Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue No. 36 - Evidence - December 7, 2017
OTTAWA, Thursday, December 7, 2017
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 8:29 a.m. to continue its study on the effects of transitioning to a low carbon economy.
Senator Rosa Galvez (Chair) in the chair.
[Translation]
The Chair: Good morning and welcome to the Standing Senate Committee on Energy, the Environment and Natural Resources. My name is Rosa Galvez. I represent Quebec in the Senate and I am the new chair of this committee.
During the last meeting, I thanked the previous chairs and vice-chair; I would like to take the opportunity now to also thank the clerk of this committee, Maxime Fortin, and the analysts of this committee, Sam Banks and Marc LeBlanc.
I now invite the senators to introduce themselves.
[English]
Senator Cordy: Jane Cordy, Nova Scotia.
Senator Richards: Dave Richards, New Brunswick.
Senator Fraser: Joan Fraser, Quebec.
Senator Patterson: Dennis Glen Patterson, Nunavut.
Senator Seidman: Judith Seidman, Montreal, Quebec.
Senator Wetston: Howard Wetston, Ontario.
[Translation]
The Chair: Thank you.
In March 2016, the committee began its study on the effects of transitioning to a low carbon economy. The committee’s focus is on five sectors that, together, account for over 80 per cent of greenhouse gas emissions: electricity, transportation, oil and gas, emission-intensive trade-exposed industries, and buildings.
[English]
Today we welcome the Commissioner of the Environment and Sustainable Development, Ms. Julie Gelfand. She is accompanied by three directors from the Office of the Auditor General of Canada: David Normand, Elsa DaCosta and Doreen Deveen.
They are here to discuss the commissioner’s most recent report, released this fall, as well as the Auditor General’s report on fossil fuel subsidies released earlier this year.
Thank you very much for joining us. I invite you to proceed with your opening statements, after which we will go to a question-and-answer session.
[Translation]
Julie Gelfand, Commissioner of the Environment and Sustainable Development, Office of the Auditor General of Canada: Good morning. I would like to thank you.
[English]
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.
In my fall 2017 reports, we examined three areas in which the federal government has been working to address climate change. We looked at 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 and 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.
[Translation]
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.
[English]
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.
In our audit, 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 at all 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.
[Translation]
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.
However, we found that the 14 other departments and agencies we examined had taken little or no action to address the climate change that could prevent them from delivering programs and services to Canadians. Many departments have an incomplete picture of their own risks.
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, strong 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 energy production and use. 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.
[English]
I would like to turn now to the audit of fossil fuel subsidies included in 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 G20 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 and government intervention and markets to lower prices and, finally, 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 of this year, 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; it is 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, and we will continue to audit this very important issue.
[Translation]
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.
This concludes my opening remarks. We are happy to answer any questions you may have. Thank you very much.
[English]
The Chair: Thank you very much for your presentation. We would like to have a first and second round of questions. I would like senators, if they can, please, to keep the preambles as short as possible and the witnesses to answer in a straightforward manner.
Senator Seidman: Thank you very much for your presentation, Ms. Gelfand. At the committee, we’ve heard a good deal about the scope of the Pan-Canadian Framework on Clean Growth and Climate Change, in particular its focus on reducing GHG emissions across all regions and sectors of the economy. Of course, this approach means that many of the things Canadians do every day, like driving cars and heating their homes, will be affected by the framework.
For example, officials from Natural Resources Canada told us about the framework’s commitment to new green energy building codes, including new requirements for retrofitting existing homes planned for 2022. We heard that those new requirements could require homeowners to update things like windows and insulation when selling or renovating and could cost individual homeowners as much as $35,000.
My question for you is: Do you believe Canadians have a good understanding about what the government’s climate change commitments could mean soon for them in their daily lives?
Ms. Gelfand: I’m a Commissioner of Environment and Sustainable Development, and I’m located in the Office of the Auditor General. That means that what I can talk to you about is the results of our audit. I cannot make pronouncements on policy and policy statements. If the government says — and the example I always use is — not everybody likes it, but it’s the clearest one for me — they’re going to put a woman on the moon, I can go in and audit that. I can say, “Do you have a rocket ship? Do you have several women on the bench in case somebody gets sick? Have you got enough fuel to get there? Have you got a flight plan? Are you going to be able to get back?” Those are the kinds of questions I can ask.
If you ask me whether or not it’s a good idea to fly a woman to the moon, I can’t answer that. What I can tell you is that the government said it was going to do it and that I will audit it to find out whether or not it’s achieving its objectives.
In this case, there is a pan-Canadian framework in place. It says that Canada has said it’s going to reduce and achieve greenhouse-gas-emissions reductions several times. There have been probably 8 to 12, depending on how an auditor defines what a climate-change-reduction plan is. There have been anywhere from 5 to 10 different plans. None of them have achieved our greenhouse-gas-reduction targets.
Senator Seidman: Let me try to put it a different way. Your office did find that Environment and Climate Change Canada did not consistently report to the public on results of implementing regulations for reducing greenhouse gas emissions. So this was with regard to communications.
Ms. Gelfand: That is correct. We found that in the past, yes.
Senator Seidman: The media went on to suggest that the federal government did not give much thought to keeping Canadians informed about how it planned to meet its climate targets.
Could you speak about, then, your findings about the lack of good communications on the government’s actions around the climate change issue?
