For countries that have based much of their economy on fossil fuel resource extraction, a low-carbon energy transition is a major challenge. Ryan Heath discusses these challenges in an article on the Politico website.
Justin Trudeau walks sustainability tightrope
Canada has long been on a climate collision course. The country extracts some of the dirtiest oil in the world from its Alberta tar sands and is building new pipelines, just as the world’s major banks are getting out of the sector. Yet Prime Minister Justin Trudeau wants the world to see him as a “woke” friend of the climate. He instituted a carbon tax — and recently increased it during the Covid-19 pandemic — and is committed to cutting the country’s emissions 30 percent below 2005 levels by 2030. Meanwhile, Mark Carney, the country’s former central banker, is the world’s leading advocate of climate finance.
May has been a busy month for Canada’s competing climate visions.
On one hand, Alberta’s Energy Minister Sonya Savage told an oil industry podcast this week that “now is a great time to be building a pipeline because you can’t have protests of more than 15 people.” She was referring to the Trans Mountain oil pipeline, which started construction in December and would pump 890,000 barrels of oil a day. Trudeau supports the project on economic grounds but it is opposed by many environmentalists and indigenous groups. Meanwhile, Savage’s boss, Alberta Premier Jason Kenney, is pushing back against U.S. presidential candidate Joe Biden — saying he “hasn’t been well or accurately-briefed” — after the presumptive Democratic nominee promised that, if elected, he would stop a different pipeline, Keystone XL, from crossing the border into the United States.
On the other hand, Trudeau’s Liberal government has been busy building new climate responsibilities and incentives into its Covid-19 recovery plans.
Environmental Defense Fund energy expert Sam Kotis described Canada’s Energy Stimulus Plan as “a standout example of how world leaders can carefully meet society’s immediate needs while simultaneously reducing the greenhouse gas pollution that is destabilizing our climate.” Kotis suggests Trudeau is pulling off the political miracle of protecting both jobs — even in oil and gas — and the climate.
While Kotis takes a decidedly optimistic view, Canada’s plan does seem likely to have a serious impact on cleaning up methane leaks. Methane is around 80 times worse for the climate than other greenhouse gases, and cleaning it up is one of the most cost-effective ways of reducing climate impact. Trudeau has committed to a $550 million Emission Reduction Fund, which offers loans to oil and gas producers to cover the costs of spotting and cleaning up leaks.
The methane plan was Trudeau’s counteroffer to the oil and gas industry’s initial bailout demands, and the International Energy Agency thinks other countries could copy Canada’s incentive-based model for methane control. Yet the broader context is inescapable: Canada still chooses not to apply its signature carbon tax to the methane emissions of the oil and gas sectors.
Getting Covid-19 Relief in Canada will now require companies to disclose their climate impacts. Access to an initiative known as the Large Employer Emergency Financing Facility — a bridge loan system for companies with $300 million or more annual revenue — requires applicants to “commit to publish annual climate-related disclosure reports … including how their future operations will support environmental sustainability and national climate goals,” Trudeau said in a press release. As always, there’s a catch: A senior government official told POLITICO that Ottawa doesn’t have a mechanism to force companies to report on the specific financial impacts of climate change.
Experience in Europe suggests that climate disclosure requirements don’t always lead to actual disclosure, financial or otherwise. A new report by the Climate Disclosure Standards Board, an NGO consortium, found that 39 of Europe’s 50 largest listed companies are not adequately reporting the environmental and climate-related risks of their business model, as they are required to do under the EU’s Non-Financial Reporting Directive and the TCFD recommendations.
Canada is putting in other building blocks for a whole of government Covid-19 and climate response. Tiff Macklem will start as Bank of Canada Governor on June 3, raising expectations for a climate focus at the bank. Macklem served as deputy to green-minded central banker Carney, who led the bank from 2010 to 2014. Macklem later chaired a federal Expert Panel on Sustainable Finance, which reported in 2019 that the transition to a low-carbon global economy could create US$26 trillion and 65 million jobs.