

Cleland, Michael, et al. 2016. “A Matter of Trust: The Role of Communities in Energy Decision-Making.” University of Ottawa, Positive Energy Program.

Comeau, Louise, Elizabeth Gresch, and Louis-Charles Vaillancourt. 2022. Why Do Wind Energy Projects Fail? Conservation Council of New Brunswick.

Consolidated Fastfrate Inc. v. Western Canada Council of Teamsters, 2009 SCC 53 (2009).

Constitution Act, 1867, 30 & 31 Vict. 1867, c. 3 (2023).

Dolter, Brett, and Nicholas Rivers. 2018. “The cost of decarbonizing the Canadian electricity system.” Energy Policy 113, 135-148. 

Environmental Protection Act of 1990, R.S.O. 1990, c. E.19 (2023).

First Nations Lands Management Act, S.C. 1999, c.24.

Framework Agreement on First Nation Land Management Act, S.C. 2022, c. 19, as amended.

Futurepolicy.org. 2023. “The German Feed-in Tariff” (2023).

Government of Ontario. 2017. Greenbelt Plan.

Impact Assessment Act of 2019, S.C. 2019, c. 28 (2023).

Interprovincial Co-Ops. v. The Queen [1976] 1 SCR 477 (1976).

Kanduth, Anna and Jason Dion. 2022. Electric Federalism: Policy for aligning Canadian electricity systems with net zero. Canadian Climate Institute.

Kauffman, Rebecca. 2023. “Threatened Jurisdiction: Species at Risk and the Constitution.” Environmental Law Centre.

Lee, Caroline, Jason Dion, and Christiana Guertin. 2022. Bigger, Cleaner, Smarter: Pathways for aligning Canadian electricity systems with net zero. Canadian Climate Institute. 

Migratory Birds Convention Act, 1994, S.C. 1994, c. 22, as amended.

Municipal Act, 2001, S.O. 2001, c. 25, as amended.

Natural Resources Canada. 2023. Powering Canada Forward: Building a clean, affordable and reliable electricity system for every region of Canada.

Nuclear and Safety Control Act, S.C. 1997, c. 9, as amended.

Physical Activities Regulations. 2019. Impact Assessment Act. SOR/2019-285 (2023).

Planning Act, R.S.O. 1990, c. P13, as amended.

Prince Edward County Field Naturalists v. Ostrander Point GP Inc., 2015 ONCA 269 (2015).

R. v. Francis, [1988] 1 SCR 1025 (1988).

References re. Greenhouse Gas Pollution Pricing Act, 2021 SCC 11 (2021).

Reference re. Impact Assessment Act, 2023 SCC 23 (2023).

Semeniuk, Ivan, and Wendy Stueck. 2023. “Three bat species at risk of becoming endangered as wind turbines take heavy toll on wildlife.” The Globe and Mail, May 11. 

Suncor Energy Products v. Town of Plympton-Wyoming, 2014 ONSC 2934 (2014).

Surrey (City) v. Peace Arch Enterprises Ltd., (1970), 74 WWR (ns) 380 (BCCA). 

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Streamlining clean growth project approvals with strategic assessments

Introduction

Canada needs a better strategy for building clean electricity projects, industrial decarbonization projects, and critical mineral mining projects at the necessary speed and scale for the net zero transition. As industry and government search for ways to streamline the country’s regulations (Chalmers 2023; Thurton 2022; Crawley 2023), strategic assessments represent an important but neglected tool that the federal government can and should put to greater use.

It is abundantly clear that changes to regulatory review must be done carefully. The federal 2019 Impact Assessment Act overhauled Canada’s regulatory regime in an attempt to make it more holistic and responsive to the public interest, and the main instrument it relies on is project-level impact assessment (Wright 2021). Each impact assessment examines a project at risk of significantly impacting sustainability and has the power to stop the project if necessary.

However, in October 2023, the Supreme Court of Canada ruled that the Act is largely unconstitutional. The Court’s argument was that the impact assessment process currently allows the federal government to examine and stop projects for reasons outside of federal jurisdiction (Supreme Court of Canada 2023). Until the Act’s constitutionality is resolved, projects will face greater uncertainty during their regulatory reviews.

This is where strategic assessments could play a role. They are a way for regulators to add strategic-level analysis, where what’s being assessed are policies and systemic issues rather than individual projects. By adding strategic analysis, regulators can accelerate and strengthen Canada’s predominantly project-level regulatory system. Moreover, although the Impact Assessment Act defines strategic assessments, that part of the Act was left untouched in the October 2023 Supreme Court ruling. Canada has yet to complete a strategic assessment under the Act, but variations have been used by provinces, territories, and the federal cabinet (Gibson et al. 2020; Noble 2008; Noble 2021). The federal Strategic Assessment of Climate Change also closely followed the Act’s process (Government of Canada 2020).

Specifically, strategic assessments are a way for regulators to address the impacts of multiple projects at once. They are meant for examining and advising on overarching policies and systemic issues that may be contributing to project-level impacts. For example, a regulator could use a strategic assessment to assess the Canadian Critical Minerals Strategy and note that the strategy might contribute to impacts on waterways and Indigenous governance. As part of the strategic assessment process, the regulator could then recommend general approaches for assessing a mine’s pollution and how it shares benefits with communities. These approaches could be used to inform policy and also save future impact assessments from having to build their own approaches from scratch.

Strategic assessments are a way for regulators to address the impacts of multiple projects at once

Strategic assessments are unlikely to provoke constitutional challenges in the same way impact assessments have. By being a way to advise the federal government on strategy, strategic assessments under the Impact Assessment Act are a step removed from project approval and exist more squarely within federal jurisdiction. Conversely, though, their influence over projects depends entirely on how the federal government chooses to implement their advice.

Despite—or perhaps because of—the current uncertainty surrounding regulatory review, it is worth investigating how strategic assessments can be used to streamline the process for clean growth projects. We define clean growth projects as those that contribute to making Canada’s economy stronger, less polluting, more inclusive, and more resilient.  A great many such projects will be needed for Canada to meet its climate and economic goals. This paper explores how regulators have used strategic assessments before to make regulatory review more effective and efficient for projects, and the resulting lessons for Canada.

We define clean growth projects as those that contribute to making Canada’s economy stronger, less polluting, more inclusive, and more resilient.

Locating strategic assessments within Canada’s regulatory system

The Impact Assessment Act establishes strategic assessments as a tool for informing impact assessments. This could help streamline regulatory reviews and would be an historically novel use of the instrument. Other jurisdictions—including Canadian jurisdictions—have used strategic assessments before, but rarely in the same way as the Act intends to. For instance, the federal cabinet has its own directive to conduct strategic assessments, but for the narrower purpose of rejecting environmentally harmful policies rather than for generating strategic advice. The federal government also conducted a Strategic Assessment of Climate Change, but mainly used it to identify climate impacts rather than evaluate them (Box 1). The federal government has provided some guidance on how it plans to use strategic assessments under the Impact Assessment Act, although much of the process remains undefined.

Strategic assessments are one of three types of assessments established by the Impact Assessment Act:

  1. Impact assessments examine individual projects, assessing their direct impacts and cumulative impacts.
  2. Regional assessments examine all projects within a geographic region, and assess cumulative impacts.
  3. Strategic assessments examine policies or issues that are relevant to impact assessments, and assess cumulative impacts.

Specifically, the Act says that strategic assessments can examine:

“(a) any Government of Canada policy, plan or program—proposed or existing—that is relevant to conducting impact assessments; or

(b) any issue that is relevant to conducting impact assessments of designated projects or of a class of designated projects,” (Impact Assessment Act 2019).

There are practically no limitations on what might be considered a relevant policy or issue. Some examples of relevant policies (or plans or programs) might be policies for developing an environmentally vulnerable area, policies for installing a series of large projects, and policies for creating a supply chain for a product with significant pollution concerns. Relevant issues, meanwhile, might include environmental issues, health issues, local economy issues, and Indigenous rights and title issues frequently caused by projects.

Canada’s definition of strategic assessment is broader than other countries’ in three important ways. First, Canada uses the term strategic assessment rather than the much more common strategic environmental assessment used in the United States and elsewhere (Arnold and Beck 2023). The term reflects how, in its current form, the Act intends to holistically consider non-environmental impacts including social, health, and economic impacts.

Second, few countries recognize regional assessments as distinct from strategic assessments. Instead, if they are recognized at all, regional assessments are usually seen as a subtype of strategic assessments that happen to correspond with regional boundaries (Partidário 2003; Arnold et al. 2022). This paper focuses on strategic assessments with the understanding that many lessons are also applicable to regional assessments. Distinct regional assessments are important for Canada, given its regional differences and the place-based connections held by Indigenous Peoples.

Third, in most other countries, strategic assessments are used to assess policies (or plans or programs) and are not directly linked to impact assessments. Under Canada’s Impact Assessment Act, however, strategic assessments can only examine policies and issues relevant to impact assessments (Noble 2021; Impact Assessment Act 2019). This phrasing gives Canadian strategic assessments greater potential to proactively examine areas where impact assessments are being conducted but policies are lacking or are in development. For example, Canada could strategically assess how projects reuse building materials, even though the government is still in the process of developing regulations for reusing materials (Cundiff et al. 2023).

However they are defined, all types of assessments follow the same basic process: they start with a trigger, then are used to identify and evaluate impacts, and are wrapped up with a decision or recommendations around the impacts. Strategic assessments have not been formalized much beyond this in Canada, meaning that their process is still largely undefined.

Without clear triggers, the Impact Assessment Act’s strategic assessments lack formalization from the start. Whereas the size or location of a project can trigger impact assessments, strategic assessments are only initiated at the discretion of the federal Minister of Environment and Climate Change. The Impact Assessment Agency of Canada serves as the federal authority on assessments and can recommend that the minister initiates a strategic assessment. Anyone—including members of the public, the private sector, and other jurisdictions—can also send the Agency requests for a strategic assessment. Ultimately though, the power to initiate strategic assessments rests in the hands of the Minister.

Furthermore, there is little indication of the Minister’s or the Agency’s priorities for strategic assessment, other than the rudimentary criteria listed in the Policy Framework for Strategic Assessment. According to the framework, the Agency’s recommendations on whether to strategically assess a particular subject are based on whether doing so would be relevant, within federal jurisdiction, and in the public interest, as well as whether the assessment could adequately inform, improve, and assist with the impacts (IAAC 2022). It is difficult to imagine the Agency recommending a strategic assessment that does not meet these criteria.

Once triggered, strategic assessments also lack formalization on how they can be used to identify and evaluate impacts. The Impact Assessment Agency only provides general steps, leaving the details to be determined on a case-by-case basis (IAAC 2022):

  1. Deciding to conduct the assessment
  2. Planning informed by early engagement
  3. Drafting the assessment’s terms of reference
  4. Finalizing the assessment’s terms of reference
  5. Conducting the assessment
  6. Drafting a strategic assessment report
  7. Finalizing a strategic assessment report

When a strategic assessment is completed, the process of arranging it to inform impact assessments likewise lacks formalization. Impact assessments are currently mandated to factor in relevant strategic assessments at various stages, but the Agency has not published guidance on what “factoring in” or “relevance” look like.

Some guidance can be found that predates the Impact Assessment Act. In 2009, the Canadian Council of Ministers of the Environment proposed a detailed process for the strategic assessment of policies (CCME 2009). If the guidance were to be followed, there would be three phases for strategic assessment: i) measurement and identification, ii) projection and evaluation, and iii) implementation and monitoring.

According to the 2009 guidance, the Impact Assessment Agency should develop terms of reference and identify key impact data in the first phase of strategic assessment, and also identify particularly important baselines and trends. In the second phase, the Agency should evaluate alternative scenarios with an eye towards cumulative impacts. For example, the Agency might collate scenarios representing alternative policy choices, activity intensities, and technology mixes, and then select the scenario with the most preferential outcomes. In the third phase, the Agency should make recommendations to align with its preferred scenario, which may include new regulatory requirements, and should establish follow-up monitoring and evaluation. Further, the guidance recommends that strategic assessments should be validated through public engagement (CCME 2009).

The Council’s guidance did not visibly shape Canada’s regulatory development in the following years, and it is unclear whether strategic assessments under the Impact Assessment Act will draw on it. It is also unclear how the federal government will amend the Impact Assessment Act in response to the Supreme Court of Canada’s ruling (Supreme Court of Canada 2023). The ruling was mainly concerned with unconstitutional federal overreach during impact assessments; strategic assessments were not directly implicated. Any amendments to impact assessments could indirectly affect strategic assessments, though, because strategic assessments are required to have relevance to impact assessments. If impact assessments get scaled back in scope, strategic assessments may have a more limited range of subjects for assessment.

The Impact Assessment Agency recognizes that strategic assessments can streamline the regulatory review process for projects by sharing new information (IAAC 2022). For strategic assessments to live up to their streamlining potential, though, Canada needs to adopt a more formalized process, something other jurisdictions can shed light on.

Box 1: A short summation of strategic assessments in Canada Strategic assessments have a long but fragmented history in Canada. Since the 1990s the federal cabinet has had a mandate to strategically assess policy proposals at risk of causing significant environmental effects (PCO and CEAA 2010). However, cabinet has only recently started complying with that mandate. Moreover, cabinet uses strategic assessments more as a final safeguard against harmful policies rather than as a source of information for regulatory review (Noble 2021).

Provincial governments have also conducted variations of strategic assessments, although in different ways (Gibson 2020). Ontario has done environmental assessments of subjects that lend themselves to strategic-level approaches, such as timber management, hydro-electricity planning, and hazardous waste (Gibson et al. 2020). Saskatchewan also conducted a regional environmental study of the Great Sand Hills which informed the guidance on strategic assessment produced by the Canadian Council of Ministers of the Environment (Noble 2008; CCME 2009). The guidance itself was further used by Parks Canada to conduct a strategic assessment of activities within Wood Buffalo National Park (Public Services and Procurement Canada 2016).

The 2019 Impact Assessment Act is Canada’s first federally legislated provision for strategic assessments. The Act breaks from previous usage by directly relating strategic assessments to impact assessments. So far, two strategic assessments have been associated with the Act, neither of which was fully completed under it. The first was the Strategic Assessment of Thermal Coal Mining, which was triggered under the Act but was cancelled due to perceived irrelevance, as Canada does not intend to build more thermal coal projects (IAAC 2021).

The second is the Strategic Assessment of Climate Change, which was triggered under a different act, but since completion is considered to be a strategic assessment under the Impact Assessment Act. The Strategic Assessment of Climate Change provides technical guidance on how project proponents should account for and share their project’s greenhouse gas emissions and other climate information when undergoing federal impact assessment. This includes recommendations on how to identify a project’s net and upstream emissions, its climate resilience, and a trajectory for reaching net zero emissions by 2050 (Government of Canada 2020).

During impact assessments, the Strategic Assessment of Climate Change recommends that the Impact Assessment Agency compares a project’s emissions performance with that of similar projects, considers a project’s ability to achieve net zero emissions by 2050, and examines whether a project is aligned with and included in Canada’s emissions targets and forecasts (Government of Canada 2020). The Strategic Assessment of Climate Change stops short, however, of providing detailed recommendations on how the Agency should do this in practice (Johnston et al. 2021). For instance, the Strategic Assessment of Climate Change directs the Agency to assess a project’s net zero plans by how it “seeks to minimize greenhouse gas emissions . . . as early as possible for the project lifetime” but it doesn’t provide hard cutoffs for determining when a project’s reductions come too late.

Further detail may come in subsequent technical guidance. So far the Strategic Assessment of Climate Change has delivered two draft technical guides, one on emissions data in 2021 and another on climate resilience in 2022.

Using strategic assessments to streamline regulatory review

Streamlining clean growth project approvals means making regulatory review faster without compromising on—and ideally improving—sustainability. Regulators can use strategic assessments to streamline the regulatory review process by harnessing their potential to regulate cumulative impacts and share regulatory burdens with impact assessments.

Strategic assessments can effectively address cumulative impacts from projects

Strategic assessments are a better instrument for addressing cumulative impacts than impact assessments, which are constrained to individual projects. Cumulative impacts are impacts that may be negligible from the perspective of an individual project and are of greater significance when all impacts of its kind are combined. Assessing cumulative impacts across projects is crucial for regulating complex problems like climate change, biodiversity loss, and threats to Indigenous rights and title. In a first for Canada, the British Columbia Supreme Court used the concept of cumulative impacts in 2021 to determine that the Crown had infringed upon Treaty rights (Buhler et al. 2023).

Globally, strategic assessments have been used to successfully address cumulative impacts, but mainly through influencing policies. The European Union has had a formalized process to assess policies since 2001 with its Strategic Environmental Assessment Directive, and some member states have processes that date back farther (EC 2001). In a study of 60 European strategic assessments of transport and land use policies, Fischer (2002) found that policies that followed a strategic assessment integrated significantly greater sustainability protections.

Under Canada’s Impact Assessment Act, strategic assessments can influence projects through more than just policies. The Act currently requires strategic assessments to be relevant to impact assessments. Even though they have no direct authority over project approval, conducting strategic assessments under the Act will therefore generate information that assessed projects can find relevant. By providing a broader framework for understanding a project’s cumulative impacts, strategic assessments can be used to provide a basis for collaborative action across industry. Collaboration may resemble efforts like the Canadian Automotive Partnership Council’s work on regulatory efficiency, which is strategic in nature and relates to the impacts of multiple projects (Task Force on Major Project Development and Regulatory Excellence 2023). Regulators can also use methodologies laid out in strategic assessments to conduct more effective impact assessments. The Strategic Assessment of Climate Change, for instance, created a methodology for assessing climate impacts that empowers impact assessments.

Strategic assessments can share regulatory burdens with impact assessments and make them more efficient

Regulators can use strategic assessments to make regulatory reviews more efficient by having them share the regulatory burden of conducting impact assessments (Bonnell 2019). They can be specifically targeted towards policies and issues that come up regularly during projects’ impact assessments and inform the execution of subsequent impact assessments. For example, by providing a methodology for assessing climate impacts, Canada’s Strategic Assessment of Climate Change could save future impact assessments from creating their own duplicative methodologies.

Strategic assessments are an efficient way to assess strategic subjects like plans to build hydropower and the resulting impacts on waterways, at least relative to the overall cost of making policy. Worldwide, strategic assessments rarely cost over $685,000, and they usually comprise less than 10 per cent of the cost of planning policy and less than 1 per cent of the cost of implementing policy (Thérivel and González 2020; Thérivel and González 2021b). The information they generate can make impact assessments more efficient in turn. Strategic assessment recommendations have guided impact assessments in Ireland, particularly in terms of scoping relevant impacts and identifying vulnerable areas (González and Therivel 2022).

