Environment Committee on April 28th, 2022

[The Chair, Liberal, Francis Scarpaleggia]

I call this meeting to order.

Unfortunately there was a delay caused by the vote. The intention, if House of Commons resources permit, is to still do the full two hours. That would take us to 1:47. We'll see what happens.

Commissioner, welcome—

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

I have other matters, Mr. Chair. I cannot stay until 1:47. We'll have to discuss that.

[The Chair, Liberal, Francis Scarpaleggia]

Okay, I understand that.

We'll have to deal with it when we get close to the one o'clock time slot. As I say, we don't know what the House resources will permit. There's always a potential for substitution. The committee will have to decide if it wants to adjourn before 1:47. We'll deal with that as we get closer to one o'clock. I do understand your predicament, Mr. Seeback.

Commissioner, you have the floor for around 13 minutes.

[Jerry V. DeMarco, Commissioner of the Environment and Sustainable Development, Office of the Auditor General]

Thank you, Mr. Chair.

Thank you for inviting us today to discuss my spring 2022 reports.

I would like to acknowledge that we're on the traditional unceded territory of the Algonquin Anishinabe people.

With me today are Milan Duvnjak, Philippe Le Goff, Kimberley Leach and David Normand, who are responsible for the reports.

The five reports I provided to Parliament earlier this week are on programs that relate to the federal government's efforts to address the climate crisis. Last fall, I provided Parliament with an overview of Canada's climate record. I indicated that audits of specific programs like the ones I am discussing today would follow. As the programs are ongoing, my reports provide a type of mid-term report card that should help improve outcomes, because the climate change clock never stops ticking.

By auditing these important programs at an early stage, our intent is to provide Parliament with useful information that can be used before the clock runs out. We cannot afford a fourth decade of failure on climate action.

First, let's turn to carbon, which is led by Environment and Climate Change Canada. As is recognized by the Supreme Court of Canada and many international organizations, effective carbon pollution pricing drives changes in consumer and producer behaviour that in turn reduce overall greenhouse gas emissions. Carbon pricing is therefore essential if Canada is to finally succeed in significantly reducing its greenhouse gas emissions.

We found that the department had ensured that carbon pricing systems were in place in all provinces and territories. In 2021, the department worked to address weaknesses in its initial approach that had allowed some less effective provincial carbon pricing systems to be accepted. However, the department did not fully address some shortcomings that could hinder the overall effort to meet Canada's emission reduction targets. For example, we found that federal requirements for large emitters continue to undermine the polluter pays principle by approving weaker systems for large emitters in some parts of the country.

In addition, indigenous communities and some groups in society remain disproportionately affected by carbon pricing systems.

Canada's carbon pricing approach needs further improvement to support the achievement of Canada's national emission-reduction targets, including transparent reporting so that Canadians can better understand the effectiveness and impacts of carbon pricing systems.

Canada is committed to moving away from fossil fuel dependence towards a low-carbon economy that reaches net-zero emissions by 2050. It is also committed to what is called a "just transition" for the workers and communities affected by this economic shift. This is the subject of the second audit released today.

The burning of coal to produce electricity has been a major contributor to greenhouse gas emissions. Phasing out coal is an early part of the government's plan to transition to a low-carbon economy. The government identified Natural Resources Canada as the lead department to deliver just transition legislation in 2019.

When it comes to supporting a just transition to a low-carbon economy, the government has been unprepared and slow off the mark. The department took little action until 2021, and it did not have an implementation plan to address this significant economic shift, which affects a variety of workers, communities, regions and stakeholders.

We found that as Canada shifts its focus to low-carbon alternatives, the government is not prepared to provide appropriate support to more than 50 communities and 170,000 workers in the fossil fuel sector. Without a proper just transition plan in place, there are risks that are comparable to what occurred with the collapse of the northern cod fishery in Atlantic Canada in the 1990s.

In the absence of a coordinated federal approach to support a just transition to a low-carbon economy, federal organizations relied on existing mechanisms, such as social assistance programs. These fell short of achieving a just transition for coal workers and the communities where they live.

