Full-court press on climate in mandate letters, but environmentalists will wait and see

By John Woodside, Local Journalism Initiative Reporter, Canada’s National Observer

December 22, 2021

The cabinet ministers’ mandate letters published last week hint at a whole-of-government approach to tackling the climate crisis, but the devil will be in the details, many environmentalists say. 

Mandate letters signal the government’s expected priorities, and Prime Minister Justin Trudeau has directed the cabinet to pursue climate change solutions that spread many critical tasks across multiple ministries. 

“We’re seeing the support, at least on paper, of a whole-of-government approach to climate change, and that’s really important because historically climate was only addressed by ECCC (Environment and Climate Change Canada),” said domestic policy manager with Climate Action Network Canada Caroline Brouillette. 

“We know that climate change affects every single sector of our economy and of our societies, and so a whole-of-government approach is absolutely necessary.”

Building climate-resilient infrastructure, capping oil and gas sector emissions, achieving a 100 per cent net-zero electricity grid by 2035, providing international climate finance, developing a whole-of-government emergency preparedness strategy and requiring federally regulated institutions to develop and disclose climate risks and net-zero plans are just a few of the significant climate-related proposals included in the Liberal government’s new mandate letters.

These objectives are spread across departments like Public Safety, International Development, Natural Resources, Environment and Climate Change Canada, Finance and others. 

Freeland tasked with climate finance regulations 

Climate change is, for example, reflected heavily in Finance Minister Chrystia Freeland’s mandate letter, which requires her to ensure all budgetary measures are in line with Ottawa’s net-zero by 2050 goal, work on just transition legislation with other departments, eliminate fossil fuel subsidies in tandem with Natural Resources Canada (NRCan) and launch a $5-billion green bond program, among other things.

Perhaps most importantly, her mandate letter requires mandatory climate-related financial disclosures and net-zero plans from federally regulated institutions, including banks, pension funds and other government agencies. 

It remains to be seen whether these compulsory disclosures and net-zero plans are “going to be a really strong regulatory approach or not, but that could have a bigger impact than most other government measures,” said Environmental Defence national program manager Dale Marshall.

“If this is a robust regulation, it could have a huge impact on money flows — private and public — in the future and either lead to greater climate action or lead to more fossil fuels,” he added.

Adam Scott, director for Shift Action for Pension Wealth and Planet Health, told Canada’s National Observer the implication of the finance minister’s new mandate letter is that a number of Crown corporations will have to have their mandates changed to align with net-zero goals. 

“Export Development Canada is really high on that list,” said Scott. 

EDC keeps much of its financing under wraps for stated corporate competitiveness reasons, but its international financing for fossil fuels is estimated at somewhere between $2 billion and $9 billion from 2018 to 2020. EDC also has a separate commitment to end international fossil fuel financing, which would bring it closer to being in-line with Ottawa’s climate goals. 

Canada also provides more financing to the fossil fuel sector than any other G20 country, funnelling that money mostly through EDC. For example, in 2018-19, Enbridge received more than $300 million from EDC for business in the United States, while Calgary-based Parex Resources was given at least $94.5 million in loans for oil and gas extraction in Colombia that same fiscal year.

The billions from EDC pale in comparison to the hundreds of billions worth of assets being managed by the Canada Pension Plan and the Public Sector Pension Investment Board, both Crown corporations that control nearly $750 billion worth of assets around the world. The Canada Post pension plan is smaller but still owns roughly $27 billion worth of assets.

As Crown corporations, it is expected they would all have to develop plans to align with a net-zero future, making the finance department a key player in Canada’s coming climate policy. 

“It’s great to make a promise that budgets need to align with climate goals, but when we don’t actually have clarity on what those goals are — for example, winding down fossil fuels versus ramping them up while investing in unproven carbon capture— it’s hard to put much stock in that promise,” said Amara Possian, Canada campaigns director with climate advocacy group 350.org.