Regulators have only recently started to value strategic assessments for their potential to streamline regulatory review processes. Historically, their main role has been to improve policies, with their implications for projects and impact assessments being of secondary importance (Thérivel and González 2021b). Evidence suggests that they can be used to achieve streamlining, though, if they are set up for it.

Leading practices for increasing strategic assessments’ streamlining potential

Regulators can use strategic assessments to streamline regulatory review for clean growth projects, but they are not certain to succeed in every case. In a study of strategic assessments of wind energy policies, British and German government stakeholders labelled 7 out of 18 strategic assessments as unsatisfactory, which suggests that they are frequently done poorly (Phylip-Jones and Fischer 2015).

If Canada is to do better, it should draw lessons from strategic assessment usage around the world and within the country. According to the survey of usage in this paper, regulators hoping to use strategic assessments should target them towards strategic priorities and validate them with public engagement. Strategic assessments should also produce timely and practical information, and the regulators conducting them should monitor outcomes post-assessment. Otherwise, strategic assessments are at risk of being abused for political ends, providing unhelpful information, or failing to provide lasting direction.

If Canada is to do better, it should draw lessons from strategic assessment usage around the world and within the country

Prioritize the most important strategic subjects

Strategic assessments should be designed around subjects with demonstrably important implications for clean growth projects, such as policies to build projects or systemic issues caused by projects. For instance, regulators might want to strategically assess a critical mineral strategy’s approach to hazardous waste, if critical mineral projects were known to frequently clash with hazardous waste regulations. Or regulators might be interested in strategically assessing how clean energy projects impact local species-at-risk, if impacts on species-at-risk were some of the most harmful impacts from clean energy projects.

The International Association for Impact Assessment is working on identifying prevalent issues for renewable energy projects. In its first report on the topic, the Association categorizes issues by project type. It distinguishes between environmental and social issues, with land development and waste management being recurring environmental issues and livelihoods and public well-being being recurring social ones (Dalal-Clayton and Scott-Brown 2022).

Table 1: Recurring international issues for regulatory review across renewable energy projects

Environmental issuesSocial issuesGeneral issues
-Air and water quality
-Pollutants, including greenhouse gas emissions
-Biodiversity and ecosystem services
-Climate adaptation and resilience
-Land development
Waste management
-Livelihoods and job opportunities for locals
Social acceptance
-Public well-being
-Cultural heritage
-Land ownership
-Upfront costs
-Associated infrastructure, including roads and transmission lines
-Baseline data availability
-Alternative project options
Source: Dalal-Clayton and Scott-Brown, 2022.

The European Union uses strategic foresighting to identify a range of important strategic subjects. Some identified subjects include the socio-political significance of migration, the influence of social media, and climate change and environmental degradation (EC 2023). Separately, the E.U. also uses formal triggers to aim strategic assessments towards important subjects. The E.U.’s triggers include policies being integral to sustainable development, policies setting frameworks for project approval, and policies pertaining to a predefined list of sectors. Additional triggers are when policies have transboundary impacts, cumulative impacts, widespread impacts, intense impacts, or impacts on special natural characteristics or cultural heritage (EC 2001).

Conduct early and ongoing engagement

Strategic assessments should be guided by early and ongoing public engagement (González and Thérivel 2022; Rega et al. 2018; Phylip-Jones and Fischer 2015; Noble et al. 2019). Canada’s Impact Assessment Act already reflects this by requiring strategic assessments to enable meaningful public participation and report on the inclusion of Indigenous knowledge (Impact Assessment Act 2019). Instances of both are available subnationally. Strategic assessments in Quebec suggest that meaningful public engagement requires collaborative dialogue early enough to shape policy design (Gautheir et al. 2011). Meanwhile a strategic assessment in Nunavut showcases methods for embedding Indigenous knowledge, including through joint report writing, Indigenous knowledge advisory committees, and information tours for Indigenous communities (Two Worlds Consulting 2020).

Make practical and timely information available for impact assessments

Strategic assessments should provide information that is specific enough for impact assessments to use but also generalized enough to be applicable across different contexts. Timing is equally important: strategic assessments should be conducted early enough to inform policy design but not so early that they become outdated for projects built under the policy (Phylip-Jones and Fischer 2015; Bonnell 2019; González and Thérivel 2022; Buse et al. 2020; Arnold et al. 2022).

The United States was the first country to formally recognize the practical value of tiering assessments. Tiering is the positioning of broad, high-level assessments so that they inform more specific, lower-level assessments. The U.S. has used tiering in instances like a strategic assessment of an entire high speed rail project followed by impact assessments of individual sections, and a strategic assessment of waterfront development with impact assessments of irregular projects. In essence, the U.S. shows that strategic assessments can be of practical use for identifying and evaluating ideal impact thresholds and template designs. Impact assessments are then able to focus on projects that exceed ideal thresholds or stray from ideal templates (Thérivel and González 2021a). Additionally, to improve timeliness, regulators could mandate regular updates to strategic assessments (Bonnell 2019).

Conduct comprehensive monitoring of outcomes

Regulators rarely go beyond monitoring whether strategic assessments are conducted in adherence with their legislated processes. The primary objective of strategic assessments, however, should be to contribute to sustainable outcomes, so regulators should also monitor how strategic assessments outwardly influence subsequent assessments, policies, and projects (Thérivel and González 2021a; Fischer and Retief 2021).

With this imperative in mind, the United Kingdom is exploring Environmental Outcomes Reports as a new type of instrument that could replace strategic and impact assessments (Department for Levelling Up, Housing and Communities 2023). Rather than assessing impacts on the existing environment, these reports are used to assess deviations from the ideal environment. For example, a strategic assessment might be used to assess whether transmission lines pose a significant risk for wildfires. With an Environmental Outcomes Report, meanwhile, the assessment would start with some low level of wildfire risk as the ideal outcome and evaluate whether transmission lines would stop that outcome from being met. It is too early to say whether these reports are superior to strategic and impact assessments, but they do show that regulatory instruments can be built around improving outcomes rather than just avoiding harm.

Regulators designing strategic assessments should adhere to the above leading practices, from selecting important subjects to prioritizing sustainable outcomes. Doing so could make building at the speed and scale required by the net zero transition more manageable.

Considerations for using strategic assessments to streamline clean growth projects in Canada

Strategic assessments have significant potential for streamlining clean growth project approvals, but only if they are done well. As the federal authority on assessments, the Impact Assessment Agency is the principal designer of strategic assessments in Canada. Here are several considerations that the Agency could incorporate into the instrument’s design and use.

Strategic assessments have significant potential for streamlining clean growth project approvals, but only if they are done well

Designing strategic assessments to have triggers

Strategic assessments under the Impact Assessment Act have an ambiguous triggering process, making them vulnerable to underuse or politicalization. The Impact Assessment Agency can recommend subjects for strategic assessment and the Minister ultimately decides when to conduct one, but neither has disclosed many details on their priorities for assessment. The Agency could share more elaborate criteria on the kinds of issues and policies that would trigger a strategic assessment, similar to the European Union’s more formal triggers.

Designing strategic assessments to have tiering

The Impact Assessment Act calls for tiering between different types of assessments, but that part of the Act has not been substantively implemented.  Canada lacks standards for how strategic assessments should inform impact assessments, with the Impact Assessment Agency providing no dedicated channels, tests for relevance, timelines, or procedures for sharing information. More fundamentally, the Act tasks both strategic and impact assessments with considering cumulative impacts, making the division of impacts between them ambiguous (Impact Assessment Act 2019; IAAC 2022). Without implementing formalized tiering, Canada may continue to default to assessing strategic-level subjects in project-level assessments (Leach 2021).

Newfoundland and Labrador offers a case study in the limitations of conducting strategic assessments without formalized tiering. The Canada-Newfoundland and Labrador Offshore Petroleum Board has been conducting strategic assessments of offshore petroleum since 2002, which typically entails describing the environmental setting, identifying petroleum impacts and mitigation approaches, making policy recommendations, and consulting the public at various stages. The Board also reviews its strategic assessments every five years to maintain timeliness. Overall, in many ways, these strategic assessments reflect leading practices. However, they have failed to meaningfully influence impact assessments. The Board is too cautious about intervening with project-level recommendations in its strategic assessments, while also being too cautious about trusting information without repeating processes in its impact assessments (Bonnell 2019).

Designing strategic assessments to have outcome monitoring

Monitoring is critical to the improvement of any policy or program, but it is unclear how the Impact Assessment Agency intends to monitor strategic assessments. Practice in Canada so far suggests that basic monitoring might, at the very least, trigger better adherence to strategic assessment processes. The federal cabinet is mandated to conduct its version of a strategic assessment when receiving policy proposals with potentially significant environmental impacts. However, an audit found that the cabinet only assessed 6 per cent of such policy proposals between 2011 and 2014. After annual audits were imposed, the rate quickly rose to 93 per cent in 2017 (Noble et al. 2019).

Table 2: Compliance with the cabinet directive to strategically assess policy proposals improved after annual audits were imposed

 2015 audit2016 audit2017 audit2018 audit
Years audited2011 to 20142013 to 20152013 to 20162017
Policy proposals in need of assessment1,955506359283
Policy proposals assessed115 (6 per cent)98 (19 per cent)80 (22 per cent)263 (93 per cent)
Source: Noble et al. 2019

If the Agency does not have monitoring capacity, it can delegate the task to another body. For instance, the federal government provides up to $2 million annually for Indigenous-led monitoring of project development in the Alberta oil sands (Raderschall et al. 2020).

Using strategic assessments for clean growth subjects

In addition to design considerations, if Canada is to accelerate clean growth projects, strategic assessments should be used for relevant subjects. Two areas where impact assessments could greatly benefit from strategic guidance are assessing the positive impacts of clean growth projects and assessing cumulative negative impacts of such projects on Indigenous communities.

The Impact Assessment Act requires regulators to recognize both negative and positive impacts during assessments, but Canada does not have a well-defined approach for identifying or evaluating positive impacts (Hatfield Consultants LLP 2021). By ignoring such impacts, regulatory review is limited to only screening-out the worst projects and can’t do much to screen-in the best ones. Clean growth projects in particular have a number of significant positive benefits that are not formally accounted for in impact assessments, such as clean technology innovation, increased climate resilience, improved energy security, and decreased fossil fuel consumption.

Strategic assessments can recommend how regulators should consider the strategic importance of clean growth projects during impact assessments. They could shed light on positive climate impacts, for example, by providing methodologies for identifying and quantifying the value of climate action (SFAC 2022; Dasgupta 2021). They could also recommend benchmarks for positive climate impacts that would make a project eligible for fast-tracked regulatory review, similar to the tiered systems in the U.S. and Newfoundland and Labrador.

At the same time, projects on Indigenous territory are negatively impacting Indigenous communities beyond what impact assessments have identified. In September 2023, the British Columbia Supreme Court ruled that B.C.’s regulatory process for mining projects is in violation of the province’s duty to consult with Indigenous groups. The court specifically objected to mining project proponents being allowed to make mineral claims and surveil sites before consultations. The Supreme Court gave the provincial government an 18-month deadline to amend its process (Fionda 2023). How B.C. responds could have implications for Indigenous rights across the country, as the majority of provinces and territories similarly require few preconditions for making mineral claims—only in Alberta, Nova Scotia, and Prince Edward Island does the provincial government allow itself discretion when approving initial claims (Manhas et al. 2021).

Strategic assessments can be used to identify and evaluate cumulative impacts on Indigenous communities, including impacts from clean growth projects. For instance, standards could be established for sharing project benefits with local Indigenous communities and consulting all relevant Indigenous rights holders (Raderschall et al. 2020; Tsuji 2022). Additionally, the Impact Assessment Agency has made progress on frameworks for including Indigenous knowledge in impact assessments, but major strategic barriers include assessments lacking capacity and the historical and ongoing effects of colonization and distrust (Eckert et al. 2020).

Conclusion

As far back as 2009, the Council of Canadian Environment Ministers called for more strategic assessments because they can help promote environmentally sustainable policies, direct and streamline impact assessments, and effectively assess cumulative impacts (CCME 2009). The same reasons are still relevant today, and not enough progress has been made to activate this instrument.

Global experiences show that regulators can use strategic assessments to streamline regulatory reviews by providing useful information and shortening processes. To maximize the instrument’s potential, regulators should aim strategic assessments towards the most contentious policies and issues for clean growth projects and deliver information that is both practical and timely. They should also monitor outcomes to determine whether and how much clean growth project timelines are being streamlined.

So far in Canada, the Strategic Assessment of Climate Change bears the most resemblance to a strategic assessment under the Impact Assessment Act. It identifies the climate impacts that should be considered during impact assessments, but it could go further by recommending how climate impacts should be evaluated in detail. Especially with the Supreme Court of Canada’s ruling that the Act is largely unconstitutional, any additional certainty that strategic assessments can add to regulatory reviews would be helpful. If Canada is to achieve a competitive clean economy, regulators should put more and better formalized strategic assessments to use.

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Permitting reform for clean energy projects in New York and California

Introduction

The 2022 Inflation Reduction Act in the United States is expected to channel at least US$370 billion in public funds to develop renewable energy, electric vehicles, clean fuels, advanced biofuels, and other clean technologies. It represents a generational investment in the clean energy transition—and one that is already paying dividends

But despite its potential to transform the US economy on the path to net zero, the Inflation Reduction Act does not automatically translate to “shovels in the ground.” 

Meeting the United States’ climate goal of net zero emissions by 2050 requires new clean electricity generation equivalent to constructing two 400-megawatt solar power stations every week for the next 30 years, according to one analysis. Yet it has historically taken four to five years to build this type of large-scale solar project in America.

The challenge is even greater for transmission infrastructure. Clean electricity will be the backbone of a net zero economy, but on average it takes over a decade to build new transmission lines. If the United States is unable to more than double the pace of transmission expansion, from 1 per cent a year to an average of 2.3 per cent a year from the present day until 2030, over 80 per cent of the potential emissions reductions created by the Inflation Reduction Act could go unrealized. 

There are two main reasons why it takes so long to build clean energy projects in the United States. The first relates to the complex and time-intensive permitting processes that project proponents 1 must complete, often involving multiple levels of government. Second, local opposition to projects and the politicization of clean energy development can cause significant delays. 

As this case study will explore, these two issues are related: permitting processes that lack sufficient community engagement can erode local support, trust, and buy-in for projects, adding delays to what are often already lengthy review processes. Consequently, lawmakers at the state and federal level have begun implementing reforms aimed at expediting permitting processes while strengthening community engagement to ensure that clean energy projects are built more quickly. 

While the challenges with reforming federal permitting tend to get the most attention, this case study focuses specifically on state-level reforms. The majority of clean energy projects in the United States must acquire state level permits and undergo state assessments before proceeding with construction, whereas federal permitting processes often exempt projects that are expected to have insignificant impacts, including many clean energy projects. As a result, reforms at the state level can have a large impact on getting clean energy projects built expeditiously, and also have clear parallels with how provinces review and approve projects in Canada. State-level reforms can also provide rich examples of policy experimentation, where the most effective reforms can be adopted by other governments that are experiencing similar challenges. 

Within this context, this case study examines permitting reforms implemented by New York and California, two of America’s most populous and economically powerful states, and also two climate policy leaders. Specifically, we look at whether these reforms are fully achieving the goal of getting projects built faster. It then concludes by exploring what lessons Canadian governments can glean from these experiences, particularly given the important jurisdictional and governance differences between the two countries. 

How the permitting process for clean energy projects works in the United States

Figure 1 contextualizes state-level reforms within the bigger permitting process in the United States. While the process for any given project ultimately depends on the jurisdiction where it is located and the nature of the project itself, permits and environmental reviews can be triggered at local, state, regional or interstate, federal, and/or Indigenous (or tribal) levels of government. This complexity reflects the fact that the United States—like Canada—has a federal structure of government. As a result, there are multiple permitting processes from various orders of government that clean energy project proponents must comply with before they can proceed with construction.

Figure 1: Summary of project permitting processes in the United States

This figure illustrates how regulatory processes operate at various government levels in the United States. It is important to note that project characteristics and/or size determine the dependency of environmental assessments, leading to certain exemptions from the permitting processes mentioned above. Furthermore, the power of local authorities to grant permits for clean energy projects may be limited depending on whether local governments have the freedom to make their own rules (home rule) and the extent to which state laws empower them to do so (state enabling).

At the local level, every project—including projects in both New York and California—must acquire a land-use permit in compliance with local by-laws and zoning ordinances. At the state level, most governments (with few exceptions) require project proponents to apply for numerous permits, including both New York and California. For example, depending on the size of the project and the state in question, project proponents might have to apply for state-level permits and comply with state regulations and assessment frameworks, such as demonstrating compliance with endangered species or migratory bird protection laws. Additionally, a select number of states, including New York and California, have environmental review laws that require an assessment of a project’s environmental impacts before permits are granted. 

The permitting process at other levels can overlap with the local and state-level processes. While outside of the scope of this case study, these warrant a few comments: 

  • Regional and interstate: Projects that cross state boundaries (e.g., renewable generation and transmission projects) are subject to additional approval from Independent System Operators which govern at either the state or interstate level. For example, renewable energy projects looking to connect to the electricity grid must apply for an interconnection request. The Federal Energy Regulatory Commission also plays a role in permitting transmission projects in select cases.
  • Federal: Larger projects have to apply for federal permits and undergo a federal environmental assessment (e.g., under the National Environmental Policy Act). Similar to the state level, there are various federal laws and regulations governed by a vast array of federal agencies that grant permits for various projects. In cases where multiple federal permits are required, a lead federal agency coordinates all permitting. 
  • Indigenous: Native American tribes were granted authority in 2012 to establish their own regulations, in accordance with Bureau of Indian Affairs guidelines2. However, granting long-term leases for clean energy projects on federally designated tribal lands still requires the approval of the Secretary of the Interior

State-level regulatory reforms 

New York and California have taken bold steps to expedite clean energy projects. This section provides an overview of the major changes underway.

New York

New York’s state legislature passed the Accelerated Renewable Energy Growth and Community Benefit Act in 2020, the first comprehensive permitting reform at the state level.

The Act is multifaceted but centres around building out renewable energy generation capacity and significantly accelerating project approval timelines. It created the Office of Renewable Energy Siting to serve as a “one-stop shop” to address permitting challenges, conduct impact assessments, and to support project proponents to apply for state permits. It also established statutory time limits for issuing building permits, ranging from a maximum of six months for projects located on pre-approved brownfield sites to one year for all other projects. The Act also states that a permit will be automatically approved if the Office of Renewable Energy Siting does not make a determination within the required timeframe.

