THE STANDING SENATE COMMITTEE ON ENERGY, THE ENVIRONMENT AND NATURAL RESOURCES
EVIDENCE
OTTAWA, Thursday, March 12, 2026
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 8 a.m. [ET] to examine and report on such issues as may arise from time to time relating to energy, the environment, natural resources and climate change.
Senator Joan Kingston (Chair) in the chair.
[English]
The Chair: Good morning. Before I begin, I’d like to ask everyone to consult the cards on the table for guidelines for audio incidents.
Please keep your earpiece away from the microphones at all times. Do not touch the microphone. Activation and deactivation will be managed by the console operator. Finally, please avoid handling your earpiece while the microphone is on.
Thank you for your cooperation.
I’d like to begin by acknowledging that the land on which we gather is the traditional ancestral and unceded territory of the Anishinaabe Algonquin nation.
My name is Joan Kingston. I’m a senator from New Brunswick. I’m the chair of this Standing Senate Committee on Energy, the Environment and Natural Resources
Before we begin, I’d like to ask senators to introduce themselves, starting on my left.
Senator Coyle: Good morning and welcome. I am Mary Coyle, a senator from Antigonish, Nova Scotia.
[Translation]
Senator Galvez: Rosa Galvez, Quebec.
[English]
Senator Fridhandler: Daryl Fridhandler, Alberta.
Senator Wells: David Wells, Newfoundland and Labrador.
Senator McCallum: Mary Jane McCallum, Treaty 10, Manitoba region.
Senator Lewis: Todd Lewis, Saskatchewan.
[Translation]
Senator Youance: Suze Youance, Quebec.
Senator Miville-Dechêne: Julie Miville-Dechêne, Quebec.
[English]
The Chair: I’d like to welcome you here today and everyone with us online.
Today, pursuant to the order of reference received from the Senate on September 25, 2025, we are beginning our study of the 2025 progress report on the 2030 Emissions Reduction Plan.
Our first panel, from Environment and Climate Change Canada, Judy Meltzer, Associate Assistant Deputy Minister; Alison McDermott, Assistant Deputy Minister, Strategic Policy and International Affairs Branch; Jen Collette, Director General, Horizontal Policy, Engagement and Coordination Directorate; and Derek Hermanutz, Director General, Economic Analysis Directorate.
I understand that Ms. McDermott will be giving the opening remarks for five minutes, and then there will be questions by the senators.
Welcome, everyone.
Alison McDermott, Assistant Deputy Minister, Environment and Climate Change Canada: Thank you. I, too, will begin by acknowledging that we are gathered on the traditional unceded territory by the Algonquin Anishinaabe people.
[Translation]
Thank you for the opportunity to appear before you today to discuss the 2025 Progress Report on Canada’s 2030 Emissions Reduction Plan and Canada’s broader greenhouse gas reduction strategy.
[English]
Canada remains committed to achieving the objectives of the Paris Agreement and to reaching net-zero emissions by 2050, as legislated under the Canadian Net-Zero Emissions Accountability Act.
That act requires transparent planning, regular progress reports, independent advice and clear public reporting to Parliament and Canadians, ensuring that climate action remains durable and accountable over time.
[Translation]
The 2030 emissions reduction plan provides a sector-by-sector road map for Canada to pursue its 2030 target and lays the foundation for net-zero emissions by 2050.
The 2025 progress report demonstrates important progress on that plan. Canada’s emissions are now trending downward from their peak, while the economy continues to grow.
[English]
Since 2005, Canada’s economy has become approximately 34% less carbon intensive. This demonstrates that emission reductions and economic performance can move forward together.
Across major sectors — electricity, transportation, buildings, heavy industry and oil and gas — Canada continues to implement a comprehensive suite of policies and measures. These include industrial carbon pricing, methane regulations, clean electricity initiatives, zero-emission vehicle measures and programs that support households and businesses in reducing emissions.
[Translation]
At the same time, Canada is adapting its approach to decarbonization to reflect new realities. We are taking a longer-term outlook and evolving our approach in light of geopolitical, economic, and affordability pressures.
Canadians expect climate policy to be practical, affordable and aligned with economic opportunity. They also expect it to reflect regional realities and the different economic structures across the country.
[English]
Canada’s evolving approach recognizes these realities while maintaining our overall commitment to ambition.
Canada’s next phase of climate action integrates competitiveness, affordability and national unity. Clean growth is now central to Canada’s economic strategy. It is not only about reducing emissions; it is about economic resilience, competitiveness and long-term prosperity.
The Climate Competitive Strategy, released in Budget 2025, will help to leverage Canada’s strengths. It creates the conditions to build a stronger economy and encourages cleaner innovation through strengthened industrial carbon pricing by investing in deep decarbonization, supporting clean grown through clean economy tax credits and reducing methane emissions.
Canada’s strategic regulatory framework and investments have led to significant reductions in methane emissions from the oil and gas sector while supporting Canada’s climate competitiveness in global energy markets. They also create new economic opportunities for Canadians, an estimated 34,000 jobs to be created in Canada in the abatement field alone between 2027 and 2040.
[Translation]
These will be further supported by a series of forthcoming economic strategies, including an electricity strategy. These strategies are designed to attract investment, create good jobs, strengthen domestic supply chains and position Canada as a leader in global clean markets.
Honourable senators, Canada’s climate approach remains steady, accountable and pragmatic.
[English]
The government recognizes that climate action and economic development go hand in hand. The government is committed to working closely with all governments, Indigenous Peoples and industry partners to build a stronger, more sustainable and more competitive Canada for generations to come.
We would be pleased to answer your questions.
The Chair: Thank you.
[Translation]
Senator Miville-Dechêne: Welcome to all four of you.
I’ll start with a general question.
In Chapter 5, the 2025 progress report concludes:
Meeting Canada’s 2030 greenhouse gas target “at all cost” risks undermining Canada’s broader economic and social objectives.
However, there is overwhelming evidence that climate change is also compromising our economy, in large part because of the high cost of more frequent natural disasters, but also because of the impact of GHGs on health. Inaction comes at a cost. Does Environment Canada take into account the cost of inaction or only the cost of meeting our targets?
Ms. McDermott: We are very aware of the fact that there are a number of economic costs associated with not taking action. We have different ways of measuring them. For example, the Insurance Bureau of Canada reports that extreme weather in 2024 resulted in insured losses amounting to $9.4 billion, making it the most destructive year in Canadian history. In 2025, losses totalled $2.4 billion.
We’re very aware of the fact that the cases are real. That’s why the government is taking all these measures to fight climate change. We’ve made major investments in adaptation to better prepare the economy and Canadians for the changes to come.
Senator Miville-Dechêne: Nonetheless, we won’t meet our 2030 targets. You seem to have accepted that reality. I’m not seeing total costs either. You told us about the cost of extreme events in 2024, but there’s no table showing the costs of inaction versus what you’re forecasting.
I think it’s all well and good to tell us that you’re progressing in this or that area, but we’re not meeting our targets, even though we set those targets ourselves.
Ms. McDermott: We can provide you with other estimates and other ways of measuring. We have other witnesses who will talk to you about this subject as well. I would note that there’s $6.8 billion to address climate risks, including wildfires, flooding and extreme heat.
These investments are money very well spent. According to the Canadian Climate Institute, for every dollar spent on adaptation, the economy as a whole saves up to $15. There will be other pathways to discuss. The latest estimates don’t show that the exact targets are being met. However, the government’s ambition remains to fight climate change and achieve its goals.
We are still working and looking for new measures. A few have just been announced. We’re continuing that work.
Senator Miville-Dechêne: Thank you, Ms. McDermott.
[English]
Senator D. M. Wells: Thank you, witnesses, for coming before us today.
I have a couple of questions about Canada’s targets, specifically our 2030 targets, and the targets that were set for 2050. It seems clear that we’re not going to meet them. Some of the measures you mentioned, Ms. McDermott, like carbon pricing, zero emissions, other decarbonization, clean growth and various aspects regarding emissions reduction — none of these seem to be working as effectively as the government would like. Would you agree with that? It is 14%, rather than 20% below the 2005 targets?
Ms. McDermott: The government’s targets and ambitions were always an ambitious set of targets. Each time we do a report, we’ve been generally making progress. Vis-à-vis the last set of projections, there’s been some deterioration in progress, but in general, the government has been making a lot of improvements. As we’ve discussed, there have been quite significant improvements from the government’s position several years ago.
