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C2C Journal

The Fight Against Ottawa’s Crazy and Unconstitutional Single-Use Plastics Ban

Published

6 months ago

29 minute read

From the C2C Journal

By Christine Van Geyn
In their rush to strike a virtuous blow against plastic waste, the federal Liberals skipped a few important steps. The 2022 ban on plastic straws, shopping bags and other useful household items deliberately ignored the basic facts of waste disposal in Canada, as well as the economic reality of substituting other materials for cheap and effective plastic. What else got overlooked? Canada’s Constitution. With a court hearing set for later this month to decide on the fate of the ban, Christine Van Geyn takes a close look at the legal arguments involved in Ottawa’s efforts to phase out certain plastic items, and the vast constitutional threat this poses if allowed to stand.
Like many writers, I prefer to work surrounded by other busy people going about their day. And as I sat down in a bustling café in downtown Toronto to begin writing this story with my laptop and an iced matcha latte before me, I instinctively reached for a straw. And my heart quickly sank – ugh, paper.

I care about sea turtles, I really do. But as I poked that flimsy thing through the lid and took a sip, it was not sweet enjoyment I was experiencing. It was bitter disappointment. Almost immediately the straw started to soften and it soon collapsed upon itself. It was like trying to drink through a soaked napkin. Frustrated, I tossed the straw aside and drank straight from the cup, hoping that I wouldn’t end up with bright green latte all over my laptop or sweater. Yet another small indulgence ruined by Ottawa.

Small indulgences, ruined. Across the country, Canadians are growing frustrated with a single-use plastics ban that has given them useless paper straws and taken away useful items such as plastic bags. (Source of right photo: CTV News)

I’m not alone. Across the country Canadians are griping about dissolving cardboard straws, berating themselves for forgetting their reusable shopping bags (made of a much thicker and unrecyclable plastic) and wondering exactly how they’re supposed to eat their takeout meal without a fork. Life is stressful enough with inflation, rising public drug use, street protests, overseas wars and other major calamities. Now even the tiniest details of our lives – like enjoying a cold drink on a hot day – have been imperilled as well. And yet a soggy, useless straw is not just a lousy way to start your workday. It’s also another worrisome example of the Justin Trudeau government’s relentless intrusions into provincial and local jurisdictions.

There is hope, however. In November 2023, a Federal Court judge struck down the government’s regulatory efforts against certain plastic items as “unreasonable and unconstitutional”. The ban, however, continues to remain in force while Ottawa appeals that ruling. The appeal will be heard later this month; and the legal charity I work for, the Canadian Constitution Foundation (CCF), will be an intervenor because we think this is a very important case. At stake are the very foundations of Canada’s Constitution. And a chance to get some straws that actually work.

Canada’s Plastics Ban 101

It’s easy to understand the desire to reduce plastic waste. Images of masses of trash floating in the Pacific Ocean or videos of sea turtles and birds choked by ring-carriers and bags have a visceral impact on many people. We all want a clean environment that is safe for wildlife and humans alike.

Ottawa knows best: While many Canadian cities, including Edmonton (shown at left), were experimenting with various regulations for single-use plastics, the federal government usurped their jurisdiction by announcing a nation-wide ban on six common plastic items to take effect in 2022. At right, Prime Minister Justin Trudeau unveils the federal plastics ban at a press conference in Mont-Saint-Hilaire, Que., 2019. (Source of right photo: The Canadian Press/Paul Chiasson)

And it is for these reasons that reducing plastic waste has been a policy goal for governments across Canada for many years. Numerous cities and towns have experimented with different approaches. Vancouver, Edmonton, Montreal and Guelph, for example, have all imposed some type of ban on what are termed “single-use” plastics. Toronto has not done so, but recently introduced a bylaw requiring businesses to ask customers if they’d like a single-use item and requiring them to accept reusable bags and cups. In early 2024, Calgary introduced a single-use plastic bylaw prohibiting businesses from giving customers single-use straws and food-ware unless they specifically asked, and requiring a 15¢ charge for single-use bags. Calgarians immediately went ballistic, however, forcing City Council to repeal the measure just weeks after coming into effect.

Despite these many diverse local innovations, in 2022 the federal government imposed its own vision on the country with a sweeping attempt to eradicate or severely curtail the use of six single-use plastic items: straws, cutlery, takeout containers, stir sticks, plastic bags and ring-carriers. These banned items would need to be replaced by substitutes made of other material, such as paper, wood, ceramic or metal.

As environmental policy, the federal plastics ban has some very large problems. As this C2C Journal article pointed out, Canadian plastic waste comprises a perishingly small share (0.02 percent to 0.03 percent) of total ocean plastic pollution. Almost all plastic waste in Canada is either recycled, incinerated or landfilled; it is not polluting the environment. The federal government’s own analysis also revealed that eliminating single-use plastics would actually increase overall waste generation rather than reduce it. While the goal is to remove approximately 1.6 million tonnes of plastic waste from 2023 to 2032, the amount of other waste streams is expected to grow by 3.2 million tonnes. This is because substitutes tend to be heavier than the plastic items they replace.

Sea turtles are safe with us: Despite widespread concern over the effect of plastic pollution on ocean life, the overwhelming majority of plastic garbage in Canada is either recycled, landfilled or incinerated; Canada’s share of plastic ocean pollution is estimated at between 0.02 percent and 0.03 percent. (Sources: (photo) Shutterstock; (chart) Greenpeace)

It gets worse. According to the government’s Strategic Environmental Assessment, substitutes for plastic products, such as paper bags, “typically have higher climate change impacts” including higher greenhouse gas emissions and a reduction in air quality. By banning plastic bags, straws and so on, we will end up with not only more garbage, but also a dirtier environment.

An Order-in-Council signed in April 2021 brazenly declared every product made from plastic to be a threat to human health. This includes everything from children’s toys, water pipes, health-care devices and protective helmets to car parts and computer keyboards.

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The plastics ban fails on basic economics as well. A cost/benefit analysis prepared by the federal government puts the ten-year monetary benefits arising from a reduction in plastic garbage across Canada at $616 million. On the other side of the ledger, the costs – including the impact on businesses required to replace perfectly useful plastic items with lower-quality substitutes that are generally more expensive – comes in at $1.9 billion. By the federal government’s own reckoning, its policy thus entails a net loss of $1.3 billion. In sum, the plastics ban does nothing to reduce worldwide ocean pollution, creates twice as much garbage as it saves and imposes costs exceeding its benefits by a substantial margin. Based on these rational measures alone, we should bin the ban. But the biggest reason to oppose it is constitutional.

