No. 15: January-June 2016

David Blair

Canada’s Climate Policy

Academic Foresights

How do you analyze the present situation of Canada’s climate policy ?

In the global politics of climate change, Canada has come under growing international scrutiny for what is widely regarded as an inadequate effort to reduce the country’s greenhouse gas (GHG) emissions.  In 2013, Canada’s total GHG emissions were 726 megatonnes of CO2 equivalent, compared with 613Mt in 1990, an increase of 18% despite the Canadian government’s pledge to reduce emissions 6% by 2012 when it signed the Kyoto Protocol.  After declining from a high of 761 Mt in 2007 to 699 Mt in 2009 (largely due to the effects of the global economic recession) GHG emissions have be increasing steadily since 2009.  The imminent failure of Canada to meet its target under Kyoto led the Conservative government of Stephen Harper to withdraw from the Protocol in December 2011.  Within the framework of the Copenhagen Accord, the Harper government adopted a revised target for emissions reductions of 17% by 2020 from 2005 levels, a goal which the federal government’s own environment ministry recently predicted would not likely be met (Environment Canada 2014).  Given Canada’s record with its past two international commitments on climate change, the Harper government’s next target of a 30% GHG reduction from 2005 levels by 2030 was greeted with considerable scepticism.

Within Canada, a succession of federal governments have been criticised for their failure to implement climate policies sufficient to keep the country’s GHG emissions from rising.  Since the late 1980s, when climate change first appeared on the policy agenda, the federal government’s approach has been to rely for the most part on consumer education and exhortation, subsidies, support for research and technological development, and negotiations with the business community encouraging it to adopt voluntary emissions restraint measures.  While the Harper government did adopt regulations on coal-fired power plants, vehicle emissions and the renewable content in gasoline and diesel fuel, its long-promised regulations in the oil and gas sector did not materialise.  The Harper government also repeatedly rejected calls for a national system of carbon pricing that many analysts argued would be more effective in allowing the country to attain its emissions targets than this sector-by-sector regulatory approach.

An examination of the various explanations offered for Canada’s performance on GHG emissions to date may provide some indication of what to expect in the country’s climate policies going forward.  The following discussion sets out the most common of these explanations and offers an evaluation of each.  The first set of explanations can be found in the “national circumstances” regularly cited by the Canadian government in international forums and in its communications to the Canadian public.  Among these is the argument that Canada is a large country with low population density, with long travelling distances that contribute to higher transportation energy demand on a per capita basis than many other countries.  It is also pointed out that Canada has an extreme and highly variable climate that contributes to high energy use for both heating and cooling.  Canada also has one of the highest population growth rates among developed countries, resulting in increasing GHG emissions (Prentice 2009).

While this list of national circumstances may seem daunting, not all are convinced that they are sufficient to explain Canada’s record on climate change or that these physical and demographic characteristics are structural barriers that preclude the adoption of more ambitious climate policies.  Even though Canada has a large territory, most of the country’s population resides in urban areas where travelling distances are not unusually long. The model of urban development long followed in Canada, more than the geographic size of the country, contributes to the higher per capita transportation energy demand, and there are other developed countries with extreme climates that have lower levels of per capita energy use for heating and/or cooling. A growing population would seem to be reason to have more aggressive climate policies than other countries, not less.  Immigration is the main reason the population has been able to grow, and much of that immigration is from countries with lower per capita emissions than Canada. Since per capita emissions tend to be higher in developed countries, this immigration will likely contribute to higher global emissions. Even though per capita emissions have been declining in Canada in recent years, they are still among the highest in the world, and have not fallen as much as in countries such as Germany or the United Kingdom (Conference Board of Canada 2015). During the period between 2010 and 2014, Canada was the 15th largest emitter of CO2 on a per capita basis, following a list of mostly small oil-producing countries. It was the third largest per capita emitter in the OECD, after the United States and Australia. The Canadian government has tried at times to put the country’s contribution to climate change in context by pointing out that Canada contributes less than 2 per cent of total global greenhouse gas emissions.  However, Canada was still the eighth largest emitter in the world in absolute terms in 2013.