Senator D. M. Wells: I understand. In my notes, it says targets or emissions plan, which is a plan.
Given that the top three emitters — China, the United States and India — are just over 50% of global emissions, and Canada is at a minuscule 1.5%, and decreasing — decreasing probably because the others are increasing, not because we’re actually decreasing in real numbers, and, of course, that carbon doesn’t see political borders — is the cost to Canada actually worth it? Maybe that’s a question for Mr. Hermanutz on the economic side, or whoever would like to address that.
About two years ago, we had a panel here from Environment and Climate Change Canada, and they said that the cost for this Canadian project was $2 trillion. They said $4 trillion and then revised it to $2 trillion. If we’re not reaching any targets, if it’s damaging the economy — and I recognize what you said about there are economic opportunities in decarbonization, but probably not as many as in energy production — is there a real value for Canadians in this project?
Ms. McDermott: We certainly see climate change generally as a collective action problem. It’s the reason why there are regular meetings with other countries and why Canada has signed on to the Paris Agreement. There’s a tonne of progress and momentum in moving the world to a lower carbon economy.
Admittedly, right now, there are some challenges geopolitically with the fact that the United States has started to step away from some of its targets. That makes it difficult. We certainly acknowledge that, but we’ve always felt that there’s good evidence that moving to a low-carbon economy creates a lot of economic opportunities for the country, and as has been pointed out by your colleague, the costs of climate inaction are much greater than the cost of moving to a lower carbon economy.
We see great agreement economic opportunities. Canada has been calibrating its steps forward to ensure that the climate action that it undertakes is not harming its competitiveness. My colleague, Ms. Meltzer, could talk about some of the instruments we have in Canada that are specifically designed to minimize competitiveness risk while achieving our climate goals.
Senator D. M. Wells: Thank you. I have one last question.
When you mentioned the efforts to decrease methane emissions, specifically targeted at the oil and gas industry, do these targets take into account the different oil and gas industries that we have offshore of Newfoundland and Labrador and what we have on mainland Canada? Or is it just categorized into one oil and gas industry?
Judy Meltzer, Associate Assistant Deputy Minister, Environment and Climate Change Canada: Thank you for the question. I can speak to that. It is absolutely taken into account. The existing federal methane regulations, which have been in place for some time and have effectively driven reductions as well as investments in decarbonization, applied separately in terms of upstream oil and gas versus how the offshore is treated. For example, we know that methane emissions from offshore are significantly lower.
I would say to both of your points that we know that methane abatement is key. Methane, of course, is a powerful greenhouse gas, and we know that the abatement costs are relatively low compared to some other actions. It often relies on Canadian technologies, so we’ve designed the federal enhanced methane regulations, which were published in December, to provide as much flexibility as possible. We have an option whereby the facilities themselves will choose how best to reduce their methane emissions. We’re a global leader in that regard. I don’t think any other country has been provided that flexibility, and it’s specifically with a view to ensure competitiveness and low-cost action.
It’s the juxtaposition of competitiveness and economic impacts. It’s not a dichotomy with abatement. We have to be careful with that kind of binary.
The other tool that we have is that we know that, with respect to methane, we’ve relied really successfully on provinces to do the heavy listing, for example, in B.C., Alberta and Saskatchewan. We leverage equivalency agreements, so it also provides a little bit more opportunity for provinces to tailor their regulations to their particular sectors and circumstances.
Senator D. M. Wells: Thank you.
Senator Galvez: Thank you so much for being with us this morning and for answering our questions. Thank you for reiterating what the Prime Minister said about his renewed commitment to reach net-zero by 2050. There’s one element that you forgot to mention, which is that he wants to focus on goals and results, not on targets.
The fact is that we’re not going to reach our target by 2030, and we are very far from 2050. Also, the organizations that assess the policies that will take us there, in Canada, are insufficient. This was before the rollbacks of environmental regulations that we’ve seen. So we’re not going to get there.
You mentioned that Canada is slowly decoupling growth from emissions, but our peers in the G7 did this 10 or 15 years ago. We are very far from where we should be to get results.
You said you’re doing everything to make progress. Are we asking for transition plans from industry? Do we have a green taxonomy in place? Are we aligning the financial sector, which is investing $4 in oil and gas versus less than $1 in renewable energy? Using all the parameters, they say that this is the way to go if we want to focus on results. Where are we on that?
Ms. McDermott: I’ll just address your comment about how Canada compares with other countries. First, Canada has made significant progress. It has to be recognized that Canada’s economy is very different. My colleague, Derek Hermanutz, could talk about the economic costs for Canada.
Senator Galvez: My question is this: Where are we with respect to accessing the transition plans of industries? Do we have our green taxonomy? Are we aligning the financial sector with investing more in the transition?
Ms. McDermott: This is absolutely a priority for the government right now. In Budget 2025, the government reconfirmed its commitment that it made in October 2024 to support the development via an external organization of voluntary sustainable investment guidelines, what we call “the taxonomy.”
In December, the government announced the selection of the Canadian Climate Institute to lead the development of the guidelines, working with Business Future Pathways, which is an investor-led initiative, and bringing together representatives of major financial institutions and technical experts.
I suspect that your next witness would be happy to talk more about that. Do you want to add a little bit more about that, Ms. Meltzer? Also, please talk a bit about the progress on disclosures.
Ms. Meltzer: To your first question, I wanted to highlight two things. It’s obviously a really good question. It is really important because you’re highlighting the metrics of investments and decarbonization. I want to highlight the net-zero challenge, which is a voluntary initiative, but now has 340 members of Canadian businesses and organizations, and those are commitments to develop to have robust net-zero plans in place. I would be happy to send you the list. It’s quite interesting to see the profiles of the different organizations.
The other point I would like to highlight with regard to your important question is that we’re focused on looking at how we can ensure that our regulations are fit for purpose to protect the environment and human health, but we’re also seeing really interesting developments in terms of the incentives they create for investment. One example is the Clean Fuel Regulations, where we now see tens of billions of dollars of investments in things like low-carbon fuels and hydrogen, which are flowing from that. I want to put it on the radar that this is an important metric to your question.
Senator Galvez: I have a second question. You rightly mentioned the new economy and geopolitical stresses that we are living in because of the situation created by our southern neighbour, which makes it such that we have to focus on increasing competitiveness, productivity and innovation, and we have to look for different markets. That’s why our Prime Minister is in the southeast and north, looking for new markets for our products, such as critical minerals and gas. But that is an example of a constructivist economy; it’s not an example of a knowledge industry aligned economy. We are a G7 country.
How can we look for competitiveness, innovation and productivity in a sector whose sun is setting? The oil and gas sector is sun setting. It has been mature for the last 30 years. Carbon capture and storage were developed when I was starting my PhD 40 years ago. We don’t have a single plan for real and added performance that they claim.
Last year, there were trillions of dollars of investments in renewable energy. How much did Canada receive of these investments?
Ms. McDermott: In 2024, global investments in clean energy reached $2 trillion, which is nearly double the level of investments in fossil fuels. I’m not sure that I have a figure for Canada.
Senator Galvez: We’re in the last place.
Ms. McDermott: That is very much part of the government’s plan. Of course, we have to look at decarbonization within the fossil fuel sector because that’s where a lot of the emissions are, but a huge focus of the Carney government’s decarbonization plan is about growing the low carbon sector as much as it is about decarbonizing high carbon parts of our economy.
[Translation]
Senator Youance: Thank you to the witnesses.
The Department of National Defence has one of the oldest real estate portfolios and one of the most carbon-intensive operational fleets.
As such, can you explain how Environment and Climate Change Canada assesses the department’s actual capacity to meet these net-zero targets? What specific measures do you expect the department to take to modernize its facilities and decarbonize its fleet?
Ms. McDermott: I’ll ask my colleague to speak to our work with colleagues in other departments.
Jen Collette, Director General, Horizontal Policy, Engagement and Coordination Directorate, Environment and Climate Change Canada: Senator Youance, thank you very much for your question about my role at Environment and Climate Change Canada.
We work very closely with other departments, including Housing, Infrastructure and Communities Canada.
When we talk about the programs we want to develop, we consider not only the department’s mandate, but also the needs and considerations to ensure that these programs combat climate change, whether in terms of emissions or resilience, knowing that climate change will impact the real estate sector in many ways.
Senator Youance: Thank you.
What are the concrete actions?
Ms. Collette: There are several programs. I’m sorry, I don’t think I know all of them.