Ottawa Takes Charge

Waste management is a provincial matter which provinces typical delegate to municipalities. This process is working well, as evidenced by all the experimentation in plastic waste policies described above. Yet the Trudeau government desperately wanted to be seen as a leader on this issue. And to get around the fact Ottawa has no clear authority to do so, the Liberals had to get creative.

Their solution was to add all “plastic manufactured items” to the list of toxic substances maintained under the Canadian Environmental Protection Act. Thus an Order-in-Council signed in April 2021 brazenly declared all products made from plastic to be a threat to human health. This includes everything from children’s toys, water pipes, health-care devices and protective helmets to car parts and computer keyboards. Items that are indispensable to our daily lives instantly became “toxic” as the result of a single federal Cabinet order. The policy took effect at the end of 2022.

Toxic, every last one. As a result of a 2021 Order-in-Council, the entirety of “plastic manufactured items” – including everything from children’s toys to life-saving medical devices – was declared hazardous to human health under the Canadian Environmental Protection Act. (Source of bottom photos: Pexels)

In response to this obvious absurdity, a group of plastic industry companies called the Responsible Plastic Use Coalition demanded a judicial review, arguing the federal order made no practical or scientific sense. Faced with the prospect of defending its decision to declare, among other things, a wide variety of life-saving and medically-necessary devices as officially toxic, the federal government claimed it only intended to restrict the use of plastics that posed a real risk to the environment. Despite categorizing all plastic as deadly, Ottawa said it was only looking to regulate the harmful bits, like straws and plastic bags. Bureaucrats, using the new authority granted them by Cabinet, would later decide which was which.

The federal government tried a similar line of argument when defending another piece of controversial environmental legislation, the Impact Assessment Act. This act purported to subject proposed new infrastructure projects to review across a vast range of economic, social, health, environmental and even gender-related impacts. The law was challenged in court by Alberta on the grounds that it intruded into provincial jurisdiction. In court, Ottawa argued that it only intended to regulate projects with environmental impacts of significant national concern. The Alberta Court of Appeal was unmoved by this attempted rationale, finding the Act unconstitutional, and last October a 5-2 majority of the Supreme Court of Canada upheld the lower court’s findings. Chief Justice Richard Wagner wrote for the majority that Parliament “plainly overstepped their constitutional competence” by purporting to regulate projects that would otherwise fall within provincial jurisdiction. The vast majority of the Act was found to be unconstitutional.

Calling out an absurdity: Responsible Plastic Use Coalition, an industry lobby group, challenged the Trudeau government’s declaration that all plastic is toxic in the Federal Court of Canada.

A similar thing happened with the plastics ban. In November 2023, Federal Court of Canada Justice Angela Furlanetto sided with the plastics coalition and struck down the law, calling the government’s sweeping attempt at banning plastics as “outside their authority.”

In her ruling, Justice Furlanetto shredded the government’s tortuous logic defining every form of plastic to be a threat to human health, observing that “plastic manufactured items” is far too broad a category to include on a list of toxic substances; the government provided no evidence to establish that every product listed was actually harmful. “The broad and all-encompassing nature of the category of [plastic manufactured items] poses a threat to the balance of federalism as it does not restrict regulation to only those [items] that truly have the potential to cause harm to the environment,” she wrote. She also noted that “for a chemical substance to be toxic it must be administered to an organism or enter the environment at a rate (or dose) that causes a high enough concentration to trigger a harmful effect. In this instance, the reverse logic appears to be applied…”

As Justice Furlanetto held in her 2023 Federal Court decision, ‘The machinery of criminal law cannot be used to assume control over something that is not within Parliament’s authority.’

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Justice Furlanetto also held that the Cabinet order extended far beyond the federal government’s ability to regulate the environment through the Canadian Environmental Protection Act. As a result, she ordered the ban quashed and declared invalid and unlawful. Ottawa immediately appealed this ruling, with the case to be heard at the Federal Court of Appeal on June 24 and 25. Alberta and Saskatchewan are both intervenors and will argue that the Federal Court ruling should be upheld. British Columbia is intervening to support the federal government’s position that the order is within federal jurisdiction. There are other public interest interveners as well, including the CCF, EcoJustice, and Animal Justice.

The Bogus Fight Against Plastic Criminality

“Unreasonable and unconstitutional”: In her November 2023 ruling, Federal Court of Canada Justice Angela Furlanetto found that Ottawa overstepped its jurisdiction in classifying all plastic goods as toxic. Ottawa is now appealing her ruling. (Source of photo: @FedCourt_CAN_en/X)

One of the main issues at the appeal will be the role of the federal government’s criminal law power. Section 91(27) of the Constitution Act grants the federal government exclusive authority to make criminal law. And previous court rulings have found and affirmed that prohibiting truly toxic substances, like lead and mercury, under the Canadian Environmental Protection Act is a legitimate expression of that power.

But it is no magic wand. Ottawa cannot simply claim a need to invoke its “criminal law power” and instantly transform any issue into an area it can regulate. As Justice Furlanetto held in her 2023 Federal Court decision, “The machinery of criminal law cannot be used to assume control over something that is not within Parliament’s authority.” In this case, criminal law power should not be allowed to justify the sweeping inclusion of every imaginable plastic product on the list of “toxic” substances and therefore place them all under the umbrella of federal authority. This is what lawyers call ultra vires – Latin for “outside the power”, in this case, of a government.

Criminal law powers should be applied cautiously. To claim authority to regulate something based on this authority, Parliament must clearly demonstrate the criminal aspect of the targeted activities. The federal government cannot assume control over an entire area which is not, in itself, harmful or dangerous. This is particularly important when Parliament has asserted control and jurisdiction over an amorphous subject matter prone to overlapping jurisdictions, like environmental regulation.