These reforms are primarily targeted at large-scale projects. Only projects with a capacity of 25 megawatts or greater will be administered through the Office of Renewable Energy Siting. However, projects with a capacity ranging from 20 to 25 megawatts are eligible to opt into the Office of Renewable Energy Siting process

In aggregate, these regulatory changes could dramatically shorten permitting process timelines. Prior to the passage of the Act, it took approximately five to ten years to get renewable energy projects to the construction stage—a clear impediment to achieving New York state’s legally-binding target of 70 per cent renewable electricity generation by 2030. Under the new process, renewable energy projects could conceivably get approved in as few as two years.

The Act also creates a Build-Ready program that allows the private sector to proactively identify and nominate brownfield sites for renewable energy development—sites that have, at some point in the past, received project approvals for economic development (for example, a retired industrial plant). If deemed viable, the New York State Energy and Research and Development Authority works closely with municipalities to advance the permitting and interconnection process. Once the site is fully permitted and approved, it is auctioned off to private renewable energy developers.

New York’s Accelerated Renewable Energy Growth and Community Benefit Act also includes provisions for community benefits and employment. All new renewable energy projects administered through the Office of Renewable Energy Siting and the New York State Energy and Research and Development Authority are required to provide a benefit package for the host community of the project in the form of utility bill credits and other community benefits. These benefit packages are intended to help get community buy-in early in the process to reduce the likelihood of opposition and future delays. Additionally, the Act provides funding for communities to intervene in the approval process to ensure that they’re receiving tangible benefits from proposed projects. 

Lastly, the Act authorizes an expedited permitting process for transmission projects in existing rights-of-way and creates a program to invest in distribution and local transmission capital plans to meet the state’s climate goals. 

California

Clean energy project construction in the state of California is notoriously difficult. California Governor Gavin Newsom recently stated in an interview that “people are losing trust and confidence in our ability to build big things.” And the data backs that up. Among all the western states, approvals for new clean energy projects take the longest in California

Climate change, and the need to dramatically cut state-wide emissions, have put these regulatory barriers in clearer focus. The increasing frequency of extreme weather events in the state, such as recent heat waves and wildfires, have repeatedly threatened the capacity, reliability, and financial viability of the electricity grid. Moreover, the state needs to dramatically increase its supply of clean energy to achieve its climate targets.

Consequently, in 2022 California started reforming its permitting process, starting with Assembly Bill 205

In many respects, the bill mirrors the reforms implemented in New York. It provides the California Energy Commission with the sole authority over permitting for wind and solar projects over 50 megawatts and storage projects over 200 megawatt-hours. Assembly Bill 205 also establishes statutory limits of 270 days for Environmental Impact Reviews.

The California reforms also include requirements for community and employment benefits, similar to those in New York. Assembly Bill 205 mandates the inclusion of community benefit plans in project approval to address or mitigate local opposition, and establishes labour and prevailing wage standards as a prerequisite for projects to enter into this newly established process under the California Energy Commission. Project proponents are required to partner with one or more community-based organizations to provide job training, community assets like parks, and investments in public infrastructure. The California Energy Commission can also place various other conditions for project approval as a means to address local concerns.   

Strengths of the regulatory reforms

Both the New York and California regulatory reforms have the potential to expedite clean energy projects and generate local economic benefits while upholding environmental protections. The reforms have several core strengths, including: 

1) Providing more certain timelines for project proponents can make a greater number of vital clean energy projects financially viable.

Lengthy permitting processes for clean energy projects do not just slow projects down; they also adversely affect the bankability and economic viability of a project. Project proponents need to invest in engagement efforts with local communities and Indigenous Peoples and hire lawyers to navigate the complex administrative processes. At the same time, project proponents need to continue paying their employees during the regulatory process, which is especially challenging given that projects are not generating revenue at this stage. Ultimately, repeated delays might force project proponents to seek additional financing—which becomes increasingly challenging over time—or abandon the project altogether 3.

The reformed system in New York has already proven to be faster and more predictable than the previous process. Publicly available data indicates that of the eight renewable projects entirely handled through the new Office of Renewable Energy Siting process, it has taken less than eight months on average to receive a permit. Only one project took a full year to issue a permit,  the maximum allowed by law. 

Initial data indicates that these reforms in New York have also helped cut the entire timeline for getting projects built, from start to finish. Before the Act, the entire process could take five to ten years; after its passing, seven of eight projects were approved within two years, and the eighth took two years and one month.

The California reform, by contrast, is too new to determine its effects on permitting timelines. But given that it implemented similar changes to the New York reform, it is positioned to drive similar results.

2) Mandating community benefit agreements can help reduce local opposition and expedite the permitting process. 

A recent U.S. study showed that concerns about decreasing land values were the most common concern expressed by locals opposed to clean energy projects. The analysis also indicated that project opponents believe that the site of a clean energy project could be put toward a more productive use for their local community. Lastly, the analysis found that feelings of not being heard or adequately integrated into the permitting process increased local opposition. Misinformation about the purported harms of renewables also poses challenges for renewable projects seeking local land-use permits. 

The reforms in both New York and California require community benefit agreements between the project proponents and the local community. They are designed to generate tangible benefits for host communities to offset the types of concerns that have historically delayed or cancelled project development. Benefit agreements can help address concerns over property values and land use by encouraging investments in community centres, schools, and other valuable community resources. For example, EDF Renewables’ Tracy Solar Energy Center project, permitted under New York State’s Office of Renewable Energy Siting, plans to dedicate US$20,000 annually to local and community-driven initiatives in the project area over a period of ten years once the site becomes operational in 2025.

New York even goes a step further by requiring project proponents to provide utility bill credits to affected communities and funding to facilitate community involvement in clean energy projects. The proposed Mill Point Solar I project, for example, commits to providing US$1.25 million over the first ten years to be distributed evenly across utility customers within the Town of Glen. These types of agreements help community members to participate in the permitting process and the energy transition more broadly. 

An additional strength of community benefit agreements is that they indirectly prioritize projects that are more financially stable. Developing such agreements takes a high degree of coordination, planning, and strong financials, all of which helps screen out weaker projects. 

Overall, embedding community benefit agreements can help set and formalize expectations for both communities and proponents, speeding up the process and getting the buy-in of the local community. Both states’ reforms operate from the assumption that well-designed benefit agreements are a necessary investment in sustaining local support for the project, and the earlier these agreements are established the better.

3) Eliminating all of the permitting costs for clean energy projects on brownfield sites helps to ensure that more get built. 

New York’s Build-Ready program flips the script on the permitting process for clean energy projects. By identifying, evaluating, and permitting brownfield sites for clean energy project development while simultaneously engaging with local communities to create a benefits package, the Program eliminates all of the costs and uncertainty for project proponents associated with the permitting process. Once the permits and interconnection requests have been approved and the site has been auctioned off to a project proponent, construction can begin right away without fear of the project being tied up in regulatory delays and with limited risk of litigation.   

The California reforms, by contrast, do not include any provisions to accelerate projects on brownfield sites.

4) Setting time limits on litigation and judicial reviews should reduce costs for project proponents.

Lawsuits against development projects in the United States, often filed by local citizens concerned about the social or environmental impacts to the community, occur frequently. These disputes create a substantial obstacle to speeding up the construction of clean energy projects, both on a local and national scale, even when efforts are made to simplify the process of selecting project sites. 

Legal actions are particularly pervasive in California, where, under the California Environmental Quality Act (CEQA), “public projects” have been interpreted to include any private development. Court challenges stating that a CEQA review was incomplete or insufficient are cheap and simple to file, and can be done anonymously. Such filings can add significant delays to clean energy projects, or even scare away developers from making a proposal in the first place.

The reforms in California’s Assembly Bill 205 are attempting to address this issue by establishing a statutory limit on the timeline for judicial reviews. It aims to reduce litigation costs for project proponents and minimize the effectiveness of frivolous lawsuits.

It is still unclear, however, whether these reforms will have their intended effect. Statutory time limits could, for example, impede citizens from raising valid concerns with clean energy projects. Other tools, such as stronger anti-SLAPP legislation—which aims to reduce bad faith attempts to limit or compromise public processes—or ending the practice of anonymous filings could be considered to help address frivolous litigation. Moving forward, legal strategies to slow down or stop clean energy projects will likely remain a major source of resistance in the regulatory review process in both jurisdictions.

5) The ability to opt-in to accelerated permitting processes can give project developers added flexibility.

California’s reform creates an opt-in system, which allows project proponents to “forum shop.” For example, if the project site is in a jurisdiction that is heavily in favour of renewable development, they could choose not to opt-in to the California Energy Commission process. However, if proponents encounter local resistance, or if they are looking to build in a community that lacks experience with renewable projects, they can bypass the local level as the Commission has exclusive jurisdiction over all permitting if a project opts-in. 

This added flexibility allows project developers to choose the smoothest path through the permitting process, reducing the time it takes to get projects built. 

However, similar to the time constraints on legal action, this provision in the Californian reform could have unintended consequences by minimizing or skirting legitimate concerns at the local level. The extent to which this becomes a problem depends largely on implementation by the state. Provisions within the new California Energy Commission process require the state to ensure projects are in the public interest, which could help address these potential impacts. 

6) Minimum thresholds for project size helps prioritize larger projects, which often face the biggest barriers.

The reforms in both states are designed to accelerate big projects. In New York, the new permitting and regulatory processes are only applicable for projects exceeding 20 megawatts. In California, renewable projects must produce over 50 megawatts in power and storage projects over 200 megawatt-hours to be eligible. 

Prioritizing larger clean energy projects in the regulatory reforms makes sense for a few reasons. Larger projects typically face a higher degree of scrutiny in the permitting process due to their larger environmental impacts. As a result, the permitting process for bigger projects often involve more decision points and overlapping layers of government, and are therefore more likely to face unnecessary delay and friction. At the same time, the stakes are higher for getting big projects built: they have the potential to generate economies of scale that can both close the states’ clean energy gap while generating significant local benefits.

It is worth noting, however, that smaller-scale projects can also run into similar challenges as larger projects but would be ineligible to access expedited permitting processes to address those challenges. Small-scale projects are likely to have even greater financial difficulties arising from regulatory delays suggesting that additional reforms targeting small-scale project proponents could be beneficial. In these circumstances, a framework to fast-track small- and medium-sized projects that meet minimum standards, in terms of environmental and social impacts, could be helpful. 

Limitations of the reforms 

Even though the permitting reforms in New York and California are still new and have yet to be fully implemented, limitations are already starting to emerge. If left unaddressed, these limitations could undermine the efficacy of the reforms and, in some cases, lead to unintended consequences. 

1) Vague language in the California reform risks jeopardizing its effectiveness.

Although the California reform sets ambitious statutory targets to expedite permitting processes, vague language throughout the law could impede those efforts. For instance, the 270-day time limit for Environmental Impact Reviews can be extended if there are “substantial changes . . . that may involve new significant impacts . . . ; new information of substantial importance . . . is submitted;” or if the California Department of Fish and Wildlife and/or the State Water Resources Control Board determine that they need more time to obtain information. In fact, the plain language of the law states that the California Energy Commission must certify an Impact Review and issue a decision on an application “no later than 270 days after the application is deemed complete, or as soon as practicable thereafter.” That qualifier, “or as soon as practicable thereafter” is particularly broad and could be abused.

2) Expediting the permitting process could compromise the rights of Indigenous Nations and people in both California and New York. 

Under the UN Declaration on the Rights of Indigenous Peoples, which the United States has not endorsed but announced in 2010 it supports, ensuring the free, prior, and informed consent of affected Indigenous people is an essential component of project development. Fulfilling these obligations under UNDRIP requires relationship building with affected Indigenous nations and communities, which takes time and effort. As Trent Fequet, the CEO of the Steel River Group, an Indigenous business management firm, has stated, “when building relationships, it can only be done at the speed of trust,” and that means engagement early, often, and in community.

Yet the push to expedite permitting processes could compromise the objective of free, prior, and informed consent as outlined in UNDRIP. 

California has made a stronger effort to integrate Indigenous rights and title within the permitting process. The state of California is required, for example, to provide the project application to California Native American tribes “that are culturally and traditionally associated with the geographic area of the site and initiate consultation with those tribes.” The state is also required to integrate traditional Indigenous knowledge within the permitting process, and project proponents must include affected tribes within community benefit agreements. 

Even with these commitments, however, the prescribed time limits for the permitting process in California could lead to inclusion of Indigenous Nations that falls short of the UNDRIP principles. Unlike in Canada, the United States does not have an established legalconstitutional obligation to engage or even consult Indigenous governments before taking permitting actions that would significantly impact them. The vague language around the permitting process timelines (highlighted above) may provide some room for accommodation; however, it is still too early to determine how these extensions could be applied in practice. 

It is noteworthy that the text of the New York reform bill, by comparison, includes no such commitments or language around Indigenous rights and title in the permitting process. 

3) Both reforms increase administrative efficiency, but it is unclear whether staffing capacity will be sufficient to match the expected increase in clean energy projects over the coming years.

At the national and state level in the United States, limited agency capacity is one of the primary causes of permitting and other regulatory delays. Sustained, long-term funding and workforce planning to recruit experienced and knowledgeable staff are vital to ensuring that projects are reviewed in a timely manner. Scaling up administrative capacity to match the sharp increase in clean energy projects is critical for their timely completion.

The reforms in New York and California are designed to streamline the project permitting process and, as a result, help address these gaps in administrative capacity. The new permitting office in New York, for example, is specifically designed to put the previously disparate administrative resources under one roof. 

It is unclear, however, whether the reforms in either state are sufficient to ensure the necessary administrative capacity to meet the significant increase in applications. California has proposed providing, but has not yet budgeted for, additional, long-term funding to the California Energy Commission.

4) Clean energy interconnections are not adequately addressed by either reform, which highlights the federal government’s important role.

The process for connecting clean energy projects to the grid is often lengthy in the United States. Interconnection requests are evaluated sequentially (in the order that they apply) by Independent System Operators or Regional System Operators, which has created a backlog that is, in many cases, years long. As of the end of 2021, 1.4 terawatts (1,400 gigawatts) of power generation and storage capacity was awaiting interconnection throughout the United States, triple the amount queued up in 2016. California’s Independent System Operators queue has more than quintupled since 2014; in New York, the queue has increased from approximately 10 gigawatts in 2014 to roughly 75 gigawatts in 2021.  

That has led numerous clean energy project proponents to abandon their projects, with only 23 per cent of all proposed projects reaching completion across the United States, a rate that is declining. In fact, across the country, California and New York’s Independent System Operators have the lowest rates of projects that reach commercial operation, at 13 and 17 per cent respectively.

Unfortunately, California’s reform does not adequately address these interconnection challenges. Assembly Bill 205 does not make any changes to CAISO, its Independent System Operator. Efforts by New York to expedite its permitting processes and invest in distribution and local transmission capital plans hold promise, but ultimately, such efforts may not be sufficient. Transmission across state boundaries exceeds state authority, falling within federal jurisdiction. 

Recent announcements suggest that the federal government is starting to fill this gap. The Federal Energy Regulatory Commission recently had its backstop permitting authority expanded. If it were extended further, it could address even more of the interconnection challenges. Moreover, the Department of Energy released its proposed Coordinated Interagency Transmission Authorizations and Permits Program in August 2023, which would set a two-year limit on permitting reviews and would streamline the application process.

Lessons for Canada 

The permitting reforms in California and New York have great potential to speed up assessment and approval processes for clean energy projects. They are designed to not only shorten the timeframe for getting projects approved and built, but they include explicit provisions to share the benefits with local communities. This combination is designed to secure local buy-in earlier in the process and remove unnecessary friction, while still upholding the environmental and social standards that these processes were originally designed to protect. The strengths and limitations of these reforms are summarized in Table 1—the identified limitations serve to highlight areas for future improvement and additional research. 

Table 1: Strengths and limitations of New York and California’s permitting reforms for clean energy projects

StrengthsLimitations
1. Clear project timelines boost clean energy project financial viability.1. Vague language in the California reform puts its effectiveness at risk.
2. Mandatory community benefit agreements can reduce local opposition, increasing permitting speed.2. Expedited permitting may adversely impact Indigenous Nations and people’s rights.
3. Removing permitting costs on brownfield sites accelerates clean energy project development.3. Both reforms aim for administrative efficiency, but the state of required staffing capacities remain unclear.
4. Time limits on litigation can reduce project proponent costs.4. Neither reform addresses interstate electricity transmission, underlining the Federal government’s crucial role in this aspect.
5. Opting into accelerated permitting offers developers more flexibility.
6. Minimum project size thresholds prioritize larger, barrier-prone projects.

The reforms—both their strengths and limitations—offer some important insights for Canada, which faces similar challenges in rapidly scaling up clean energy projects to meet its climate commitments. And like the United States, frictions in regulatory review and permitting processes have been identified as a major barrier to getting these projects built quickly. The different structures of government between the United States and Canada—including the different division of powers between the federal government and states/provinces— mean that not all lessons are directly transferable. However, we identify a number of important insights that could help drive progress in Canada. 

First, the experience in New York (and, to a lesser extent, California) shows the value in establishing a “one-stop shop” for streamlining permitting processes. Second, the introduction of statutory time limits could provide developers in Canada with greater regulatory certainty and reduce unnecessary costs and delays. Third, New York’s program to proactively nominate and approve development on brownfield sites is another idea that could open up new possibilities for development in Canada, where environmental reviews on such sites can likely be shortened (particularly in cases where the new activity clearly has smaller environmental impacts than the activity originally commissioned on the site). Finally, the mandatory inclusion of benefit packages for host communities could reap similar gains in Canada and help secure local buy-in earlier in the permitting process. 

The shortfalls and limitations in each state also hold important lessons for Canadian governments. The California reforms highlight the dangers that accompany vague language when setting timelines for review processes, which may create loopholes that undermine the original intent of providing greater regulatory certainty for project developers. Secondly, the experience in both states emphasizes the importance of ensuring that any type of regulatory reform or shortening of timelines is consistent with the principles under the United Nations Declaration on the Rights of Indigenous Peoples. 

Here, the context is clearly different between countries. Canada has a constitutional responsibility to ensure meaningful consultation and engagement with Indigenous Nations and communities, whereas the United States has not formally endorsed UNDRIP. Canada’s federal government passed the UNDRIP Act in 2021; however, it is still unclear how this Act will be operationalized in project permitting processes. In fact, these commitments make any type of new time limits on the permitting process even more challenging within the Canadian context, suggesting that governments would need to proceed more carefully than in the United States. 