[English]
Over the years, there have been several programs, whether it is looking at retrofits or Build Canada Homes, et cetera. There’s recognition that this infrastructure will last a long time. We need to give consideration to how the money that is spent now meets climate objectives, resilience objectives and the infrastructure objectives that need to go forward. Part of what our department does is to work with those colleagues to ensure those considerations remain at the forefront when the government is evaluating its decisions and program choices.
[Translation]
Senator Youance: In recent years, record-setting wildfires have greatly increased greenhouse gas emissions in Canada, so how do you explain abandoning the goal to plant two billion trees? How will that impact our climate goals?
Ms. Collette: I don’t think it’s my role to discuss decisions about this specific program that was led by Natural Resources Canada. However, we know that, following the comprehensive expenditure review, a number of assessments and decisions were necessary — difficult, but necessary — for the government to determine the costs and benefits of various programs and how to move forward with them.
Senator Youance: Budget cuts will affect approximately 840 jobs at ECCC by the end of 2026. What services will be cut in your department? Will GHG monitoring be affected?
Ms. Collette: I will have to hand that question to the assistant deputy minister.
Ms. McDermott: We’re not really here to talk about those processes in detail. I can say that we’ve reviewed all activities that contribute to government reductions, and we’ve identified programs that are less aligned with government priorities or less effective. Our department may have a more minor role than others or not be as well positioned as others. However, these decisions have certainly been difficult for the government. They’ve been difficult for our department, too, because we have many important activities. However, it’s also important to keep improving how effectively and efficiently we work.
Senator Youance: Thank you.
[English]
Senator Lewis: Thank you for being here and answering our questions.
I come from a province that has the highest per capita carbon footprint of any province. At the same time, in Saskatchewan, we have a million people who feed billions. We have an oil and gas industry. We have a mineral extraction industry that, once again, supports billions of livelihoods across the world.
We always talk about carbon and decarbonization. There has been some recent science about measuring issues like carbon sequestration. Has Environment and Climate Change Canada, or ECCC, kept up with that new science? Are they taking that into account at this point?
Ms. McDermott: Although Ms. Meltzer might be able to speak a little bit to some of the roles, we have a colleague who is focused exclusively on nature. A big part of her work is about how to conserve biodiversity and other objectives, but also because there is this connection with protecting nature and biodiversity, protecting forests, and so on. There is also this important sequestration role.
Senator Lewis: I’m speaking specifically to sequestration agriculture. Has that measurement been adjusted with the new science?
Ms. Meltzer: I won’t speak from the science lens, but there is, of course, awareness. As you say, it is a fast-evolving space. It’s incumbent on all of us to keep up with the current knowledge.
We are excited to be developing an enhanced soil organic carbon offset protocol. The federal offset system, for example, applies no burden. It basically just offers an economic opportunity for those farmers. We know they’ve been innovating for many years. But it tries to create an actual crediting opportunity so the farmers will do more to sequester.
We’re working closely with our colleagues in Agriculture and Agri-Food Canada, or AAFC, on that, and it is still very complex. We are still some distance away from getting to a draft protocol. In the interim, though, we are trying to find beyond the soil, which is, of course, an important area to focus on, but the lower-hanging fruit in the near term is for beef cattle farmers, who are doing a lot of innovative things in terms of reducing methane from beef cattle, for example. We have a protocol out that’s crediting that. We are aware and actively working in that space, certainly.
Senator Lewis: To that point, beef producers ask questions. Where are these numbers are coming from? For every cow that produces this much methane: a certain number of methane units for a certain number of cows. There has been a huge improvement on pasture management, feed additives and all those things. Is that being taken into account?
Ms. Meltzer: It is, in particular, with feed additives. We have a fairly robust and complex protocol for the calculation, which I’m happy to share. You’re right, the place we’re focusing our attention now to expand that crediting opportunity around methane reductions is on feed additives. We need to be able to make sure we’re quantifying the added value of that in a robust way, and there’s work under way in the department to do that with the Canadian Food Inspection Agency, or CFIA, and AAFC.
Senator Lewis: Certainly, on the soil sequestration side, according to the new science and the new reports that are available, net-zero agriculture does exist in Western Canada, and it’s not being recognized.
Ms. Meltzer: Absolutely, and the Senate has been doing interesting work in that regard as well. That is high on our radar.
Ms. McDermott: I would note that there are some programs that help support innovation in this area. The Agricultural Climate Solutions program’s On-Farm Climate Action Fund has distributed over $124 million through 13 projects that support different kinds of approaches to help farmers adopt and implement better management practices that store carbon and reduce greenhouse gases.
Senator Lewis: Many farmers have already done that adaptation. They’re not looking for a new program. They just want recognition for what they’re doing.
Senator McCallum: Thank you for coming today.
In the 2025 Progress Report on the 2030 Emissions Reduction Plan, the summary states that Canada is not on track to achieve any of its climate goals. In recent years, the federal and provincial governments have removed or weakened more climate policies than they have strengthened.
When I look under the transport section in the independent assessment, it indicates that the transport sector depends largely on regulations to reduce its emissions. When I went to visit Suncor in Fort McMurray, at the end of the visit, they let us know that they had 80 vehicles that were AI driven, that they were going 24-7 and that there would eventually be up to 165 vehicles. They were using hydro. They were using natural gas so you could see the flares. How many companies were there? I think there were four, and they were all emitting methane.
Looking at AI-driven vehicles, whether they’re passenger vehicles or taxis, I wonder how AI will impact vehicle emissions? How will it impact jobs and the new economic initiatives that you talked about? Will AI impact those jobs? We see that they’re going to be replacing many humans in the next while. Have you taken AI into consideration?
Ms. McDermott: I’ll start at a high level, and I may turn to my colleague, Ms. Meltzer, to talk a little more about the auto sector.
We see many opportunities for AI to help the government meet its climate objectives. I know that’s a specific element, but you asked about the workforce impacts of AI as well.
Those are quite complex. I know economists have different views on those impacts.
In general, the impacts of new technologies that displace jobs over history, those types of technologies have generally also created a lot more jobs than they have destroyed. There are still a lot of economists who believe that AI will not have negative impacts on the workforce, but we know that there will be some. The government is actually doing a lot of work in this area, not so much led by Environment and Climate Change Canada, but Employment and Social Development Canada, or ESDC and Innovation, Science and Economic Development Canada, or ISED, are definitely doing some work in looking at the impacts of AI but also how to make sure Canada maximizes the positive benefits of AI for the economy, and that we’re prepared to deal with some of the dislocations that can result.
From a climate perspective, where we’re most interested, we see a lot of positive opportunities for AI to help our processes become more efficient and ensure that we are as efficient in the use of energy as possible.
Ms. Meltzer may be able to say more about the auto sector.
Ms. Meltzer: Thank you. That’s an interesting question.
A point I would add from the lens of how we think about implementing measures, incentives and regulations for these sectors, and maybe just with respect to auto, for example, I would say we’ve actually been strengthening measures, and that’s industrial pricing. We are going to focus on stringent emissions standards for the auto sector.
One of the things that allows us to do, rather than use tools and prescribe what vehicles need to be sold by what time, is it means we’re not picking technology winners. We’re technology neutral. You create the space for innovation and allow companies themselves to see what makes sense for them to invest in. AI will be an interesting area to watch that grow. But rather than us prescribing that solution, what we want to do is create a regulatory environment where there’s an incentive to make those investments at a pace and scale that makes sense for a particular company but not prescribe the solution.
With respect to autos, we are putting in place a stringent greenhouse gas reduction target, a unique Canadian standard to incent. We want to see emissions across fleets, whether that’s in companies or on the road, decline. Taking into account near-term competitiveness stresses and shifting market dynamics that folks are aware of, we don’t want to be prescriptive on the how. Your question feeds into how we create the enabling environment that rewards and pulls forward those higher-cost investments but at a pace and scale that also allows time for transition.
I would say we look at the balance. I will use Suncor. I’m thinking about the methane piece. We just released, a couple months ago, more stringent enhanced methane regulations. One of the co-benefits of that is that it is creating jobs. I can provide a third-party figure. Canada is a leader in methane abatement technologies, so we see growth this that sector.
We need to look at the full picture, but from ECCC’s perspective, we’re not prescribing those technologies, but they can come online and be rewarded for their investments. That drives a lot of the measures we’re putting in place.
Senator Coyle: Thank you. This has been a very important and interesting conversation thus far.
