Environment Committee on Oct. 9th, 2025

[Jerry V. DeMarco]

Deadlines drive action and provide a sense of urgency. That was one of the hopes of adding an objective for 2026, instead of just thinking about how 2030 is a way off. One of the options that have been under consideration, which we talked in the last session, is annual carbon budgeting, where you would have specific amounts and targets for each year to keep on track. That's one element.

There are different ways of doing it, but a stepwise plan to get there.... Just a hope that we will arrive in 2030 and land on target is not sufficient, and we know that from the last 30 years.

[The Chair, Liberal, Angelo Iacono]

Thank you, Commissioner DeMarco.

Mr. St‑Pierre, you have the floor.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Thank you for your testimony, Commissioner.

My question is for the three witnesses from the Office of the Auditor General.

As you know, provincial governments play a key role in meeting Canada's targets. I'm a member for Quebec, and even Quebec is missing its 2030 target of 37.5%.

Provinces have many regulatory and legislative tools at their disposal to reduce these emissions.

Are the measures provinces like Quebec and Ontario have taken sufficient to reduce emissions?

[Jerry V. DeMarco]

All levels of government, communities, the private sector and Canadians must take action to address climate change.

Does the federal government believe that provincial measures will be sufficient? No, the provinces need leadership on this issue.

The Supreme Court of Canada confirmed that the Canadian Environmental Protection Act and the Greenhouse Gas Pollution Pricing Act fall under federal jurisdiction.

If the willingness is there, the federal government can be a leader in this field while working with the provinces on their turf. However, if we look at all the federal and provincial measures taken to date, they're not sufficient to reach the target.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Are there certain provinces that concern you or that are particularly behind in meeting their targets? How could this affect federal targets?

[Jerry V. DeMarco]

The Office of the Auditor General of Canada is mandated to review federal performance. Provincial offices sometimes analyze progress made in their own provinces.

Two weeks ago, the Auditor General of Ontario released her report on the progress made in that province.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

This question is for Mr. Cosbey from the Commission on Carbon Competitiveness. The carbon border adjustment mechanism imposes a levy on carbon-intensive goods coming into one's jurisdiction and addresses carbon leakage, as you mentioned. Europe recently adopted a CBAM model specifically to introduce a level playing field for industrial sectors, like cement and steel.

I'm interested in getting your perspective. Should Canada adopt a similar CBAM type of model or system?

[Aaron Cosbey]

Our finding was that Canada has no choice. In the immediate term, the output-based allocation—the sectoral standards under industrial pricing—are working to prevent leakage and competitiveness risks, but when firms start to decarbonize more and the credit markets get tighter, that's not going to work anymore. We are going to have to find some other ways to protect against competitiveness impacts and the risk of leakage.

The European CBAM is a pioneering effort in that space. We're all watching it to see how well it does. It's not an easy challenge, but I think it's inevitable that Canada will have to go there. Other players are doing the same. Australia and Japan are considering it, and Norway and the U.K. have adopted it. We're seeing that any country with a seriously ambitious industrial carbon price has to think about how to protect the competitiveness of those industries, and border carbon adjustment seems the premier tool of choice.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Great.

Just to follow up on that, we're living in a fairly complex world right now, with the discussion around tariffs being front and centre. I would argue that our new government is handling the situation exceptionally well.

Could Canada implement carbon tariffs as a way to ensure that our Canadian industries are strengthened?

[Aaron Cosbey]

It's absolutely a mix of a desire for competitiveness and avoiding risk of leakage. The mix of these environmental and competitiveness objectives drives the move toward instruments like border carbon adjustment in the EU and other places. If we start from a place of strength, if we start from a place where our producers are relatively clean compared with global production, then putting in place that kind of border protection does give your domestic producers a leg-up.

To be clear, our producers of steel are among the cleanest in the world. Our producers of aluminum are among the cleanest in the world. The same goes for fertilizers. Yes, these things will have a beneficial competitiveness impact in Canada.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

As a quick follow-up, using the few seconds I have left, could you speak to specific Canadian industries that would stand to benefit? I heard you quickly mention steel. Could you highlight those in 20 seconds?