Ms. Gelfand: I would say that we’ve been auditing climate change commitments for many years. We were part of the Kyoto implementation plan and we had to report every year on what the government was achieving. We weren’t achieving much.
If you’re not achieving much, there’s not a lot to report on. If we’re not hitting any of our goals, if we’re not implementing any of our plans, there’s actually nothing to talk about. I would say that, when we actually see some of the actions implemented, then we’ll be in a better shape to see whether or not they’re doing a good job on reporting.
One of the things we talked about specifically on reporting was just the level of greenhouse gas emissions, where they were at and whether the government was doing a good job on reporting on emissions. We found, in our last audit, that they had improved their methodology for reporting on greenhouse gas emissions.
Senator Wetston: I want to talk to you about something that I think auditors think about, but I could be wrong. The extent of climate change uncertainty is clear — how much climate change will occur over time, what models you use, what methodology you use. The problem with it is that the uncertainty relates to the future.
Of course, you know that old saying that the problem with the future is you have to wait for it to come. So, we’re waiting.
The question I have for you is what discount rate do you use? Do you use a discount rate to assess the cost and benefits over time? Various discount rates have been used, as you know. What do you rely on from the point of view of addressing this issue of uncertainty about the extent of climate change in the future?
Ms. Gelfand: It’s a great question, not something that we have audited. We’re not looking at the financial aspects of climate change. We’re looking at what the government has said it was going to do and whether or not it has achieved that.
The government has said, “We’re going to achieve a 2020 greenhouse-gas-emission-reduction target,” and we went in to see whether or not we are going to achieve that. We did not look at the cost of achieving that. We just looked at, “Here is the government’s commitment, and here’s what it said it would do.” We looked at whether or not the government said it was going to adapt to climate change and get ready to assess the risks. They said they were going to do it. We went in, and they had not done it.
Senator Wetston: If I may follow up, models use a discount rate to assess what the future might likely present. Here is what I mean by that: Three to 4 per cent seems to be a figure that’s used a great deal. In the U.K., in a significant report that I think was issued at some time in the recent past, they used a figure of 1.7 per cent. I’m not asking you for cost and benefit. I’m just asking: What do you use? Because you can use different numbers to assess what the uncertainty would be. Maybe you don’t do that at all, but it seems to me like it’s a pretty important matter because you have to use some model, some methodology, to assess whether or not compliance is occurring. What are you using?
Ms. Gelfand: What we do is that, if they say they’re going to reduce their greenhouse gas emissions, we go look at the emissions charts and we ask them, “Have we reached those targets?” We’re not the experts on modelling, and we have not looked at the cost issue, which is something that I think you’re asking about.
Senator Wetston: More or less.
I want to ask you about technology.
Ms. Gelfand: Yes.
Senator Wetston: I kind of made a quick note here, and it’s important, I think, from my perspective. I think the future for greenhouse gas reduction is less in human behaviour, just because of the way humans are. Use all of the behavioural sciences, economics and technology that you may use, but, at the end of the day, I think the future will need to accelerate technological change. It will be required.
You’ve obviously referred to that with respect to the issues associated with clean energy technology. Do you believe, or will you be able to comment on: For example, this budget has a fair amount of money now being allocated for clean tech, which I suspect you may or may not agree with, but it sounds to me like you’re indifferent to whether you agree with it or not. That’s not your job. But do you think we are supporting sufficient research in clean technology, given your audits? If not, what can we do about that? I think the future is going to require huge investment in clean tech to achieve those goals.
Ms. Gelfand: In our clean technology audit, people can feel comfortable that the money that has been spent to date has been spent well. I believe $1.4 billion was allocated, $713 million was actually spent. Three funds were established, two under Natural Resources Canada and one under Sustainable Development Technology Canada. We looked at both of those funds. We were looking for whether there were any problems. We went out and looked at 65 different files, 65 different projects. We went out and physically visited six or seven of them, talked to the people who received the money, and all we got was that this is a good news story.
Canadians can feel comfortable that we can put money into these processes and it’s going to lead to good, new technology development.
Where I remember my staff telling me there was a concern was that we’re good at the beginning of the cycle with the research; we’re not so good with the scaling up. That’s something, apparently, Canada is not very good at. That’s what we were hearing from the receivers of the money. We’re good at the first step. We’re not good at the second step.
Senator Wetston: I do appreciate your last comment.
Senator Fraser: It was ever thus. As far back as I can remember, we’ve been very good at initial steps and then we fail at development and implementation.
I’m not a scientist. I’m not an auditor. One of the things that I keep wondering about is the degree to which we can trust the numbers we are given. I hope you can tell me this.
For example, when we are told that greenhouse gas emissions have risen by 15 per cent or dropped by 5 per cent, how can we trust those numbers? A layperson, for example, will think about the Volkswagen case where people were taking, as given, numbers that were provided that were fraudulent. How confident can we be in the numbers we’re given?
Ms. Gelfand: I would say, generally, the work of Environment Canada is quite good in the area of greenhouse gas emissions. It’s not perfect, but when we talk about an imperfection, it’s very small. It’s around the margins.
My personal confidence or our office’s confidence in the numbers that we’re given by Environment Canada is quite high. I also looked at the issue in terms of predictions for the future. I’ll let Ms. DaCosta speak to that.