“Harm should be real”: According to University of Alberta law professor Eric Adams, the federal government’s criminal law power must only be used when there is a real threat of criminal behaviour. Fretting about plastic pollution does not meet such a test. (Source of photo: University of Alberta)

When the framers of Canada’s original Constitution in the 1860s decided that the federal government and not the provinces should control criminal law, this was premised on Parliament using its authority to prevent actual harm. University of Alberta law professor Eric Adams has written that criminal law power rests on the notion that “harm should be real in the sense that Parliament has a ‘rational basis’ for seeking to suppress it with prohibitions” and that it can be “demonstrated with evidence.” Accordingly, federal criminal law power must be focused, justified and rationally connected to a real criminal threat to the area in question, in this case the environment. Deeming every single imaginable plastic manufactured item “toxic” does not meet this test.

Hardly Incidental

The federal government will be defending the Cabinet order listing non-harmful plastics as toxic by arguing that any intrusion into provincial jurisdiction is merely “incidental” and not worth worrying about. There is, indeed, an aspect of Canadian constitutional law called the “incidental effects doctrine” which recognizes that it is practically impossible for one level of government to legislate without touching on the powers of another level of government in some way.

Negotiating the application of the incidental effects doctrine requires a flexible approach to federalism that permits collateral and secondary effects on another jurisdiction without threatening the main intent of the originating jurisdiction’s legislation. This concept was crystallized in the 2007 Supreme Court ruling in Canadian Western Bank v. Alberta that found Alberta was within its constitutional right to regulate the sale of insurance (a provincial responsibility) at banks in the province, even if the banking sector itself fell under federal jurisdiction.

Hardly incidental: Ottawa argues its intrusion into provincial jurisdiction over plastics is merely “incidental” and should be allowed to stand. In previous rulings, however, the courts have rejected such arguments when the outcome would make an “otherwise unconstitutional law valid”. In 2019, the B.C. Court of Appeal struck down a proposed B.C. law intended to stop the federally-regulated Trans Mountain pipeline (shown) on similar grounds. (Source of photo: Adam Jones, Ph.D. – Global Photo Archive, licensed under CC BY 2.0)

But such incidental effects cannot be limitless; they must indeed be incidental. Courts have repeatedly emphasized in other cases that a flexible approach to federalism must not “erode the constitutional balance” inherent in Canada’s division of powers and cannot make an “otherwise unconstitutional law valid”, as a 2019 B.C. Court of Appeal ruling stated in striking down a proposed B.C. law intended to stop the Trans Mountain pipeline, a federally-regulated endeavour. The classification of effects as incidental or consequential must be made with clarity and rigour.

The Trudeau government’s Cabinet order that all plastics are “toxic” clearly crosses the dividing line between incidental effects and intrusion into provincial jurisdiction. Plastic is ubiquitous in modern society and most matters requiring the regulation of plastic materials properly fall under provincial jurisdiction. By listing all imaginable types of plastics as toxic, without regard to whether they actually cause any harm, the federal government sought to greatly expand its jurisdiction across an exceedingly broad subject area. Like criminal law powers, the incidental effects doctrine should not be misused to cloak far-reaching legal effects from constitutional scrutiny.

The Bigger Threat

The brilliance of Canadian federalism is that it prevents the concentration of power within any single institution or level of government and creates laboratories of democracy across Canada where different jurisdictions can tailor different policy solutions and test what works best. Canada’s constitutional division of powers is thus a pathway to better policies that lead to a freer Canada. It also acts as a restraint on government overreach. It deserves to be protected.

But in numerous recent court cases and policies, the Trudeau government has demonstrated its extreme ambivalence – if not outright hostility – to Canada’s constitutional federal structure. In examples including the Greenhouse Gas Emission Pricing Act Reference, the Impact Assessment Act Reference and now the Cabinet order on plastics, the mechanism, if not the intent itself, is to grab additional authority from other levels of government in order to impose national policies that violate the founding structure of our country. This is why the plastics case has implications far beyond saving Canadians from soggy straws.

Ottawa would essentially become the master of all environmental policy in the country; and since so many other policy areas have an environmental dimension, the federal government could gradually come to rule them all.

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The CCF will argue in the Federal Court of Appeal that federal environmental regulation poses a unique challenge to the division of powers, particularly where the purported federal target is submerged in a sea of local and provincial jurisdiction. Accordingly, federal statutes must be tightly focused on federal targets and not allowed to wander deeply into provincial jurisdiction.

If plastics of all kinds are confirmed as toxic substances, and Parliament is given authority to regulate them, this could trigger a whole host of other regulatory environmental mechanisms in the areas of licensing, regulation of substitutes and offset mechanisms that would further encroach on provincial jurisdiction. It is widely discussed, for example, that the federal government will seek to uphold its planned cap on oil and gas emissions, as well as its Clean Electricity Regulations (both currently in draft form) through similar listings under the Canadian Environmental Protection Act. It would also likely use its criminal law power to get a foothold into the regulation of methane, carbon dioxide and other substances in order to control them in a detailed manner. And there is reasonable concern the federal government could also attempt to regulate things like electricity markets and other technologies under these newfound powers. Ottawa would essentially become the master of all environmental policy in the country; and since so many other policy areas have an environmental dimension, the federal government could gradually come to rule them all. The only thing necessary for each new intrusion will be for the Liberals – or some other future activist federal government – to whisper the magic phrases “criminal law power” and “incidental effects” and it becomes so.

Where will it end? According to the Canadian Constitution Foundation, allowing the federal government to get away with labelling all plastic products as toxic will inevitably encourage further intrusions into local and provincial jurisdiction, allowing Ottawa to set itself up as the master of all environmental policy. Shown, protesters gather outside the Federal Court in Toronto during the initial plastic-ban hearings in 2023. (Source of photo: Michael Cole/CBC)

If the division of powers under Canada’s Constitution means anything, the Federal Court of Appeal must find the Trudeau government’s plastics ban unconstitutional. My struggle to drink my straw-free iced latte is thus a small part of a much larger struggle for balance and respect in Canada’s foundational framework. I am slurping with purpose.

Christine Van Geyn is litigation director of the Canadian Constitution Foundation.