I know we have the very heavy tome here, the report, and I appreciate the work that has gone into that. Just for the purpose of this discussion today, would you be able to identify for us the main sectors of our economy that are lagging and that we’re just not getting there with our targets? Also, what levers do you see being the most effective?
Reports are what we’re supposed to learn from, and we’re supposed to adjust and do something different. What wasn’t working, and what are we going to do to improve our performance?
Ms. McDermott: I think different witnesses here would have different views as to which sectors most to tackle. In terms of pure numbers, the oil and gas sector is certainly our largest source of emissions, but I think quite a lot has been done. Ms. Meltzer could speak to that.
My pick for the next area for the government to focus even more on is the building sector because that is a sector that is currently third in terms of emissions, I think. It is a challenging sector. We have a large stock of buildings, and that stock continues to grow as our population grows. The figures I have in front of me, 83 megatonnes of emissions — about 12% of our emissions — are broadly split between residential and commercial. The government has put a lot of focus into trying to provide incentives and support to Canadians, both on the commercial and on the residential side, to make investments that are more climate-friendly and prepare ourselves for net zero. We think we could continue to work on that in terms of there still being a long way to go.
Ms. Meltzer: It is an important question. You can think about it in terms of where we see the greatest emissions, in which sector. Also, when we think about it from what measures and how to create the incentives or push to address them, it’s really thinking about where the low-hanging fruit is versus where the high-cost reductions are.
When we think about the oil and gas sector, we think about two pieces. I will go back to the methane example. We have some near-term opportunities using available technologies that are relatively lower cost. How do you incent those in the very near term and ensure success? The bigger question is how you pull forward those investments. We know the environmental benefit, but how do you create the economic incentive for higher-cost decarbonization projects like carbon capture and storage and direct air capture? That’s where the mix of instruments is important.
We know, even in the process of strengthening industrial pricing, even with a robust price signal, for some projects you need a much higher incentive. That’s where you look at the interplay of measures.
I look at things like the Clean Fuel Regulations, which are pulling forward, in some cases, low-hanging fruit with biofuels and low-carbon fuels, but it is also pulling forward those higher‑cost decarbonization projects because it creates the revenue stream that makes them economic over time.
For us — I’m speaking to one piece of it — it’s the combination of incentives. Where do you target your investment tax credits, for example, and how do those matchup with the drivers of regulation?
Maybe my answer is really that it is a top-of-mind question for us, as we think of the mix of measures and avoid duplication, but how to get the near-term, low-hanging fruit but ensure that it’s not at the expense of getting those investments in the longer term.
We are seeing those come online. One example is Imperial Oil’s Strathcona facility, which came online this summer. That’s a renewable diesel facility that is creating huge demand for canola in Alberta, for example. That’s a high-cost investment that is only economic because you have the Clean Fuel Regulations that will credit it and pull it forward.
I don’t have a simple answer. It’s very case by case and depends on the technology, but it’s an important question.
Ms. McDermott: The industrial carbon pricing approach also encourages investments to go where they are most efficient for the economy.
Senator Coyle: My question for you may not be in your area of expertise, but earlier this week, we had Director General, Vincent Klassen, from ECCC, talking about the new draft of the Federal Sustainable Development Strategy, the new one. I was rather surprised when I looked at it. The target 2.1.2 says that Canada’s environmental and clean technology sector accounts for 3% of national gross domestic product. That’s what we’re aiming for. Then it says that the starting point was 3% in 2023.
I’m curious: Our environmental and clean tech sector is something we talk about growing, but in this sustainable development strategy, it’s actually targeting keeping it at the same level it currently is. Can you offer any light on this subject?
Ms. McDermott: I would agree with you that it’s very important to try to be ambitious in terms of growing the sector. It’s certainly part of the government’s plan to do it in Canada. It’s one of the reasons it has invested so much in clean economy investment tax credits.
In terms of where one sets the precise targets under the Federal Sustainable Development Strategy, Mr. Klassen from ECCC would be better placed to answer the question, but I think the government could agree that growing the clean economy is crucial.
Senator Coyle: The strategy is static. It’s not growing. He said I was right in my reading of what I saw there. It just seems a disconnect for me with what we’re hearing today, what needs to be done and what was in that strategy.
Ms. McDermott: It is an opportunity for the government to continue to consider.
Senator Coyle: Would you be able to come back with something in writing to help explain that, or else let us know whether there’s somewhere elsewhere we see more ambition for that sector?
Ms. McDermott: We’d be happy to follow up a little bit more on that area.
Senator Coyle: That would be great. I’m just concerned about that.
Senator Galvez: Building on what Senator Coyle just said about clean tech, renewable energy and the transition, the jurisdictions where our Prime Minister is looking to create new markets for our products have stricter environmental emissions regulations. Just take Europe, for example, with its carbon tax adjustment.
How do we want to be competitive if our products embed a high carbon footprint and then go and compete with other products that are better? There is some incoherence. Yes, Senator Coyle is right to refer to the people who came yesterday to talk about the sustainable development strategy because it seems as if everybody is working in silos, and nobody is connecting their efforts.
We heard yesterday that people are talking. Yesterday, the witness clearly answered my question, saying, “I’m talking to my peers.” I’m talking to people from other departments. But we don’t know what they’re talking about, and we don’t know what the synergy is because we are really behind.
How are you coordinating this with other offices that are implicated in this so that we can achieve — as our Prime Minister said — results?
Ms. McDermott: I’m going to turn to Ms. Meltzer shortly. The main thinking behind the government’s climate competitiveness strategy was to set out that objective, which the Prime Minister has articulated many times. It is the idea that moving to a lower-carbon economy for Canada isn’t something we’re doing because it’s the right thing to do; it’s something that will help us over the long run. It will make sure our firms are competitive because that is the way the world’s economy is going.
The whole strategy has many pieces to it. It is very much focused on industrial carbon pricing and other elements, such as key regulatory measures and providing certainty for companies to know what those requirements will be. That includes things like strengthening carbon pricing but also moving forward on enhanced methane regulations for the oil and gas sector and targeted updates to the Clean Fuel Regulations. It also strengthened and confirmed the number of investment tax credits, including the intent to deliver the clean electricity investment tax credit, or ITC, expanded eligibility for that clean electricity ITC and the clean tech manufacturing ITC, among other changes.
That strategy announced new measures to support critical mineral projects and company supply chains. It announced other measures to promote — as has been talked about — the next steps in moving forward with sustainable investment guidelines. It committed to some amendments to the Competitions Act’s greenwashing provisions to better achieve the intent behind those provisions. It was a whole strategy, and the government continues to do more. I know Ms. Meltzer wants to jump in with a few more ideas.
Ms. Meltzer: That’s great. I was just going to add to your specific question that you asked: Who are you talking to about what? I’m just going to pick one example. You were speaking about the EU Carbon Border Adjustment Mechanism to enable them to have ambitious climate goals and mitigate carbon leakage and competitiveness risks.
We are working closely with Global Affairs Canada and Finance Canada as well as the European Union to make sure they have a very sound understanding of our relatively different industrial carbon pricing systems across the country. Those conversations are critical. They have a really good understanding of what the carbon price in Canada is and how we make sure that they can take into account and minimize duplication for industry in terms of how they report, monitor and verify. There are concrete conversations going on.
One small point to your broader question is that it is exactly right: It’s balancing near-term competitiveness but also that long-term trade diversification. We know that the European Union, Asian partners, Japan and Korea are going to continue to make low-intensity fuel imports a priority. It’s important that we continue to decarbonize in that sector.
I would add to the landscape of the question by saying that the other aspect is electrification. How do we make sure we’re driving toward a net-zero grid because electrification is going to be key for many of our industries to make that transition? Clean electricity regulations, which ultimately have a view to 2050, are going to be key to positioning our industry to be more competitive. We are having concrete conversations. Part of it is understanding where demand is going to grow for our low‑emitting products over time.
Senator McCallum: When we look at all the conversations we’ve had now, in 2026, five years after its coming into force, the Canadian Net-Zero Emissions Accountability Act is slated for a statutory review. What provisions of the act should the review prioritize? What would a review of the legislation provide to federal climate policy or to independent advisory bodies such as the net zero?
Ms. McDermott: That’s a great question for you to ask future witnesses as well, but I may turn to Ms. Collette.
One area that I would point to is for us to continue to look at would be how to make sure that the reporting pieces of that act are well calibrated and efficient. There is a lot of reporting and many accountability mechanisms. In the interests of efficiency, I think there’s room to look at some of those. Ms. Collette may have more substantive suggestions for you.