Another insight for Canada comes from the inadequate administrative capacity in each state, highlighting the importance of ensuring that any procedural reforms in Canada are matched with sufficient staffing to process a higher number of applications and environmental reviews. Finally, the inadequate focus of the United States reforms on transmission projects and interconnectivity across state boundaries should motivate Canadian governments to give the key issue of interprovincial transmission lines special attention and careful consideration in regulatory reforms.   

Canadian governments can and should learn from experiences in other jurisdictions as they attempt to address their own challenges with sluggish permitting processes. However, fully leveraging the lessons from other countries requires a more complete understanding of the sometimes unique barriers holding back project development in Canada. While it is clear that clean energy projects are not getting built at a pace consistent with the country’s climate objectives, it is not yet entirely clear where the biggest pinch points are within the Canadian system. Without an accurate and accepted diagnosis of current weaknesses, no amount of permitting reform can provide relief in the long term. Ongoing research at the Canadian Climate Institute is exploring these specific barriers in more detail, which can put governments in a better position to implement the lessons from other countries. 

The authors gratefully acknowledge the substantive contributions made by Jared Forman to drafts of this case study when he was a member of staff at the Institute in 2023.


References

Canada’s oil and gas sector, the road to net zero and regional fairness

When it comes to charting a path to net zero, the oil and gas sector faces unique challenges. While other sectors in Canada are steadily bending emissions curves down, oil and gas emissions remain stubbornly high as production, profits, and economic activity in the sector continue to grow. Oil and gas companies are reducing their focus on emissions reduction in favour of short term production, profits, and dividends. At the same time, global efforts to stabilize the climate raise real questions about the long-term demand for Canadian oil and gas: while a global transition to net zero requires more (low-carbon) steel and cement, it will need less oil and gas as fuel for the global economy, even when fossil fuels are produced with fewer emissions.

That tension sets up a dilemma: how much capital — both political and financial — should the federal and provincial governments spend to decarbonize a sector that international markets will eventually transform? This question has proven to be divisive, fueling a conversation in Canada with plenty of heat and not enough light.

These competing visions for Canada’s oil and gas sector are a barrier to achieving Canada’s 2030 targets and setting the country on a path to net zero. Phasing out production in the short to medium term through government policy is not a viable option. But nor will the policies Canada has implemented so far put the country on track to achieve its emissions targets — with rising emissions from oil and gas production representing one of the biggest challenges to Canada achieving its targets.

The key to unlocking sound climate policy for the oil and gas sector in Canada — and just as importantly, to framing a conversation in which Canadians aren’t talking past each other — is to explicitly surface something that has long been the third rail of Canadian climate policy conversation: regional fairness. How should different sectors (and the regions that house them) contribute to national pathways to net zero? And how should the costs of those reductions be shared across the country?

Those questions make long-time climate policy wonks wince because historically, debates about regional fairness have paralyzed policymaking in this country, just as they have in international climate negotiations. Yet they are questions that cannot and should not be avoided if Canada is going to successfully navigate the global energy transition.

Finding an enduring path forward requires tackling fairness head-on. An explicit focus on fairness acknowledges up front that policy solutions require going beyond reducing emissions and achieving Canada’s emissions targets, just as it requires going beyond efforts to minimize the overall costs of reducing emissions or preserving the competitiveness of the Canadian economy. That doesn’t mean making policy by consensus, limited by the lowest-common denominator. Instead, it means getting creative to design policy that achieves Canada’s emissions targets in a way that is cost-effective, protects competitiveness, and is fair.

Adding regional fairness to the policy conversation leads us to four specific policies that can set the oil and gas sector in Canada on a path to a competitive future consistent with a net zero Canada and a net zero world, while explicitly accounting for the fact that the transition from here to there requires some runway. Some of the policies are obvious, and some perhaps less so. But together, these four policies can provide a coherent package that is greater than the sum of its parts:

  1. Stringent regulations to dramatically reduce leaking and non-emergency flaring of methane from upstream oil and gas production.
  2. Public financial support for carbon capture and storage in the oil and gas sector — including both the Investment Tax Credits already proposed, as well as potential additional targeted support to further de-risk projects.
  3. An emissions cap for Canada’s oil and gas sector, going above and beyond the economy-wide carbon pricing that already applies.
  4. A government-backed “transition” investment taxonomy to identify and scale private investments that significantly reduce emissions from hard-to-decarbonize sectors.

What does success look like?

Before we get into the policy details, let’s take a step back. What problems are governments trying to solve? Understanding what success looks like is the essential first step toward understanding how fairness fits into the bigger picture.

Goal 1: Emissions reductions

Ultimately, the goal of mitigation policy is to achieve Canada’s emissions targets in order to reduce the costs and risks associated with a changing climate. A summer full of heat and wildfires — globally and across every region of Canada — has served to underline the necessity of this ambition.

The stringency of Canadian climate policy has ramped up over the past decade, which has led to a measurable dent in emissions. However, as the figure below illustrates, unless Canada quickly implements all of the additional policies it has proposed, it will drift further off-track from its 2030 target.

This trajectory matters because failing to achieve the 2030 target makes getting to net zero by 2050 harder. Moreover, the challenge of emissions is a cumulative one: the fewer emissions on the way to net zero, the more progress we make in addressing climate change.

This graph from 440megatonnes.ca shows the total greenhouse gas emissions for Canada from 2005 to 2050. Projections show the evolution of emissions up to 2030 in 3 different policy scenarios: legislated, legislated and developing, and legislated, developing and announced.

While the goal is to reduce emissions economy-wide, it’s hard to disentangle that broader goal from emissions from producing oil and gas in particular. Greenhouse gas emissions generated from oil and gas production (specifically, Scope 1 and 2 emissions associated with the sector) are actually Canada’s biggest and fastest growing set of emissions. The sector was responsible for producing 189 Mt of greenhouse gas emissions in 2021, which represented 28 per cent of Canada’s official total. The oil sector has seen improvements in emissions intensity (the emissions produced per barrel of oil), but these improvements have been swamped by increases in overall production driving the increases in emissions.

Goal 2: Cost-effectiveness

In addition to driving down emissions, climate policy should also seek to minimize the economic costs of achieving climate goals. Policies that impose lower costs on businesses, individuals, and governments help support clean growth and higher income for Canadians. Considering the cost-effectiveness of policy, in other words, explicitly recognizes that some actions to reduce emissions are costlier than others, and that more expensive emissions reductions would be counter-productive to the wellbeing of Canadians.

That doesn’t mean Canada should slavishly pursue textbook economic efficiency, but it shouldn’t ignore costs either. Shutting down oil and gas production in Canada would no doubt reduce Canada’s emissions, but doing so would be expensive. At the other extreme, an oil and gas sector that fails to adapt to changing global markets could also result in high costs from uncompetitive assets that ultimately become stranded.

In this sense, considering cost-effectiveness means considering the historical, current, and future economic benefits that the oil and gas sector generates. Oil and gas still occupies an important segment of Canada’s economy, generating around five per cent of GDP, and the sector has boosted incomes for workers in oil and gas-producing provinces. It also generates significant revenue — from both income tax and resource royalties — for provincial governments.

Pursuing cost-effective climate policies is essential to the future prosperity of Canadians. And in the context of Canadian oil and gas, designing policies that both minimize costs and generate transformational emissions reductions can create a smoother transition as global energy demand shifts.

Goal 3: Competitiveness

Sound climate policy should bolster industries’ ability to attract climate-aligned investment in order to support economic growth, jobs, and the wellbeing of Canadians. When it comes to the oil and gas sector, there are two sides to the competitiveness coin.

On the one side, if domestic climate policy constrains oil and gas production, rather than emissions reductions, supply from other countries would fill the gap as long as global demand persists, leading to what economists call “emissions leakage.” The net result is the worst of both worlds: a potentially big hit to Canada’s trade balance — as of 2022, oil and gas made up about 30 per cent of Canada’s exports — with negligible impacts on global emissions. These global realities underpin the logic behind Canada’s output-based pricing system, which is a specific type of carbon pricing system for heavy-emitting sectors that maintains an incentive to reduce emissions while simultaneously shielding Canadian producers from undue competitiveness pressures.

On the other side of the coin, a global shift toward net zero also threatens the competitiveness of Canadian oil and gas, but in a different way. New scenarios from the International Energy Agency, BP, as well as the Canada Energy Regulator show that in a world that takes climate seriously, global demand for oil plateaus in the next five years and then declines, potentially rapidly. Even in the CER’s scenario where the rest of the world moves more slowly toward net zero, Canadian oil production falls by 22 per cent and its gas production by 37 per cent. Very quickly, policies elsewhere such as low-carbon fuel standards or border adjustments could mean that only Canadian fuels produced with fewer emissions can compete in international markets.

This raises an essential truth for Canadian climate policy. The combustion emissions associated with exported Canadian oil and gas (i.e., Scope 3 emissions in the jargon) don’t affect Canada’s climate targets, because these emissions accrue to other countries where the fuels are burned. However, as global demand for fossil fuels declines, these combustion emissions do have big implications for the benchmark price of oil, for the long-term competitiveness of the Canadian oil and gas sector, and for the Canadian trade balance. The U.S. Inflation Reduction Act is a prime example of how this transition risk could manifest, as that landmark climate and industrial policy bill is expected to accelerate the shift away from fossil fuels in Canada’s primary export market.

Competitiveness is not only about the near term. Sound climate policy should also consider how regions can attract and maintain investment through the transition. Over time, the oil and gas sector might well transform itself to provide goods and services — and jobs and income — that are consistent with a net zero global economy.

Goal 4: Regional fairness

Canada’s existing approach to climate policy is roughly consistent with the three goals we’ve listed so far. Economy-wide carbon pricing helps drive low-cost emissions reductions from all sectors. Using an output-based approach to carbon pricing for sectors such as oil and gas that are highly emissions intensive but also traded in international markets help protect Canada’s international competitiveness and avoid the challenges with emissions leakage discussed above. Methane regulations could drive low-cost abatement from emissions that are hard to price. All else being equal, ratcheting up the stringency of these policies, especially carbon pricing, would be a way to cost-effectively achieve deeper emissions reductions while protecting competitiveness.

But that’s not the end of goals for sound policy. Even though it’s the trickiest to measure and operationalize, a fourth goal matters too: regional fairness.

The question of how to share effort in achieving national climate across provinces and territories is particularly thorny and is the dimension that we see as most important to advancing climate policy in Canada. Jurisdiction over climate is shared between provincial / territorial and federal orders of government, which makes addressing regional fairness a complex — and unavoidable challenge.

There’s more than one way to think about a fair allocation of effort across sectors and regions. Should regional fairness be measured in terms of emissions reductions going forward? Cumulative emissions reductions over time? Improvements in emissions intensity? Emissions relative to a target year baseline? Costs of abatement? The challenge inherent in these different definitions is that there is no objective, correct way to measure fairness, but a clear discussion of the tradeoffs can at least help move the negotiation forward.

In recent years, Canada’s climate policy approach has dodged this question with some success. An economy-wide carbon price drives cost-effective emissions reductions irrespective of which sector or region they come from. Regions that have more cost-effective emissions reductions can do more. In other words, Canadian policy has focused on the equal treatment of sectors and regions.

As Canada pushes toward deeper emissions reductions, however, that equilibrium is no longer holding.

Canada’s legislated net zero accountability process is increasingly, and necessarily, tracking progress sector-by-sector. Other countries are doing the same. Sector emissions are asymmetrically distributed across provinces due to differences in geography and geology as well as historical choices and economic development. Provinces such as Alberta and Saskatchewan see the prospect of more aggressive policy for the oil and gas sector relative to other sectors — such as the proposed cap on oil and gas emissions — as unfair. Importantly, these concerns are as much about the costs of required emissions reductions as the magnitude of required emissions reductions.

Fairness also cuts the other way. As Canada maps pathways to net zero, deeper and deeper emissions reductions are required. Increasing Canada’s carbon price beyond the scheduled increase to $170 per tonne by 2030 across the economy could fill the gap, driving additional emissions reductions across the economy. Yet delivering the required additional emissions reductions through an economy-wide carbon price exacerbates the distributional challenges across regions and sectors.

Oil and gas emissions could well continue to grow, as they have significantly since 2005, given high costs of abatement in the sector. If Canada is to stay on track to its target, other sectors would have to reduce emissions even more deeply, essentially getting a smaller share of Canada’s allowable emissions. Meanwhile, the economic benefits of those emissions-intensive activities — which increased local income significantly — are concentrated in British Columbia, Alberta, Saskatchewan, and Newfoundland and Labrador.

Historical emissions trends also have a bearing on perceived regional fairness. Historical actions to reduce emissions are immaterial to the cost-effectiveness of emissions reductions moving forward; they are sunk costs. Yet not all sectors have undertaken the same historical efforts to reduce emissions, meaning some regions have contributed more to historical emissions reductions than others.

Finally, in considering fairness across regions, we should consider not only how national emissions reductions are distributed, but also how the costs of those reductions are distributed. As we’ll see below, policies can distribute costs of emissions reductions in different ways. Federal subsidies, for example, transfer the cost to taxpayers across Canada.

Policy that’s perceived as unfair engenders opposition and is unlikely to last. Yes, different approaches to assessing fairness can be contentious, but ignoring fairness will ultimately only exacerbate these challenges. Explicitly considering regional fairness could unlock durable, effective climate policy in Canada.

Four policies that matter for the oil and gas sector

Four policies can collectively square the tensions and trade-offs that exist across the four goals of emissions reductions, cost-effectiveness, competitiveness, and regional fairness. Each has trade-offs. Yet on balance, this policy package addresses the different challenges raised by each individual policy.

Policy #1: Stringent regulations on methane for upstream oil and gas production

Let’s start with the lowest-hanging policy fruit for the sector. The federal government is currently planning new regulations requiring oil and gas firms to take actions to dramatically reduce how much methane they leak and flare into the atmosphere. The anticipated regulations will require oil and gas producers to reduce their methane emissions by 75 per cent by 2030. And it is noteworthy that the Alberta government has suggested this level should be more like 80 per cent, and the B.C. government has committed to “near zero” methane emissions by 2035 — these reductions are widely recognized as being low-cost and achievable.

The federal government should move forward with its regulations without delay, for multiple reasons.

Reducing methane is hugely important from a climate perspective, because methane is a powerful greenhouse gas. Getting these emissions under control is particularly important given that current methane emissions from the oil and gas sector are significantly under-reported: the problem is bigger than the National Inventory Report suggests it is.

Methane reductions are also inexpensive because stopping leaks and finding alternatives to non-emergency flaring means saving additional gas that can be sold. Because many activities and technologies to reduce fugitive methane are cheap, regulations that require regular actions to check and mitigate methane leaks are a cost-effective solution and fill an important gap. Analysis from Dunsky Energy and Climate Advisors suggests that deep cuts in methane emissions are inexpensive: Dunsky estimates that the government’s goal of 75 per cent reductions could cost the equivalent of about $11 per tonne of CO2e on average. New Climate Institute analysis shows that simply following through on the planned methane regulations can deliver one third of the emissions reductions required to put the oil and gas sector on a pathway aligned with Canada’s climate targets. Furthermore, relying more on methane reductions actually decreases the costs of those reductions.

Tackling methane also makes sense for the long-term competitiveness of the sector. As global demand for gas declines, given international progress in reducing emissions, Canada’s oil and gas sector may have other opportunities, such as producing blue hydrogen or asphalt. Yet those opportunities are only consistent with net zero if firms eliminate their upstream methane emissions. Even in the short-term, the United States is likewise focused on deep cuts in its methane emissions, leveling the playing field for Canadian firms.

Still, the ultimate effectiveness of Canada’s methane regulations will hinge on elements of regional fairness. Ensuring a consistent price signal across provinces and regions is critical to the perceived fairness of the policy and therefore its durability. Given the fact that provinces like Alberta and British Columbia are pushing for a more stringent standard than the proposed federal approach, achieving this equitable balance seems doable. And because the regulations require oil and gas firms to take low-cost actions to reduce their own emissions, it minimizes other aspects of regional inequities, real and perceived. As we’ll see in a minute, that’s not the case for federal subsidies.

Policy #2: Targeted and temporary policy support for carbon capture and storage

Looking across the options that oil and gas producers have to reduce their emissions, carbon capture and storage (CCS) could have among the biggest impact on getting the sector on a net zero pathway (reducing methane being the other big one). Deploying CCS provides a way to significantly lower the carbon intensity of oil and gas production while demand still persists in global markets. That could be key for the competitiveness of Canadian oil and gas in the “mid-transition” (i.e., while international demand persists, but emissions increasingly matter).

However, deploying CCS technology at a sufficient scale to make deep cuts in emissions requires unprecedented capital investments. And these investments aren’t yet happening at scale, even in the presence of carbon pricing.

Policy support can help mobilize private investment from oil and gas companies to deploy CCS technology on oil and gas facilities. The federal government has proposed an Investment Tax Credit for CCS, though oil and gas firms are asking for more, including carbon contracts for difference that would guarantee the value of credits in existing carbon pricing markets (see the Canadian Climate Institute’s explainer on carbon contracts for difference).

Following through with both of these policy measures can get large-scale CCS projects built before 2030. Recent analysis by the Pembina Institute and the Climate Institute, for example, show that it’s only through the combination of carbon contracts for difference and the proposed tax credits that CCS deployment at existing oil sands facilities becomes economically viable. It also shows that no additional incentives — beyond those already announced — are necessary to get these projects over the hurdle rate, especially if carbon pricing can be made more certain through contracts for difference.

The combination of these policies can help address important gaps in the market, which means that public support for CCS infrastructure can have social benefits that justify the costs.

Policy uncertainty is a big barrier holding the oil and gas sector back from making big bets on CCS. Carbon contracts for difference reduce this uncertainty by guaranteeing that carbon prices (or the trading price of credits) will increase according to the set schedule laid out by governments. These contracts effectively give oil and gas producers insurance against future governments changing policy and undermining their investments to reduce emissions. Contracts for difference are also much less expensive than direct support, because they only pay out if future increases in policy stringency don’t play out as planned.

Absent this combination of tax credits and carbon contracts for difference, private firms are likely to underinvest in CCS. Firms know that they are unlikely to capture the full returns of potential innovations and, as a result, invest less in research and development than is socially optimal. Their experience might well lead to learning that makes CCS more effective and less expensive, but other firms can and will take advantage of those innovations. It could lay the groundwork for development of blue hydrogen, or even nascent industry based around Direct Air Capture and technologies that permanently remove CO2 from the atmosphere — technologies the IPCC now recognizes as necessary to keep warming below 1.5 degrees Celsius. In other words, CCS subsidies could pay off for society, even beyond oil and gas’s international demand horizon.