Elsa DaCosta, Director, Office of the Auditor General of Canada: Just to clarify, there are two sets of numbers that Environment Canada produces. There’s the National Inventory Reports. Those are historical emissions that get collected through getting information from emitters, from industry.
Senator Fraser: I will interrupt to be sure. They are not Environment Canada’s own people out there with measuring instruments?
Ms. DaCosta: No, they have a reporting system that comes and they work with provinces and industry to get that reporting.
There are also the projections numbers. They take the historical data and they project into the future.
Those processes adhere to international guidelines set by the United Nations Framework Convention on Climate Change, and within that convention there is also an oversight process. So, in terms of the projections, that methodology gets updated and looked at very stringently. I can speak to the confidence that those numbers are as accurate as they could be. They’re still evolving every time and every year, but I can speak to the confidence of the process there.
Senator Fraser: With the exception of the clean energy funds, reading your material is really depressing.
Ms. Gelfand: I’m sorry.
Senator Fraser: If I start with the assumption that throughout this vast government apparatus people are basically operating with goodwill and good intent, where do we fall down in getting the proper appreciation of the task and of the complexity of the task? And then, if we do get a proper appreciation, where do we fall down in actually doing what needs to be done?
As you’ve said, we’re very good at plans, but where does it go wrong?
Ms. Gelfand: It’s a great question because in some cases, it goes right. When we look at the report that David did on adaptation, we looked at 19 different departments. Environment Canada said to all the departments, “Hey, climate change is happening, assess your risks.” Canada has $66 billion of assets. The Canadian government is the biggest entity in the country, $66 billion of assets. We should be looking at what the climate change risks are.
Environment Canada produces a framework and, remarkably, five departments go out and do this good work. So there is some kind of leadership that happens somewhere. Fourteen other departments, frankly, including Environment Canada, didn’t go out and do a good risk assessment. It’s really hard to pinpoint exactly what’s wrong. Sometimes things go right.
I recall from my past history that many years ago, if not decades ago, Transport Canada started hiring experts on climate change and started building a little team of people. They’re with one of the five that had looked at their climate change risks. Some civil servant had the wherewithal and leadership to say, “Hey, there’s a risk coming at us. It’s going to affect our airports, railways, infrastructure in Canada. We need to get on top of that.” And they went ahead and did it. Others don’t. I can’t answer where we fall down; we just do. But not always. In some cases, we have good results.
Senator Fraser: You used the word “leadership” a couple of times. Basically, it has to be driven from the top or pretty close to the top?
Ms. Gelfand: I didn’t go in and audit. I didn’t go in and find out from Transport Canada how they got there or, Fisheries and Oceans, why did you do all that good work compared to other departments? Basically we said, “You were supposed to do it. Did you do it?” We didn’t go deeper to see what made it so that five did a good job and 14 didn’t. What was the difference in that? Was it a team of people that created that? I’m not sure. I don’t know if you know.
Senator Fraser: One clarification.
Do you happen to know whether bonuses include, as part of the criteria, action on the environmental front across the government?
Ms. Gelfand: At one point, through the Federal Sustainable Development Act, the current act does talk about performance agreements with the deputy ministers on achieving the results of their departmental sustainable development strategy.
The concern is that many of the sustainable development strategies are about procurement, greening government operations, buying good papers and pencils, reducing air travel, and things like that. So that would be likely, according to the research in management, be a way to spur action.
[Translation]
Senator Massicotte: Thank you very much for being with us this morning.
[English]
To summarize what I’m hearing, maybe the most important message to the public is that we are missing our plan. This is extremely important. This is not an academic study. This will have consequences of significant measure in our lifestyle. Unfortunately, you can’t put borders around it, so it’s going to affect the world and I suspect other countries are the same.
The takeaway I get from what you’re saying is that we’re pretty good. Like in many organizations, we’re very good with making plans and strategies, but we have extreme difficulty in getting it done and executing it. It’s easy to develop strategy, but the execution part, that’s where the hard part is. But the consequences are serious, and I hope Canadians wake up to put pressure and prioritize their lives and our resources appropriately.
Relative to your auditor role, there have been studies, as you know. The ministers put out studies saying that, for instance, to the extent we don’t get it right and to the extent that we don’t spend $1 today, I understand 10 years from now that dollar becomes $1.40, from memory. Other studies indicate that whatever money you think you are saving by not getting it done now, the consequences and the costs go up dramatically. By 20 years, the amount triples in terms of the consequences to our GDP, for instance.
You’re obviously aware of those numbers. Are those numbers right on? Could it be a lot more? I guess the point I’m trying to make is that people should realize it’s costly to do a climate change strategy. It’s inconvenient. It causes changes to our lives, but they should know that the cost and inconvenience now is nothing compared to what’s going to be in 20 years if we don’t get this right. Could you comment on that?
Ms. Gelfand: That’s one of the reasons that we looked at adaptation and whether we’re getting ready for the changes.
I’ll bring in a small story. We’ve been meeting with the chairs and vice-chairs of parliamentary committees to talk to them about the role of the Office of the Auditor General and my role.
One member, Mr. Casey, brought and showed me this picture. He described Nova Scotia and told me how much money and activity comes into the Port of Halifax, and how it then all drives through this little space between Nova Scotia and New Brunswick and down to Chicago. It’s something like $50 million of economic activity every day.
The problem now is that with rising sea levels, the water break is actually the railway line. You know how railways are banked up? The railway line is what is keeping the water from flooding out the railway itself, along with the highway and the agricultural land.
