“If we lose the war, nothing will matter … if we win the war, the cost will still have been of no consequence and will have been forgotten.”
— C.D. Howe, Canada’s Second World War minister of munitions and supply, responding to the extraordinary ramp-up in wartime spending
“No great fortunes can be accumulated out of wartime profits.”
— J.L. Ilsley, Canada’s Second World War finance minister
The quotes above — spoken by two of Canada’s foremost ministers during the Second World War — provide historic reminders of what audacious leadership sounds like in a time of emergency.
Our deputy prime minister and federal minister of finance today, the Honourable Chrystia Freeland, is the highest-profile and most powerful minister in the Trudeau cabinet, and widely viewed as the most likely successor to Justin Trudeau. According to recent polls, even before taking centre stage in Canada’s response to Russia’s invasion of Ukraine, Freeland is more popular than the PM, and well ahead of any other prospective Liberal leadership contender. The Globe and Mail even dubbed her the “Minister of Everything,” a hat-tip to C.D. Howe’s extraordinary role in Canada’s Second World War cabinet.
What people are reading
But pray tell, where is the Minister of Everything on the defining crisis of our time — the climate emergency?
Beyond passing boilerplate references to the importance of climate action, I can think of no substantive intervention or speech Freeland has made on the most pressing collective challenge of our lives. In contrast, the minister seems intent on appeasing the governments of Alberta and Saskatchewan and sending friendly signals to the oilpatch. She has stubbornly refused to rethink the Trans Mountain pipeline expansion project (TMX), even in the face of massive cost escalations, instead going to extraordinary lengths to orchestrate and back-stop financing for the climate-defying project with government loan guarantees.
Yet, more than any other minister, Freeland holds the key levers to truly pivot us into climate emergency mode. I have written numerous times about the markers of genuine government emergency mode, the first two of which — spend what it takes to win and create new economic institutions to get the job done — are firmly in the hands of the finance minister. And Freeland’s record clearly indicates that when she takes firm hold of a file, she is a minister who can get things done.
So, if the finance minister really wanted to show us that she understands and is ready to lead on the climate emergency, what would she do?
I have a few suggestions.
Spend what it takes to win
As noted in my last column, Canadian Centre for Policy Alternatives economists Hadrian Mertins-Kirkwood and Marc Lee calculate that federal government spending on direct efforts to reduce emissions will amount to $3 billion this year, with another $9 billion spent on investments in green infrastructure, clean technology and industrial decarbonization credits. Spending at this level represents just 0.4 per cent of GDP. Distinguished climate economist Nicholas Stern recommends governments spend two per cent of GDP on climate-related investments. For Canada, that would currently be about $56 billion a year. So federal government spending on the climate emergency isn’t a little less than it should be, it is off by an order of magnitude.
And just as we must spend what it takes to win the climate fight, the finance minister needs to rapidly stop spending on the things that spell ruin for our kids and grandkids — notably subsidies for fossil fuel companies. That means both ending existing subsidies, which totalled as much as $18 billion in 2020, and reconsidering the decision announced in the last budget to add to these a tax credit for carbon capture and storage clocking in at $2.6 billion over the next five years and $1.5 billion annually after that.
Institute carbon budgeting
To ensure the government is held accountable for meeting its climate targets, the finance minister should develop a system for national and sectoral carbon budgets that decline each and every year.
Budgets matter, as the finance minister well knows. They are the core annual policy of any government. They guide how governments function. Once a budget is set, the full architecture and machinery of government is designed to ensure its delivery and accountability — a legislative committee consults the public; inter-governmental meetings seek agreement with the provinces, territories and Indigenous Nations; the Treasury Board ensures ministerial budgets are adhered to; the auditor general ensures money is well spent; and the Parliamentary Budget Office ensures our plans align with evidence-based projections. All these mechanisms exist to verify budgets are properly set and adhered to.
This is exactly what’s needed now if we are to move our climate targets from distant promises to reality.
The U.K., which by a large margin has been the most successful G7 country when it comes to driving down emissions — slashing GHGs by 43 per cent since 1990, compared to Canada’s 21 per cent growth in emissions over the same period — has operated with a national system of carbon budgeting since 2008. Under the U.K.’s Climate Change Act, the government is held to legally binding five-year carbon budgets, with the national allowance of GHG emissions steadily declining over time. These carbon budgets are overseen by an independent expert body, the Committee on Climate Change (CCC), which advises on what the five-year budgets should be (including detailed sectoral studies) and reports annually to parliament on progress made meeting those targets.