Main image shows an anti-plastics slogan projected onto the Supreme Court of Canada building in Ottawa on Earth Day, April 22, 2024. Source of image: The Canadian Press Images PHOTO/Oceana Canada and EARTHDAY.ORG.
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C2C Journal

Why the Trump Administration is Unlikely to Impose Import Tariffs on Canadian Oil and Natural Gas

Published on November 25, 2024

By

From the C2C Journal

By George Koch

Few things about Donald Trump’s recent election are causing worse disarray worldwide than the incoming U.S. President’s vow to erect a tariff wall against all imports in order to spur a resurgence in American manufacturing might. Canada’s up to $200-billion-a-year worth of oil and natural gas exports lie at stake, feared to be among the new Administration’s tariff targets. But how strong is the basis for such fears? Probing the political psychology of Trump’s economic and trade policies and examining the intricate mechanism that is North America’s vast integrated oil and natural gas sector, George Koch illuminates the role Canadian energy can play in the U.S. economic revival and the Trump team’s geopolitical drive for global “energy dominance”.

Tariff,” U.S. presidential candidate Donald Trump was fond of saying with a smirk, “it’s my favorite word.” It was enough to curdle the blood and wobble the knees of political leaders, trade officials and business groups around the world – not least in export-dependent Canada. This was one Trumpian campaign line not swatted aside by critics as bombast, trolling, dog-whistling to the “extreme right” or unhinged fantasy. And with evident good reason.

After all, it was President #45 who after rising to political prominence largely on his promise to go after “bad trade deals” had upended 70 years of U.S. trade policy by imposing tariffs on Chinese (and some Canadian) imports and demanding to renegotiate the North American Free Trade Agreement. It was returning candidate Trump who picked as his running mate J.D. Vance, whose life story growing up amidst family wreckage in rural Ohio is almost the embodied result of a hollowed-out manufacturing economy, and who today is an articulate frontman for the something-less-than-free school of international trade. And it is President-elect Trump who has nominated prominent advocates of “America-first” trade policy – in which tariffs are central – to become his Secretary of Commerce and Secretary of the Treasury.

Tariff king: Consistent with his first presidency, U.S. President-elect Donald Trump has vowed to pursue an “America-first” trade policy this time. Shown, Trump speaking during an America First Policy Institute gala at his Mar-a-Lago, Florida estate, November 2024. (Source of photo: AP Photo/Alex Brandon)

Few sectors in any country stand to suffer greater damage from U.S. tariffs than Canadian energy. Canada’s fossil fuel production is at record levels, with crude oil averaging 5.8 million barrels per day so far this year and natural gas well over 18 billion cubic feet per day. Exports of these key commodities (plus natural gas “liquids” like ethane and propane) are valued at more than $134 billion per year – another measure has it at US$160 billion – with exports of petrochemicals generating billions more. Canada’s oil and gas sector is directly responsible for $210 billion of the nation’s GDP and 25 percent of its exports.

Yet while the industry today is a marvel of leading technology, deep expertise and operating efficiency, Canadian energy remains costly to produce, heavily taxed and saddled with ever-increasing regulations, such as the recently announced federal “emissions cap”. Moreover, the remoteness of the Western Canada Sedimentary Basin – the world-scale producing region that covers most of Alberta plus northeast B.C., southern Saskatchewan and a corner of Manitoba – imposes costs not incurred by U.S. producers. Constraints on export capacity effectively trap oil and gas within Western Canada, dampening regional benchmark commodity prices. And the industry remains over-dependent on the U.S. market; the expanded Trans Mountain pipeline will enable at best 20 percent of Canada’s crude oil production to access offshore markets, while the country’s first liquefied natural gas (LNG) export terminal is not yet operational.

This critical industry thus sits exposed and vulnerable to U.S. tariffs. A levy of 10-20 percent – the rate Trump has said he wants to slap on all imports – would be catastrophic, reducing Canada’s energy exports by an estimated 22 percent, causing domestic pricing to collapse and, with it, any new capital investment. Thousands would lose their jobs and government deficits would soar. Rory Johnston, a Toronto-based oil market researcher and founder of Commodity Context, describes Canada as “uniquely vulnerable to market pressure posed by U.S. refineries.”

“Uniquely vulnerable”: Canada’s oil and natural gas production is setting records and generating 25 percent of the country’s overall export earnings; a 10-20 percent U.S. import tariff could wreak catastrophic damage. (Sources: (graph) CAPP; (left photo) MikoFox, licensed under CC BY-NC-SA 2.0; (right photo) Green Energy Futures, licensed under CC BY-NC-SA 2.0)

But is the threat of such a tariff imminent – or even credible? The evidence to date – partial and indirect though it may be – suggests not. More profoundly, the logic of U.S. self-interest and of Trump’s stated policy objectives points away from tariffs on Canadian oil and natural gas.

First the evidence. Trump had barely been declared victor in the November 5 Presidential election before voices on both sides of the border began talking about creating a tariff “exemption” for Canadian fossil fuels. Wilbur Ross, Secretary of Commerce in Trump’s first term, called fears of such a tariff “overblown” and said he “can’t imagine” his former boss imposing them. Alberta Premier Danielle Smith also said she was “not worried”.  Then again, she also wrangled for herself invitations to key events such as next month’s meeting of the Western Governors’ Association, as well as Trump’s Inauguration in January, to make sure Alberta’s message gets through.

Similar views have been expressed by other knowledgeable sources from industry, trade and investment organizations. They note that Trump has done this very thing before; the renegotiated U.S.-Mexico-Canada Agreement of 2019 notably excused oil and natural gas flows from any tariffs. A further favourable indication is Alberta’s recent admission to the U.S. Governors’ Coalition for Energy Security, a group of 12 states that have banded together to cooperate on policies that promote reliable and affordable energy.

Guys who get it: Among Trump’s Cabinet nominees are North Dakota Governor Doug Burgum (left) and Liberty Energy CEO Chris Wright (right), both known for their vigorous support of oil and natural gas development and free North American trade in energy products. (Sources of photos: (left) Gage Skidmore, licensed under CC BY-SA 2.0; (right) Gage Skidmore, licensed under CC BY-SA 3.0)

Another positive sign is that alongside Trump’s pro-tariff Cabinet picks have come nominations of individuals with a deep understanding of North America’s petroleum sector. Douglas Burgum, a successful software entrepreneur and currently Governor of North Dakota, is slated to become Secretary of the Interior, chairman of the newly created National Energy Council and a member of the U.S. National Security Council. Burgum’s primary mandate is to promote innovation and investment by cutting through the thicket of new restrictions on oil and gas development that President Joe Biden had imposed. Chris Wright, founder of Liberty Energy and an unashamed industry booster, has been nominated to become what one U.S. commentator describes as “the most knowledgable secretary of energy the nation has ever had.” Lee Zeldin, another pro-industry figure, has been tapped to head the Environmental Protection Agency.