If we don’t start getting ready, the impacts of changing climate are happening now; we’re basically already living with them. If emissions continue to rise, it is highly likely there will be even more impacts.
Our audit looked at whether the government is achieving its goals of reducing greenhouse gas emissions. Except for the United States, the whole world has said that they’re going to reduce their emissions and Canada should play its part. We represent 2 per cent of the world’s emissions and .009 per cent of the population, or some other very small amount of the population.
We’re producing a lot of greenhouse gases for our population size, so we looked at that and whether the government is ready to adapt to changing climate now. That’s $66 billion of assets. I just had to ask the Auditor General how many assets we have, whether we have looked at climate change and whether we are ready. Are things going to fall into the sea or into the permafrost? What’s going to happen with these assets?
We looked, as well, at reducing subsidies to the fossil fuel sector and investing in new, green technology. So, from a sort of quadrant, we tried to look at the whole aspect of it that we could do in the role of audit.
Senator Massicotte: After your report, two or three weeks ago the United Nations came up with a report basically saying the same thing that you are saying relative to Canada’s performance, and it also made a comment about the world.
In other words, if you look at what’s happening now, governments have promised a lot and a lot of them are not delivering, especially Canada. You’re basically going to a 3.5 or 4 per cent Celsius temperature increase from the current projection, and that includes what they call a significant reduction of CO2 from natural resources. There are proactive things you can do, but there is a lot of stuff they presume can suck up the CO2 in the air, an area in which we’re going nowhere.
I’m very discouraged. It looks like we’re going to hit the wall in a big way and find it’s too late. You can’t just automatically stop and the CO2 will disappear. It takes hundreds of years to have an influence.
I’m trying to ring the bell. Having said that, shouldn’t we tell people, “This is where we’re heading,” in a real and descriptive manner? Here’s the consequence to our lifestyle when you hit 3.5 or 4 per cent. Some people in Canada are saying that 4 per cent is good because we’re a cold climate, but people don’t realize the Ice Age was only a difference of 5 degrees Celsius and mankind couldn’t survive. This is serious stuff. How do we get that message across?
Ms. Gelfand: You would have to ask the government how to do that. As commissioner, I recognize that climate change is a serious and important issue, so I have conducted audits to see whether the government is meeting its commitments that it made.
These are not commitments that I am making on behalf of the government; they are commitments that the government has made. The government said it would assess its climate change risks and it said it would invest in new green technology, and it is doing that. It said it would reduce inefficient subsidies to the fossil fuel sector and that it would get ready to adapt.
We looked at all the things that the government said it would do in this very important, complex and urgent —
Senator Massicotte: So, out of four of them, three fail?
Ms. Gelfand: Well, remember that, in adaptation, five departments did do a good job, so I want to give a shout-out to those. But we have not reached our 2020 target and we now have a more difficult target to reach in 2030. On emissions reductions, it’s not a great situation. On adaptation, five departments did good work.
Senator Massicotte: They issued good reports.
Ms. Gelfand: No, they actually did some activities and did good actions. On investing in new green technology, we’re doing a good job. At the beginning of the cycle, for innovation and, finally, on fossil fuel subsidies. At this point the reason that the Auditor General tabled that report was because Finance was not giving us the information that we were looking for. There was an access-to-information issue which goes beyond the commissioner.
We are going to do another audit on reduction of inefficient fossil fuel subsidies shortly, again, to make sure that the Department of Finance gives us the information.
Senator Patterson: Regarding the collaborative reports on climate change being prepared with provinces and territories that are to be tabled in Parliament in early 2018, what will be examined in those?
Ms. Gelfand: That’s a great question. Auditors general from across the country have agreed to look at two things within their jurisdictions: Is their jurisdiction going to meet the jurisdictional target to reduce greenhouse gas emissions — that is, if they had one; not all jurisdictions did — and is the jurisdiction getting ready to adapt and identify its risks related to a change in climate?
For the first time, we have everybody working on this issue together. They’ve all been reporting. I think there was a report in the Yukon on Tuesday. Each jurisdiction has been reporting their own audits to their legislatures.
Once they’re all complete, which should be in February, we will issue a summary report. Again, it will look at two areas: Are we achieving our reduction targets province by province and territory by territory? And has each jurisdiction looked at and identified their climate change risks and started to get ready to adapt to a changing climate?
Senator Patterson: This is about your role, now. Looking at Nunavut, I hate to say it is the poster child for diesel in Canada, because we have no alternate energy sources like the neighbouring territories. We have no hydro.
When you find out that there has been no progress in reducing greenhouse gas emissions in Nunavut, which I’m predicting, will your mandate allow you to examine why there has been no progress?
Ms. Gelfand: I don’t know the details of the Nunavut chapter yet because it has not been tabled, but all we can audit against is whether Nunavut even set emissions reduction targets. I don’t know if the Government of Nunavut has said they will reduce. Some of the territories have said they are going to increase their greenhouse gas emissions because they don’t have much choice. I don’t know the situation of Nunavut exactly. It has not yet been tabled. It’s in progress right now.
All we can audit against is a government commitment. Have they committed, what have they committed to, and how well are they reaching that target? Then we will ask what they have done in terms of commitments, what they are going to do about adaptation and whether they have met those commitments.
Senator Patterson: You said you will look at how well they have done in reaching those targets.