Scott said another important area to watch will be the Office of the Superintendent of Financial Institutions (OSFI), the federal financial regulator. OSFI regulates banks, pension funds, insurance companies and other financial institutions. While net-zero plans will need to be developed, how quickly emissions will be reduced is an open question, which could render the Paris Agreement goal of holding warming to 1.5 C impossible if steep emissions reductions are not soon met. 

“Good targets are really critical, but we won’t be successful at any of this if creative accounting is allowed to continue, and that’s what we’ve got a lot of right now,” said Scott. “Creative accounting can come in the form of messing with offsets, it can be messing with the baseline year, and it can be messing with greenwashing.”

Changing mandates

Of the mandate letters for other government departments, NRCan has also seen a significant change in its priorities since 2019. 

“NRCan’s role went from being seen as a promoter of the extraction of natural resources in a status quo kind of context towards positioning the ministry as a proactive actor of the energy transition,” said Brouillette. “Historically, ECCC and NRCan would work in silos rather than in a complementary and coherent fashion, (but now) we’re seeing a lot of files being shared by ministers (Steven) Guilbeault and (Jonathan) Wilkinson.”

In fact, the first bullet point of then-Natural Resources Minister Seamus O’Regan’s 2019 mandate letter was to “construct and complete the twinning of the Trans Mountain Pipeline,” with other references in the letter to ensure the energy sector remains competitive. By contrast, Natural Resources Minister Wilkinson’s 2021 mandate letter does not mention Trans Mountain (TMX) once, and the only reference to the oil and gas sector is to cap emissions. 

Possian said TMX will be a litmus test for the federal government’s commitment to responding meaningfully to climate change given that every credible energy forecast, whether international or domestic, shows demand for oil falling in every scenario.

“One would think a budget aligned with our climate goals would cut off public funding for that project. But as of yet, Trudeau doesn’t even seem to be open to the idea of reconsidering the pipeline approval in the wake of those reports, as well as wildfires and flooding along the pipeline route, so it’s hard to imagine Chrystia Freeland delivering a budget that is truly aligned with this government’s pledge to keep warming below 1.5 C,” she told Canada’s National Observer. 

Who’s responsible for Canada’s climate action? 

Environmentalists have long called for a whole-of-government approach to address climate breakdown as a way of avoiding progress by one department being wiped out by another, but a more all-encompassing strategy raises concerns about who is ultimately accountable for what. 

“It seems like it’s an open question with this government where the buck actually stops on climate, and that could be a problem given the lack of clarity in our government’s approach to actually meeting their climate promises,” said Possian. 

Recently, the federal climate watchdog accused Trudeau’s government of “policy incoherence” in a series of scathing reports after finding it chased policies, like TMX, that directly undermined its own climate goals. A few days later, the Prime Minister’s Office announced the mandates of its new cabinet committees and had two climate committees with identical mandates but totally different members.

Despite multiple attempts for clarification, PMO spokesperson Cecely Roy could not identify any difference between the two.

“As we finish the fight on COVID-19 and build a resilient recovery, both committees will be able to work on policies to make sure they promote economic growth that works for Canadians and builds a cleaner, greener future,” she repeatedly told Canada’s National Observer earlier this month.

Moving forward, however, recently passed legislation could help to hold the government responsible for its action on climate change, Brouillette said.

“There definitely are concerns around accountability on climate change. Historically, we have missed every single climate target we’ve set for ourselves,” she explained. “However, I think a big chunk of that answer is … found within the Canadian Net-Zero Emissions Accountability Act, where one minister, Minister Guilbeault, has the responsibility to table plans that show how we are meeting our climate targets.”

That plan is expected to be tabled in March. 

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“I think it will be a key moment to set an important precedent in terms of transparency, accountability and rigour of the first plan to be tabled under this new climate accountability framework that we have in Canada, but also a place to attribute clear responsibility on some specific measures,” she said.