The fundamental objective underlying all of Trump’s trade policy is to strengthen American manufacturing. It is something he has articulated since before entering politics in 2015; it can accordingly be regarded as sincere.

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Equally noteworthy is that, in contrast to the widespread and bipartisan clamouring for tariffs on Chinese imports, nobody in the U.S. is demanding that Trump target Canadian energy. Even Bernie Sanders, the avowedly socialist Senator from Vermont who wants a “windfall tax” and higher government royalties imposed on all oil producers, appears indifferent to import tariffs. And while U.S. environmental groups don’t like any free trade in oil and gas, they devote most of their energy to pushing their government towards restrictive European/Canadian-style climate-change policies or a new UN “climate damages tax.” The American fossil fuel sector, meanwhile, is not only in favour of tariff-free trade in energy products – including with Canada – it opposes tariffs on anything.

The evidence to date, however hopeful it may seem, remains inconclusive. Trump prides himself on his unconventional and unpredictable nature. This is what causes America’s adversaries – most notably Communist China – the greatest consternation. Regardless of his previous decisions on trade issues, if Trump thinks imposing tariffs on Canadian energy imports make sense now, he will do so.

“Manufacturing superpower”: The fundamental objective underlying Trump’s trade policy is to reverse the long slide of American industry through decades of globalization – mainly by targeting offshore manufacturing. Shown at top and middle, Trump at campaign event at Dane Manufacturing in Waunakee, Wisconsin, October 2024; at bottom, an assembly line for automobile engines. (Sources of photos: (top and middle) AP Photo/Charlie Neibergall; (bottom) Alliance Employment Services)

Logic and self-interest, however, also point away from such tariffs. The fundamental objective underlying all of Trump’s trade policy is to strengthen American manufacturing. It is something he has articulated since before entering politics in 2015; it can accordingly be regarded as sincere. Trump wants to halt and if possible reverse that sector’s long slide through decades of offshoring and globalization that crippled or wiped out whole industries all over the U.S., especially in the Midwest heartland. These are the places Trump promised to help, this lies at the core of his slogan “Make America Great Again”, and these are many of the people who sent him to the White House the first time and stuck by him through the depths of his ignominy following his second, failed Presidential run. This year, Trump ran on a platform to transform his country back into “it’s my favorite word.”.

To accomplish that dramatic – some would say grandiose if not unachievable – objective, Trump intends to punish countries that use subsidies, favouritism and other policies to unfairly advantage their own industries and flood the U.S. with underpriced goods, harming domestic producers and preventing new ones from starting up. China may be hit with tariffs as high as 60 percent. He will also target imports believed to threaten U.S. national security (such as electric vehicles vulnerable to hacking by foreign enemies) while working to reduce dependence on imports of strategic materials or components critical in wartime. And he wants to close loopholes allowing China to bypass U.S. tariffs by locating production in proxy countries – especially the two countries adjoining the U.S.

Mexico has gone quite far down the road of partnering with Chinese companies, and Trump’s key advisors have warned that Mexico will be held to account for it. Canada is certain to be scrutinized as well, but can probably allay similar U.S. concerns by avoiding becoming a backdoor and way-station for Chinese goods, something Deputy Prime Minister Chrystia Freeland already promised last week. This will require several key policy commitments, as well as competent, rigorous enforcement (always a questionable assumption for this Liberal government). It will also be necessary to continue matching U.S. tariff-related moves against China, as Canada did earlier this fall in imposing tariffs on Chinese EVs and aluminum.

Closing the back door: Trump is determined to eliminate loopholes allowing China to bypass U.S. tariffs through “transshipment”, i.e., locating assembly plants in Mexico or Canada. Shown at top, Chinese company setting up facility in northern Mexico; at bottom, transshipment occurring in Texas. (Sources of photos: (top) Kosuke Shimizu/Nikkei; (bottom) T. Hammonds MSW, licensed under CC BY-NC-SA 2.0)

In addition to tariffs, Trump’s critical policies in restoring American manufacturing competitiveness will be reducing taxes, lifting the regulatory burden and, as his campaign platform puts it, ensuring the flow of “Reliable and Abundant Low Cost Energy”. By “energy” one should mainly read “crude oil and natural gas” – something Trump describes over and over as “liquid gold”. (Ending the demonization of coal is also a part; as well there is likely to be a modest revival in nuclear power.) In addition to supporting American industry, cheap energy is intended to help ease inflation and improve the lot of hard-pressed consumers, homeowners and wage-earners.

Among the associated promises and policies Trump has mentioned are to cancel the Biden Administration’s planned pro-electric vehicle policies (similar in effect to Canada’s outright mandate) and its moratorium on new LNG export facilities, end permitting of offshore wind turbines, reopen offshore areas to oil and gas drilling, unlock Alaska’s National Petroleum Reserve, reopen federal lands to drilling and hydraulic fracturing, pull the U.S. out of the Paris Climate Accord (for the second time, in Trump’s case) and otherwise end the Biden-era’s “Green New Deal”, which Trump derides as a “green new scam”.

During his election-night acceptance speech, Trump pointedly told Robert F. Kennedy, Jr., his pick to be Secretary of Health and Human Services and formerly a vocal anti-oil activist, to keep his nose completely out of energy issues. Chris Wright, his recently announced nominee to be Secretary of Energy, has written a 180-page paper which contends that “Zero Energy Poverty by 2050 is a better goal than Net Zero 2050.”

Trump’s energy policy includes cancelling President Joe Biden’s moratorium on new liquefied natural gas (LNG) export facilities, reopening offshore areas to oil and gas drilling and unlocking Alaska’s National Petroleum Reserve. Shown at left, Trump visits the Cameron LNG liquefaction terminal in Hackberry, Louisiana, 2019; at middle, an oil drilling platform at Green Canyon in the Gulf of Mexico; at right, the National Petroleum Reserve. (Source of right photo: mypubliclands, licensed under CC BY 2.0)

Trump’s energy policy, in short, is “drill, baby, drill” – often written in all-caps. Where might Canadian-produced oil and natural gas fit into this picture? Right in the middle, as it turns out – figuratively and literally.