Ms. Collette: Thanks very much, Senator McCallum, for the question.
You’re absolutely correct that, as part of general good housekeeping, acts are often subject to a thorough review after five years. That’s a parliamentary review, so that’s not necessarily one we do ourselves. We can all say that the context has changed significantly from when the act was first promulgated to where we are now. There have been many opportunities and lessons learned along the way in terms of what the act requires, whether that’s reporting, Net-Zero Advisory Body, other obligations such as financial disclosure, financial risk reports and that kind of thing.
It is an excellent opportunity in the context of constrained resources and increasingly ambitious targets to look at whether or not that act is serving to drive the kinds of change that we are looking at. It wouldn’t be up to me, necessarily, to say specifically, but I do think that, as part of good housekeeping, it’s an excellent opportunity to ask, “What have we learned over the implementation of this act over the first five years?” What is working efficiently? What is not? How would we continue to proceed to answer exactly the questions you’ve raised here? How do we work with other departments? How do we work with outside advice? How do we work with transparency with Canadians on how we’re doing?
There are provisions there to talk about how targets are set, who needs to be consulted, how often they’re set and when plans are required. I think those are all worthwhile questions to look at.
Senator McCallum: Thank you.
The Chair: We’ve run out of time.
I would like to thank all of you for being here. I believe Senator Coyle may have had a question that we would like a written answer to. Thank you for being here.
We’d like to welcome our second panel for this morning. From the Canadian Climate Institute, Rick Smith, President; from Net-Zero Advisory Body, Dr. Damon Matthews, who is a member as well. We welcome you both.
Mr. Smith, you have five minutes for your opening remarks, and then we’ll turn to the senators for questions.
Rick Smith, President, Canadian Climate Institute: Thank you for the opportunity to speak on this important topic today.
A couple words about who we are: The Canadian Climate Institute was launched in 2020 with the mission of producing the best available research and evidence to support climate change decision-making in our country for stakeholders, elected leaders and the Canadian public.
For the past six years, we have had, as a core part of our mandate, the tracking of greenhouse gas emissions reductions in Canada, the assessment of which public policies are most effective in contributing to this reduction and how public policy might be improved to accelerate this reduction.
I should underline here that we don’t do this simply because we’re interested in emission reduction per se, but also because the direction of travel of the globe is toward decarbonization. It is important for Canadian public policy to foster a trajectory of decarbonization that helps keep Canadian industry competitive, creates enhanced investment opportunities in Canada and makes lower-cost new machines like electric vehicles and heat pumps more available to Canadian consumers. This economic lens is also core to our mandate.
Our institute’s 440 Megatonnes project has periodically assessed Canada’s Emissions Reduction Plan since its inception. Most recently, we released an independent assessment of the federal government’s 2025 progress report. I sent that to the Senate clerk today.
Overall, our institute finds that the 2025 ERP report offers a credible picture of Canada’s progress. It’s comprehensive. To the government’s credit, it has made some significant improvements over previous versions of government reporting.
In our view, however, the 2025 progress report does not offer an adequate policy response to the growing gap between our country’s emissions and its climate targets.
I’d like to highlight three specific conclusions from our independent assessment today.
First, according to our institute’s modelling, the country is not on track to meet our climate goals, including the 2035 target and the net-zero emissions target by 2050.
Emissions in 2024 were down about 8.5% versus 2005 levels. National emissions are on course to be between 18% and 22% below 2005 levels by 2030, depending on the final design of key policies. That gets us roughly halfway to Canada’s stated 2030 target.
Second, in terms of effectiveness in driving emissions reductions, some policies are clearly much more important than others.
Much depends on how the federal government follows through on commitments from its budget and the Canada-Alberta Memorandum of Understanding, particularly those concerning cooperative action with the provinces, including industrial carbon pricing and oil and gas methane regulations.
The institute’s analysis shows that if the federal government gets the details right on industrial carbon pricing and the provinces implement strengthened systems, it can roughly double the additional emissions reductions from this policy compared to a scenario where we continue with the systems, as they are now in a weakened state.
The federal government has a direct policy lever at the moment to fix credit prices in the form of the industrial carbon pricing benchmark, which is currently under review. It can and should require provinces to deliver a minimum effective carbon price. My third and last point is — and it may sound strange for an organization like ours dedicated to tracking emissions to say this — but tracking emissions is an incomplete method of describing climate-change progress. Tracking emissions reduction is a lagging indicator. If you think about it, it’s a measurement of decisions that have been taken in the past. Meanwhile, in the here and now, many fast-moving and consequential changes are occurring that deserve tracking and course correction. Measurements that are more relevant for the Canadian public and relevant for ensuring that Canada is structuring itself so as to take advantage of opportunities in this clean-energy transition.
Examples of such leading indicators include consumer uptake of electric vehicles, heat pumps, the number of major projects focused on clean energy and other examples.
Tracking things that are more relevant to Canada’s economic progress and the consumer choices of Canadians is a necessity in the years ahead, and to its credit in the 2025 progress report, ECCC identifies some of these leading indicators that it will be increasingly focused on. For our part, the Canadian Climate Institute will shortly be launching our new tracking framework, and will be developing a more detailed assessment of potential policy options that governments — federal, provincial, territorial, and Indigenous — can implement to make deeper emission reductions and bolster low-carbon growth. Thank you very much.
The Chair: Thank you, Mr. Smith.
Mr. Matthews.
Damon Matthews, Member, Net-Zero Advisory Body: Thank you, chair.
My name is Damon Matthews. I am a climate scientist and professor based at Concordia University in Montreal. I also direct the Future Earth Canada Hub, which is housed at Concordia. I joined the Net-Zero Advisory Body, or NZAB, a year ago and at the time was very excited to contribute to NZAB’s legislated mandate to provide advice to the minister on the actions required to realize Canada’s climate targets. The Net‑Zero Advisory Body’s independence and diverse expertise play a critical function in informing effective climate policies while also delivering benefits to Canadians.
The Net-Zero Advisory Body echoes other assessments that Canada is not on track to meet any of its stated climate targets. Missing our near-term emissions targets will have negative consequences for Canadians. The costs of inaction are real and will rise with every delay. In our view, the least costly pathways to net-zero are those that begin early and produce rapid, near‑term emissions reductions. Canada also faces international economic and reputational risks in failing to meet our targets, given that many important trading partners are moving quickly to adopt new technologies and to decrease their own emissions. The Net-Zero Advisory Body is highly concerned that this lack of progress toward near-term targets will also jeopardize the 2050 net-zero target. There’s nothing in the progress report that indicates how this long-term target will be achieved if short-term targets are not met. Furthermore, near-term targets are critical to constrain the climate implications of emissions on a pathway to net-zero. Missing near-term targets will cause higher total emissions over time, and therefore more climate changes, even if the same long-term target is somehow achieved.
Regarding recent policy announcements, I should clarify that NZAB has not been meaningfully consulted on any climate‑related decisions that have been made since the 2025 election. We are currently not operating at full functionality in part because the only direction provided by the minister to our secretariat staff during 2025 was to produce an annual report that is largely a summary of our pre-election work. We’ve lost significant capacity in recent months owing to member resignations and term expiries and are waiting for details of new appointments and resources to support our work. Nevertheless, based on our own discussions, we don’t see evidence that recent policy announcements will improve emissions projections and progress toward our targets. In the case of the new auto strategy, emissions from the automobile sector seem likely to decline more slowly relative to what was expected under previous cancelled policies. The key uncertainty, of course, is whether emissions standards for conventional vehicles will be sufficiently stringent to compensate for a slower mandated pace of electric vehicle availability.
The details of implementation will also be consequential for many of the clauses contained in the Canada-Alberta Memorandum of Understanding. For example, the choice of benchmarks for industrial carbon pricing, the pace of methane regulations, and the effect on clean energy regulations, both in Alberta as well as in other provinces, will all have important implications for emissions reductions in the coming years.
A key unanswered question in the 2025 progress report is how to close the gap to our near and long-term targets. The report emphasizes the high emission reduction potential of transformative technologies such as small modular reactors, carbon-capture storage and utilization and direct air capture. At present, however, these new technologies are very expensive options with uncertain effectiveness. We are concerned that too much emphasis is being placed on the potential for high-risk future technologies rather than implementing available options that can generate more immediate emission reductions. In our previous reports to the minister, we have offered many suggestions for how to strengthen climate policy in Canada. Some of these, notably stronger industrial carbon pricing, are evident in current government policies. In other areas, like oil and gas emission reductions and clean electricity production, it will only be possible to assess the impact of recent policy announcements once there is more clarity on the specific implementation details associated with the policy.