Ms. Gelfand: Whatever targets they set.
Senator Patterson: That’s what I’m getting at. By the way, you are the Auditor General for Nunavut.
Ms. Gelfand: That’s correct.
Senator Patterson: There’s no Nunavut Auditor General, so it’s all in your shop.
Ms. Gelfand: That’s correct.
Senator Patterson: What I’m wanting to know is when you examine how well they have done in reducing their emission targets, will you be looking at issues like progress on alternate energy, or do you just do a bald “they haven’t met it” or “they have met it”? When you say how well, do you look at the methodology to reduce emissions?
I’m getting at this because Nunavut signed the Pan-Canadian Framework on Clean Growth and Climate Change, so at least in principle they have agreed to reducing greenhouse gas emissions and signed it in good faith. We’re promised accommodations, we’re promised a study on the impact of carbon pricing. The study isn’t done, and it hasn’t been completed and released. We’re now going into 2018, with a promise to increase the cost of carbon in the highest cost-of-living jurisdiction in the country. To my knowledge, there’s no progress on alternate energy.
As the Auditor General looking at this, will you be looking at this question of progress in developing alternate energy so that consumers will have a choice when their cost of living goes up, rather than just have their cost of living go up?
Ms. Gelfand: I believe that if they’ve used the same methodology, which they have, as all the other provinces and territories, what we’re looking at is: Did the jurisdiction set an emission reduction target, yes or no, and how well have they achieved that target? Have they done it? Have they not? Are they on track or not? Did the jurisdiction indicate that it should identify its climate change risks? Did they do it? That is what we will be looking at in Nunavut.
The principal is not here, so there is another person who is running that audit for Nunavut. We could try to get back to you in terms of the criteria that they used if they did anything beyond that.
Senator Patterson: I would appreciate if you could get back to the committee on that.
Senator Cordy: Thank you very much. I would like to talk about the 5 of the 19 departments and agencies that have fully assessed the climate change risks and acted on them. Could you tell us which departments or agencies those are? I think you said Transport and Fisheries were two of them.
Ms. Gelfand: I have a table here. We have Fisheries Canada, Indigenous and Northern Affairs Canada, Natural Resources Canada, Transport Canada and then Health Canada. If I’m correct, I believe Health Canada was a little bit on the edge.
When you survey 19 departments, what you struggle with is the really good guys, the middle guys and the bad guys, or do you just break them into two. Health Canada just made it over the fence into the top five. There is still more that they could do.
Senator Cordy: So there are the really good guys. What stages are the other departments at? We’ve been talking about climate change for a long time, and I hope Canadians are finally starting to get that we better start acting quickly with the fires and the flooding that’s happening across Canada. You spoke about Nova Scotia and at least the Department of Fisheries raising a wharf because of the flooding. You’re right, the Chignecto Isthmus connecting New Brunswick and Nova Scotia is very small and the transportation comes through with produce and material from the Port of Halifax through New Brunswick to get to Chicago or to New York or Boston, so it’s all pretty scary.
Where are they? Are they the bad? Have some assessed it but not done anything about it? I wonder if you could clarify that a bit.
Ms. Gelfand: Absolutely. I’ll give you an overview, and if David wants to add he can.
There were a couple of departments that made absolutely no climate change risk assessment, nothing. They were Public Services and Procurement Canada, and Innovation, Science and Economic Development Canada. The remaining ones we looked at took some actions. I’m going to give an example. National Defence realized that some of their Arctic operations are going to have accessibility issues, so they looked into that and they might have done something around that.
Certain departments identified key areas and went ahead and did something. Those include Agriculture, Canada Food Inspection Agency, Environment Canada, Global Affairs, Infrastructure, National Defence, Parks Canada and the Public Health Agency. Some of them they identified, but they didn’t do what was called a complete risk assessment according to the Treasury Board guidelines where you would look at all your operations, all your programs and all your services and say where are we going to have a risk related to a changing climate and what are we going to do about it?
David Normand, Director, Office of the Auditor General of Canada: Actually, I think this is an accurate picture of the situation. For example, for the good ones, they identified what the risks are to their mandate. There are two sides of the coin here: the things they should do or could do to help Canadians adapt, and the things they should do as part of their mandate to deliver on their own operations to fully deliver on their mandate. Those five did a good job of assessing the risks. They identified that climate change could impact their operations. Not only that, they were able to align the nature and how climate change would actually impact their operations. Then they identified measures to adapt. So concrete actions with timelines, et cetera.
The rest of the 14, we found, did not do that. Basically, for some of them, they identified climate change as one of many potential risk drivers to their organization, but they have not identified in what shape or format climate change could impact them. As a result of that, they took little action to adapt and build their own resilience to climate change.
Senator Cordy: So what happens now? The report is out and 14 departments or agencies have certainly not done what they should be doing. What happens now? Do you follow up? Do you leave it to the Department of Environment? It is not on the list, by the way. What do you do? I guess I should say what do we do?
Ms. Gelfand: The theory of the way this whole process is supposed to work is that Parliament tells the government what to do and the auditor goes in to see whether or not the government has done what Parliament has asked it to do and reports to Parliament. So mom tells you to get a B in science. I go in and see how much homework you’ve done, and I report back to mom to say I think you’re going to get an A, B or C. Then mom has to go and hit the kid over the head and say, “Get on with your homework.”
