2017 Fall Reports of the Commissioner of the Environment and Sustainable Development; Fossil Fuel Subsidies

Opening Statement to the Standing Senate Committee on Energy, the Environment and Natural Resources

2017 Fall Reports of the Commissioner of the Environment and Sustainable Development

(2017 Fall Reports of the Commissioner of the Environment and Sustainable Development)

Fossil Fuel Subsidies

(Report 7—2017 Spring Reports of the Auditor General of Canada)

7 December 2017

Julie Gelfand
Commissioner of the Environment and Sustainable Development

Madam Chair, thank you for this opportunity to discuss my fall 2017 reports, which were tabled in Parliament in October, as well as the Auditor General’s spring 2017 report on fossil fuel subsidies. I am accompanied by Elsa DaCosta, Doreen Deveen, and David Normand.

In my fall 2017 reports, we examined three areas in which the federal government has been working to address climate change: reducing greenhouse gas emissions, adapting to the impacts of climate change, and fostering the development of clean energy technologies.

Climate change is one of the defining issues of the 21st century. It is far-reaching and complex. These audits show that when it comes to climate change action, Canada has a lot of work to do in order to reach the targets it has set.

Our first audit looked at whether Environment and Climate Change Canada had led efforts to meet Canada’s commitments to reduce greenhouse gas emissions.

Canada has missed all of its reduction targets since 1992 and is also not on track to meet the 2020 target. Our audit found that the federal government had shifted its focus to a new, more difficult target—one that has to be met in 2030. This amounts to moving further into the future the timeline to reach the emission reduction target.

In December 2016, the government released its newest climate change plan—the Pan-Canadian Framework on Clean Growth and Climate Change. We found that the federal government, the provinces, and the territories established a governance structure to oversee and report on the framework’s implementation. Environment and Climate Change Canada worked with other federal departments to determine the roles and responsibilities for implementing the measures set in the framework and developed processes to track progress and report annually to first ministers. While Environment and Climate Change Canada has made progress in working with the territories and provinces to develop the framework to meet the 2030 target, it remains the latest in a series of plans that have been produced since 1992.

Environment and Climate Change Canada already estimates that even if all the greenhouse gas reduction measures outlined in the framework are implemented in a timely manner, emissions will go down, but more action will be needed to meet the 2030 target.

Our second audit examined the federal government’s efforts to adapt to climate change impacts. The impact of wildfires, floods, and extreme weather events is being felt across the country. Identifying climate change risks and taking measures to address them is another area in which governments can take action to adapt to a changing climate.

We looked at whether 19 federal organizations had identified and addressed climate change risks to their programs and operations.

Overall, we found that the federal government is not prepared to adapt to the impacts of a changing climate.

Environment and Climate Change Canada developed a Federal Adaptation Policy Framework in 2011, but the Department did not move to implement it. The Department also failed to provide other federal organizations with adequate guidance and tools to identify their climate change risks.

We found that, as a result, only 5 of 19 departments and agencies we examined had fully assessed their climate change risks and acted to address them. For example, Fisheries and Oceans Canada determined that rising sea levels and increasing storm surges could impact some small craft harbours. For this reason, in Nova Scotia for example, the Department raised a wharf after the harbour flooded, to guard against another flood. In another example, as a response to the risk of degrading permafrost and rising sea levels, Natural Resources Canada examined the vulnerability of mine waste management practices in the North and developed adaptation strategies.

We found that the 14 other departments and agencies we examined had taken little or no action to address the climate change risks that could prevent them from delivering programs and services to Canadians.

Many departments have an incomplete picture of their own risks, and the federal government as a whole does not have a full picture of its climate change risks. If Canada is to adapt to a changing climate, stronger leadership is needed from Environment and Climate Change Canada, along with increased initiative from individual departments.

Our third audit examined three funds that support the development of demonstration projects on clean energy technology. These technologies are one way to decrease greenhouse gas emissions from the production and use of energy.

I am happy to report that the three clean energy funds we looked at were working well overall. The money was spent properly, the tracking of which projects were funded was easy, and projects were approved through a rigorous and objective process.

I would like to turn now to the audit of fossil fuel subsidies included in the the Auditor General’s spring 2017 reports. In this audit, we focused on whether Environment and Climate Change Canada and the Department of Finance Canada supported Canada’s Group of 20G20 commitment to phase out and rationalize inefficient fossil fuel subsidies while providing targeted support for the poorest.

The Department of Finance Canada is responsible for the tax side of the commitment, while Environment and Climate Change Canada is responsible for the non-tax side.

The non-tax side of the commitment is important, as it covers things like government grants and contributions, government loans or loan guarantees at favourable rates, government intervention in markets to lower prices, and research and development funding.

Our audit found that Environment and Climate Change Canada did not yet know the extent of non-tax measures that could be inefficient fossil fuel subsidies. However, in February 2017, the Minister of Environment and Climate Change approved a plan with timelines to identify these measures and to interpret the G20 commitment.

On the tax side, the Department of Finance Canada approached the commitment by focusing on identifying tax measures that are specific to the production or consumption of fossil fuels and that provide a preference to taxpayers. We found, however, that the Department did not consider a number of tax measures that applied specifically to the oil, gas, and mining sectors.

We also found that the Department of Finance Canada did not have an implementation plan to support the phase-out and rationalization of tax measures that are inefficient fossil fuel subsidies.

Addressing climate change is not only difficult and complicated, but also important and urgent. It requires whole-of-government action, across all departments and agencies. The federal government has come up with a new climate change action plan, and it worked with important players to develop it. That sets this plan apart from the ones that came before, which did not meet any of Canada’s climate change commitments. Now, the federal government needs to turn its new plan into action. We remain hopeful that progress can be achieved. We will continue to audit this very important issue.

In closing, I wish to inform the Committee that in early 2018, a collaborative report on climate change prepared with the provinces and territories will be tabled in Parliament.

Madam Chair, this concludes my opening remarks. We are happy to answer any questions you may have.