It cannot be said often or loudly enough: inexpensive, reliable and plentiful energy is essential to economic competitiveness, national prosperity and modern civilization. But many Western governments – Canada’s among them – act as if it is optional. Right now, industries in authoritarian China use low-cost coal-fired electricity to produce the pricey solar panels and wind turbines that are exported to Western countries where they produce exorbitantly expensive electricity that in turn renders their domestic industries uncompetitive. Industrial users in Great Britain, for example, currently pay five-and-a-half times as much for electricity as those in the U.S., while German industry pays more than three times as much. Both countries are seeing their industrial base evaporate before their eyes. If Canada remains on its current policy path, it will be next.

Oil and natural gas are critical inputs that make American manufacturers more competitive, reduce the operating costs of nearly any business and allow American consumers to pay less to fuel their vehicles and heat/cool their homes. Canadian oil and natural gas not only do not undermine Trump’s economic and trade policies, they strengthen and advance them.

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Trump is unshakeably determined to avoid that for his country – and this is where Canadian energy enters the picture. Crucially, Canadian fossil fuels are not manufactured goods except in the narrowest technical sense. Unlike cars, smartphones, toys, shoes or furniture, they are commodities rather than finished products. They aren’t produced with unfair subsidies. They don’t contain secret chips enabling the Chinese to spy on U.S. military bases. They don’t threaten to displace or bankrupt age-old American companies, throw thousands of employees out of work or transform once-thriving cities into ghostly husks.

They are the very opposite: critical inputs that, by being priced competitively, make American manufacturers more competitive, reduce the operating costs of nearly any business and allow American consumers to pay less to fuel their vehicles and heat/cool their homes. Canadian oil and natural gas not only do not undermine Trump’s economic and trade policies, they strengthen and advance them.

Integrated system: Western Canada’s producing region supplies the U.S. heartland with crude oil and natural gas, where it can be refined and distributed, meeting the Trump test of (as his campaign platform puts it) “Reliable and Abundant Low Cost Energy”. Shown at top, an oil refinery in Rosemount, Minnesota. (Sources: (photo) Pexels; (map) CAPP)

This beneficial role is accentuated by some geographical quirks. Although North America’s vast interlinked system of energy pipelines is a near-miracle of technology, operating efficiency and reliability, it is not perfect or seamless. Major consuming regions tend to get most of their oil, natural gas and liquids from the nearest producing region; why ship the stuff farther than you must? Consequently, the U.S. Midwest and portions of the “near South” and northeast are heavily supplied from Canada.

If this supply were to be curtailed or disrupted by tariffs or other measures, manufacturers in these dependant regions would suffer immediately as wholesale and consumer prices jumped substantially. Regional oil refineries, gas/liquids facilities and petrochemical plants would pay more for their feedstock, face shortages as Canadian producers “shut in” no-longer-profitable production, and/or would operate below capacity or inefficiently as they sourced sub-optimal feedstock from elsewhere.

Even a 10 percent tariff would raise the average retail gasoline price across the U.S. by 5 percent, according to commodity pricing analysts at Montreal-based BCA Research. But the regional effects would be much greater. Regional prices not only for gasoline and heating fuel, but on any goods related to oil and natural gas, would rise far more than is implied by a mere 10-20 percent import tariff. And keep in mind, much of this region is MAGA country. Over time, some pipelines that currently ship product out of the Midwest might need to be “reversed”, no longer exporting to the Gulf of Mexico and Northeast regions but drawing energy from them. The U.S. might even need to increase imports from geopolitical adversaries like Venezuela or dodgy and corrupt African states.

All of this would be damaging not only to American consumers, business and manufacturing industries, but to U.S. foreign policy and even to the U.S. energy industry itself, the ostensible “competitor” that one might intuitively think stands to benefit from import tariffs. It hardly needs to be said that this would run counter to the new Administration’s objectives.

Despite being dubbed “dirty oil”, “unsustainable” and a “sunset industry”, the energy sector has led America’s productivity gains over the last decade while providing well-paying jobs to hundreds of thousands of Americans – including Hispanics, Blacks and American Indians. (Source of bottom photo: Sahara Group)

In addition to its roles in supporting manufacturing and consumers, America’s oil and gas industry is seen by Trump and key members of his nascent Administration as a competitive advantage for the economy as a whole, as a major source of wealth-creation in its own right and as a geopolitical weapon. For this to make sense, one needs to know a few things about this industry. In contrast to its image as “dirty oil”, “unsustainable” or a “sunset industry”, oil and natural gas is among the most technologically advanced, innovative, entrepreneurial and dynamic industries in the economy. This sector led the entire American economy in productivity gains over the previous decade, as the accompanying graph indicates.

The million or more jobs it provides across the continent are by turns technically intricate, dangerous, physically hard, intellectually stimulating – and very lucrative. Just as more and more Canadian First Nations are becoming proponents of natural resource development because they recognize the benefits to themselves, the U.S. industry provides jobs to hundreds of thousands of Hispanics, Blacks and American Indians – an impressive number of whom just voted for Trump.

This is all thanks to one of the most remarkable industrial turnarounds in history: America’s transformation from an insatiable importer of oil and natural gas, its domestic production sagging by the year towards apparent oblivion, its producing sector increasingly demoralized and decrepit, into a country that’s not only energy self-sufficient but has leapfrogged to a net exporter. All in the dizzying time-frame of barely a dozen years, starting in 2008, the year U.S. crude oil production reached its nadir of a mere 5 million barrels per day. (Not long after, just as U.S. oil production was showing sparks of revival, President Barack Obama contemptuously declared that, “Anybody who tells you that we can drill our way out of this problem doesn’t know what they’re talking about, or just isn’t telling you the truth.”)

By last year the average rate had soared to 12.9 million barrels per day which, the U.S. Energy Information Administration recently pointed out, represented “more crude oil than any country, ever.” U.S. production isn’t just higher than Saudi Arabia and Russia’s – it’s nearly 30 percent higher. How this came about is its own story. But suffice it to say that Canadian visionaries and companies played an important role. So, interestingly, did prospective energy secretary Wright and his company, Liberty Energy, which helped pioneer the development of formerly inaccessible shale reservoirs by using horizontally drilled wells completed with multiple hydraulic fractures. In short, this transformation has fundamentally changed the energy game for the U.S., domestically and internationally.