We have also recommended implementing a national carbon budget and mobilizing low-carbon options in the building sector, which could help to close the current emissions gap.
In our view, Canada’s targets are not aspirational. Transitioning rapidly to clean-energy technologies can benefit all Canadians both now and in a net-zero future. We must continue to look for effective and creative policy options to accelerate emissions reductions, and as members of the Net-Zero Advisory Body, we, of course, look forward to the opportunity to contribute our expertise to this process.
Thank you.
The Chair: Thank you, Mr. Matthews. We’ll begin with questions from the senators, beginning with Senator Coyle.
Senator Coyle: Thank you to both of you for being here, and for the very important work that each organization does.
I’ll start with a question for Mr. Smith: You talked at first about the various audiences for the Canadian Climate Institute. Of course, the federal government is probably the most significant audience, but you talked about other jurisdictions, including the Canadian public. We know that the federal government doesn’t have control over everything in our country that has an impact on our emissions, right? In what ways does the federal government call upon you, listen to you, and what about other jurisdictions, such as provinces?
Mr. Smith: Thank you very much for that question.
Just a bit of a history lesson. We were set up six years ago through a request-for-proposal process with the federal government. The idea being that climate change is a sufficiently fraught, difficult issue, and having an expert independent research organization providing good ideas primarily, but not exclusively to the federal government, would help Canadians navigate the issue. Of course, this is a model that works very well in about 30 other countries around the world now. The kind of global best practice now is for national level governments, increasingly subnational governments, like in Quebec, to set up organizations like ours to help tether the climate-change discussion to evidence at a time when, sometimes, it feels like public policy based on the best evidence is a difficult task.
That’s what we try to do, and we work across the whole waterfront of climate-change policies. We’re interested in emission reduction, net-zero policy and everything that flows from that, but we also have a whole team focused on adaptation. We work very closely with the insurance industry and municipalities to ask, for instance, the pragmatic question of how do we keep Canadian communities safer from flooding and wildfires? We have a whole team working in a clean-growth area. This intersection between climate-change policy and good economic policy, I think, is core to where we need to head in the next few years.
In terms of the federal government, we try to proactively provide the best available research to inform those various climate change questions. We’ll respond to federal government announcements to try to suggest areas we think are working, and areas that could use some improvement. We’re very active at the moment, for instance, on the topic of industrial carbon pricing.
A big part of what we have tried to do with all levels of government over the last six years is try to suggest priorities for climate-change policy. In other words, of the dozens and dozens of things that governments could do, what are the very few things that governments must do to measurably move the ball forward, and industrial carbon pricing — getting that right — has to be top of the list.
Senator, I hope that answers your question. Those are some of the ways that we interact with decision making.
Senator Coyle: Maybe just to probe that a little further, then, I know the purpose of today’s meeting is to look at this report, and you’ve issued a report looking at the report —
Mr. Smith: — report.
Senator Coyle: Exactly, and you’ve spoken briefly to that. Has there been engagement between the Canadian Climate Institute and the government on your report on their report, and what is happening?
Mr. Smith: Yes, there has been quite a deep and — I would say — productive engagement. In fact, if you compare the federal government’s 2023 Progress Report on the 2030 Emissions Reduction Plan and the 2025 report, you’ll see, we think, some significant improvements and some things that we’ve been suggesting would be useful.
For instance, in the government’s latest report, there is a prioritization of 18 climate measures the government is particularly focused on to really move the ball forward, and we think that’s a good way to go. There’s a whole section on, as I mentioned, leading indicators.
Yes, of course, it’s important to track progress in terms of emission reductions because we do need to get to net-zero by 2050. That’s a scientifically established chemical necessity for the atmosphere, and, of course, we need some kind of benchmarks along the way to figure out if the trajectory is working or not. Clearly, there are many other things going on and many things going right in our economy with respect to climate change or emissions reduction that also deserve comment, tweaking and policy prodding — things like electric vehicle uptake.
In the current kind of climate change discussion, I think there’s, perhaps, too much of an emphasis on these difficult-to-describe emissions reduction targets and approaches as opposed to more tangible things that Canadians are increasingly seeing in their daily lives — electric vehicles and heat pumps — these major projects the federal government is really focused on. A lot of those are focused on clean energy. It’s a good thing. Let’s highlight some of those.
That element of leading indicators is also quite a different approach by the federal government in this latest report and, we think, quite healthy.
[Translation]
Senator Miville-Dechêne: I’m going to continue along the same lines with Mr. Smith.
People really focus on CO 2 emissions in this debate, and it gets very technical. You said there should be studies on vehicle electrification. What other elements do you consider important that are much more relevant to consumers? Focusing on those things would engage people more because they understand them better. People find all these figures and data quite complex. From a consumer’s point of view, there hasn’t been much progress, even on things like electric vehicles, and some things have been cut. Tell me, from a consumer’s perspective, what can be done or what is being done? Is the government on the right track?
[English]
Mr. Smith: Thank you for that question.
If we go back a little bit more than ten years to the signing of the Paris Agreement and the creation of this emissions reduction tracking architecture that we now use — that every country in the world uses — if you boil it right down, it was really an attempt to establish a shape for the climate change discussion.
When we talk about climate change, we’re talking about trying to get to a goal by 2050, a goal of parts per million in the atmosphere by 2050. These are difficult concepts for your average person to wrap their arms around or for decision makers to wrap their arms around, and 2050 is 25 years away. That’s a hell of a long way away. How do we chart progress between now and then? How do we know if we’re winning or losing? This emissions reduction architecture that we track against and that we comment on is really an attempt to help decision makers and the public to ascertain progress or the lack thereof.
When the Paris Agreement was signed in 2015, electric vehicles weren’t really a thing, by and large. Heat pumps were not that great in 2015 — certainly the deployment is not what it is today. The cost of solar panels and wind turbines was much higher than they are today. Large-scale industrial batteries weren’t really a thing. Surely, one of the most significant advances in this area in the last couple of years has been the incredibly low cost now of industrial scale batteries that can pump out a lot of electricity for a very low cost. It didn’t exist in 2015.
To your question, I think it’s important for us as leaders in this area to continue updating and altering how we talk about this issue and how we try to connect it to the lives of Canadians and how we continue to try to make it clear that taking action on climate change will benefit people’s daily lives and will benefit consumers.
In the case of electric vehicles and heat pumps, in many cases across our country, these machines are now —
Senator Miville-Dechêne: Obviously, it’s a difficult climate. People have problems doing their groceries, so are we progressing on that front?
Mr. Smith: I think we are in some ways, and in other ways, we’re not. A big part of what our institute does is we try to highlight both areas where we’re making progress, places where things are going well and places where things are going well and can be built on, and then areas where, clearly, we need to do better.
In the first bucket of things that are going well, heat pumps are going very well across the country. In some places in Atlantic Canada now, areas that formerly relied on fuel oil, heat pumps increasingly are dominating the new HVAC installation market because it’s just a better deal for consumers.
The areas where we need to pull up our socks, for example, industrial carbon pricing, is not going so great across the country. These systems are weak; they’re ineffective. The federal government is committed to dramatically improving them, and that needs to happen in the next few months in partnership with provinces. Not so much because we’re, kind of, fetishizing that policy but because that policy needs to drive green investment that benefits Canadians, and it’s not really doing that at the moment.
I think your question, senator, is really important. At a time when Canadians are mostly — my family, my in-laws, all of us, we’re worried about affordability concerns. As leaders on this issue, we need to make sure that we are credibly making the case that making progress on climate change will make Canadians’ lives better and get more detailed in how that’s going to happen.
[Translation]
Senator Miville-Dechêne: Thank you.
[English]
Senator Galvez: I will ask some questions, and you pick which one you want to answer.
I’m happy to hear that we have to measure something else other than just greenhouse gas emissions. For sure. Of course. But it’s not one or the other, because, yes, we need a public that relates to planet warming and not climate change, because that was initially the name that scientists gave to the phenomenon, but it is important when you — both of you — transmit your information to the government that it’s science-based, that they are core science-based numbers and that the policy recommendations you give are based on evidence and on science. We have to do both. We cannot do one and not the other.
In both your speeches, you talk a lot about what the impact is on the economy. Apart from talking to insurance, we don’t talk much about what the role of the financial sector is in moving us to this transition.
