What we examined (see Focus of the audit)

The audit focused on the actions of three federal entities: Environment Canada, Natural Resources Canada, and Transport Canada. It had three objectives:

• to determine whether Environment Canada, working with others, has made satisfactory progress in addressing four key issues from our 2012 audit: putting measures in place to reduce greenhouse gas emissions; assessing the success of the measures; working with the provinces and territories; and developing plans to achieve the 2020 Copenhagen Accord target;
• to determine whether Environment Canada, working with others, has used sound methods for estimating and reporting Canada’s future greenhouse gas emissions; and
• to determine whether Environment Canada, working with others, is tracking, assessing, and reporting on funding under Canada’s Fast-Start Financing initiative and the results achieved, including reductions in greenhouse gas emissions.

We did not audit the actions of provincial or territorial governments. We also did not audit the multilateral banks, other multilateral organizations, or other governments that helped distribute the funds under the Fast-Start Financing initiative.

The audit covered the period between January 2011 and July 2014.

What we found

Working to reduce emissions

Overall, we found that federal departments have made unsatisfactory progress in each of the four areas examined. Despite some advances since our 2012 audit, timelines for putting measures in place to reduce greenhouse gas emissions have not been met and departments are not yet able to assess whether measures in place are reducing emissions as expected. We also found that Environment Canada lacks an approach for coordinating actions with the provinces and territories to achieve the national target, and an effective planning process for how the federal government will contribute to achieving the Copenhagen target. In 2012, we concluded that the federal regulatory approach was unlikely to lead to emission reductions sufficient to meet the 2020 Copenhagen target. Two years later, the evidence is stronger that the growth in emissions will not be reversed in time and that the target will be missed.

• Regulations to reduce emissions have been delayed and good practices have not been consistently followed (see paragraphs 1.14-1.25)

  Recommendation. Given its commitment to be a world class regulator, Environment Canada should publish its plans for future regulations to reduce greenhouse gas emissions, such as the oil and gas regulations, with sufficient detail and lead time, so that consultations with interested and affected parties can be transparent and broadly based, and the parties can plan effectively.

• Departments are not yet assessing the success of current regulatory measures (see paragraphs 1.26-1.29)

  Recommendation. Environment Canada, with the support of Natural Resources Canada and Transport Canada, should publicly report the effects of the regulations currently in place to reduce greenhouse gas emissions. With the other departments, it should also identify the lessons learned from measuring the effects of these regulations and should apply them to planned regulations to reduce greenhouse gas emissions.

• Environment Canada is not coordinating with the provinces and territories to achieve the national target (see paragraphs 1.30-1.35)

• Environment Canada still does not have a planning process for how the federal government will contribute to achieving the national target (see paragraphs 1.36-1.41)

  Recommendation. Environment Canada, working with other federal departments and agencies, should put in place a planning process that includes the following elements:

  • a quantitative description of what contribution the federal government will make to Canada’s 2020 target and to reducing emissions beyond 2020;
  • a detailed description of what measures it will take to do its part in achieving the national target, including planned timelines;
  • a regular review to assess progress and identify how plans will need to be adjusted, if necessary (this should include the provinces and territories); and
  • a regular report to Parliament so that Canadians understand what has been achieved and what remains to be done.

Estimating Canada’s future emissions

In the present audit, we found that Environment Canada has produced forecasts and reports regularly, voluntarily providing Canadians with information about energy use and greenhouse gas emissions. This is a positive step. The Department has generally used sound methods to estimate and report future emissions; however, it could improve these methods by enhancing its modelling capacity, continuing to strengthen its internal training, and providing greater consistency and detail in its predictions and reports.

The government needs to have a good understanding of the likely future level of greenhouse gas emissions so that it can respond appropriately. Its analysis also provides a basis for reports to Canadians and international parties, including the Emissions Trends reports that we described in 2012 and the National Communications and Biennial Reports required under the United Nations Framework Convention on Climate Change.