The way it’s supposed to work is that the government has said you are supposed to assess your climate change risks. We’ve gone in and found that 14 have not. We’ve reported this to Parliament. Technically, it’s up to Parliament to go back to the government and ask them to do it.
Now, in our recommendations, each of the departments said that they would. Some of them gave timelines as to when it would happen. We often do follow-ups, but there are many issues to take care of, so we encourage you to call the departments to task, bring them in front of you, ask them what they’re going to do about these issues and ask for an action plan. We encourage the House of Commons committees to do the same thing.
Senator Richards: Thank you for coming. Maybe David can answer this. Maybe it’s been answered.
What percentage of alternate green energy has already replaced fossil fuels in Canada as a sustainable energy form today? Can you give me a rough estimate of that? Is it very small?
Mr. Normand: I cannot answer this question. This is not something we looked at. As the commissioner has said, we looked at if each organization had assessed their own risk and how they’re responding.
Senator Richards: I thought this might be how they are responding. I thought that might be part of the answer. But it is not?
Mr. Normand: No, we did not.
Senator Richards: There is one thing about the Tantramar Marsh. I’m just playing devil’s advocate here, and I will for as long as this debate continues. The Tantramar Marshes have been flooding for a hundred years. Now we are going to do something about it, and it’s high time we do something about it because we’re losing our structure there. The New Brunswick government has petitioned the federal government to help them build dikes along there so they can support the traffic.
I’m not saying that climate change isn’t the main culprit; I’m saying there are other culprits. It has been happening from the time I was five years old.
Ms. Gelfand: I only brought that example up as a member of Parliament showing it to me. It wasn’t something we audited.
Senator Richards: Okay.
The Chair: I’m going to ask a couple of questions.
The consensus is that we are frustrated because promises have not been achieved, and your role is like an accountant: “Here is where we are supposed to be, and we are here.” You cannot give political recommendations on what should be done.
I have a global question and a particular question. The global question is this: If you put yourself in our position and you have a lot of data or information, what can we senators do, as this committee, to help you push or to be the mother to spank the kid when he’s not doing it? That’s my first question.
Ms. Gelfand: To answer that global question, a Senate committee can ask the departments to come forward and present to you. When you ask a department to come forward, make sure it’s the deputy minister that comes, because I’ve seen many cases where they pass it on to more junior staff who cannot answer on behalf of the department. If you’re concerned about emissions and meeting the Pan-Canadian Framework on Clean Growth and Climate Change, call the deputy minister to account, ask them for their plan and then call them again the next year.
I believe the power the committees have is to call the government to task by bringing them in front of you, asking them questions, and then getting them to come back six months or a year later and present to you again. That’s the biggest role you can play as senators.
The Chair: My second question is this: Have you compared your work with similar work elsewhere, like in England or —
Ms. Gelfand: Yes. I have that right in front of me, actually. In the issue of adaptation, there are several countries that have made risk assessments mandatory. Some countries have climate change legislation.
In the U.K., they’ve embedded climate change adaptation into the legislation. Both the U.K. and Finland require governments to assess their risks and develop adaptation plans at the national level.
Germany developed a strategy for adaptation in 2008, and determined 15 areas of vulnerability and identified specific priorities in 2015.
France, the U.K. and Germany prioritize their activities. They have identified in France, for example, 230 measures to implement, with timelines in their 2011 adaptation plan. The U.K., I already said, must assess their priority risks.
Some of them have national oversight committees. In the U.K. and Finland, they have a subcommittee to give parliament an independent assessment of progress on the adaptation plan. In Finland, they have a national monitoring group that provides ongoing presentations back to parliament.
In the area of adaptation, we looked at how other countries are doing this.
The Chair: Thank you.
Senator MacDonald: I apologize to everybody and my colleagues. I had a bill before the Fisheries Committees and was trying to do two committees in one morning which is not easy to do.
Number 16 on your list here — I’m happy to report that the three clean energy funds you looked at were working well, the money was spent properly, the tracking of the projects, the funding was easy to track and the projects were approved to a rigorous and objective process. I’m wondering if you could elaborate on that claim.
Ms. Gelfand: We looked at three different funds in this case. Two of them came from Natural Resources Canada and one of them was the Sustainable Development Technology Fund.
Within Natural Resources Canada, some of the money went to carbon capture utilization and storage technologies and projects. The other money went into small-scale renewable and clean-energy system funds.
For the three funds, there was a $1.4 billion allocated between 2006 and 2017, or about 11 years. About half of that was spent. Most of them were public calls for submissions of proposals from specific companies, except in the area of carbon capture, because those are very large, industrial facilities where they’re capturing carbon made from the upgrading of bitumen, essentially, into new oil products.
I was saying earlier we looked at 65 different projects. We went and visited six or eight of them. My staff were across the country, meeting with the actual people and companies who received the money. Overall, we found it to be a good-news audit. That is rare, because auditors are usually looking to find the thing that’s not working. So it was a pleasure to actually find out that things were good in this area and that, as Canadians, we should feel confident that if we put more money into these flows, at least it’s being well spent into good projects. We can account for it all.
As I said earlier, we heard from people who received the money that we’re good at the front end of the innovation cycle, but the development and the scaling up is where we have difficulty in this country.
Senator MacDonald: You say it’s being well spent. Where is it being spent? Is it being spent broadly across the country in every province, or are one or two areas sucking up half the money?