As the coal phase-out is the first of several transitions to a low-carbon economy facing Canadian workers, communities and governments, there is an opportunity for the federal government to learn from this initial experience to improve future policies and programs. The future will involve changes at a much larger scale than the coal phase-out, so it is essential for Canada to make up for lost time and ramp up its approach to a just transition.

Hydrogen is the subject of the third report. As Canada's energy mix shifts away from fossil fuels, attention has turned to hydrogen as a possible cleaner substitute. The failure to appropriately project hydrogen's impact on reducing greenhouse gas emissions could jeopardize Canada's ability to meet its emission-reduction targets.

Two departments—Environment and Climate Change Canada and Natural Resources Canada—both endorse the idea of this clean energy source but took different approaches to project the role hydrogen should play to reach emission-reduction targets.

Environment and Climate Change Canada estimates hydrogen could produce the equivalent of a 15 megatonne reduction in greenhouse gas emissions by 2030, while Natural Resources Canada estimates up to 45 megatonnes of reductions by the same date.

In its transformative scenario, Natural Resources Canada assumed the adoption of aggressive and sometimes non-existent policies, along with an ambitious uptake of new technology. In our view, the assumptions in the federal hydrogen strategy are overly optimistic and compromise the credibility of the expected emission reductions.

This is concerning, because Canada's greenhouse gas emissions have increased significantly since the United Nations Framework Convention on Climate Change was signed in 1992, making Canada the worst performer of all G7 nations since that time. As I noted in the fall, Canada has consistently failed to meet its climate targets, despite numerous plans and commitments. Going forward, Canada needs realistic goals, credible plans and, most importantly, effective actions.

If hydrogen is to be part of Canada's plans to reduce greenhouse gas emissions, Environment and Climate Change Canada and Natural Resources Canada will need to coordinate their approaches and more effectively model and communicate a pathway for hydrogen.

Our fourth report is a snapshot of the greening government strategy launched by the Treasury Board of Canada Secretariat in 2017.

Federal government operations are a significant contributor to Canada's total emissions of greenhouse gases. We found that the secretariat had taken initial steps to support departments' efforts to reduce the federal government's environmental footprint. However, five years into the strategy, efforts to reduce emissions are not as complete as they could be. This is important, given Canada's publicly stated commitment to reach net-zero emissions by 2050 and to be a national and global leader in transitioning to carbon-neutral government operations.

At the time of our audit, eight of 27 departments had created reduction plans covering 81% of departmental emissions. We looked at National Defence, the largest emitter in government, and found that there was no clear information about how the department's efforts were contributing to the overall reduction target. The audit found that some important information on greening government was hard to find, unclear or incomplete. There was also a lack of detail on costs and savings.

In addition, the emissions of Crown corporations were not part of the strategy.

Overall, this lack of information makes it difficult for decision-makers, Parliament and Canadians to track whether the government will meet its 2050 target and whether Canada is being the global leader in greening government that it has set out to be.

More work is needed to ensure that the Greening Government Strategy delivers the desired results and that complete plans and methods are put in place to track and report on emission reductions.

In our last audit, we looked at whether selected federal funding programs contributed to more resilient, less carbon-intensive, and inclusive infrastructure investments.

We found that Infrastructure Canada had designed and implemented a way to assess whether funded projects could better withstand the effects of climate change, such as increasing floods and wildfires, and help reduce greenhouse gas emissions. In the initial roll-out of the department's Climate Lens assessment tool in 2018, those managing infrastructure projects were required to provide detailed estimates of their projects' expected emission-reductions.

However, we found that these requirements were weakened when the Climate Lens tool was changed in 2021. This reduced the department's ability to track and report on the funding programs' contributions to the government's climate-related objectives. The information deteriorated to the point that Infrastructure Canada was unable to accurately account for the expected climate mitigation and resilience benefits of the projects it funded.

We also found that Infrastructure Canada did not integrate Canada's commitments to meeting the United Nations' Sustainable Development Goals into the design of its programs. The department did incorporate gender-based analysis plus in the design of its programs and collected related information from project proponents, but it did not consistently measure and report on outcomes. Without complete and reliable information on the expected benefits and outcomes of funded projects, the government will not be able to tell whether its investments contributed to less carbon-intensive and more resilient infrastructure, or to its commitments to enhance diversity and inclusion.