Another explanation for Canada’s performance in controlling GHG emissions offered by the Harper government and a number of non-governmental actors is the character of the Canadian economy.  The Canadian economy has been described as highly dependent on natural resource extraction in comparison with other developed countries, and an increasingly important part of the resource sector is oil production.  Oil and gas production, including from the Alberta oil sands, was promoted by the Harper governments as a key driver of economic growth in Canada.  The oil and gas sector is also the source of about one-quarter of GHG emissions in the country, larger than any other sector in the economy.  This industry accounted for the majority of GHG emissions growth over the past quarter century, primarily as a result of increased oil sands production.  Emissions from oil sands production are roughly 20 per cent higher than for conventional oil production.  Consequently, a common explanation for the government’s failure to impose stringent controls on carbon emissions, particularly from this sector, has been that adopting more aggressive climate policies would inevitably inflict serious harm on the Canadian economy by slowing the development of a valuable industry.  However, an examination of Statistics Canada data reveals that oil and gas extraction over the past 15 years has averaged about 6 per cent of Canada’s GDP, and oil sands production (which would bear the brunt of more stringent climate policy within that sector) currently contributes roughly 2 per cent to GDP Leach 2013; Statistics Canada 2015).

An important part of the economic argument for restraint in climate policy is the claim that if Canada imposes policies that make the country’s industries less profitable, but Canada’s competitors do not act likewise, this will make Canadian exports less internationally competitive and deter investment in the carbon-intensive sectors of the economy. Not only would this undermine economic growth by giving those industries an incentive to move to countries with more favourable regulatory regimes, but it would also fail to reduce global emissions. This argument was central to the Harper government’s position that regulation of the oil and gas sector could only be introduced if similar regulations were adopted by the United States, the destination for almost all of Canada’s oil and gas exports. However, a number of studies conducted by independent researchers both in Canada and internationally have challenged this competitiveness imperative argument, noting that the overall economic impact of unilaterally adopting more stringent climate policies would on average be less than one per cent of GDP, and that even that impact could be reduced by a number of policy design options (Rivers 2010). Other studies point out that the estimates of economic losses from carbon reduction measures often ignore the economic losses that would be incurred if adequate action is not taken to mitigate climate change, for example, the impact of rising temperatures on insect development rates that pose a threat to the forests of Western Canada (NRTEE 2011).

Other explanations for Canada’s climate change policies are primarily political in nature, although they often overlap with these economic considerations.  The first of these concerns the regional distribution of the costs that would be incurred in the effort to reduce the country’s GHG emissions.  As mentioned earlier, the sector that is expected to experience the greatest growth in emissions for at least the next decade or two is the oil and gas sector, particularly the Alberta oil sands.  Not surprisingly, up until recently the provincial governments that have most vigorous opposed the imposition of more aggressive climate change policies by the federal government have been those in Alberta and Saskatchewan, the two largest producers of oil in the country.  Concerns about the impact that more stringent climate policies might have on economic growth in those Western provinces, coupled with long-standing disagreements about the proper division of authority between the federal and provincial governments, have made the adoption of more stringent climate policies at the national level a sensitive political issue.  More recently, the framing of the consequences of climate policy for these regional interests has been gradually shifting from focusing only on the costs of taking action on climate change to an awareness of the potential costs to these provinces if more action is not taken, as major economies such as the United States and the European Union move to brand crude from the oil sands as ‘dirty oil’ and debate the imposition of border adjustment measures on the import of this product.

Added to the obstacles posed by these distributional and jurisdictional issues are ideological challenges to government regulation of carbon emissions and the influence exerted by variety of interests and political actors over government decision making.  Conservative parties in Canada have tended to be strong supporters of a neoliberal approach to climate policy, which includes downplaying the importance of climate change or Canada’s contribution to it, and presenting economic growth and technological development as the most effective means of addressing the issue. The fact that conservative parties have held power for most of the past decade at the national level and in Saskatchewan and Alberta helps to explain the reluctance of these three governments to adopt more far-reaching measures to control greenhouse gases. The adoption of anti-taxation and anti-regulation political rhetoric by these parties has also contributed to their electoral successes until quite recently. The influence of this neoliberal discourse has not been confined to conservative political parties. Other political parties have adopted elements of this neoliberal approach and the political tactics that support it, or once elected have been deterred from introducing climate policies because of opposition from some of their own members or for fear of alienating the broader public where neoliberal ideas have taken on the aura of common sense. A good example of this has been the reluctance of both federal and most provincial governments to introduce carbon taxes, which during the 2008 federal election were framed by the Conservative government as “a tax on everything” and contributed to their re-election that year.