[Aaron Cosbey]

It would be steel and aluminum in particular. If you look at global benchmarks, we are literally the cleanest in the world, with very few exceptions in those sectors, benefiting from our clean energy mix and benefiting from our modern production methods.

Those two sectors in particular stand out as liable to benefit under a border carbon adjustment scheme.

[The Chair, Liberal, Angelo Iacono]

Thank you, Mr. Cosbey.

Mr. Bonin, you have the floor for six minutes.

[Patrick Bonin, Bloc, Repentigny, QC]

Thank you, Mr. Chair.

Commissioner, your report clearly shows that Canada is not on track to meet its target. You mentioned setbacks, particularly with regard to the consumer carbon price, but we believe there are other setbacks as well.

Another setback, for example, is the issue of approving liquefied natural gas projects. The government classified one of these projects as being in the national interest.

Furthermore, Mr. Carney is talking about green oil. He made an announcement about the Keystone XL pipeline this week, and we're no longer hearing anything about capping oil and gas emissions.

In your opinion, how will the government's shift toward oil and gas affect the action plan?

[Jerry V. DeMarco]

Some measures were scrapped, such as consumer carbon pricing and others you mentioned.

According to the results of the department's new model, Canada will achieve a reduction of less than 36%. I don't know the exact figure.

It's also unclear whether the government will implement new measures to replace those it scrapped.

I can't do the math because I haven't seen the whole new plan. I know the current plan has shortcomings because of the elimination of consumer carbon pricing, but I don't know what the new version of the plan looks like.

We hope there won't just be scrapped measures; I'd like to see new or improved measures.

[Patrick Bonin, Bloc, Repentigny, QC]

As I understand it, you would also like to see modelling if new measures are implemented as part of the upcoming climate competitiveness strategy.

Is that correct?

[Jerry V. DeMarco]

What do you mean by “modelling”?

[Patrick Bonin, Bloc, Repentigny, QC]

The government has promised to implement a climate competitiveness strategy. As I understand it, you would like this strategy to include modelling to ensure each measure effectively reduces emissions.

Am I understanding that correctly?

[Jerry V. DeMarco]

We only know the title of the new plan. We don't know what's in it. However, we do recommend that improvements be made to the content of the plan for the coming decades.

I don't know if this is a new plan that will replace the current one or if it's an addition to it. I've only read the title. We'll see.

[Patrick Bonin, Bloc, Repentigny, QC]

With regard to the Canadian Net-Zero Emissions Accountability Act, it's clear the government is not on track to meet its targets for 2026 or 2030.

If it doesn't comply with the act, what does that mean for Canada?

[Jerry V. DeMarco]

It might be easier to talk about our new audit on adapting to climate change. If Canada and other countries fail to meet the targets set, the planet will suffer the consequences. There will be more forest fires and more flooding, which will have adverse effects on the economy, on social measures, etc.

It's not just future generations that will suffer. This generation is already suffering.

It's not just about the future; we're already seeing these negative effects.

[Patrick Bonin, Bloc, Repentigny, QC]

Is there a way to strengthen the act to ensure it's enforced?

[Jerry V. DeMarco]

I understand your question.

The Canadian Net-Zero Emissions Accountability Act now requires the government to publish a progress report, which is something we analyzed in our report.

That said, can this act be amended to make it have legal consequences? Maybe, but that's up to Parliament to decide. It's not for us to put forward.

Cases can also be brought before the courts, as is the case in the Netherlands and at the International Court of Justice, so there could be consequences in terms of liability.

[Patrick Bonin, Bloc, Repentigny, QC]

Beyond the consequences or legal remedies, do any other countries have stronger legislation that can force the government to meet its targets?

[Jerry V. DeMarco]

Yes, I would like to invite Ms. Leach to talk a little about the United Kingdom. Their system has things we don't have in Canada.