This policy combination of tax credit incentives and de-risking through contracts for difference, therefore, can help mobilize oil and gas investment and expertise to enable emissions reductions elsewhere in the economy. And these benefits could be felt long after global demand for oil and gas starts to decline: as the world accelerates its transition, better and cheaper CCS technology could provide a competitive advantage for Canadian cement, steel, and fertilizer in a global market that explicitly accounts for emissions.

These broader societal benefits may also provide a rationale for targeted federal and provincial support to develop CCS infrastructure, such as CO2 pipelines and sequestration facilities. Public support for a network of CCS infrastructure could allow these other hard-to-abate sectors, such as cement, steel, and chemicals, to directly tap into and utilize the same infrastructure as oil and gas. Yet because building this type of infrastructure is highly capital intensive, and because it’s difficult for any one company to reap the full benefit of the investment, policy support could help crowd in private investment and get these projects built. Here, public financing (loans, guarantees, insurance) could help move the dial.

But these policy supports also come with their own set of challenges and pitfalls.

First, it’s all too easy to over-subsidize. The Climate Institute’s cash flow analysis on the application of CCS on existing oil sands facilities shows that through the combination of incentives from existing and proposed government policy, oil sands operators could make healthy returns on the investment. At a point, these supports become less about sharing risk with industry and more about privatizing the benefits and socializing the risks. Public dollars have opportunity costs; spending them where they aren’t needed undermines the cost-effectiveness of policy.

Second, direct public support — whether it’s through direct subsidies or less direct means like public financing — comes with significant opportunity costs. Unlike other major sectors of the Canadian economy where demand is expected to remain stable or grow through the transition (e.g., renewables, low-carbon hydrogen, EVs, batteries, and even industrial commodities like steel and cement), demand for oil and gas products is expected to decline. And given that government budgets are finite, a dollar spent on emissions reduction for oil and gas means a dollar less for areas that offer higher growth potential. And the faster the rest of the world moves toward net zero, the greater the risk of building CCS for oil and gas projects that ultimately becomes unprofitable. As a result, CCS projects that are specific to oil and gas production are a potentially wasteful use of public dollars.

Third, CCS subsidies could also increase emissions. It is hard to “ring-fence” investments in CCS for oil and gas production. Providing public funding for CCS on one project could free up private capital for expanding or developing projects that make no attempt to reduce emissions. In other words, if public dollars for CCS ultimately crowd in investment in fossil fuel production more broadly, there’s a risk of locking in more emissions long into the future, both in Canada and internationally. Given the oil and gas sector’s plans for future growth and expansion, this risk is material. To mitigate these risks, the newly proposed Climate Investment Taxonomy from Canada’s Sustainable Finance Action Council (described more below) could provide clear criteria for whether or not specific CCS investments or projects genuinely align with net zero pathways.

Fourth, federal CCS subsidies raise regional fairness questions. CCS subsidies are funded by revenue generated from taxpayers across Canada, but fund specific actions in a sector concentrated in specific regions. In a vacuum, that’s a challenge for fairness, but perhaps less so through a broader lens: the federal government is in fact also providing other subsidies to sectors such as batteries and auto manufacturers located mostly in central Ontario, which raise fairness concerns from other regions.

These challenges emphasize the importance of designing public funding for CCS with caution, in line with the recently proposed framework by the Climate Institute and the Institute for Research on Public Policy. As illustrated by the figure below, this framework recommends focusing government support on projects that will have a greater chance of surviving declining global demand (i.e., those with lower production costs and lower emissions). It also means carefully choosing policy instruments that reduce the overall transition risk exposure for public investments.

This figure shows governments should consider project risk and policy risk when placing bets on oil and gas emission reduction projects.

Policy #3: An emissions cap for oil and gas producers

That brings us back to the federal government’s proposed cap on oil and gas emissions.

From an emissions perspective, the appeal of an emissions cap is straightforward. Canada’s oil and gas sector remains the largest source of the country’s greenhouse gas emissions. It is also one of the only sectors where emissions have grown since 2005 and where emissions are expected to keep growing. Unlike every other sector, low-carbon solutions are not yet being deployed at scale in oil and gas, and recent company announcements show a sector that is backing away from previous commitments for investment in emissions reduction.

Capping emissions would effectively create guardrails on emissions from future oil and gas activity. An emissions cap can enforce a decarbonization pathway consistent with the government’s 2030 and 2050 targets. It can also establish a regulatory incentive strong enough to hold the industry to its own net zero commitment. It’s for these same reasons that British Columbia is exploring its own emissions cap for its oil and gas sector, partly as a way to ensure that new liquified gas projects don’t jeopardize the province’s climate targets.

Moreover, a federal emissions cap would address potential negative environmental side-effects of CCS subsidies. It would reduce the risk that public funding contributes to locking in more emissions from the sector. An emissions cap would constrain total emissions in the sector, ensuring that oil and gas firms cannot simultaneously offset emissions from some projects using CCS (funded by subsidies) while increasing unabated production in others. It would also ensure that oil and gas producers bear some of the technological risk, should CCS not prove to be a viable solution for reducing greenhouse gas emissions at scale. It commits the sector to following through on its embrace of net zero by 2050.

Still, Canada’s climate goals are ultimately not sector-specific. An emissions cap would likely lead to a higher carbon price in the oil and gas sector relative to other sectors; as a result it will drive more expensive emissions reductions overall than simply increasing the carbon price across the full economy. But the alternative raises challenges too: as we discussed above, increasing the economy-wide carbon price (beyond $170 per tonne) is unlikely to result in transformative emissions reductions within the oil and gas sector and therefore raises important fairness concerns from other sectors that are doing the heavy lifting.

The fact that the cap is on emissions — and not production — helps protect the sector’s competitiveness by giving firms flexibility on how they comply, whether that is through direct abatement opportunities like CCS or electrification, or through purchasing credits on the market. Under the cap, firms that are lowest-cost and lowest-emissions will have a competitive advantage. Furthermore, the combination of an emissions cap with public funding for CCS would lead to more equitable sharing of the costs of those emissions reductions between firms and the public.

Viewed through a fairness lens, an emissions cap for the oil and gas sector has additional benefits. It would guarantee that the sector — and the regions that generate economic activity from it — would contribute its share of emissions reductions on a pathway to net zero, holding the sector to the commitments it has made, on a timeline consistent with Canada’s emissions goals.

Yes, trade-offs with this policy are real. An ambitious emissions cap would almost certainly impose a higher carbon price in the oil and gas sector, driving higher-cost emissions reductions. Yet the benefits that come from a more fair policy package can justify those higher costs. And at the same time, public funding also takes the edge off the higher costs for the oil and gas sector to comply.

A final note on the emissions cap: determining the rate of the cap decline — i.e., the stringency of the cap — remains a point of contention. Industry has concerns about how quickly it can mobilize CCS projects, which include the infrastructure to transport and safely store unprecedented volumes of carbon dioxide. Yet giving the sector too much flexibility on the timing of deep emissions reductions risks the perception (or the reality) that oil and gas firms will delay serious investments on the bet that future governments will relax, rather than accelerate, policy ambition. And claims about cost and time should be viewed through the lens of similar debates about compliance with historical environmental regulations where costs have typically been significantly lower than industry estimates.

Policy #4: A government-backed transition taxonomy

Fossil fuel firms and their investors are beginning to consider transition risk from declining global demand. Yet information about the industry’s transition risk isn’t standardized in financial markets, and the risk of greenwashing (i.e., firms investing more in marketing and communications than in emissions reductions) is widespread. Perhaps unsurprisingly, oil and gas firms tend to plan around global market scenarios that do not achieve net zero as they try to attract capital, rather than those projecting a significant decline in both global emissions and global demand.

The federal government formally adopting the Sustainable Finance Action Council’s proposed Climate Investment Taxonomy could help address the information problem. Like other taxonomies that codify and label individual parts of complex systems (e.g., biology), the climate investment taxonomy would create a standardized framework to help financial markets assess whether or not projects and investments are genuinely aligned with Canada’s climate goals. Important parts of Canada’s financial regulatory system, such as the Office of the Superintendent of Financial Institution, the Bank of Canada, provincial security regulators, and others are already starting to track the issue. What’s left is getting official endorsement from the federal government to create a new independent Taxonomy Council and Custodian, similar to what the government of Australia did this year.

By improving the information available to investors and capital markets, a Canadian taxonomy could help drive private capital to emissions-reducing activities in the oil and gas sector that are genuinely aligned with Canada’s climate commitments. That would be good for competitiveness. It would also enhances the fairness and cost-effectiveness of the overall package. The more private dollars that flow to emissions-reducing projects, the less public dollars are required to get projects over the finish line.

In other words, the taxonomy complements CCS subsidies and provides a robust framework for how to evaluate other types of public funding for fossil fuels. And in the long term, mandating other core pieces of investment infrastructure, such as climate disclosure, net zero target setting, and transition plans can help further improve the information that’s available to capital markets and unlock much-needed investment.

Some voices have raised concerns that the transition taxonomy would not actually reduce emissions from the oil and gas sector. However, the taxonomy, in combination with the emissions cap, helps assuage these risks: the cap ensures that the sector will reduce emissions, and the taxonomy helps mobilize capital to drive emissions reductions in Canada’s hardest-to-decarbonize sector.

Addressing regional fairness explicitly can future-proof Canadian climate policy

At the beginning of this essay, we asked the central question: how much capital — both political and financial — should the federal government spend to decarbonize a sector that international markets will eventually transform? Our answer: a significant amount of each.

As the country’s biggest and growing source of emissions — and in the short-term, an economic engine for trade and economic growth — the oil and gas sector urgently needs policy solutions to reduce emissions in the short term and to position itself for long term success. But sound policy must stand the test of time. Policy that has broad buy-in is more likely to do so. And that requires thinking about fairness explicitly.

Taking regional fairness seriously doesn’t mean ignoring emissions targets, costs, or competitiveness implications for industry. Yes, Canada needs the policies that effectively address failures in the market (i.e., carbon pricing, methane regulations, standardized information). Adding a fairness lens does, however, cast new light on both the problems and solutions for tackling emissions and investment in the Canadian oil and gas sector.

Ultimately, the four policies outlined in this piece complement one another and explicitly address the core goals of sound Canadian climate policy. Each element of the policy package we’ve proposed addresses trade-offs in other elements:

  • Increasingly stringent regulations on methane emissions can drive low-cost emissions reductions and can deliver around one third of the emissions reductions required to align the sector with 2030 targets, taking some pressure off the emissions cap.
  • A cap on oil and gas emissions ensures that Canada can achieve its 2030 and 2050 climate targets, even if it results in a carbon price that is higher than in other sectors. It ensures that other policies don’t undermine achieving emissions goals. And it ensures that the sector and the regions in which it operates are contributing to net zero pathways.
  • Public financial support for technologies like CCS can help the sector meet their obligations under the oil and gas cap, addressing fairness concerns from facing a higher carbon price. They can also offer value for public dollars even in the face of declining international demand for oil and gas by supporting CCS infrastructure that other sectors can use (while leveraging private oil and gas investment dollars).
  • A government-backed Climate Investment Taxonomy can help the oil and gas sector raise transition-aligned capital from the private sector to help pay for new investments under both the emissions cap and methane regulations, supporting low-carbon competitiveness but also cost-effective transitions to net zero.

Together, these four policies are greater than the sum of their parts, and can ensure that the oil and gas sector contributes to Canada’s clean energy transition. This package of policies would be fair for fossil fuel-producing provinces, the federal government, the industry, and the rest of Canada. And that just might be a ticket to a credible, durable pathway to net zero in the years ahead.

How to set up the Canada Growth Fund for success

The federal Budget 2023 included important news for the Canada Growth Fund, Canada’s recently established “green bank” to catalyze private investment in Canada’s clean economy. The Public Sector Pension Investment Board (PSP Investments), a federal Crown corporation, will manage the Growth Fund’s assets to deliver its mandate of attracting private capital to invest in Canada’s clean economy. 

That’s good news for getting the Growth Fund going fast. PSP already has expertise and resources, and has an arms-length relationship with the federal government.  

But here’s the challenge: to succeed, the Canada Growth Fund can’t focus on delivering private returns. The purpose of the Growth Fund is to invest in projects the market alone won’t invest in. Its mission will be to find projects that don’t currently deliver private returns , but will deliver bigger, broader benefits to society by unlocking additional private investment. That’s an important function, but one that is different than what PSP Investments is used to, and likely counter to the instincts of its investment strategists

We unpack some key differences between the functions of the Canada Growth Fund and PSP Investments and explore the implications for their respective investment strategies. We also discuss three ways to help make the relationship between the two institutions a success and enable the Canada Growth Fund achieve its purpose.  

The Canada Growth Fund and PSP Investments have distinct purposes and accountabilities

PSP Investments, established in 2000, is one of Canada’s largest pension investment managers with $230.5 billion in assets under management. PSP Investments’ mission is to manage these assets in the best interests of contributors and beneficiaries. The objective is to “invest its assets with a view to achieving a maximum rate of return, without undue risk of loss” and in line with the policies and requirements of the included pension plans. 

In contrast, the Canada Growth Fund was established in late 2022 and capitalized with $15 billion from the federal purse. Its purpose is to “make investments that catalyze substantial private sector investment in Canadian businesses and projects to help transform and grow Canada’s economy at speed and scale on the path to net-zero.” The Fund was created to support both economic and climate policy goals, including emissions reductions and Canada’s future economic well-being. Equipped with public money and established to drive public policy objectives, the Fund is ultimately accountable to the Canadian people. 

These distinct functions imply differences in investment strategies and decision criteria (see Table 1)

The Canada Growth Fund will use concessional finance instruments that help attract private-sector investors to get clean growth projects off the ground whose project economics are unattractive to conventional investors (including PSP Investments). Clean growth projects are often unprofitable to private investors because they rely on novel, high-risk technologies, require large upfront capital investment, and have long return horizons. Still these projects can generate significant benefits for Canadian society, furthering the transition to a low-carbon economy, creating jobs and generating learning spillovers for companies in the same or other sectors. But private investors are unable to capitalize on these society-wide benefits. The Canada Growth Fund’s purpose is to step in and lower risks for private investors just enough to make these clean growth projects palatable for them and thus realize the benefits for Canadian society. In other words, assuming higher risks than conventional funders must be part of the Canada Growth Fund’s investment strategy and necessary for achieving its purpose. At the same time, the Canada Growth Fund is also looking to recover its capital on a portfolio basis (i.e., not necessarily for each individual project) and recycling its capital base over the long term (i.e., not immediately). 

In contrast, PSP Investments does not invest on a concessional basis. It has no mandate to consider societal benefits in its investment decisions, which are exclusively dependent on project economics and risks/returns for investors. While PSP Investments has developed a climate strategy and has set goals with regards to shifting its portfolio toward assets that are consistent with Canada’s emission reduction targets, it is not the Fund’s purpose to support Canada’s climate objectives. Rather, taking climate and transition risks into account is simply part of prudent financial management to better serve the people that PSP Investments is accountable to, namely current and future retirees. 

In sum, the Canada Growth Fund and PSP Investments have overlapping but distinct mandates and accountabilities (see Table 1). These differences imply different investment criteria, or at least a different weighting of criteria (e.g., an asset’s projected financial returns vs. its anticipated role in the transformation of Canada’s economy). As a result, management of the Canada Growth Fund will require a different mindset (e.g., different level of comfort with risk) and different expertise (e.g., in domestic and global climate policy, concessional finance, technological innovation and low-carbon technology markets). 

The risk of conflating private and social returns could undermine effectiveness of the Canada Growth Fund

A key risk in this new arrangement is that Canada Growth Fund will be absorbed in PSP Investments’ ‘business as usual’ approach to fund management. The danger is that the Fund’s policy-focused mission wil lbecome conflated with a focus on private, rather than social returns, —whether intentionally or not. 

The good news is that important details about the relationship between the Canada Growth Fund and its new institutional home, as well as between the Fund and the federal government, still need to be hammered out. And this is an opportunity to reduce the risks we’ve outlined here and to instead set the Fund up for success. 

Here are three ways to mitigate the risks of these arrangements:

  1. The Canada Growth Fund must have a clear, transparent investment strategy. 

To operationalize the distinct purpose and mission of the Canada Growth Fund, it requires an explicit, transparent investment strategy, including a set of clearly defined and measurable performance criteria that set it apart from PSP Investments’ core business. 

The first reading of Bill C-47 suggests that PSP Investments will “incorporate a subsidiary for the purpose of providing investment management services to the Canada Growth Fund Inc.” The bill also introduces other amendments to the Public Sector Pension Investment Board Act that exempt the subsidiary from PSP Investment’s usual investment policies, standards, and procedures. In other words, this bill suggests a clear separation between PSP Investment’s core business and the management of the Canada Growth Fund, in line with this recommendation. 

The Canada Growth Fund’s investment strategy should be co-written by policy and finance experts, because the Canada Growth Fund’s work will reconcile these two areas. The strategy’s authors should have expertise in climate and clean growth policy, as well as finance. 

The Canada Growth Fund must aim to generate social returns in addition to being financially profitable. It must fund projects that are based in Canada and that yield returns to Canadians. This is not a trivial task. Global capital markets are usually not particularly concerned with localized benefits of investments: money simply goes wherever expected financial returns are highest. 

Importantly, the Canada Growth Fund’s strategy should be made accessible to the public. Transparency is key to building public trust in the new institution, and will create the foundation for holding the Fund accountable for its performance measured against its mandate. 

Australia’s Clean Energy Finance Corporation (CEFC), the world’s largest green bank, is an illustrative example of an institution guided by the kind of language that the Canada Growth Fund’s investment strategy could include. The CEFC’s purpose is to contribute to both the delivery of policy outcomes and the transformation of Australia’s renewable energy sector. Similar to that of the Canada Growth Fund, the CEFC’s role is to develop new markets by funding projects that private markets do not invest in. Like the Canada Growth Fund, Australia’s green bank invests on behalf of the Australian government. 

The CEFC’s investment mandate explicitly states its double objectives. The mandate defines a portfolio benchmark return that the CEFC has to achieve over the medium- to long-term. At the same time, the mandate also states that it should “have regard to positive externalities and public policy outcomes when making investment decisions and when determining the extent of any concessionality for an investment.” For instance, the investment mandate strongly encourages the CEFC “to prioritise investments that support reliability and security of electricity supply.” In its annual report, the CEFC has to report on both financial and non-financial outcomes of all its investments. 