Since its nadir at 5 million barrels per day (mmbpd) in 2008, U.S. crude oil production has soared to an average of 12.9 mmbpd in 2023 – more than any other country in history and trumping Saudi Arabia and Russia. Concurrently, exports of liquefied natural gas have zoomed from zero a decade ago to 12 billion cubic feet per day. (Sources of graphics: (top) eia.gov; (bottom) S&P Global, retrieved from The New York Times)

Here again, imported Canadian energy is neither a competitive threat nor a hindrance – but a source of economic value. The quirks of geography combined with the refusal of successive Canadian governments to ensure that Canada’s oil and natural gas could access global markets have created what amounts to a gargantuan, continent-spanning arbitrage mechanism that enriches American companies, investors and governments. In brief, cheap Canadian crude oil, natural gas and liquids are drawn into the U.S. from the north, enabling domestically produced crude oil, natural gas, liquids, refined fuels and petrochemicals to be exported from the vast Gulf of Mexico energy complex to hungry global markets, where they access premium international prices.

This has become a multi-hundred-billion-dollar opportunity that American entrepreneurs and financiers have exploited with alacrity. Vast investments in LNG export facilities have taken the U.S. from zero LNG as recently as 2014 to approximately 12 billion cubic feet per day this year, a figure forecast to zoom to 20 billion cubic feet per day within two years (the U.S. will thus be exporting more gas than Canada produces in its entirety). U.S. net exports of refined fuels (much more valuable than crude oil) are generating more than US$60 billion annually. The associated processing and export facilities themselves employ thousands.

Trump’s ‘liquid gold’ will soothe American consumers, grease the skids of American manufacturing, fill the financial tanks of American investors and set economic bonfires upon America’s enemies.

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Clearly, the more Canadian oil and natural gas can be imported from the north, the more American energy – including value-added refined/processed products – can flow from the Gulf of Mexico outward to the world. Indeed, Trump himself has said he would like to reinstate the federal permit for the much-fought-over, 800,000-barrel-per-day Keystone XL pipeline, which he approved early in his first term but was then cancelled by Biden.

The stunning U.S. energy turnaround in barely 15 years plus the current prospect of enormous further growth enable Trump and his policymakers to credibly talk about elevating the U.S. to global “energy dominance”. That is to say, an America liberated from dependency on imported oil not only can act unconstrained by the need to placate oil-producing nations that don’t share U.S. interests, but can use its own energy exports to enrich itself and support allied countries. It can also stare down oil-producing adversaries like Iran and Russia, leaving them weaker, contained and less able to fund wars, terrorism and other foreign mischief. Trump’s stated policy to curtail oil production misused by dictatorships in Iran and Venezuela also implies that Canadian energy exports will be more highly sought-after than ever. More Canadian energy strengthens U.S. energy dominance and weakens its enemies by helping to hold down international commodity prices.

Golden opportunity: The Trump Administration’s stated goal of global “energy dominance” appears achievable, weakening its oil-producing adversaries while holding open the door to Canada – if Canada’s political leadership is intelligent enough to seize the moment. Shown, Trump shakes hands with UFC Champion Jon Jones at Madison Square Garden, New York, 11 days after his election victory. (Source of photo: AP Photo/Evan Vucci)

The U.S. is already the world’s energy giant. Its goal of “energy dominance” is therefore serious and realistic. Standing atop it all will be Trump, the energy dominator: his “liquid gold” will soothe American consumers, grease the skids of American manufacturing, fill the financial tanks of American investors and set economic bonfires upon America’s enemies. That simply does not sound like an Administration about to place tariffs on the very imports that will help it make this happen. Far more likely, the 47th President’s energy policy will offer Canada a golden opportunity to play a supportive role as a neighbour, friend, trading partner and ally – and to profit greatly from doing so.

George Koch is Editor-in-Chief of C2C Journal.

Source of main image: heritage.org.

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C2C Journal

Net Gain: A Common-Sense Climate Change Policy for Canada

Published on November 16, 2024

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From the C2C Journal

By Robert Lyman
Most Canadians have come to agree that the federal carbon tax needs to go. But while the rallying cry “Axe the Tax!” has been a deadly partisan tool for Pierre Poilievre, it does not constitute a credible election campaign platform, let alone a coherent environmental policy for a new government. The Conservative Party needs to develop both, writes Robert Lyman. The election this past week of Donald Trump as U.S. President creates an urgency to remake Canada’s climate policy on more realistic, sensible grounds. Drawing upon the pragmatic, economics-driven approach of the Copenhagen Consensus, Lyman proposes a middle path that discards the uncompromising, self-destructive ideology of the Justin Trudeau government while recognizing that most Canadians won’t accept doing nothing.

The Justin Trudeau government has made reducing greenhouse gas emissions the pre-eminent goal of public policy. In 2021 it passed the Canadian Net-Zero Emissions Accountability Act, binding present and future governments to a process intended to achieve “net zero” emissions by 2050 and to set incremental five-year emission reduction targets and plans towards that end. Net zero essentially means eliminating almost all the greenhouse gas (GHG) emissions resulting from the consumption of hydrocarbons – crude oil, natural gas and coal – in the Canadian economy, and doing so within 29 years of the new law’s passage.

This presents an immense challenge and is effectively impossible in the intended timeframe. Canadians currently rely on fossil fuels to meet about 73 per cent of their energy needs. These energy sources provide services essential to Canadians’ incomes and wellbeing: secure, reliable and affordable heat, lighting and motive power to move people and goods, as well as the food, medicine and other critical services to sustain them. Without these energy sources, Canadians would all be far poorer, colder, less mobile and less able to compete in the global economy.

Impossible dream: With fossil fuels currently meeting 73 percent of Canada’s overall energy requirements and fulfilling critical needs from heating to medical services, getting to “net zero” emissions anytime soon seems delusional. (Sources of photos: (top two) Pexels; (bottom two) Unsplash)

At least four trends are coming together to make the present policy course untenable:

  1. The Canadian public is becoming far more aware of the financial costs of the emission reduction measures, including especially the impact of “carbon” taxes (technically, taxes on fossil fuel-related emissions of carbon dioxide (CO2)) and higher electricity rates from switching away from lowest-cost generating options. Federal climate-related spending, by the government’s own admission (see page 125 of the pdf version of the linked document), is now in the range of $20 billion per year, while the economic cost of working towards net zero has been credibly estimated at $60 billion per year.
  2. The public – notably young people and seniors – are becoming more aware of the effects of climate-related regulations and taxes on the cost of living, especially the cost of housing, and on employment opportunities.
  3. There is a wide and growing disparity between the promises of politicians to reduce emissions and what is actually happening; no national emissions “target” has ever been met or is likely to be met.
  4. Rapidly growing emissions in many developing countries (especially China and India), which now collectively generate 68 percent of the world’s total, demonstrate that net zero will not be achieved globally. Furthermore, reductions achieved regardless of cost in Canada (which produces approximately 1.5 percent of global emissions) will yield negligible global benefits in terms of temperature or weather.