I will just give a little anecdote. I went to Singapore, and when I met with people talking about the Arctic — Singapore is so interested in the Arctic, because they say the Arctic data fits very well with the models they use to measure ocean-level rise. They’re investing a lot of money to protect Singapore from sea‑level rise. They were congratulating me because I am Canadian and pension plans are investing there. Why are they not investing here? That’s a very weird question.
I know that you both put a focus on the programs and strategies that the government puts in there, and then you evaluate which is better and worse, but I’m sure you have your own ideas of which policies will do a better job than this. In my opinion, the laws concerning climate change are a patchwork of legislation; it’s not coordinated — one does this, the other does that — and we don’t get to have a view of the whole.
First, modelling — how are we doing with modelling if we don’t have satellites for the data that needs to provide good mathematical modelling on how fast this is growing? On policies, which are the policies that the government is not doing that will take us much farther? We hear a lot about the low‑hanging fruit, but the clock is ticking, and we cannot trust the low-hanging fruit anymore; we have to go for the tree. Thank you.
Mr. Matthews: I’ll take some of those questions and then pass to Mr. Smith for the rest.
I appreciate your comment about the need to link indicators to emissions. The reason measuring indicators can be helpful is because these are things that we understand will lead to decreasing emissions over time. If we can report on those and on projections of how those indicators are expected to affect emissions, I think that would be important to clarify the role of things like electric vehicles, heat pumps and all these technologies that are lower carbon. Tying those to anticipated emission savings in the future is also important.
I agree that the role of the financial sector is key, and I would echo your question as to why we are not investing more in green infrastructure. I don’t have a good answer for you, but I think that is an important issue to raise.
In terms of what is needed, NZAB has long called for strengthening regulations. Part of the problem is that we do have some regulations in place, but they’re not operating at the capacity that they could. Industrial carbon pricing is one example where if the choice of the benchmark for the carbon price is too low, it’s not going to deliver the investments in the emissions reductions that are required. There’s a lot to be said for simply strengthening existing regulations so they are more effective than they currently are.
In my own mind, I would highlight the role of infrastructure decisions as being critically important. It is true that many of the major infrastructure projects on the table now are focused on clean technologies but not all of them. Investing in conventional energy projects is going to ultimately commit us to future emissions, and those future emissions will act against the reduction progress in other sectors.
So, the decisions for major infrastructure projects that are being made right now are very consequential for future emissions trajectories and need to be given special attention, I would say.
Mr. Smith: Senator, thanks for those questions and thanks for your leadership on this issue.
I’d agree with you that increasing capital flows and investments into areas that are both going to produce emissions reductions and keep communities safe are important things to do. We’re pleased that, finally, the sustainable investment taxonomy is moving forward again. The federal government has asked us to stickhandle getting it up and running over the next few years, working very closely with chartered banks and major asset owners. Creating that definitional architecture for sustainable investing will help. The whole point of that is to try to increase capital flows to useful things.
These are going to be a very consequential few months for industrial carbon pricing, and the federal government is engaged in this structured negotiation with the Province of Alberta. Simultaneously, ECCC is engaging with a review of the federal benchmark on industrial carbon pricing.
We’re either going to make substantial improvements to industrial carbon pricing over the next few months, or we’re not. Of course, getting that system right — ensuring that the federal system is improved, working in concert with provinces to get provincial systems improved and then moving toward what most other countries have, which is a cohesive national system of carbon pricing — is something that would help a lot in terms of more investments in this area.
I will give just one other observation. I think there’s a tendency when it comes to emission reduction targets, certainly in the media, to portray all of this as a pass-fail test, a binary thing, which is peculiar. If you think about other areas of public policy, such as health care, it is full of performance indicators. Emergency room waiting times is one example. On any given day, in my city of Toronto, I bet there are a lot of hospitals that are not hitting their aspirations in terms of emergency room waiting times, but that doesn’t mean we throw in the towel and say, “We didn’t make it today. I guess we’re going to bail on trying to achieve that target.”
I think when it comes to this area, thinking about emission reduction targets as performance metrics that we keep striving toward is the best way to think about it. Then, what really matters is continual improvement and taking a look at what we’re doing. What are we doing that’s working? What are we doing that needs improvement? How do we tweak public policy or the way we’re positioning this issue publicly? How do we continually improve what we’re doing?
There are many opportunities that the federal government has to do that this year.
Senator McCallum: Thank you for your presentations and the work you do.
In the 2025 progress report, it says that if projections show that the country is not on track for a target, the law requires the government to identify potential measures that could help hit the target. If you look at Bill C-5 and what happened there — that the government can actually ignore many of the laws that we have passed, including the Migratory Birds Convention Act, CEPA — everything.
With the first panel, I asked them a question: In 2026, five years after coming into force, the Canadian Net-Zero Emissions Accountability Act is slated for statutory review. If the government decides they’re going to ignore that law, there’s a danger this may not happen. Dr. Matthews stated that, since the 2025 election, there has been no direction or communication from this government and that resources are decreasing.
Is there an alternate way that statutory review is going to be ignored? What would you prioritize? What would a review of the legislation inform federal climate policy or independent advisory bodies like your group? But the government already has an impact because they are ignoring the advisory bodies. I’m just trying to get a handle on what we are left with in the end? How will you do your work?
Mr. Matthews: This is a good question. To be precise about the timelines, we did start to receive some direction from the minister, but it took a very long time after the election before that started. We have also had some conversations with the minister around the final report that we produced. Those conversations have been, by and large, positive.
It does seem like there is some kind of inertia in terms of moving forward on our capacity and relations with the government. I am personally optimistic that we are going to come to a more functional state in the coming months.
We are waiting for direction from the minister on several key questions that we’ve asked. I expect we will receive those answers and be able to spin up.
A key issue with the NZAB, in particular, is the loss of membership. We need to be replenished as quickly as possible in order to represent the breadth of perspectives in Canada that is necessary to provide good advice. We can’t effectively do that with only five members from a limited geographical region across the country.
In terms of legislative review, I think there are a lot of things that can be done to strengthen the accountability and transparency of government processes related to achieving our targets. I would welcome anything that strengthens the capacity of the law to encourage things like measures to address gaps between projections and targets, also focusing on the near-term targets and not just the longer-term targets, which, of course, is important but is meaningless if we don’t make progress along the way to achieving it.
Mr. Smith: Thanks for that question.
I should say that our organization’s engagement with the federal government has been quite deep and ongoing. I think it’s been a productive relationship.
In terms of your question about next steps for the Canadian Net-Zero Emissions Accountability Act. To underline, I think this 10 years of the Paris Agreement and then this enshrinement of Paris Agreement targets in national legislation — which has happened around the world, so our Canadian version of it is the Canadian Net-Zero Emissions Accountability Act — has been useful this decade, because what’s happened is that countries around the world came together in 2015 and said, okay, we’re going to get serious about finding every scrap of carbon dioxide emissions in our economy; we are going to track it and try to figure out a policy architecture to start reducing it in different ways.
Of course, depending on the industrial sector, the specific public policy will vary depending on the sector you’re talking about. That’s been a very useful process.
I think Canadians can have a high degree of confidence in the federal government’s tracking measurement of the scale of the problem.
In terms of next steps for the Canadian Net-Zero Emissions Accountability Act, perhaps one thing I’d point out that bears some reflection is — we’ve actually measured this — if you ask the question about which Canadian public policies related to climate change are exclusively federal jurisdictions, versus provincial or a shared jurisdiction, the answer is only about 20% of the heavy policy lifting on climate change is an exclusive federal jurisdiction, about 20% provincial. The vast majority of what needs to happen is a shared jurisdiction.
In some strange way, what’s happened with the Canadian Net‑Zero Emissions Accountability Act is the federal government put up its hand and said, okay, we’re going to be the level of government that tracks all of this and tries to attack all of this yet, underneath it, the federal government actually lacks jurisdiction for a lot of what needs to happen.
I think a reorientation of a net-zero approach in the country to be more of a partnership with provinces, municipalities and Indigenous nations is a necessity because, in our federal system, those other levels of government have substantial authority.
Senator Lewis: Thanks for your appearances today.
You have spoken a lot about 2015, the Paris Agreements, and what has changed. There have been some real changes on the demand side too — ten years ago, electric vehicles and heat pumps were not prominent considerations. Electricity is going to drive the future.