The U.K. carbon budgets, now in their sixth cycle, have cut carbon pollution under both Labour and Conservative governments alike, leaving Canada languishing far behind. The infrastructure for carbon budgeting, as established by the act, protects against government backsliding on its climate commitments. And the independent CCC has not shied away from criticizing government policies or fossil fuel development projects when it believes those choices will place carbon budget targets at risk.
Make a compelling offer to fossil-fuel producing provinces with a new Climate Emergency Just Transition Transfer
One reason federal and provincial governments keep approving climate-defying fossil fuel projects is that the federal government has yet to offer up an exciting alternative. We are told a new Just Transition Act is imminent. But without significant money to back up the principles in such an act — a substantial investment in the jobs of the future — just transition will remain a hollow promise.
The Canadian government needs to make an audacious and hopeful offer to those workers and communities whose employment and economic security is currently tied to the fossil fuel industry (and to a lesser extent, the auto, steel, concrete and agriculture industries, all of which face substantial transition challenges) and to Indigenous communities on the front lines of fossil fuel extraction.
In the last federal election, the Liberals promised a one-time $2-billion investment into a Future Fund for workers in Alberta, Saskatchewan, and Newfoundland and Labrador. This is welcome (although yet to materialize), but not nearly enough for the task at hand. And while those three provinces face the greatest transition challenge, every province and territory needs support in this urgent endeavour. Canada needs to spend what it takes to get this job done and give confidence to workers everywhere that no one will be left behind.
A new federal Climate Emergency Just Transition Transfer (JTT) should be specifically linked to funding climate infrastructure projects that would create hundreds of thousands of jobs, along with training and apprenticeships programs for young workers and those leaving the oil and gas industry.
As we cease all new fossil fuel infrastructure projects, the JTT would allow us to tell workers: none of you will be out of work. We need your help to meet this moment. Your skills and strength will be deployed building renewable energy projects, retrofitting buildings, renewing existing infrastructure to make it more resilient to extreme weather, and managing our forests to reduce wildfire risks in the summers to come.
The new transfer should be at least $20 billion a year. It could and should fund much of the climate infrastructure needed in the coming years. But the transfer would speak to a climate confederation conundrum: much of the climate infrastructure needed will logically come under provincial, municipal and Indigenous jurisdiction (renewable energy projects, transit, zero-carbon buildings and affordable housing, etc.), but it is the federal government that has the greatest capacity to pay.
Two features would distinguish the JTT from other traditional federal transfers. First, while most federal transfers allocate funding on a per capita basis, the JTT should be based on a formula linked to recent GHG emissions in each province and territory (but fixed from that point onward, so that it does not perversely incentivize continued high GHGs). Doing so would recognize that jurisdictions such as Alberta, Saskatchewan and Newfoundland and Labrador face a more challenging task and have to do more of the heavy lifting to transition their local economies. For example, as Alberta currently produces 38 per cent of Canada’s GHG emissions, it would receive 38 per cent of the transfer money. Moving forward, the amount of the transfer could be adjusted to reward those who realize the largest reductions in emissions, creating a positive incentive to act.
Second, rather than this transfer money being handed over to provincial governments, the funds would go to newly established just transition agencies in each province and territory, jointly governed by the federal government, provincial/territorial and municipal governments, and, vitally, Indigenous nations from each region, along with civil society representatives from labour, business, academia and expert NGOs. Indeed, some of the JTT funds should go directly to Indigenous nations, who can oversee their own climate investments and training programs. This would ensure the transfer isn't simply absorbed into provincial budgets, but rather, is used for its intended purpose. Local just transition agencies would also ensure that the projects undertaken are reflective of the specific GHG profiles and needs of each locale.
An audacious JTT would serve to restore national solidarity and renew Confederation — it could be a nation-building program for this generational task.
Pay for much of this needed spending with new taxes on wealth and windfall profits
Canadians need to know that everyone is contributing their fair share to the task before us — the rich as well as the rest of us. And as the passage above from wartime finance minister J.L. Ilsley reminds us, the public needs assurances that no one is profiteering from the emergency. As I’ve argued previously, the battle to confront the climate crisis needs to be joined with a commitment to reduce inequality and economic insecurity. Environmental and social justice are intertwined. The rich have an outsized carbon footprint, while climate impacts fall most heavily on the poor and vulnerable. Failure to link climate with tackling inequality will allow the populist right to falsely portray climate action as an elitist exercise.
