Thank you, Mr. Chairman.
Good afternoon, ladies and gentlemen. Thank you very much for the honour to appear before this committee.
I will address two of your subtopics today: climate finance and the potential for transfer of mitigation outcomes under article 6 of the Paris Agreement.
I'll give you just a couple of words about me so you know where I'm coming from.
I used to be a federal government official. I was a climate negotiator for the government for a number of years. Now I'm independent, working closely with the Center for Clean Air Policy, which is a Washington-based think tank, but also with a number of other organizations. This past year I've worked on projects that have been for the Green Climate Fund, which is a big multilateral climate fund of which Canada is a part, and working with the Swedish Energy Agency and the World Economic Forum, so various organizations have been clients or recipients of advice.
I'll just give you a couple of key messages on each of the topics and then maybe we can come to questions.
I will talk to you in English, but I welcome your questions in French.
On climate finance, the key message, I would say, from a Canadian point of view, is to focus on long-term transformation in developing countries, not just financing projects.
In this respect, Canada's long-standing focus on mobilizing private finance with its climate finance remains very valid. Going forward, Canada's approach may need to be tweaked a little bit to take into account some of the things we've learned recently in this phase. For example, we've learned that a lot of the instruments and institutions out there that are focused on mobilizing private investment in climate action in developing countries probably are not giving enough support for things like national capacity, the creation of enabling environment and things like that, which will be critically important in shifting investment towards greener investments.
Probably some of the money that they've been getting from donors is not risk-inclined enough. There's still too much caution in the kind of money that these international institutions are getting for them to achieve the kinds of impacts they're looking to achieve. They're not, therefore, meeting some of the financial gaps that are really important—for instance, the availability of money in local currency, the very early stage equity financing for climate action, etc.
The other thing that is probably missing is efforts around project origination. In other words, one the big gaps is that there aren't enough projects. There's a lot of money that's chasing too few projects, or there are a lot of projects that don't necessarily fit the money that's available. Working on origination and supporting the development of projects as much as their implementation is going to be really important as we look forward. That's been a barrier, by the way, in Canada, too, when efforts were made to try to provide finance for projects that have, for instance, Canadian partners involved. There aren't that many projects out there in developing countries, other than in places like China.
On the transfers under article 6 of the Paris Agreement, the important message there is that those transfers need to increase ambition. It's not just about shifting emissions from one country to another. To me, the transfers need to be part of an overall, all-of-the-above strategy that includes significant domestic ambition and climate finance for projects in developing countries that can count towards developing country action. Then, as well, it's about efforts to source emissions reductions in other countries to help us raise our own ambition. There are ways that it can be done that are win-win. A robust target in a country like Canada can be achieved in part by supporting reductions in developing countries in a way that also helps them raise their own mitigation ambition.
As you know, the IPCC has been clear that we need significantly much more mitigation than is on the table already. If Canada can help countries achieve or meet their targets with climate finance and then further top up productions using article 6 transfers, that's great, but, as I was saying earlier, if you take a reduction that's in one country and then use it to count towards our target here, you're not necessarily creating more mitigation overall, and we're kind of fundamentally missing mitigation globally to meet the targets.
Thinking about this going forward, you probably want to think about a few things from a Canadian point of view. I think we need to ask ourselves if people will see Canada's target as ambitious enough to justify our resorting to international reductions.
That's an inherently political question, so I'm not going to give you my own view on that, but as you know, there are many organizations that don't consider Canada's targets to be particularly ambitious when compared to those of other countries.
We just saw in the European Union today that the European Parliament called for the European Commission to come up with a target that complied with a 55% reduction by 2030 and net zero emissions by 2050, so when you compare yourselves to others, there is a question. There is a political risk in going down that path for Canada.
Second, international reductions should be thought of as a way to help us get past the fact that certain sectors are harder to reduce in than others. It's not forever creating an opportunity to offset emissions in Canada, but rather gives us the time we need domestically to achieve the kind of reductions we need to achieve. The international missions can kind of complement that, help us bridge that gap and deal with sectors where the technology just may not be available yet for reductions to occur domestically.
In that respect, as CCAP has noted in the past, crediting periods will probably need to be fairly short. The international negotiations are a bit vague on this right now, but a lot of proposals out there are suggesting that the crediting period should be relatively short, so it's not like you can necessarily count on credits being available for 20 or 30 years once you've made a commitment to acquire them.
Third, it's also important to think about the other side of the equation. Developing countries will want to keep some of the cheaper reductions for themselves to meet their own targets. It's not necessarily clear that those cheap reductions are going to be widely available for us to just scoop up, but rather, let's look at it as kind of a partnership, where the opening of Canada's market to credits from another country can be a way to also support developing countries in their own transformation efforts.
There are a lot of technical issues we could get into here if you're interested, but I won't belabour the point in opening remarks.
I'll make one final point in closing. Money allocated toward climate finance and money allocated toward the acquisition of international credits should be kept fairly separate in public reporting. The climate finance commitment is a commitment to help developing countries. It's an altruistic commitment made under the conventions. Money that goes to support the acquisition of credits is something we would do for ourselves, to make our own reductions cheaper.
Again, you might get into political risk questions if you start using climate finance money to then make your own target cheaper. When you are preparing advice for the government, be mindful just to keep those two pots of money and the way they're communicated fairly separate.
Thanks very much.