As I mentioned at the beginning of my remarks, the climate change clock never stops ticking. We are moving ever closer to some critical deadlines that the government has set for itself. I trust the findings and recommendations that I have brought forward today will help the government improve its performance in these areas of critical importance. Because climate change is an intergenerational crisis with a rapidly closing window for action, it is essential for Canada to translate its commitments and plans into real action and results. Our future depends on it.

Mr. Chair, this concludes my opening remarks. We are happy to answer any questions the committee may have.

Thank you.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you, Commissioner.

Before starting the first round of questions, I would like to welcome our colleague Wilson Miao, who is with us this morning.

I would like to let committee members know that the plan was for the Minister of Environment and Climate Change to appear on Thursday, May 5. However, his schedule has changed and he will be with us on Tuesday, May 3. Please make a note of that.

Mr. Seeback, you now have the floor for six minutes.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Thank you very much, Mr. Chair, and Mr. DeMarco, thank you very much for your report. Would you agree with me that a just transition for workers is a pretty key part of any emissions reduction plan?

[Jerry V. DeMarco]

Yes. I would agree that it's a critical part, not just “a pretty key part”.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

I was going to say “critical”, but I didn't know if you would agree to that. I'm happy that you do.

How long has the government had plans? How much time did the government have to plan a just transition for coal workers? I believe that when you gave us your briefing on Tuesday, you said they had known about this since 2016.

[Jerry V. DeMarco]

Yes, the commitment to phase out coal was announced in 2016, and then the regulations followed. In terms of the actual implementation—which is ongoing in Alberta, where there has already been the transition—I would say 2016 in terms of notice from themselves and perhaps 2015 in terms of notice from the international community, because the Paris Agreement includes wording about the necessity for a just transition.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

They've had six or seven years to plan for a just transition for these coal workers.

[Jerry V. DeMarco]

Yes.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

As a result of your analysis, you've said there was no federal implementation plan, no formal governance structure and no measuring and monitoring system. Over seven years, they did not accomplish any of that.

[Jerry V. DeMarco]

Yes, they are very slow off the mark, as I mentioned in my opening statement.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

When we look at some of the things you analyzed, we see, for example, that the government made an announcement that they would “create a pension bridging program for workers who will retire earlier than planned due to the coal phase out”. Did they not do anything other than make that announcement?

[Jerry V. DeMarco]

They relied on existing programs that were in place for other types of disruptions that people experience in their lives—unforeseen job loss, and so on—but there was no tailored approach for the phase-out of coal as an energy source and in terms of thermal coal mining.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Right, but they announced that they were going to have plans to protect wages and pensions. That's in your report.

[Jerry V. DeMarco]

That's right.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

They did an announcement but did not do the actual work.

[Jerry V. DeMarco]

Correct.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

This says, “Create a detailed and publicly available inventory with labour market information pertaining to coal workers, such as skills profiles, demographics, locations, and current and potential employers”. They made that commitment as well, and they did not deliver on that in the last seven years. Is that correct?

[Jerry V. DeMarco]

That is correct.

Now, keep in mind the period of our audits. There have been a few developments since we closed the books on this. You can ask the departmental officials for an update on what's happened since we closed the file, but as of the date, yes.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

Right, and it's the same thing with this: “Create a comprehensive funding program for workers staying in the labour market to address their needs across the stages of securing a new job, including income support, education and skills building [and] re-employment....”

It's been known since 2015 that they would need things like that, and as of your report, nothing had been done on that either.

[Jerry V. DeMarco]

I'm going to ask Ms. Leach to comment on that particular paragraph.

[Kimberley Leach, Principal, Office of the Auditor General]

Thank you very much, Mr. Chair.

I just wanted to point out that those recommendations from the just transition task force for coal workers were made back in 2018. The task force made 10 recommendations, as we noted in our chapter, and some of them were followed through and some of them were not.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

This is one that was not.