Given this, we need the finance minister to respond to rapidly rising gas prices — along with soaring oil and gas company profits ($34 billion in 2021) — with a windfall profits tax on the fossil fuel companies that are now profiteering from Russia’s invasion of Ukraine. The revenues raised could be quickly deployed to make public transit more accessible and affordable, and to financially support low and middle-income families as we hasten the transition of their homes off gas heating (insulating them from future increases in fossil fuel energy prices). The U.K. (under a Conservative government, no less!) recently announced a windfall profits tax on oil and gas companies, with revenues to be used to provide transfers to low- and moderate-income households.
But oil and gas companies aren’t the only ones making obscene profits. Even before the invasion of Ukraine, the pandemic witnessed record corporate profits across numerous sectors, from finance to food. This kind of profiteering in the midst of an emergency was illegal during the Second World War, when the government instituted an excess profits tax that held all companies to pre-war average earnings. A general windfall profits tax could accomplish the same today.
Use climate quantitative easing to fund the transition
The balance of needed climate emergency funding should come from the Bank of Canada, our public central bank. Freeland, as the minister responsible for the bank, should be embedding carbon-zero goals in the Bank of Canada’s mandate.
We need the Bank of Canada to do for climate mobilization some of what it did during the pandemic. In the face of that health emergency, for most of the first year of the COVID-19 crisis, the Bank of Canada was buying up federal government securities — in order to finance the CERB, wage subsidies and other COVID emergency response measures — at a rate of $5 billion a week. If the Bank of Canada financed the climate emergency response at that level for only four weeks a year, the federal government could fully fund the annual $20-billion Just Transition Transfer proposed above. Were this kind of “climate quantitative easing” combined with the proposed wealth and windfall profits taxes, there is no reason to believe it would be inflationary (skyrocketing profits have undoubtedly contributed to the price escalations), and the country would have all we need to dramatically transform the economy and decarbonize society.
The above proposals represent only a taste of what a finance minister could do to confront the climate emergency. With drive and vision in the face of the crisis, the options are many.
Freeland has a record of standing up to bullies, such as Donald Trump and Vladimir Putin. Progress on the climate emergency is being blocked by fossil fuel bullies prepared to put our children at risk. Their wilful efforts to delay meaningful climate action is resulting in attacks on our soil, for that is what these extreme climate-induced weather events are.
Minister Freeland, defend us from these bullies too. Be the finance minister this emergency needs you to be.
* My thanks to Ellen Gould for her research assistance regarding U.K. carbon budgets.
Klein: "spend what it takes
Klein: "spend what it takes to win and create new economic institutions to get the job done"
Of course, this is what the federal govt would do if it intended to succeed.
The federal govt clearly plans to fail. That's why the basic policy measures essential to success are not in place.
Who believes that the Liberal Govt really wants to succeed on climate but keeps missing its targets merely for lack of the right action plan?
As if climate activists just gave the Liberal Govt better policy advice, they would gratefully act on it.
The Liberal Govt is misdirected, not incompetent. The people who decide Canada's climate/energy policy (and no, it's not the Ministers of Environment, Natural Resources, or Finance) understand perfectly well what they are doing.
Assuming the Liberal Govt is sincere on climate is a false premise — petitio principii (“begging the question”). A fundamental error.
Why do the Liberals not act
Why do the Liberals not act on Seth Klein's sound advice? It's not as if they have not heard it a thousand times before.
The Liberals clearly do not accept the premise: that Canada must act on the best available science to rapidly reduce emissions in accord with its international commitments.
The reasons are obvious, but Seth Klein's explanation misses the mark:
Klein: "In contrast, the minister seems intent on appeasing the governments of Alberta and Saskatchewan and sending friendly signals to the oilpatch."
Repeating this myth does Canadians no favor.
The Liberal Govt's support for the O&G industry has little or nothing to do with appeasing Western separatist sentiment or winning seats in Alberta. This is a profound misreading.
The Liberals have nothing to gain electorally by pandering to the likes of Jason Kenney, intransigent right-wing Albertans, and the oilpatch. In recent elections, a majority of Canadian voters have voted for parties other than Conservative. In 2015, Trudeau handily won a majority government with a strong mandate from voters on climate action.
No. The neo-Liberals serve Corporate Canada and the Big Banks, heavily invested in the oilsands. It is these entities that dictate the Liberals' energy/climate policies.