However, there are signs that the influence of this neoliberal discourse is weakening.  In British Columbia, the government that introduced a carbon tax was re-elected, despite the conventional wisdom that introducing new taxes was politically suicidal.  The fact that since the BC carbon tax was introduced carbon emissions have declined while the province has experienced the highest economic growth in the country may have emboldened other jurisdictions to adopt their own carbon pricing schemes (Elgie & McClay 2013).  The governments of Ontario and Quebec have committed to adopting cap-and-trade systems for GHGs, and in Alberta the forty-year tenure of the Progressive Conservative party ended in early 2015 with the election of the left-of-centre New Democratic Party that had promised to strengthen Alberta’s climate policies as part of its election platform.  Public opinion polls have also indicated growing support for more government action on climate change, and at least one poll showed that most Canadians outside British Columbia are in favour of the adoption of a carbon tax similar to the one adopted by that province (Environics 2014) .  A potential turning point in the federal government’s approach to climate change was reached with the defeat of the Harper government in October 2015 and the election of the Liberal party which ran on a platform that embraced a ‘green economy’ frame in which policies designed to tackle environmental problems like climate change are viewed as catalysts to economic growth.

Not surprisingly, the most vigorous opponents to strengthening climate policies outside government have been from the fossil fuel industry, along with some of the energy-intensive manufacturing industry.  Most of the firms in these sectors obviously have ample resources to engage in lobbying and public relations campaigns both individually and collectively through a number of business associations.  Although the efforts of these interests to prevent the Chrétien government from ratifying the Kyoto Protocol in 2002 were not successful, its continuous pressure on both Liberal and Conservative governments thereafter appears to have been more effective in persuading these governments to refrain from adopting policies that would allow Canada to meet its carbon emissions targets or even to move in the direction of meeting those targets.  Once again, positions appear to be shifting in this sector, judging from statements made by the CEOs of some of the largest oil companies in Canada, including those operating in the oil sands.  A number of individual business leaders and business associations have expressed their support for a system of carbon pricing, as well as their concern that a failure to strengthen the country’s climate policies will hamper the access to foreign markets for Canadian products (CCCE 2009; Mitchelmore 2011; Williams 2015).

In your opinion, how will the situation likely evolve over the next five years?

The foregoing overview of explanations for Canadian climate policy to date indicates that conditions are favourable for a dramatic shift in the direction of Canada’s climate policy over the next five years.  Before assessing the changes likely to unfold in each of the areas that have served as obstacles in the past, it is important to distinguish three separate questions about the policy. First, what emissions reduction target is Canada likely to adopt?  Secondly, what policy instruments will be adopted in the effort to reach that target? Finally, what impact will those measures have, that is, will the policies adopted in fact allow Canada to reach its emissions target? The following discussion will address each of these questions.

One of the most significant political changes that will shape Canada’s climate policy over the next five years has been the election of new governments at the federal level as well as in the province of Alberta. Because the reform of climate change policy was among their core election campaign promises, both have staked their credibility as governments on delivering on their proposals. The Notley government in Alberta has already announced its intention to adopt an economy-wide carbon tax of $30 a tonne and to phase out the province’s coal-fired power plants by 2030, and it has placed a cap on carbon emissions from the oil sands at 100 million tonnes per year. The Trudeau government will not set a national target for emissions reductions until it holds a conference with the provincial and territorial governments, which it committed to do within 90 days of the Paris climate conference. However, cabinet ministers have stated on several occasions that the 2030 emissions target set by the Harper government would be a “floor” or minimum reduction that the new government would try to improve on.  The Trudeau government has also signaled its intention to allow provincial governments to adopt whichever policy instruments they prefer as long as they contribute to the achievement of the national target. Targeted federal funding will be provided to assist the provinces in their efforts, and funds will be withheld from provinces that are reluctant to participate in this national effort.  One of the conditions that will facilitate this approach is that, with the major exception of Saskatchewan, virtually all provinces and territories are now governed by political parties that are ideologically predisposed towards substantial climate policy measures.