  1. Fulfilling the Fund’s purpose requires bringing together a diverse set of expertise. 

The Canada Growth Fund’s investment decision-making committee and staff should draw on expertise on a variety of themes, including domestic and global climate policy, the functioning of Canada’s carbon markets, concessional finance instruments, net zero transition pathways, low-carbon technology innovations and markets. Formally consulting with policy experts, industry, civil society and Indigenous rights holders would enable PSP to integrate external perspectives on these themes. Decision-makers need to understand and know how to implement the Fund’s broader policy function in addition to achieving projects’ financial returns. Decision-makers need to understand and be comfortable investing in projects with higher risks and using newer technologies than some of the PSP Investment’s usual investments. 

Similarly, they need to understand the concept of externalities and local impacts of projects and investments. The Canada Growth Fund’s best investment decisions will take into account a project’s potential for generating positive externalities for Canadian society. For example, decision-makers should be able to answer the following questions to fully appreciate the project’s returns for Canadian society beyond financial considerations: 

  • Where on the learning curve does the technology sit and what is the potential for this project to achieve further cost reductions over time? 
  • How does the project benefit the local community, create employment and training opportunities, and contribute to regional economic development? 
  • How does the project contribute to achieving Canada’s emissions reduction targets? 

Coming back to the Australian CEFC, for example, investment decision-makers need some knowledge of electricity systems to be able to consider the implications of a specific project on reliability and security of electricity supply. 

  1. Defining transparent and differentiated accountabilities for PSP investment’s core business, the federal government, and the public will make the Canada Growth Fund more effective.

The Canada Growth Fund needs well-designed accountability mechanisms to carefully navigate its internal and external relationships.  

It is critical to keep the Canada Growth Fund distinct from PSP Investments because of its specific purpose, while keeping boundaries open enough to let the Fund benefit from its investment expertise. 

The relationship between the Fund and the federal government must avoid both interference in investment decisions on the side of the government and a lack of accountability on the side of the Fund. It’s a tricky balance to strike, and strong, explicit accountability structures can provide much-needed guardrails.  

When it comes to the relationship between the Canada Growth Fund and the public, transparency and proactive communication will be key. In the short term, publishing any Statement of Priorities and Accountabilities the Minister of Finance issues for the Fund would contribute to greater clarity and transparency. Moreover, by building functioning relationships with both PSP Investments and with the federal government, the Fund can support a foundation for trust with the broader public. 

Conclusion

Just like with any investment, making this arrangement work is about maximizing returns, while balancing risks. There is a sweet spot where the Canada Growth Fund capitalizes on the investment expertise and institutional strength of PSP Investments without losing focus on its specific purpose and the differences in expertise and decision-making required to be successful. 

The Canada Growth Fund has an ambitious mission and an important role to play in Canada’s clean growth policy strategy. Getting the institutional structures and accountability arrangements right will be central to making investment decisions that support Canada’s low-carbon future.  

Table 1: Key differences between Canada Growth Fund and PSP Investments

Canada Growth FundPSP Investments
Purpose“CGF will make investments that catalyze substantial private sector investment in Canadian businesses and projects to help transform and grow Canada’s economy at speed and scale on the path to net-zero.”

Support national economic and climate policy goals: 
Reduce emissions, accelerate deployment of low-carbon technologies, scale up clean growth companies, secure Canada’s future economic and environmental well-being (source)
“Manage amounts that are transferred to it in the best interests of the contributors and beneficiaries under the acts related to the Plans.” (source)
Investment objectives/strategy“To achieve its strategic objectives, CGF will use investment instruments that absorb certain risks in order to encourage private investment in low carbon projects, technologies, businesses, and supply chains. This includes investments that scale Canadian clean technology businesses.” (source)

“Its objective will be to deliver against its strategic objectives while recovering its capital on a portfolio basis and recycling its capital base over the long term.” (source)

“CGF will invest concessionally by accepting, where necessary, below-market returns relative to the risk it incurs.” (source)

Taking on risks is part of the investment strategy and will be necessary to achieve the Canada Growth Fund’s mandate.
“Invest its assets with a view to achieving a maximum rate of return, without undue risk of loss, having regard to the funding, policies and requirements of the Plans and the ability of the Plans to meet their financial obligations.” (source)

Committed to sustainable investment and ESG values, and action on climate change, commitment to investing contributing to global low carbon transition, Green Asset Taxonomy, increase investment in green and transition assets, reduce investment in carbon intensive assets
Accountability to whom?“Full accountability to the people of Canada” (source)“Responsibilities to contributors and beneficiaries” (source)

The power of Acimowin (Storytelling) for climate change policy

Tansi, Sandra Lamouche nitsikason, niya nehiyaw iskwew. Bigstone Cree Nation ochi niya. Hello, my name is Sandra Lamouche. I am from the Bigstone Cree Nation. 

This case study was inspired by my thesis research “Ê-Nihtohnak Miyo-Pimatisiwin (Seeking the Good Life) Through Indigenous Dance” and how individuals relate to and are guided by each direction of the nehiyawak (Plains Cree) medicine wheel. The wheel includes the four cardinal directions, four elements, and the four aspects of human beings—spiritual, physical, emotional, and mental (See image 1)—and is holistic, helping us to live a healthy and balanced way of life. It contains concentric circles with the individual in the centre and moves outwards to family and friends, then community, with the nation on the outermost circle. This is symbolic of how our individual actions influence our world and others. 

The spiritual aspect of culture and identity on the wheel, which is taught through story, is especially important as it teaches us about the possibility for change and transformation. It shows how we can change behaviour—both our own and collectively—to align with and embody the lessons and worldviews of traditional stories. I use a nehiyawak medicine wheel as a framework to understand a nehiyawak story to reveal the lessons it has for changing our behaviour in relation to climate action and the specific policy changes we push for from companies, governments, and our leaders. 

Indigenous stories can help us make effective and impactful progress because they are specific to the land we live on and “in order to do what the climate crisis demands of us, we have to find stories of a livable future, stories of popular power, stories that motivate people to do what it takes to make the world we need” (Solnit 2023).

Representation of the nehiyawak medicine wheel which includes the four cardinal directions, four elements, and the four aspects of human beings—spiritual, physical, emotional, and mental.
Image 1: The nehiyawak medicine wheel which includes the four cardinal directions, four elements, and the four aspects of human beings—spiritual, physical, emotional, and mental.

Racism as a barrier to Indigenous inclusion in climate change policy

Indigenous rights are being violated in Canadian climate change policy as the voices of Indigenous people are not yet fully included in climate change research. In some cases Indigenous perspectives, knowledge, and approaches to climate change are ignored (Reed et al. 2021) and this has reinforced colonial relations between Indigenous and non-Indigenous people. My own experience has taught me that there is a lack of knowledge and understanding about Indigenous cultures, which leads to them being devalued and dismissed. 

One reason Indigenous Peoples continue to be excluded from spaces where climate policies are designed and implemented, is that ongoing racism dismisses Indigenous knowledge and worldview in favour of western and Eurocentric knowledge and thought. As Charlotte Reading describes, “science has emerged as one of the most dangerous tools of colonial domination, as disciplines of science have created and maintained racial distinctions used to segregate and oppress Indigenous peoples” (Reading 2020). This dismissal has deep roots in colonial oppression which was based on the western worldview that Indigenous cultures and knowledge were “uncivilized”, “primitive”, or “inferior”. This view was reflected in residential school policies as the system was based on an assumption that European civilization and Christian religions were superior to Indigenous cultures (Truth and Reconciliation Commission of Canada 2017). Call to Action 57 from the Truth and Reconciliation Commission (TRC) of Canada’s recommendations shows anti-racism work is critical to transformational change: 

“We call upon federal, provincial, territorial, and municipal governments to provide education to public servants on the history of Aboriginal peoples, including the history and legacy of residential schools, the United Nations Declaration on the Rights of Indigenous Peoples, Treaties and Aboriginal rights, Indigenous law, and Aboriginal-Crown relations. This will require skills based training in intercultural competency, conflict resolution, human rights, and anti-racism” (Truth and Reconciliation Commission 2017).

Systemic racism severs Indigenous stories from place by prioritizing western worldview over Indigenous ways of knowing and being. It is therefore important to fulfil the Call to Action 57 in order to have Indigenous knowledge recognized for its valuable expertise and the ways in which it can inform direction and solutions to many different challenges our society faces, and especially issues of climate change. The TRC Commissioners also note that they repeatedly heard the message that reconciliation in Canada requires reconciliation with the earth (Truth and Reconciliation Commission of Canada 2017).     

The power of Indigenous story to change our behaviour and inform climate action 

Anti-Indigenous racism often leads to valuable knowledge and expertise from Indigenous people being left out of decisions and/or policies related to climate change that could make them stronger and more impactful (Reading 2020). Braiding Sweetgrass asks us to see Indigenous stories “not as an artifact of the past but as instructions for the future” (Kimmerer 2013). Jo-Ann Archibald talks about the importance of understanding Indigenous “storywork” (a term she coined) as it “signifies that our stories and storytelling should be taken seriously” (2008). For example, one of the problems with western approaches to climate change is that they focus on the symptoms rather than the root causes (Reed et al. 2021). Indigenous stories can help shift that approach as they are tied to Indigenous pedagogy and a more holistic worldview that recognizes the interconnectedness of the natural world. 

Often in nehiyawak thought we use the past as a guide for our future—a common saying is that you need to know where you’ve been in order to know where you are going (Bell 2006). In contrast to the western worldview, Indigenous stories also include valuable knowledge that instructs us to live in a sustainable, balanced way with the earth. 

To demonstrate and learn from the knowledge and expertise woven into Indigenous stories it is important to understand them through an Indigenous worldview, and the nehiyawak medicine wheel helps us do this. Nehiyawak stories speak to all aspects of the nehiyawak medicine wheel, as they carry wisdom (mental aspect in the northern direction of the wheel), explain the world (physical aspect in the southern direction), while also teach about relationships (emotional in the western direction), and our culture and identity (spiritual in the eastern direction). Using the holistic view learned from the nehiyawak medicine wheel helps us to understand and act on the teachings in the stories and, in the case of the story I chose, take action both individually and collectively in terms of environment and climate change adaptation and mitigation. 

This story, the Birds of Colour: Part 2 tells how Blue Jay got its colour. This is an oral story told by my father, Micheal Sidney Lamouche, from Kapawe’no First Nation and transcribed over a series of meetings. He has collected many stories from different friends and family that live in Cree communities across Northern Alberta and has given me permission to use this story for this case study. Stories about Wesakechak, the nehiyawak trickster, often teach us about our actions and consequences, values, and how things came to be. Many Indigenous peoples use oral storytelling to pass on knowledge, history, and culture. In my nehiyaw culture storytelling was saved for the winter. 

Photo credit: Ivan Sovic

The story of the Birds of Colour: Part 2 demonstrates the power of Indigenous storytelling and how it can inform actions to improve Two-Eyed Seeing in climate research and policy discussions with story as the vehicle to drive transformational change. As described by Albert Marshall: “Two-Eyed Seeing refers to learning to see from one eye with the strengths of Indigenous ways of knowing and from the other eye with the strengths of Western ways of knowing and to using both of these eyes together” (Bartlett et al. 2012).

Birds of Colour: Part 2

Wesakechak, hosted a contest to name the birds—the bird with the most beautiful colours would win. The birds found their colours from nature. One of the birds had difficulty choosing a colour. The bird flew around but could not decide since all of the colours were so beautiful and soon all the colours were taken. The bird went to Wesakechak and explained why he did not have a colour:

“It was love.” 

Wesakechak said, “Little brother, remember sometimes you only have one chance to get, or do, something next time to remember—that if you want something go and get it, or it may never come again. Sometimes we have thoughts or feelings that we want to do something good, but we don’t remember that those thoughts and feelings were put there by our spirit guide.”

Once the birds had gathered, there were many colours. Wesakechak decided not to choose a winner as they were all special and had a different role in nature. In trying to help the bird find a colour, he asked a sparkly white bird how he got his colour. He replied it was from trying to fly over the mountain and getting caught in an avalanche. Wesakechak said:

“There are all kinds of colourful flowers on the other side of the mountains.” 

The little bird was so excited it flew away, not waiting for Wesakechak to finish talking. As the bird flew towards the mountains it started to fly higher and when he was over the clouds, looked as far as he could see and only saw more mountains.”

The bird flew back towards the others, not realizing it had the colours of the sky—its chest was white and its back was blue. Wesakechak said it would be known as, 

“the bird that carries the sky on its back. You will also be known as the bird that didn’t wait for all the instructions. So you have to learn patience and listen to all the instructions” (Lamouche 2021).

The spark within: Igniting the spirit to take action on climate change

In the nehiyawak medicine wheel we start in the eastern direction, where the sun rises. This is also associated with the element of fire (sun), childhood, the beginning of the day, and the spiritual aspect, which includes culture and identity. Culture and identity is foundational to how we live our lives and to our behaviours, actions, and values. It is often taught through story which might become a spark of inspiration and motivation or a fire within, igniting a passion. In other words, culture and identity is our why: “Those of us who are Indian understand that it is the telling of stories, our very breath, that brings forth identity and defines purpose” (Lucci-Cooper 2003). This is an important part of learning, “…we learn best when we feel a strong, inner spiritual connection with everything around us” (Anderson 2017). For many Indigenous people culture and identity is directly connected to the land on which we live, “to know yourself you must first know the earth” (Cajete 2000).

The story of the Birds of Colour: Part 2 is also centred on identity, one aspect of spirit. We see the birds with their own agency—choosing different colours so that they can be given names and an identity. This is an important aspect of Indigenous teachings—to foster self-determination—which is a stronger motivator for change than being told what to do (Lamouche 2022). We can apply the lessons from the story that we have our own agency to make choices, to motivate us to take action and make change where it is most needed and right now that is in relation to climate change. To address climate impacts we need to make a conscious choice to change individual and collective behaviours to make a real and lasting difference in the world. We can do that by drawing on our own agency and the part of our identity (the spiritual aspect of the medicine wheel) that is connected to better “knowing the earth”—only then can we take effective action on climate, based on that deep knowledge, connection to the land, and our motivation. 

In many Indigenous cultures, language and connotation also matter in relation to identity. Indigenous stories often reference specific animals as non-human kin, by calling them simply by their name. For example, we will say “Blue Jay was flying” rather than “a blue jay was flying” which is what the western tradition would do. Another layer to this can be found in the way Blue Jay is at first referred to as “the bird” rather than “a bird”, further personifying him by giving him another layer of meaning and identification: In looking at the definition of “a” we can see that it is used before a singular noun, emphasizing the individual. By comparison “the” can be used for a singular noun but that noun should be understood generically (Miriam-Webster 2023). Rather than specifying an isolated individual animal, Indigenous storytellers’ preference emphasizes the whole, the group, or interconnectedness. This is an important spiritual understanding connected to nehiyawak identity and culture (the eastern part of the wheel). Embedded within how stories are told, even in English, we can see that the understanding of our relationships and fundamental interconnectedness with the animals, plants, and all of the natural world, are important in Indigenous worldviews. Including this deeper, fundamental understanding of the interconnectedness within the natural world—which we are a part of—in conversations about climate frameworks and policies could help guide their design and implementation so that their approach is more holistic.  

When we see the bird hesitate and say, “It is love,” Wesakechak responds by explaining that the “inner knowing” or having a “feeling” are our spirit guides. This highlights the deeper listening and body senses as knowledge that is used in Indigenous ways of knowing and Native science (Cajete 2000). In terms of climate change policy this might lead to new understandings of the environment and the need for a more holistic and balanced view of climate change and the environment. 

Embodiment, taking action, and transforming behaviour for climate action 

We move around the nehiyawak medicine wheel in a clockwise direction, often referred to as following the movement of the sun. This brings us to the southern direction which is associated with the physical, youth, and the element of earth. It is related to our fitness, our body, and the environment. The physical is about movement, action, embodiment, and transforming our lives through changed behaviour. 

In the story we see the importance of physical action when Wesakechak explains to the bird that sometimes we only get one chance to take action, highlighting the importance to sometimes act when we can. In relation to climate change we can think of this as a message to take action now—because now we have the chance, whereas in the future we may not. This also supports the idea of many Indigenous stories as “instructions for the future.” If we understand this story through this lens then we can clearly hear the message that taking action now is necessary in order to address climate change.

In this story different aspects of the environment—also part of the southern direction of the nehiyawak medicine wheel—are highlighted: the colours of birds, the sky, the plants and flowers, the images of the mountains, and the avalanche. We see the lesson of everything in nature having an important role and diversity of nature is emphasized. This can be seen as an instruction on how to be observant of the world around us, and that even if we don’t understand all the roles and meanings, to value all things in the natural world, including biodiversity. These teachings should be extended to climate policy to encourage decision makers to understand that we need to protect the biodiversity in the natural world, even if we don’t understand what part all beings and non-beings play in that world. A western approach often compartmentalizes in ways that are unhelpful—for example seeing biodiversity and climate issues as separate (Climate Atlas of Canada).  

The physical environment also becomes a reminder of our body’s (also part of the southern direction of the wheel) relationship to and reliance on the natural world. When we understand this, suddenly the need to protect the physical environment takes on greater urgency. We see that it is about protecting ourselves and, looking at it through the lens of the nehiyawak medicine wheel, our families, communities, and nations. This is a different perspective than in western science which often looks at the physical world and solutions through silos and from an economic perspective (Cajete 2000). This deeper understanding can help shift our behaviour and the approach we take to policies and solutions to protect that world. 

Connecting with the heart in order to care about climate

In the western direction on the nehiyawak medicine wheel is the stage of adulthood. It is characterized by responsibility, relationships, and emotional aspects. It is symbolized by the element of water, which is seen as healing: my Mom would say, our tears are healing, and the teachings also tell us this. Building relationships is an important aspect of nehiyawak wellness, worldviews, and knowledge. This is represented in the concentric circles of the nehiyawak medicine wheel. Unlike in western society, many Indigenous peoples do not see our lives as growing up in a linear, isolated, and individual way. Instead Indigenous cultures see lives as holistic and communal, fundamentally based on strong community relationships. This foundation also extends to developing respectful relationships with the natural world (Cajete 2000; Anderson 2017; Archibald 2008) a relationship that often differs from the one in a western worldview. It means that Indigenous Peoples have a different approach to caring for the environment and thus may have different ideas about effective solutions and actions related to climate change, an important factor in co-development of policy. 