Ms. Gelfand: I didn’t look at that specifically. We didn’t hear any problem with it being placed in one place or another. Carbon capture utilization and storage did get a lot of the funding, because those are large-scale projects.
Senator Fraser: This is so interesting. I’d like to come back to this business of the commitment to phase out and rationalize inefficient fossil fuel subsidies.
What is the definition and what are the criteria to determine whether something is “inefficient”? On one narrow point, it could just be “is the money going where the government said it was going to go,” or at the other end of the scale, it could be “are they in fact increasing the production of greenhouse gases”? What’s “efficient”?
Ms. Gelfand: I’ll start the answer and then pass it over to Doreen. We expected the government to be able to tell us what they defined as an “inefficient fossil fuel subsidy.” What was inefficient? What we found overall was that they had not defined that.
Senator Fraser: They’re going to phase it out, but they don’t know what it is?
Doreen Deveen, Director, Office of the Auditor General of Canada: When we started the audit, we started off under the premise that there are a number of quite specific terms in this G20 commitment, and “inefficient fossil fuel subsidy” was one of those.
The G20 leaders didn’t define what “inefficient” was, because they felt that it was important for each member country to define it within their own context.
As the commissioner mentioned, they had not defined what an “inefficient fossil fuel subsidy” was.
Senator Fraser: The G20 hasn’t, but has Canada?
Ms. Deveen: No.
Senator Fraser: Not at all? Is anybody working on this?
Ms. Deveen: We recommended that both Finance and Environment Canada work to define what this is. That being said, Finance Canada loosely defined this as those subsidies which provide a preference — that they would target what they would phase out over time to those subsidies that provided a preference to the oil, natural gas and mining sectors. So some action was taken, but in the absence of a formal definition of what specifically constitutes “efficient.”
Senator Fraser: Provide a preference for fossil fuels versus solar or hydro or whatever?
Ms. Deveen: That’s right.
I wanted to add, as well, that another component of the commitment was, when phasing out or rationalizing, to provide targeted support to the poorest. We asked them, as well, what that meant. Again, there was no specific working definition of what that meant in their context.
Senator Fraser: Poorest people? Poorest sectors? Poorest regions?
Ms. Deveen: That’s the thing.
Senator Fraser: Nunavut?
Ms. Deveen: We again recommended that they define what that meant when they work towards the phase-out or the rationalization of these subsidies.
They felt that what it probably meant, the G20 intent, was about consumer subsidies and that it was more relevant to the countries like India, which provided lower costs for fuel and energy to support the poorest people in the country, and that we tended not to do that as much in Canada.
Senator Fraser: Oh, so we don’t have to worry.
The Chair: Do we see that in any of the reports? Would you mind putting in writing this issue on the definition of inefficient and your considerations and sending it to Maxime, please?
[Translation]
Senator Massicotte: You define the term “inefficient subsidy.”
Ms. Gelfand: Yes.
Senator Massicotte: The department’s interpretation is to determine if there is a preference, in other words, if there is a subsidy. According to the definition of “subsidy,” it is an advantage that is given to someone. Let us set aside the word “inefficient.” Many organizations throughout the world throw around numbers to talk about subsidies, and the numbers are relatively high for Canada.
Ms. Gelfand: Yes.
Senator Massicotte: This definition of “subsidy” is vague. For example, if we spend $1 million in operating and development fees for an oil well, and tax laws allow a deduction over 15 or 20 years, and that cost is deducted over the amortization period as outlined in accounting standards, is that a subsidy? Many organizations say that any advantage constitutes a subsidy. If we follow typical accounting standards, it is normal when one spends a penny to earn another penny, to consider this expense as legitimate and not as a subsidy. According to your interpretation, is the deduction of the exploration cost for an oil well considered to be a subsidy?
Ms. Gelfand: Report 7 was tabled by the Auditor General in the spring of 2017. The reason I have not tabled this report is due to the fact that the Department of Finance did not work with our office to provide the information we needed to achieve the audit objectives. The matter of access to information is very important for all auditors general throughout the world. We are supposed to have access to the information we need. That is why the auditor general took the report.
In our report, we talk about some tax measures which were eliminated and were directed solely at the fossil fuel sector. We also talked about measures that are part of the benchmark tax system. We saw that the Department of Finance hadn’t looked fully and exhaustively at all the possible subsidies, all the deductions that you are talking about, to determine which ones were efficient and which ones were not. The department had not defined the word “inefficient.” It was therefore difficult for them to make the determination. It had not examined the deductions using an exhaustive methodology to see if they demonstrated favoritism toward one sector over another. Does that answer your question?
Senator Massicotte: It remains to be seen, in other words.
[English]
Senator Wetston: I just wanted to say that it’s very helpful that you provided what other countries are doing with respect to their strategies. I think you all know very well that it’s a bit more challenging in Canada, mostly because we are a federation, not a unitary state. Invariably, we’re compared to what unitary states can accomplish versus what we can accomplish more easily in Canada, given the nature of our federation.We love our federation, but it is sure challenging to govern in this country.
Having said that, that’s just a comment with respect to the information you’ve provided to us.
I’d like to ask a more specific question regarding how you go about doing your audits and the trade-offs that you might observe in how departments are going about dealing with decarbonization in relation to adaptation. Can you assist me in describing whether or not you see any significant trade-offs between both of those objectives? If we can’t constrain or reduce decarbonnization and we don’t meet the targets we’ve been talking about, we’re going to have some pretty significant adaptation problems.