• Environment Canada uses suitable methods for estimating future emissions but could improve its quality controls (see paragraphs 1.46-1.57)

  Recommendation. To strengthen its quality controls and increase its transparency, Environment Canada should take steps to enhance external review of its climate change modelling framework. For its projection of the most likely future path of emissions, the Department should provide greater access to model inputs, assumptions, and outputs, as well as details about the way policies are modelled. This would include full documentation of the modelling framework.

• Environment Canada can better communicate emission information to support decisions (see paragraphs 1.58-1.63)

  Recommendation. Environment Canada, working with Natural Resources Canada, should improve the value to decision makers of its climate change reports by describing the key assumptions, separately indicating the impact of federal and provincial measures as far as possible, communicating the uncertainty associated with its estimates, and more appropriately and consistently describing the future emissions from Canada’s forests.

Managing Canada’s Fast Start Financing

Overall, we found that Environment Canada, working with others, is tracking, assessing, and reporting on funding under the initiative and the results achieved so far. While the Department has developed an interactive website to provide details on the projects funded by Canada’s share of the initiative, it could improve the consistency and value of its public reports by including information about the status of project spending and the flows of funds back to Canada. It could also work with its federal and international partners to improve the prediction and assessment of results, including greenhouse gas emission reductions. This collaboration and coordination will be particularly important in view of the global efforts to reduce emissions and adapt to a changing climate.

• The government has disbursed its funds but most of the money has not yet reached the final recipients (see paragraphs 1.66-1.74)

  Recommendation. In addition to the information currently provided, Environment Canada, with its partners for the Fast-Start Financing initiative, should regularly publish a consistent, full summary of the project disbursements and the actual amounts repaid to Canada, subject to commercial confidentiality constraints. It should also describe the risks associated with the repayable contributions, indicate the extent to which concessionary terms and conditions apply, and provide an estimate of the impact of these risks on the amount that will ultimately be repaid to Canada.

• Environment Canada is working to track progress but it is too early to assess emission reduction results (see paragraphs 1.75-1.79)

  Recommendation. Environment Canada, in collaboration with its Canadian and international partners, should ensure that the lessons learned from the Fast-Start financing experience are synthesized and applied to future climate change financing. These lessons could include

  • which financing approaches and types of projects are most likely to achieve the desired outcomes including emission reductions;
  • the need for realistic estimates of the time required to make financing arrangements; and
  • the need for effective measurement and reporting for both predicted and actual results.

Response

The audited entities agree with our recommendations, and have responded (see List of Recommendations).

Why we did this audit

Scientists have documented the effects of climate change in all regions of our planet. For example, the Earth’s atmosphere is warming, sea levels are rising, the oceans are becoming warmer and more acidic, the Arctic ice cap is shrinking, and some weather extremes are becoming more frequent. In Canada, the effects include the loss of glaciers and the resulting impacts on water supplies on the Prairies, changes to water levels in the Great Lakes–St. Lawrence watershed, increasing risks from coastal storms, and more frequent heat waves.

According to the Intergovernmental Panel on Climate Change, these changes are attributable to human activities that result in emissions of greenhouse gases. Efforts to coordinate international action on greenhouse gases began in 1992 with the adoption of the United Nations Framework Convention on Climate Change. Despite these efforts, emissions have risen and are projected to rise further. The Government of Canada has recognized the need to urgently combat climate change and has made commitments and allocated funds to reduce emissions.

Details of the audit

Report of the	Commissioner of the Environment and Sustainable Development
Type of product	Performance audit
Topics	Environment
Audited entities	Environment Canada Natural Resources Canada Transport Canada
Completion date	5 August 2014
Tabling date	7 October 2014
Related audits	See our audits relating to Climate Change.

For more information

Ghislain Desjardins
Manager, Media Relations
Tel.: 613 952 0213, extension 6292
E-mail: infomedia@oag-bvg.gc.ca

Twitter: CESD_CEDD