Because of the failure of previous federal governments to adopt aggressive climate policies, most of the emissions reductions achieved so far as a result of government policies have resulted from action taken at the provincial and municipal levels, a pattern that will likely continue for the next five years.  However, in addition to providing funding to encourage provincial governments to go even further, the Trudeau government has committed itself to a number of measures to be taken at the federal level.  These include phasing out the roughly $2 billion in subsidies the federal government has given annually to the fossil fuel industry in recent years, providing funds to foster the development of clean technologies, and improving energy efficiency standards for consumer and commercial products (Liberal Party of Canada 2015).

While the provincial governments have been far more proactive than the federal government in introducing climate policies, the policies they have adopted so far are insufficient to permit Canada to achieve its 2020 or its 2030 targets, and most of the provinces will likely fall short of their own targets. Alberta’s 100 million tonne cap on oil sand emissions represents an increase from the industry’s current emissions by over 40 per cent. Even though the collapse in world oil prices has stalled new investment in the oil sands, projects under construction will continue and production will steadily grow because of the enormous investments that have already been made in the sector.  Under the Notley government’s plan, total emissions in the province are projected to increase until 2030, at which point they will only stabilise at 270 million tonnes per year. The emissions reductions achieved by other provinces will still leave Canada well short of its target by 2030, meaning that unless there are significant changes the country will have to spend billions of dollars a year to purchase carbon credits from other countries. The challenge for the federal government will be to persuade provincial governments to strengthen their targets and policies even further, even though most of these provinces have found it politically difficult to go as far as they already have.  Should this effort fail, pressure will build for the federal government to make use of its own constitutional powers to tax and/or regulate in order to bring about the emissions reductions to which it is committed. 

Several reasons have been put forward in order to explain this ambivalent performance.

Despite the efforts of the federal and Alberta governments to reframe more stringent climate policies as necessary to secure market access for Canadian exports, including its oil and gas exports, the issue of competitiveness will continue to be employed by those opposed to the strengthening of climate policies.  In anticipation of these competitiveness arguments, the federal Liberal party made the negotiation of a continental clean energy and environment agreement with the United States and Mexico part of its election campaign platform.  Since the election, the Trudeau government has reaffirmed this commitment to this goal, which would include coordinating climate mitigation policies with its North American partners, thereby addressing these competitiveness concerns.  The government will no doubt approach the other two governments with this proposal, but whether an agreement is reached will depend in large part on their willingness to negotiate.  There have been a number of recent developments that appear to enhance the prospects of this.  Hillary Clinton recently announced that if elected president she would immediately launch negotiations with Canada and Mexico toward a North American Climate Compact that would ensure all three countries adopt ambitious national targets and that would include “strong accountability measures” to cut greenhouse gas emissions (Clinton 2015).

The Mexican government has launched a number of climate policy initiatives, including cleaner fuel standards and new targets for renewable energy production.  It has already adopted a carbon tax and shown interest in selling carbon credits to Canada and the United States.  Public opinion in the United States may also be shifting in favour of more far-reaching action on climate change.  Recent polls have indicated that a strong majority of American agree that combating climate change is an important goal for the US and that protecting the environment should be a priority “even at the risk of curbing economic growth” (Mosbergen 2014).

Opinion polls in Canada have also indicated that public support for stronger climate change policies has returned to the relatively high levels it exhibited prior to the economic recession of 2008-2009.  A majority of Canadians indicated in one recent poll that they would be willing to pay more for products in order to allow Canada to meet its climate targets and would be in favour of higher taxes on gasoline and home heating if the revenue is used for projects related to a greener economy (Clark 2015).  In another poll, a majority of Albertans also supported more stringent climate policies even if it hurts the oil industry (Pembina Institute 2015).  Another significant and more surprising trend is the growing number of oil and gas executives, including those in the oil sands sector, who have expressed support for higher carbon taxes.  One reason given by a number of industry representatives for this apparent change of heart is the realisation that a strengthening of government action on climate is inevitable, and the sooner there is certainty on the form of future policy the more quickly investment decisions can be made by the affected industries.  Carbon pricing has emerged as the preferred climate policy instrument by this sector because the costs of emissions reductions will be generalised throughout the whole economy, rather than concentrated in the fossil fuel industry.  It is also possible that the industry believes that it can negotiate exemptions, rebates or other favourable treatment in a carbon pricing regime.  Some executives have expressed support for the argument that climate action is needed in order to improve market access for oil sands products, but an associated goal is also to improve the reputation of their industries in order to continue to attract investors.  Finally, many in the industry may gradually be coming to accept the need to adapt to some of the longer term structural changes that many believe will significantly affect their future.  Some of these are explored in the next section.