As we talk about jurisdictions, nobody has extra power now. We have to get more capacity in our power grid. When we talk about solar panels, windmills and those kinds of things, wind power is an important contributor, but, at the end of the day, it’s not base power. We have to have base power backing up those solar panels and wind.
Is nuclear on your radar? How does that play into how you see the future?
Mr. Smith: First of all, I think you’re quite right. It’s a bit of an exaggeration but not much to say that there is no silver bullet to solve climate change.
The closest we can get is to say we need to electrify most everything. Then we need to produce electricity in a non‑emitting, non-polluting way. That’s going to solve a big chunk of what we need to do.
As Canadians, there’s a tendency I think with this climate change issue — again, in the media — to dwell on the cost of all of this and to position fighting climate change as a cost.
Of course, there’s an opportunity side to this as well, especially for our country, where we start off with enormous clean electricity advantages. We can continue to build on that at a time when many industries are prepared to pay a premium for clean electricity, at a time when, as you say, clean electricity generation has gotten a lot cheaper and more cost-effective.
Electricity is a big part of what we do. We’ve looked at the most cost-effective pathways. Things are changing. Technology is continuing to change fast. In the last two years, industrial‑scale batteries have gotten a lot better.
An incredible project just launched with the Six Nations of the Grand River, the Haudenosaunee people in Ontario, is the 300‑megawatt battery storage facility that will dramatically improve the grid in that part of southern Ontario.
In terms of our organization, as long as the technology is non‑emitting, we’re kind of agnostic about it. Nuclear energy sounds good to us. Really, the question is what makes sense in different provinces? The energy mix is different in different provinces. What’s most cost-effective for Canadian consumers?
Mr. Matthews: I would add there are other options for base power as well that are not being explored fully. District heating with large-scale regional storage is an important one that could be rolled out in different locations.
Hydro, of course, does provide base power. If we were to amplify energy production from other renewable technologies in areas where there is already hydro, then be able to export that hydro across the country to provide base power where hydro doesn’t exist, that could be another important solution.
Yes, it has to be a combination of renewable generation, storage and deployment. I agree that the solutions are going to look different depending on where in the country you are.
Senator Lewis: With regard to your comment that sometimes we don’t celebrate our successes, heat pumps are a perfect example. Five years ago, whoever wanted a heat pump? Now, all of a sudden, very few diesel furnaces are replaced without a heat pump. It will take years for them to wear out, but as they’re replaced, certainly with a lot of new construction, there will be very little diesel. That’s an example of a policy and something driven with the idea of climate change in mind. It’s a happy coincidence that it’s good technology, and it really works in a lot of this country. We spend a lot of time not celebrating some of the things that have been very successful. That’s just a comment.
Mr. Smith: That’s right. Heat pumps have been going gangbusters in Atlantic Canada. My wife and I were at a friend’s party on Saturday night, and I was standing by the cheese tray. I started talking to this guy who worked in the heating, ventilation and air-conditioning, or HVAC, industry — a very nice guy — and we started talking about heat pumps. My wife and I just purchased a heat pump because our natural gas furnace conked out in the middle of the winter. We have this new heat pump, which has been working amazingly. It has been very cold in Toronto this winter. This HVAC guy said that heat pumps don’t work in cold climates. I said, “I just bought one.” There were a few days in Toronto that were minus 30 degrees Celsius, and it has been doing great. But I couldn’t convince him over the cheese tray. So I think we still have some work to do to dispel some myths out there.
[Translation]
Senator Youance: I raised my hand very late in this discussion because I was mulling things over. Throughout this discussion, people have raised points about flooding, drought, agricultural production and land conservation. I’m thinking of one of the three UN conventions people tend to ignore, the UN Convention to Combat Desertification, which I think offers critical levers for greenhouse gas emissions reduction and carbon sequestration. If we want to achieve net zero through emissions reduction and greater carbon sequestration, where does Canada stand in terms of implementing or placing more emphasis on this UN convention?
[English]
Mr. Matthews: Broadly speaking, there’s a lot of potential for natural sequestration or sequestration in agricultural systems, and Canada obviously has a huge land area where that could be done better. Anything involving land decisions needs to involve Indigenous communities and needs to acknowledge Indigenous sovereignty over land. Similarly, farming communities have a lot to say over what gets done with land.
The other thing to keep in mind is that, yes, Canada has a huge land area. There’s a lot of potential for nature-based solutions. These will always be secondary to industrial decarbonization efforts in terms of their contribution to emissions. Globally speaking, land use-related carbon dioxide emissions are only about 10% of the total. It is an important piece, but if we don’t succeed in decreasing emissions across the energy sector, we’re not going to be able to achieve our targets through other initiatives or faucets. It’s an important piece. I’m not trying to devalue it. It just has to be done in conjunction with all the other things that we also know we need to do.
Mr. Smith: Senator, our organization is domestically focused, so I actually don’t have much to offer, I’m afraid, on the international treaty. I would agree with Mr. Matthews and some of the interesting discussions with the last panel related to steps that the federal and provincial governments are taking in terms of assisting the Canadian agricultural industry in taking advantage of offset opportunities with different tillage practices in terms of sequestration of carbon in the agricultural industry. There’s a lot of activity in terms of offsets and offset protocols, for instance, around the world. It’s important that Canadian farmers are able to access that.
More generally, one area where our research intersects with this question is related to drought. We still have some work to do in our country talking to Canadians and helping them understand the measurable financial hit that our country, our economy and individual Canadians are taking every year because of climate change effects, such as drought and flooding.
Farmers, of course, experience this acutely and see this in terms of changing temperatures, but there’s still a tendency with the climate change discussion to focus overly on the costs of taking action. In fact, increasingly, we can measure it, and it’s clear that the real cost is the cost of inaction and delay. We’ve done a lot of work on this. One of our findings is that, for every dollar that we spend now, we avoid having to spend $15 in the future.
You can think about that in terms of flooding, for instance. For every dollar we delay spending now on improving flood walls — that’s going to come back and bite us in the future, and it’s going to be worse. It’s the same with drought. Planning for increased forest fires now and planning for community safety around droughts are something we need to get moving on now because otherwise we’ll pay a lot more later.
The backdrop to this question of drought and flooding is trying to better communicate to Canadians that these are realities now. We can measure the impact. We can measure the financial impact, and we need to get a move on solving these things.
The Chair: Thank you. We’re almost ready to wrap up our session, but I do have one question for both of you about sectors.
I haven’t heard much mention about the health care sector. It’s mostly under provincial control. I understand that, but the federal government spends a lot of money with provinces to support our health care system. If the health care system were a country globally, it would be the fifth-largest emitter of greenhouse gases.
Do you think about that? Do you ever concentrate on the health care sector as low-hanging fruit? I’m thinking about anesthetic gases and the overuse of plastic in the health care system. I’m just wondering if it’s ever something on your radar. You talked about the building sector, but health care infrastructure has some opportunities. For example, you talked about the use of batteries for primary care and small clinics. That could be useful. I just want to know if you’ve thought about it. We don’t have much time, but I want to put it on your radar.
There are health care professionals who have joined together around physicians for the environment, nurses for climate change and that kind of thing. I’m just wondering if it has reached your level yet in thinking about how that sector could improve itself in terms of reduction and also using other technologies.
Mr. Smith: Thank you for that. We actually haven’t done a specific report. Of course, when you think about climate emissions, you can slice and dice it in different ways. We haven’t done a specific report on the health care sector yet, so that’s a good suggestion, Senator Kingston. Thank you.
The Chair: Thank you. Mr. Matthews?
Mr. Matthews: Similarly, the question of how to decarbonize and decrease emissions in the health sector has not, to my knowledge, come up in the discussions. We have pointed to the health risks of climate change, which, of course, are very potent, as well as the health-related benefits of mitigation. To some extent, decarbonizing energy systems will also support decarbonization in the health sector.
I think there’s also a general understanding that services that are really critical for Canadians maybe shouldn’t be the first to be targeted with mitigation requirements. This is my own opinion, not one reflected by the body as a whole, but I think targeting big sources of emissions as a national priority will lead to the largest near-term gains. As we get closer to net zero, other, more difficult to decarbonize sectors will, of course, need to join. That’s true for other things, like cement production and aviation, which are recognized to be very difficult to decarbonize. We can start working toward that, but it’s the bigger, easier things that we need to tackle and make fast progress on. The rest will become important as we move forward.
The Chair: There is some low-hanging fruit in the health care sector, but they are large institutions that have other priorities.
We would all like to thank the witnesses here today.
(The committee adjourned.)