Corporate Canada is banking on fossil fuel expansion and climate action failure. The Liberal Party is Corporate Canada's front office.
Klein: "just transition will remain a hollow promise"
All the Liberal Govt climate commitments inconvenient to Corporate Canada will remain hollow promises.
The Liberals' plan to fail on climate was set in motion long ago.
"The Rise and Fall of Trudeau's 'Grand Bargain' on Climate"
Climate action will be too little too late. Corporate Canada, Big Oil, and the Big Banks are nowhere near ready to capitulate.
Liberal leaders have let slip
Liberal leaders have let slip their true priorities more than once. Climate activists were not listening.
Trudeau (2016): "There is growth to be had in the oilsands. They will be developing more fossil fuels while there's a market for it, while we transition off fossil fuels."
Trudeau (2017): "No country would find 173 billion barrels of oil in the ground and just leave them there."
When the IPCC issued its latest report, then-Environment Minister "Wilkinson reaffirmed Canada's commitment to phasing out fossil fuels and achieving net zero carbon emissions by 2050, but said achieving that target will require money generated by fossil fuels."
"Ottawa says it must maximize revenue from the Trans Mountain pipeline to fight climate change" (CBC, 9-Aug-21)
"'Regime of Obstruction: How Corporate Power Blocks Energy Democracy' (2021) also deepens the analysis of two key concepts: 'new denialism' and 'climate capitalism.' New denialism is essentially what Donald Gutstein describes in 'The Big Stall: How Big Oil and Think Tanks are Blocking Action on Climate Change in Canada' (2018) as the promise of clean growth, the Liberal-led shift from full-on climate denial to a regime of admitting there is a problem, but then implementing completely inadequate responses while convincing people they are reasonable. The key result is that the fossil fuel industry continues on with business as usual, or as close to it as it can."
David Gray-Donald, "Climate capitalism and 'regimes of obstruction'" (Canadian Dimension, July 27, 2021)
"NDP natural resources critic Charlie Angus chimed in to declare that the government 'is turning themselves into an open bar for the oil lobby.'"
"NDP MPs grill Liberals on fossil fuel subsidies"
Seth Klein's splendid advice is anathema to Corporate Canada. Which is why the Liberal Govt will never take it.
Climate activists need to wake up to reality.
Is all this an excuse for the
Is all this an excuse for the feds' inaction?? Are you just saying that anyone in this country who cares should just SHUT UP??!!!
Far from it. The subservience
Far from it. The subservience of government and political elites to Corporate Canada, the Big Banks, and Big Oil explain but of course do not excuse federal inaction.
Corporate capture of government is not confined to the federal Liberals. Provincial NDP govts and all levels of conservative parties also put corporate profits above the public interest.
Beyond Canada's political apparatus, the deep state (corporate capture) extends to regulators; the courts; the RCMP/CSIS; mainstream media; academe; extractionist think tanks, etc..
Under that regime, whatever its stripe, climate policy advice, however sensible, will fall on deaf ears.
As long as Canadians vote for and enable the status quo, the status quo is what we will get.
As long as progressives continue to reward the Liberals and provincial NDP with their vote, these parties have no reason to change. As long as nominally progressive parties can count on the progressive vote, they will take progressive voters for granted.
HOWEVER, voters are
HOWEVER, voters are capricious aren't they? "Low-information" as hell but still defensive AND proprietary about their "choice," i.e. their vote, at least those that even bother. A majority of provincial governments in this country ARE conservatives remember, and not the old, progressive kind but the new order, which means they are science-deniers across the board, period, (or you could say "change-deniers") INCLUDING the ACTIAL acceptance of homosexuality as something other than a lifestyle choice! What does that tell you about bringing them along? While they pretend to be more enlightened, and fight over it at the top, the federal government can only appeal to that better nature by pretending the same thing! So a dance has been going on at all levels of government even more than usual, which is not optimal at a time of crisis like now. But it remains the impossible task before any federal government in this country at this point. What we know is that the absolute worst scenario would be if that government was the solidly denialist conservatives.
So what exactly are you suggesting Mr. Pounder? Under the ACTUAL circumstances found in our system, vote for WHO then?
And is it not also possible
And is it not also possible that the carbon capture credits offered to oil companies are calling their bluff? I heard Trudeau say that maybe it's time to invest less in their lobbyists and more in their engineers.