This story of Blue Jay has another teaching for us. For example, in the story, the bird went to Wesakechak and explained why he didn’t have a colour as he sees all colours as beautiful. Wesakechak says he can not choose a winner because all the colours are beautiful. From the perspective of the story this leads to the question of what would happen if all of us “see colour” in terms of race as a beautiful thing and something that reflects the diversity of nature. This would create a more respectful relationship amongst different races and cultures, and more respect and inclusion of various knowledge and perspectives. In terms of anti-racism, colour blindness towards other races is considered a microaggression (Reading 2020). Respecting the differences of others helps us to have healthy relationships. The story teaches that diversity is a valuable part of nature and should be protected in climate change policy discussions and implementation.

The story explains how the physical features of the birds and their different colours come from the natural environment, flowers, plants, snow, and sky. This helps to highlight the birds as connected to nature and seeing a relationship between all things is an important reminder in the story as it teaches us to form a deeper connection to, and in turn, want to care for, all of creation. After hearing the story, now when you see Blue Jay, you think of the blue sky, air, mountains, and sunny days, creating a deeper connection to and understanding of how interconnected the natural world is. This deeper emotional connection creates and encourages a respectful relationship to the natural world, one that is deeper and more expansive than in western science. 

Photo credit: Sandra Lamouche

The wisdom of Elders to ensure stories continue in order to influence climate change 

The mental aspect on the nehiyawak medicine wheel is represented by the northern direction and the Elder stage of life. The mental aspect includes knowledge, wisdom, thoughts, and the element of air. Stories and teachings combined with experience give Elders a depth of layered knowledge that they carry with them and when Elders pass their knowledge on to children (east) they help the circle of the good life continue and carry on through the generations. At the end of Blue Jay’s story we hear the lesson of patience and listening to instructions before acting. In a larger context we can see that storytelling and teachings play an essential role in guiding our actions and behaviour. It can remind us to listen to our Elders and highlight the importance of the stories, wisdom, and experience that Elders carry and how that wisdom can guide our own actions. It highlights the importance of listening to Elders as “the first line of teachers, facilitators, and guides in learning Native science” (Cajete 2000).

For example, when Elders use phrases such as “beaver was swimming” instead of “a beaver was swimming” it could be misinterpreted as being less “educated” or not “proper” English, rather than thinking of the deeper meaning of these phrases as stemming from a deeper worldview.

By being patient and listening to and respecting the expertise and learnings (or instructions) from the Elders, we ensure that valuable wisdom is not missed. 

Seeing and knowing Blue Jay as the bird that carries the sky on its back changes the way we think. It reminds us of the story of the colours of birds and the teaching of patience, valuing all the different birds, listening to intuition, and taking action. These are teachings and reminders that can be valuable across a lifetime. As Elders share this wisdom they are ensuring the continued worldviews, instructions, and values that shape behaviours towards sustainability are passed on. The wisdom and experience of Elders can empower us and encourage us to think deeply about the world and move us to take action in terms of climate change and sustainability. 

Conclusion

Indigenous people have been marginalized and excluded from climate change policy even though “Indigenous lands make up around 20% of the Earth’s territory, containing 80% of the world’s remaining biodiversity—a sign Indigenous Peoples are the most effective stewards of the environment” (International Institute for Sustainable Development). Indigenous stories are connected to the land, and especially imbued with the values and worldviews that have sustained land, animals, plants, and people across Turtle Island (North America). The above examples of the deep and wide range of teachings in this single nehiyawak story show the vast amount of knowledge and expertise carried within Indigenous cultures and teachings, and how it can inform our approach to climate action and policy. These stories have been excluded and oppressed through colonization and European superiority rooted in racist ideology. This has been reinforced by western science and systems, including climate change conversations, and this exclusion means valuable lessons and perspectives are not being considered when climate actions and policies are implemented. 

As nehiyawak stories demonstrate, Indigenous stories have inherent knowledge and lessons in them that can help us approach climate action, particularly as they help us to understand the interconnectedness of the natural world and our relationships to the land. The story of Blue Jay promotes responsibility, self-determination, and listening carefully to the wisdom of Elders. It teaches us about our interconnectedness and of our direct relationship to the land. When we have a closer relationship, based on respect and understanding through the teachings that the land and all that is in it are kin, we approach climate action with a deeper caring and understanding of the best approaches for all. 

I have concluded with a list of policy recommendations for climate specialists in federal and provincial government to improve climate policy to be more holistic and understanding of Indigenous worldview including story, with the aim to advance reconciliation:

  • Climate policy should be led by Indigenous Peoples and Nations (Reed et al. 2021) at the provincial and federal levels—this might include equitable co-creation of climate policies.
  • Climate policy discourse should include storytellers, artists, spiritual Elders and cultural knowledge holders, as well as funding for them to share their work.
  • In order for policy makers to begin to understand Indigenous worldview and work in co-development of policy and research with Indigenous peoples, public servants should be provided with anti-Indigenous racism training (Truth and Reconciliation Commissions of Canada 2017).
  • Accessibility, protection, and generational transfer of the stories themselves through funding, programs for Indigenous artists and storytellers, as well as ensuring accessibility to the plants, animals, landmarks, cultural, and spiritual sites that carry these stories should be a policy priority.
  • Indigenous traditional stories, teachings, and knowledge should be respected, accepted, and included in climate policy discussions without having to validate with western scientific studies.
  • There should be funding for co-research between Indigenous and non-Indigenous climate researchers, artists, and storytellers. 
  • Funding to preserve and teach Indigenous languages should be provided, as they are necessary to understanding and interpreting stories as instructions for the future.
  • Federal and provincial governments and policy makers should work with Indigenous nations to include Indigenous governance models and ways of doing as a framework (i.e., medicine wheel) to ensure a holistic perspective that incorporates Two-Eyed Seeing approaches in co-development of climate policy.
  • An anti-Indigenous racism process should be applied to all sectors of Canadian society, especially policy decision makers at the provincial and federal level whose decisions impact Indigenous peoples and the land and waters in which our identity is inextricably connected to through story. 

References

Anderson, Comay, and Chiarotto. 2017. A Resource for Educators. The Importance of Indigenous Perspectives in Children’s Environmental Inquiry. Ottawa, ON. https://www.naturalcuriosity.ca/englishbook 

Archer, D. 2021. Anti-Racist Psychotherapy: Confronting Systemic Racism and Healing Racial Trauma. Montreal, QC. https://archertherapy.com/product/anti-racist-psychotherapy-confronting-systemic-racism-and-healing-racial-trauma/ 

Archibald, J. 2008.  Indigenous Storywork: Educating the Heart, Mind, Body and Spirit. Vancouver, BC. https://indigenousstorywork.com/ 

Bell, N. 2013. “Just do it: Anishinaabe Culture-Based Education.” University of British Columbia Dissertation 36(1).  https://ojs.library.ubc.ca/index.php/CJNE/article/view/196553 

Benton-Banai, E. 2010. The Mishomis Book: The Voice of the Ojibway. Minneapolis, MN. https://www.upress.umn.edu/book-division/books/the-mishomis-book 

Cajete, G. 2000.  Native Science: Natural Laws of Interdependence. Santa Fe, NM. https://tribalcollegejournal.org/native-science-natural-laws-interdependence/ 

Climate Atlas of Canada. 2022. Prairie Climate Centre. Winnipeg, MB. https://climateatlas.ca/ 

Ferguson, E. 2005. Einstein, Sacred Science, and Quantum Leaps: A Comparative Analysis of western Science, Native Science and Quantum Physics Paradigm. University of Lethbridge. Lethbridge, AB. https://opus.uleth.ca/server/api/core/bitstreams/5082b74d-2475-4cad-9a92-1c64fa47afe3/content 

Fontaine, F., Craft, A. 2016. A Knock on the Door: The Essential History of Residential Schools. Winnipeg, MB. https://uofmpress.ca/books/detail/a-knock-on-the-door  

International Institute for Sustainable Development. 2022. “Indigenous Peoples: Defending an Environment for All: Still Only One Earth: Lessons from 50 years of UN sustainable development policy.https://www.iisd.org/articles/deep-dive/indigenous-peoples-defending-environment-all#:~:text=There%20are%20approximately%20370%20million,effective%20stewards%20of%20the%20environment.

Kendi, I.X. 2019. How to be an Anit-Racist. New York, NY. https://www.penguinrandomhouse.com/books/564299/how-to-be-an-antiracist-by-ibram-x-kendi/ 

Lamouche, M. S. 2021. “Birds of Colour: Part 2.” Transcription of traditional oral stories.

Lamouche, S.F. 2003. Ê-nitonahk Miyo-Pimatisiwin (Seeking the Good Life) Through Indigenous Dance. Peterborough, ON. https://digitalcollections.trentu.ca/objects/etd-1045 

Lucci- Cooper, K. 2003.To Carry the Fire Home.” Genocide of the Mind: New Native American Writing. New York, NY. https://iucat.iu.edu/iuk/5642365 

Miriam-Webster. 2023. Dictionary. Springfield, MA.https://www.merriam-webster.com/ 

Mohammed, J., Anderson, P., Matthews, V. 2022. “Indigenous Peoples across the Globe are Uniquely Equipped to deal with the Climate Crisis – So why are we being left out of these conversations?” United Nations Office for Disaster Risk Reduction. https://www.preventionweb.net/news/indigenous-peoples-across-globe-are-uniquely-equipped-deal-climate-crisis-so-why-are-we-being 

Murphy, J. 2007. The People Have Never Stopped Dancing: Native American Modern Dance Histories. Minneapolis, MN. https://www.upress.umn.edu/book-division/books/the-people-have-never-stopped-dancing 

Pelletier, C. 2018. “An Application of Two-Eyed Seeing: Indigenous Research Methods with Participatory Action Research.” International Journal of Qualitative Methods 17.  https://journals.sagepub.com/doi/pdf/10.1177/1609406918812346 

Reading, C. 2020. Social Determinants of Health: Understanding Racism. Prince George, BC. https://www.nccih.ca/docs/determinants/FS-Racism1-Understanding-Racism-EN.pdf 

Reed, G., Gobby, J., Sinclair, R., Ivey, R., Matthews, D. 2021. Indigenizing Climate Policy in Canada: A Critical Examination of the Pan-Canadian Framework and the ZéN RoadMap, 12(3). https://www.frontiersin.org/articles/10.3389/frsc.2021.644675/full 

Solnit, R. 2023. If you win the popular imagination, you change the game: Why we need new stories on climate. The Guardian. https://www.theguardian.com/news/2023/jan/12/rebecca-solnit-climate-crisis-popular-imagination-why-we-need-new-stories 

Wall Kimmerer, R. 2013. Braiding Sweetgrass: Indigenous Wisdom, Scientific Knowledge, and the Teachings of Plants. Minneapolis, MN. https://milkweed.org/book/braiding-sweetgrass

Hope flows from action: Rebuilding with resilient foundations in B.C.’s Fraser Canyon Region

Foundations

The Fraser Canyon region is the heartland of an Indigenous nation known as the Nlaka’pamux, and the town of Lytton is at the geographical centre of the Nation. In 2021, a spring and early summer drought was a precursor to a Pacific Northwest heat dome which resulted in a recorded high of 49.6° C on June 29 and the next day, Lytton burned to the ground in 21 minutes (BBC News 2021). Five months later, a regional atmospheric river wiped out all but one access road and, in December, extreme cold and deep snow paralyzed the region. While these 2021 events were unprecedented, they were not unexpected: worldwide warnings about climate impacts have been growing since the 1980s, and it  is now evident that humanity is moving out of  “just-right-for-life conditions”, experiencing temporary spikes of extreme weather which could become permanent with significant consequences for human health and well-being (McMichael et al. 2017). 

The Lytton fire also showed that Canada exists on fragile foundations. Yesterday’s settler governments (Karl 2005) made decisions based on a “get-it-done” approach, resulting in buildings, systems, and economies that worked, but were neither sustainable nor resilient. Canada was also built over the lives, lifestyles, and objections of Indigenous populations with little regard for the adverse impacts on the environment and future generations. Previous settler government decisions were justified by a few on the premise of efficiency and pursuit of profit. Today’s governments must resolve these past wrong-doings and take a different decision-making approach for our collective tomorrow, one that is not based on “get-it-done” but on protecting people and communities, with the knowledge that climate change is real and its impacts are growing in frequency, duration, and intensity. 

Governments must also address historical issues created by previous decision-makers who ignored, avoided, or off-loaded issues onto future generations. This risk remains as current governments may perpetuate a status quo mindset, not recognizing that climate impacts are real and increasingly severe or not taking action quickly enough to protect people and communities. If we do not overcome our collective paralysis on addressing climate impacts (Rand 2014) adaptation planning will be delayed until it’s too late, and we are caught in debilitating response mode. Simply put, we want to avoid doing nothing today, taking our chances, and letting tomorrow bear the brunt of impact. No one is immune from climate change’s growing impacts and when we make a conscious decision to make the environment the priority, we all benefit and, more importantly, so do our children and grandchildren.

Tina and Patrick Michell’s first visit back to their home in Lytton, B.C. on July 25, 2021. Photo credit: Patrick Michell

The Fraser Canyon region’s recovery from the devastating events of 2021 is slow and not without controversy (Partlow 2022). There is a tension between building back quickly and building back better. The recovery is also constrained by a real-time process of rectifying past state decisions, decisions that off-loaded the responsibility of creating sustainable communities onto the next generation (Olsen 2023).

Integral to the recovery will be a renewed understanding of the role and functions of the physiological foundations needed for quality of life—clean air, water, food, and shelter—which must be satisfied before other needs can be met (McLeod 2018), and, more importantly, to get right in the recovery what was not done right the first time. 

There are other layers to the recovery process that are sometimes not considered. Having experienced compounding trauma, residents of the region will need to overcome individual fear, anger, and sadness, which, despite the passage of time, continues to overwhelm and undermine recovery. Secondly, they will need to work together on the common goal, which is to conceptualise, design, fund, and build a community that is resilient to the weather of today and tomorrow, allowing the core needs of residents to be met even in a future that will be destabilized by further climate events. 

While this paper focuses on the experience in Lytton, this is not only a Lytton problem. Across Canada, there are 62,000 communities at the same risk level as Lytton was in 2021 (Cohen and Westhaver 2022). The Lytton recovery story is thus important for all Canadians. 

However, having experienced multiple extreme weather events in a very short time frame (Michell 2021), inhabitants are uniquely positioned to become one of Canada’s first resilient regions. And, if Canada’s First People are part of all conversations pertaining to land and resource use (United Nations General Assembly 2007), it will help overcome learned and reinforced behaviour and avoid the mistakes of the past. First Peoples can inform decision-making approaches so that they are focused on taking action to invest in our collective foundations and ensure that all Canadians can weather the coming storms (River Voices 2020). As early as 2010, Kanaka Bar Indian Band, one of the 15 communities that make up the Nlaka’pamux Nation, set aside intergenerational anger and resentments that had accumulated since colonization and set the community toward a new and more resilient future (Michell 2010). In 2015, the Indigenous community codified a vision statement as: “Kanaka Bar is committed to using its lands and resources to maintain a self-sufficient, sustainable and vibrant community” (Kanaka Bar Indian Band 2015), which was followed shortly by the community’s climate change impacts assessment and transition plan. What follows are insights into the decisions and actions Kanaka Bar has taken to build community resilience into the four physiological foundations—clean air, water, food, shelter, so they are prepared for the weather of tomorrow, actions that can be replicated and scaled-up in communities across the country.

Knowing the weather

For the Nlaka’pamux, living in the same place for more than 8,000 years generated a collective conscious knowledge or knowing of local and regional weather, seasonal patterns, and ecosystem cycles. In the 1980s, residents of the Fraser Canyon observed changes on the ground inconsistent with this knowing, and by 1992 a label was applied by climate scientists—anthropogenic climate change. The world’s air, land, and water are retaining heat at an unprecedented rate, producing supercharged or extreme weather events that are overwhelming thousands of years of Indigenous knowing and post-colonial infrastructure and systems that were designed for the weather patterns of yesterday. Ecosystem shifts and collapses are occurring on the ground (Chambers et al. 2021), which makes living today, and preparing for tomorrow, very uncertain. When people don’t know, they worry. Stress and anxiety created by climate change fear and impacts has been accepted globally by health officials and mental health diagnoses for climate anxiety, eco-anxiety and solastalgia1 are now on the rise.

To alleviate stress caused by uncertainty about the future impacts of climate change, the Kanaka Bar Indian Band, located 18 kilometres south of Lytton, completed a 2015 community watershed Land Use Plan (Kanaka Bar Indian Band 2015) and a 2018 Climate Change Assessment and Transition Plan (Kanaka Bar Climate Change Assessment and Transition Plan 2018) and has since invested in three weather stations, seven water gauging stations and an air quality monitor. These tools generate daily site-specific community data for air quality, wind speed and direction, temperature, precipitation, and water quantity. They complement rather than replace Indigenous knowing and assist with community forecasting, early warning systems, emergency preparedness, and response planning.

Site-specific weather monitoring helps improve warning and response plans, providing communities with as much lead time as possible to prepare for extreme weather events, so they can plan for any spikes in extreme heat, wind, rain, and cold and recover more quickly. It allows communities to know with more specificity and warning about when physiological needs are not going to be met—when their health and safety may be at risk from unsafe air, water, heat, and a risk to their shelters. Site-specific data also informs the design and building of new infrastructure or for retrofitting existing infrastructure so it is resilient to the weather in a particular region. The more weather and climate information that communities have, the better warning and response plans they will have and the safer residents will be. 

     Recommendation: 

  • All orders of government (including Indigenous, federal, provincial, territorial, municipal) should implement policies that support the pooling of resources and the sharing of information, and coordination across different orders of government should be designed and implemented to enable communities to understand regional and site-specific risks, and collectively source and install more site-specific air, wind, temperature, and precipitation stations to generate regional weather data. 

Water security

Within the Fraser Canyon region, surface water streams are drying up and regional dry spells are lasting longer while demand remains consistent. Inhabitants with surface water licenses are now facing repeat “low water” and “no water” scenarios. In 2021, ground water wells were running out of water as well and while no zero days occurred—it may be coming soon. 

Lytton was originally built with surface water drawn from Lytton Creek and for years has had to supplement surface supply with water pumps (from wells and from the Thompson River). When the Lytton fire ended the region’s electric supply the town and region was without water as the ability to divert, store, and generate potable water was lost. 

The Fraser Canyon region is looking at a regional plan to share information and water infrastructure so that the water crisis of 2021 is not replicated.

The issue for those in the Fraser Canyon region is not water quantity given the 2021 drought and subsequent atmospheric river events (which unloaded too much precipitation all at once). The issue is planning and building new water storage that is reliable and sustainable even in the face of extreme weather events.