In summary, a number of developments, largely political in nature, favour the introduction of climate policy reforms at all levels of government in Canada over the next five years.  However, given the failure of the federal and some provincial governments to introduce more ambitious policies until very recently, it is highly unlikely that the target Canada set at the Copenhagen climate conference of a 17 per cent emissions reduction from 2005 levels will be met by 2020.  Nevertheless, the prospects are better for deeper reductions as a result of a combination of structural economic and political changes that may unfold over the longer term.

What are the structural long-term perspectives?

The long term future of Canada’s climate policy will be shaped in large part by the structures of both global and regional economies and Canada’s place in them.  In particular, the structure of international markets for oil and gas will have a major impact on carbon emissions in Canada, since the growth of Canada’s emissions has been largely driven by the oil industry, and most of the production of that industry is exported.  A number of factors are likely to keep world oil prices below the levels that make Canadian oil sands production economically viable.  In recent years shale oil production in the United States and other countries has taken a larger share of the world market.  Saudi Arabia has responded by maintaining high levels of production in order to drive down the world price so that it can preserve its market share.  While many hydraulic fracturing operations have been suspended in the United States in response to these lower prices, they can resume as soon as prices rise.  This will put pressure on world oil prices for a long time.  The oversupply of oil is also likely to be aggravated as economic sanctions against Iran are lifted and Iraqi production continues to recover.  Meanwhile, global demand for oil is likely to be depressed by the slower global economic growth that many forecasters anticipate will extend at least into the medium term.  In the past, lower oil prices have stimulated higher consumption, driving prices back up.  However, as a new international norm develops around the need to move toward a low-carbon global economy, this cyclical pattern may be broken or at least severely curbed.

Given this structural market trend, current long term production projections for Canada’s oil sands are seriously in doubt.  The costs of producing oil from this source are among the highest in the world.  As long as world prices remain near current levels major new investments in the oil sands appear to be unlikely for many years to come (Rubin 2015a).  The question is at what point even existing production capacity will begin to shut down as company losses mount.  Added to the problem of the low price of oil is the difficulty that will be experienced in finding markets for it.  The vast majority of Canada’s oil production is exported to the United States, but the abundance of shale oil and gas reserves in the United States has lessened that country’s attraction to Canadian oil as a secure source of energy.  Some have speculated that this was an important factor contributing to President Obama’s decision to reject the Keystone pipeline project that would have permitted more imports from Canada’s oil sands (Rubin 2015b).  Civil society opposition to the construction of pipelines within Canada to move Alberta oil to port for export to other markets is also likely to continue, and will further deter investment in the oil sands.

A related civil society activity taking hold at the international level is the movement to encourage institutional investors to divest from fossil fuel companies, particularly those that are viewed as contributing to the highest carbon emissions.  Investment will increasingly be diverted to renewable energy technologies, making renewable energy more price competitive with fossil fuels.  Much of this investment activity will be undertaken by fossil fuel companies seeking to diversify their operations, and governments will also play a more active role promoting the renewable energy industry as part of their economic recovery plans.  As a result of all of these changes in market conditions, there is good reason to expect that the vast majority of the Alberta oil sands will remain in the ground.  This will increase the chances of Canada reaching its long term emissions reduction targets, as well as making the adoption of more ambitious climate policies politically easier.  As the importance of the oil sands in the Canadian economy diminishes, so too will the credibility of the argument that strengthening climate policies would be devastating to the economy.