In your work, have you been able to examine any of those trade-offs between those objectives?
Ms. Gelfand: That’s a really interesting question. I would say that, generally, we’ve been looking at each issue as an independent piece of the pie. So we’ve been looking at: The government said it would reduce greenhouse gas emissions and hit a target, be it the Kyoto target until we withdrew, the 2020 target, or now the 2030 target. We’ve been going in as auditors to say, “You said you were going to hit the 2020 target, where are we?” Okay, we’re nowhere close. Are we even working on a 2020 target anymore? It doesn’t even sound like we’re working on that anymore. All we’re talking about now is the 2030 target.
In essence, as somebody in our office said, we’re kicking the can down the road. This is not an easy target for Canada to reach. Canada has a lot of production of oil and gas, and that production creates a lot of greenhouse gases. So this is a difficult target for Canada, and Canada is a cold country, a large country, with communities all across the country in very isolated places. That’s why I said it’s complex. For Canada, in particular, meeting our greenhouse gas commitments is complex, important and urgent, all of those adjectives.
In the area of adaptation, we looked at the adaptation framework, the policy framework that had been established by Environment Canada and circulated to the departments, which said that Government of Canada departments should each look at their climate change risks, identify them and then take action to deal with those risks. We have looked at them as — I’m not sure we’ve done the trade-off issue that you’ve asked about. We’ve said that the government is committed to reaching an emission-reduction target. Where are we at? The government has said it should identify its climate change risks. It has a lot of assets, a lot of programs. How are they doing on that? We’ve looked at it that way.
The Chair: I have just one last question. Would it be possible, under certain circumstances and conditions, that your next exercise includes economics and finance? It is the belief of people that it is very expensive to apply the actions. Very few people have started calculating the cost of not doing anything. Because you’re the auditor and I understand that you’re working with goals and achievements, can you do the same in money terms?
Ms. Gelfand: That’s a great question. Half of the office of the Auditor General is accountants, and all the provincial auditors general, who are now looking at climate change in terms of value for money and performance audits, I hope are starting to think about: What is this going to cost our jurisdiction, both to get ready to decarbonize and, if we don’t decarbonize, what are the climate change risks and how much is that going to cost?
By encouraging Auditors General across the country to think about this, I’m hoping that it will spur the accounting folks — because they’re on a different side of our office — to start thinking about that and looking into that.
I’m not exactly sure how the accountants do those kinds of audits, or if they do. Usually they look at the books of an entity. We go in and look at the books of the Government of Canada. I don’t know how accountants would do that economic analysis, but we do have an economics team within the Office of the Auditor General and I could bring this forward to them as a potential review for them to look at.
The Chair: Just a small comment. Insurance and banks are already doing it, so I think the government should do it, too.
Senator Richards: This is my last question. I won’t bother you too much. I’m wondering, do you have any idea how much money is going into research into alternate forms of energy in this country? How much money is given out in grants and subsidies? What percentage in the big scheme of things is given out to that? It seems to me, if this is dire and it seems to be, then research should be one of the fundamental things we are doing. As you say, this is a vast country and it gets pretty cold in the winter. Most people turn up their heat.
Ms. Gelfand: Yes, we do. I’m reviewing, very quickly, our chapter on clean energy to see if we indicated the total amount in the country. I don’t believe we did.
We looked at three of the largest funds that the government has established to help fund that, but we have not done a review of all the R&D. All of that work has not been done by our office. We just looked at three funding areas.
Ms. Deveen: In 2012, we did a study. As part of that study, we looked at federal funding to the fossil fuel sector in terms of the grants, et cetera. Based on the numbers that we had back then, federal funding to the fossil fuel sector for research and development and economic development was $508 million between 2007-08 and 2011-12.
Senator Richards: That’s the fossil fuel sector, though. I’m talking about research and alternate forms of energy. All of a sudden some young woman figures out a fusion and then we’re all saved. Sooner or later it will have to happen, hopefully.
Senator Fraser: I have last question, if I may, and it goes back to this question of trade-offs and how we grapple with it.
What is the mechanism to get a study done, for example, of the situation in the Tantramar Marshes? Does somebody have to ask the Auditor General to go and look and say, “Here is what likely to happen, here is the cost of preventing those floods from going beyond their historic levels?” And what would the cost be to Canada if we didn’t do that?
The prospect of Nova Scotia becoming an island is —
Ms. Gelfand: Kind of serious.
Senator Fraser: I think the New Brunswick legislature has done some work on this, but not anything like the really specific gritty —
Senator Richards: They’ve come to it late, like everything else.
Senator Fraser: How do we get this work done?
Ms. Gelfand: Remember again that auditors can audit against government commitments. So government has to say we’re going to prevent these marshes from flooding and then we can go in and look at that.
I believe, through the Library of Parliament, you might be able to ask for a study. The other person to think about is the Parliamentary Budget Officer, to ask him to look at some of these questions or his office to look into some of these questions.
Senator Fraser: Because there are federal installations on that land.
Ms. Gelfand: Absolutely.
[Translation]
The Chair: Thank you to all four of you for this enriching discussion. Thank you also to the senators for their revealing questions.
[English]
Now it is time to adjourn the meeting. Thank you.
(The committee adjourned.)