Nlaka’pamux communities have and continue to exist where stable and predictable sun, wind, water, and seasons have been observed to produce healthy ecosystems. Proximity to year-round fresh water sources for ecosystem health, drinking, cooking, animal husbandry, irrigation, and fire protection was where Indigenous people chose to live—thus the saying “water is life.” Nlaka’pamux life changed through contact with European explorers, and when an initial period of Indigenous-explorer mutual relations ended (Manuel and Posluns 1974), it was replaced by colonial law and policy based on denial and oppressions that existed for generations.

Once established, colonial and provincial states oversaw the allocation of fee simple land parcels (private property) to newcomers, which included water licenses which are “first in line-first in right” for purposes like drinking, irrigation, and economic benefit, with little or no thought to the original inhabitants or the ecosystems that had relied on the water for millennia. Inherent title and rights to nation lands and water were disregarded and, since federal reserve allocations came after Confederation, Indian Act reserve lands and water licenses (if available) were small, in bad locations, and not suitable for housing and agriculture. The result was most Nlaka’pamux communities were displaced and relegated to living in very poor conditions, and forced to be in response-mode to colonialism and live with the impacts of these conditions for generations. 

As part of their plan, and to fulfill their vision statement, Kanaka Bar took steps to address these wrongs and to secure for their community one of the most important physiological foundations: Water. With forecasted changes in both weather and precipitation and seeing actual change occur, Kanaka Bar made investments in water gauging stations on seven surface streams within the traditional territory. With site-specific quantity and flow data received to date, Kanaka designed and built new intakes, storage, and delivery systems which can handle “too much” water scenarios and store water for timed release during winter and summer drought conditions. 

Kanaka Bar’s water system is gravity-fed so water can flow during power outages. Kanaka also invested in small-scale solar, wind, and some hydro renewable electricity generation so, if needed, it can shift the energy source for the existing potable treatment plant so it can be kept running during a power failure.

Photo credit: Kanaka Bar Indian Band

Kanaka has also doubled its surface water storage based on current and short-term need forecasts and has created plans for quadrupling storage should demand increase. Finally, Kanaka has separated potable water storage and delivery systems from raw water (purple hydrants and taps) so that an ample supply of non-treated water is available for irrigation and fire protection. All the above has addressed the community’s short and medium long-term water needs and, perhaps more importantly, alleviated current eco-anxiety by giving present day and future generations knowledge that regardless of the weather, they will have a sustainable water supply, which is one of the most important physiological foundations.

To have a meaningful, realistic, and achievable climate change transition and adaptation plan requires water and while you can’t control the weather, you can mitigate its impacts. To learn from Kanaka Bar’s example, communities should consider the following when building a sustainable water security plan: 

  • Assumptions: Don’t take personal, community, or regional water security for granted. Communities should understand where their water source is and plan for scarcity.  
  • Relevant: Understand water licenses. When were they issued? Are they still applicable today? Is there still water to draw on? What are reasonable alternatives to accessing water if your supply stops?
  • Quantity: Install water quantity gauging stations on surface and groundwater and get the empirical data to help forecast water scarcity and possible zero days (i.e. when there is no supply).
  • Collaborate: Meet with regional “water boards” to discuss and plan for water certainty including storage, conservation, timed release, and delivery of potable water in case system failure has occurred. Share knowledge, resources, and plans to minimize shortage and expedite recovery. 
  • Resilient: Design, build, or retrofit physical infrastructure for the weather of today and tomorrow so that an atmospheric river or a wildfire doesn’t bring an end to the water supply. 
  • Hybrid systems: Examine potable water treatment options that are not dependent on the grid to work and separate out raw water from the potable water systems. 

These approaches can also inform policy design and have broad implications for all Canadians and orders of government.

Food security

The Lytton fire exemplifies food fragility and security concerns. Stores were lost in the fire, roads were closed, and an extended electricity outage resulted in families, whose homes had survived the fire, losing their fridge and frozen foods. The families who had either dehydrated or canned their foods, and whose  cellar and basement storage survived the fire, were okay as their food supply was not impacted by the extended electricity outage. Food donation centres were set up, but adequate supply, diversity, and quality varied with the donation. For those who can afford to travel, going to and from the urban stores has become an expensive new norm.  

For more that 8,000 years, the Fraser Canyon’s climate and resulting ecosystems supplied the original inhabitants with access to fresh meats, fruits, vegetables, fish, medicines, tools, and clothing, and a language, culture, laws, and art form developed. Protocols for food harvesting, preparation, storage, and ceremony were well known and surplus was used for trade. 

Colonial policy codified prohibitions on Indigenous people from accessing their traditional territory and practising their old ways, including the sale or barter of food to others (Karl 2005). These prohibitions created generations of suffering and established dependency on the state. To make matters worse, while colonial law prohibited slavery, the many generations who were forcibly removed from their families to attend residential school, were often required to toil in the fields. Concurrent to this, federal policies like the peasant farm policy in the prairies regulated agricultural production on reserve (Carter 1990). Conversations with community show that terms like farming and agriculture now carry a stigma among some Indigenous people because of these historical wrong-doings. Now that the archaic and draconian restrictions have been lifted, Indigenous people are returning to their territories where they are observing traditional foods suffering from air, soil, and water contamination, as well as heat, drought, and over-exploitation. Ecosystem shifts are now occurring in the Fraser Canyon region including the decline of the Fraser River’s wild salmon species (Chambers and Hocking 2021) and traditional field crops are struggling from drought and too much heat. Unfortunately, a shift to community or home-based gardens that could support greater food security has not yet occurred on the scale it needs to and as a result dependency on others for our food continues and will worsen as extreme weather events and impacts increase in frequency, duration, and intensity.  

In 2016, Kanaka Bar did a community food assessment, and a significant finding was that there has been a shift away from community-based food systems in favour of reliance on third-party supplies and suppliers (Berezan 2016). With knowledge that today’s stores carry at most a three-day supply of essentials (when supplies are available) and when roads are closed shelves go empty, Kanaka has invested in a range of food security initiatives including controlled environment agriculture which allows the community to grow fruit and vegetables year-round regardless of the weather. 

Aerial view of the Kanaka Bar community garden. Photo credit: Kanaka Bar Indian Band

Kanaka has also cleared and serviced vacant lands in preparation for community “aquaculture” or the raising of fish proteins in lieu of depleting wild salmon stocks. Kanaka has also secured ownership of off-reserve land from farmers and owners who no longer work their properties to raise proteins that are not water intensive and don’t require a lot of feed such as rabbits, pork, poultry (all types), goats, and, in the future, fallow deer. By taking these steps, Kanaka has made significant progress on ending dependency on the grocery store. Kanaka’s surplus meats, fruits, and vegetables are also available to the region at the new community centre, which is grid-connected but also powered by solar with significant battery storage.

Canadian society is based on importing the things we need rather than producing or manufacturing them ourselves. This puts food—one of the physiological foundations—at risk. It is also learned behaviour which can be quickly reversed, as demonstrated by Kanaka Bar’s approach. Governments can change their focus from growing the economy and GDP to stabilizing them through rural and regional strategic investments in resilient, effective, and efficient growing, processing, storage and delivery food security systems. The goal is that communities can make sure their food is secure, even in the face of extreme weather events.2 

Some initial food security planning steps that all orders of governments should undertake together include:

  • Economic Leakage: complete a food economic leakage study to determine where our food is coming from, consider want versus need, and assess impacts of extreme weather on supply and costs. Understand what we need to live, and then produce it here!
  • Food Sovereignty: support regional food production, processing, and storage through incentives and direct financial support. Create regional food security so that there is always an adequate close source of quality foods so that people never have to go without.
  • Land Bank: secure unused arable land from owners who are unable or unwilling to work their land and then lease out at very low rates to farmers or hire workers (local or from other countries) to grow the food we need. 
  • Food sovereignty, security, and resilience: Rebrand farming and agriculture as a national and province-wide food security issue and promote a resilient food plan. We have the land and resources to generate more than we can eat and thus be in a position to export our surplus but we need to ensure we have the food we need to eat before we put the economy at the forefront. 
  • Food hubs: Make strategic investments in regional storefront and warehousing of fresh and processed food so a ready supply of food and water is available for residents experiencing an extreme weather event or are in recovery from an event. 

Shelter security

The municipality of Lytton lost all its buildings in just over 20 minutes to the fire, and they must rebuild an entire community. The question is will they rebuild it in a way that is resilient to the weather of today and tomorrow.

Nlaka’pamux architecture and engineering for roads, bridges, ditches, boats, energy, and shelter existed for generations before contact as first observed by initial European explorers to the region (Lamb 1960). With colonization and confederation, Nlaka’pamux were required to leave their original places of occupation to live year-round on reserve lands in stick and frame homes built above ground. These homes never met any standards other than the most basic and are not suitable for today’s extreme weather events. Now the Nlaka’pamux, like everyone else, must find a way to design and build shelters that are affordable, resilient (to heat, wind, rain, and cold), energy efficient, and constructable. Kanaka Bar recognized the challenges post-contact policy had on housing, and for years worked to renovate and retrofit deficient existing structures. Today, all new builds in Kanaka Bar are based on passive design and have high-energy efficiency requirements. Kanaka Bar’s own “building code” requirements are that design and construction meet the highest efficiency standards and that owners’ representatives are on site during construction so they can ensure that the work meets community requirements. Kanaka Bar is building durable assets for their children and grandchildren—assets that are resilient to climate change. They are not interested in building assets for flipping later for a capital gain.

In addition, a new subdivision currently under construction called the Crossing Place is grid-connected but will have its own power generation and battery storage, so future residents’ lights, heating, cooling, and air circulation systems will work when the grid goes down. In May of 2022, Kanaka Bar met with new suppliers who shared information on building materials that met the community’s criteria for ensuring new infrastructure would be resilient to extreme weather events (River Voices 2022). 

The passage of time has not been easy on Lytton’s displaced residents, but they understand they have a second chance and, with appropriate government support, can build back better. First, the town was built over the Indigenous village of Tl’kemstin and the Lytton fire gave the residents an opportunity to do something that was not done previously—complete archaeological works to locate artifacts and develop mitigation plans for the rebuild which will minimize future impacts on undisturbed sites. Secondly, following a first-of-its-kind report (GHD 2021), each property has been cleaned and owners given a site clearance certificate confirming that the soils were inspected and lands cleared of all historical contamination and any toxins released in the June 30, 2021 fire. A builders’ charrette was held in April 2023 and a building symposium in May 2023 to discuss the best steps forward for rebuilding. The first build has yet to be determined and the community now has the options and must make the choice: to not build back the same structures and systems that were lost or following the example of Kanaka, build back so that new infrastructure will be resilient to the impacts of climate change. 

Photo credit: Kanaka Bar Indian Band

Some steps for all orders of government to consider to ensure shelter is resilient to climate impacts: 

  • Building bylaws and codes review: Building codes, bylaws, and infrastructure policy must take into consideration the site-specific forecasted weather of tomorrow to be climate resilient. Further, insurance providers should take into consideration accommodating these adjustments so that rebuilds after a disaster are resilient or resistant to fire, heat, wind, rain, and cold.
  • Government housing: governments should consider taking back land from owners, corporations, and speculators who are sitting on land “as an investment” to build safe and resilient social housing for vulnerable populations that are more at risk from climate impacts because of a lack of access to appropriate shelter.
  • Pilot build: the Fraser Canyon region has abandoned, underutilized lands available for government use and Lytton itself will have multiple shovel ready serviced lots that can be used for builds that showcase different building options, envelopes, and systems that are more resilient to climate impacts. 
  • Land back: if there is no business case to justify private builds or federal, provincial, or governments are unable or unwilling to acquire or build the homes that are needed, give Indigenous people fee simple lands to develop inclusive, sustainable, and resilient rental housing.

There is still time and hope

For thousands of years, Indigenous communities thrived based on a symbiotic relationship with the land3, and when an Indigenous community thrives, so does a region.

It was the actions of a few that created the conditions we are facing today and it is the actions of all of us today that will determine our collective future.

This will require leadership and there is hope—Indigenous Peoples survived contact and ongoing colonization and today, because of the United Nations Declaration of the Rights of Indigenous People, Canada’s Truth and Reconciliation Commission’s recommendations and movements like Idle no More putting on public pressure, Canadian governments have moved from avoidance to a position of reconciliation based on new relationships and meaningful collaboration (Union of British Columbia Indian Chiefs and Canadian Centre for Policy Alternatives 2018). 

The logic is inescapable that the current pattern of temporary extreme weather spikes of too much heat, wind, rain, or cold will continue in greater frequency, duration, and intensity. Although our governments understand extreme weather risks, the financial cost of delaying, and the urgent need to adapt to and mitigate the impacts of climate change, sometimes actions are not taken quickly enough (Sawyer, Dave, Ness, Ryan, Lee, Caroline, and Miller, Sarah 2022). Canadians can overcome learned and reinforced behaviour through awareness and action—there is no more time for denial, hypocrisy, apathy, and complacency. The Fraser Canyon story and regional recovery and rebuild exemplifies the risk of waiting too long to prepare for worst-case scenarios. 

On the ground at Lytton, once the now identified contamination risks are alleviated and the archaeological sites are reclaimed and protected, the rebuilding of the B.C. town lost in a day will proceed—with the right government policies, resources, funding, and perseverance—based on a renewed appreciation for the need to protect the four physiological foundations of life: clean air, water, food, shelter. The rebuild, done properly, should provide the Fraser Canyon residents with safety, affordability, and resiliency that enables them to thrive and maintain a high quality of life, regardless of today or tomorrow’s weather. 

Our decision makers need to move away from the now outdated colonial principles and approaches that put the economy above everything and understand that the physiological foundations must be the priority for decision making. This is an opportunity not only for Lytton but for the country and the community of Kanaka Bar shows that it is possible. Climate change transition and adaptation is not a cost, it’s an investment in our collective foundations to ensure that all Canadians can weather the coming storms. 

Hope flows from action: Our children and grandchildren are worth it.

References

Albrecht G., Sartore G.M., Connor L., Higginbotham N., Freeman S., Kelly B., Stain H., Tonna A., Pollard G. 2007. “Solastalgia: the distress caused by environmental change”. Australia’s Psychiatry. 2007;15 Suppl 1:S95-8. DOI: 10.1080/10398560701701288. PMID: 18027145. 

BBC News. 2021. “The Canadian Town that Burnt Down in a Day” [Video], YouTube. https://www.youtube.com/watch?v=8mgpcVwGsNA (Accessed December 18, 2022).

Berezan, Ron. 2016. Fostering Food Security and Food Sovereignty for Kanaka Bar. https://www.kanakabarband.ca/files/fostering-food-security-published-may-2016.pdf

British Columbia Government News. 2023. “Historic Investment in Food Security Supports British Columbians”. https://news.gov.bc.ca/ministries/agriculture-and-food 

Carter, Sarah. 1990. Lost Harvests. McGill-Queen’s University Press.

Chambers, K., D. Stanyer, and M. Hocking. 2021. “State of the Fraser River at Kanaka Bar”. Ecofish Research Ltd. https://www.kanakabarband.ca/files/ecofish-2021-07-12-2.pdf  

Cohen, Jack D. and Alan Westhaver. 2022. “An examination of the Lytton, British Columbia wildland -urban fire destruction.” https://firesmartbc.ca/wp-content/uploads/2022/05/An-examination-of-the-Lytton-BC-wildland-urban-fire-destruction.pdf

GHD. 2021. “Summary of Results and Safe Work Considerations: Bulk Material Sampling and Air Monitoring, Lytton Wildfire Response Lytton, British Columbia- Emergency Management British Columbia.”. https://lytton.ca/wp-content/uploads/2021/09/Summary-of-Results-and-Safe-Work-Consideration.pdf  

Kanaka Bar Indian Band. 2015. Kanaka Bar Indian Band: Land Use Plan. https://www.kanakabarband.ca/files/land-use-plan-march-31-2015-pdf-2.pdf 

Kanaka Bar Indian Band. 2018. Kanaka Bar Indian Band: Climate Change Vulnerability Assessment. https://www.kanakabarband.ca/downloads/climate-change-vulnerability-assessment-pdf-2.pdf   

Karl, Preuss. 2005. “Review of Making Native Space: Colonialism, Resistance, and Reserves in British Columbia, by C. Harris”. American Indian Quarterly, 29 (3-4), 709–713. http://www.jstor.org/stable/4138999 

Lamb, William Kaye. 1960. “The Letters and Journals of Simon Fraser 1806–1808.”  Toronto: Pioneer Books, The MacMillan Company of Canada Limited. 

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Michell, Patrick. 2010. “Memory, Loss and Sorrow…”. https://www.kanakabarband.ca/files/memory-loss-and-sorrow-written-first-in-2010.pdf

Michell, Patrick. 2021. “Climate Change and Extreme Weather Events: Opportunities and Challenges for Sustainability – Kanaka Bar Indian Band and Resiliency” [Presentation]. https://www.kanakabarband.ca/files/climate-change-and-extreme-weather-events.pdf 

Olsen, Tyler. 2023. “How the Lytton Rebuilt Went Wrong”. Fraser Valley Current. https://fvcurrent.com/p/lytton-rebuild

Partlow, Josh. 2022. “A Village Destroyed by Fire Vowed to Rebuild the Right Way. Then the Fight Begins”. The Washington Post. https://www.washingtonpost.com/climate-environment/2022/12/15/lytton-fire-canada-climate-change/ 

Rand, Tom. 2014. Waking the Frog: Solutions for Our Climate Paralysis. Toronto: ECW Press.

River Voices. 2022. “Resilient Housing Solutions – Kanaka Bar Band” [Video], YouTube. https://www.youtube.com/watch?v=4H7fJNeGwCc&t=1s (Accessed March 11, 2023)

River Voices. 2020. “For the Next Thousand Years! Kanaka Bar’s Vision for a Sustainable Future” [Video], YouTube. https://www.youtube.com/watch?v=6md2Ld5lChw (Accessed March 11, 2023).

Sawyer, Dave, Ness, Ryan, Lee, Caroline, and Miller, Sarah. 2022. “Damage Control: Reducing the costs of climate impacts in Canada”. Canadian Climate Institute.https://climateinstitute.ca/wp-content/uploads/2022/09/Damage-Control_-EN_0927.pdf 

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1 Solastalgia is, “the distress that is produced by environmental change impacting on people while they are directly connected to their home environment.” 

2 March 2023 announcements by the B.C. and Canadian government show they understand the priority of making investments in food sovereignty and security to keep food on the table regardless of the weather.

3 For the Nlaka’pamux, there is a saying, what you do to the land, you do to yourselves so take care of the land and it will take care of you.