In addition to this structural economic shift, an impending structural political change within Canada could favour the adoption and maintenance of ambitious climate policies over the long term.  Elections in Canada have been conducted for almost 150 years using a majoritarian (or first-past-the-post) electoral system.  Justin Trudeau promised during the 2015 election campaign that federal elections would no longer be conducted under this system if his party formed the next government.  It is likely that future elections will instead be held using some form of proportional representation.  Because conservative parties have traditionally received less than 50 per cent of the vote federally, the more progressive parties that have tended to support more stringent climate policies will likely dominate federal governments for many years to come under a new electoral system.  Minority or coalition governments would become the norm, and some of the smaller parties such as the NDP and Greens that have been most strongly supportive of effective climate policies would be in a position to push the Liberal party to go even further in that direction.

The long term prospect for dramatic changes both in Canada’s climate policies and for lowering its carbon emissions examined through this analysis appears to be much better than is widely believed.  Of course, unexpected developments could alter this prospective.  Among these could be a sudden disruption in the global supply of oil that sends oil prices much higher and revives interest in the expansion of unconventional sources such as the oil sands.  But a volatile situation such as this may also make alternative energy sources more attractive, both on economic and security grounds.  Another global economic crisis could divert public and government attention from the issue of climate change for a period of time, but this will not likely derail for long the momentum that appears to have gathered for tackling a much greater existential problem.  A shift in the conceptualisation of the relationship between economic growth and environmental protection also appears to be taking hold among governments around the world, so that addressing climate change may increasingly be regarded as an effective means of enabling economic recovery in times of economic crisis rather than forestalling it.  Finally, one further structural change will no doubt increasingly alter attitudes towards climate policy in Canada and in most other countries over the next decades: climate change itself.


CCCE (Canadian Council of Chief Executives) (2009) Business Leaders Support Call For Unified National Policy On Carbon Pricing. April 16.

Clark, Campbell (2015) Canadians back bold climate-change action, poll finds. Globe and Mail February 27.

Clinton, Hillary (2015) Hillary Clinton’s Vision for Modernizing North American Energy Infrastructure.

Conference Board of Canada (2015) Greenhouse Gas (GHG) Emissions.

Elgie, Stewart and Jessica McClay (2013) BC’s Carbon Tax Shift Is Working Well after Four Years (Attention Ottawa) Canadian Public Policy 39 (September), pp.S1-S10.

Environics Institute and David Suzuki Foundation (2014) Focus Canada 2014: Canadian opinion about climate change. 

Environment Canada (2014) Canada’s Emissions Trends 2014.

Leach, Andrew (2013) Canada, the failed petrostate? Maclean’s. November 4.

Liberal Party of Canada (2015) Real Change: A New Plan for Canada’s Environment and Economy.

Mitchelmore, Lorraine (2011) Shell Canada President and Country Chair calls for national strategy to improve Canada’s global competitiveness. News and Media Release. March 20. 

Mosbergen, Dominique (2014) Americans Are Getting More Worried About Climate Change, According To New Polls. The Huffington Post. September 25.

NRTEE (National Round Table on the Environment and the Economy) (2011) Paying the Price: The Economic Impacts of Climate Change for Canada. Climate Prosperity Report 04.

Pembina Institute (2015) Poll: Most Albertans want stronger climate change policies. September 30.

Prentice, Jim (2009) Speaking Notes of the Minister of the Environment to the Francophonie Luncheon, Copenhagen, December 16.

Rivers, Nic (2010) Impacts of climate policy on the competitiveness of Canadian industry: How big and how to mitigate? Energy Economics, 32, pp.1092-1104.

Rubin, Jeff (2015a) The Carbon Bubble: What Happens to Us When It Bursts. Toronto: Random House Canada.

Rubin, Jeff (2015b) Oil sands economics no longer make sense. Globe and Mail. November 9.

Statistics Canada (2015) Summary Tables: Gross domestic product at basic prices, by industry.

Williams, Steve (2015) In This Together: Carbon Pricing and Alberta’s Family Business. Keynote address, Ecofiscal Commission event, Calgary. May 22.


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David Blair is associate professor of political science at Huron University College at the University of Western Ontario (Canada) where he teaches International Politics, Global Political Economy and Global Environmental Politics. His research interests are the relationship between economic integration and environmental protection, and the global diffusion of neoliberalism.

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