The Temptation of a Different Kind of “Net Zero” Policy

Based on these trends, it might be argued that Canada should perform an immediate policy U-turn and cancel all federal measures founded upon any claim of impending climate catastrophe. This would give new meaning to the term “Net Zero Policy”: a government whose climate change policy is to have no policy. Enthusiasm for such an approach must, however, be tempered by the recognition that it runs counter to the position held by all the main political actors in Canada, including notably the mainstream media. Policy, like politics, best evolves in the realm of compromise and consensus.

“Axe the Tax” has its limits: Conservative Party leader Pierre Poilievre (top) has pledged to get rid of the hated consumer carbon tax and eliminate comprehensive electric vehicle mandates, but he’s expected to maintain the pricey “producer” carbon tax on industrial emitters. (Sources of photos: (top) The Canadian Press/Paul Daly; (middle) WSDOT, licensed under CC BY-NC-ND 2.0; (bottom) Shutterstock)

Thus, one should consider where might lie a “middle ground” that could garner the support not only of those strongly opposed to all elements of current policy – which can loosely be described as Conservative leader Pierre Poilievre’s core base – but also of moderates, i.e., people who do not doubt the general notion of climate change but who shy away from radical or ruinous policies to deal with it. This disparate category likely includes much of the business community, what used to be called “Red Tories”, some centrist Liberals disaffected with Trudeau and some working-class NDP voters suspicious of that party’s current direction.

Politics at its most basic will require that the Conservatives have something to put in their campaign platform entitled “climate change”, “emissions” or, more broadly, “the environment”. So far, Poilievre has been cobbling together policy ideas seemingly ad hoc. As practically every Canadian knows, he pledges to get rid of the consumer carbon tax – the one everyone pays at the gas pump or on their natural gas heating bill.

Less understood, however, is that Poilievre is widely believed to intend to maintain the “producer” carbon tax on industrial emitters – an equally steep, equally escalating levy that is burdening industry with billions of dollars in additional taxation. Additionally, Poilievre has promised to get rid of some major Liberal-imposed regulations – like the mandate to transition to entirely electric vehicle production by 2035 – but would rely even more heavily on other technocratic regulations at the industrial level.

Some of these policies make sense on their face; some might not make sense at all. What is clear, though, is that the Conservatives do not have a complete climate change and/or environmental policy – at least not one they have shared with the public. Eliminating the consumer carbon tax as an unfairly imposed cost and needless drag on the economy as well as a symbol of climate policy over-reach would be an important and politically popular way to demonstrate a more common-sense approach.

It is not enough, however, and it would leave a new government vulnerable to the accusation that it lacked a coherent and well-considered approach. Attempting to govern without a clearly articulated overall policy on climate would politically damage even a solid majority government; in a minority situation, it could be enough to destabilize the government altogether and prompt an early election.

A Better Way

There is a better way – a middle way between the current ideological approach and a no-policy-policy. It is inspired by the work of the Copenhagen Consensus Center. This ongoing project seeks to establish priorities for advancing global welfare in a range of areas, from battling diseases like malaria to advancing national economic development to addressing climate change, through methodologies based on welfare economics, which centres on cost-benefit analysis.* The Copenhagen Consensus was conceived and launched in the early 2000s by Bjorn Lomborg, the famous Danish environmentalist. In each policy area examined, subject matter experts present potential policy solutions, which are evaluated and ranked by a panel of economists, thus emphasizing rational prioritization through economic analysis.

Of 15 possible policy measures to respond to climate change, the Copenhagen Consensus panel ranked carbon taxes the very worst – something that’s of obvious relevance to Canada. Also of interest in the Canadian context was the experts’ strong endorsement of research into carbon storage.

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In 2009 the Copenhagen Consensus assembled an expert panel to consider the best responses to climate change and rank them as priorities. The panel was asked to answer the question: “If the global community wants to spend up to, say $250 billion per year over the next 10 years to diminish the adverse effects of climate changes, and to do most good for the world, which solutions would yield the greatest net benefits?”

In the resulting report, the top priorities generally focused on investments in scientific research and technology development and commercialization, while measures to reduce CO2 emissions using currently available technologies were ranked lower, because these were found to incur high costs in relation to the expected environmental benefits. Of 15 possible policy measures to respond to climate change, the Copenhagen Consensus panel ranked carbon taxes the very worst – something of obvious relevance to Canada. Also of interest in the Canadian context was the experts’ strong endorsement of research into carbon storage (something that Alberta and Saskatchewan are very enthusiastic about), planning for adaptation and the expansion and protection of forests.

A better way: Founded by Danish environmentalist Bjorn Lomborg, the Copenhagen Consensus Center uses rational economic analysis to advance global welfare in areas from battling disease to addressing climate change. (Source of left photo: TED Conference, licensed under CC BY-NC 2.0)

The Copenhagen Consensus approach to climate policy presumes that human-induced climate change is occurring and that it probably will have adverse effects, but it contends that other social and environmental issues are more serious threats to humanity and should be addressed as higher priorities. Its careful analyses came to recognize the limitations of currently available technologies in achieving a cost-effective transformation of the global energy system. This is why it advocates prioritizing a significant increase in funding of basic science to accelerate the discovery and commercialization of new emission-reducing technologies. It also places priority on measures taken to adapt to (rather than seek to prevent) potential climate changes and to enhance the overall resiliency of the energy system.

Climate Change Policy Implications for Canada

The Copenhagen Consensus’ cost-benefit-based prioritization of climate change policies is applicable to Canadian policy-making and governance approaches in several important and broad areas, at not only the national but international and inter-provincial levels. What follows is a brief, simplified discussion of the most important aspects, keeping in mind that some of these are large issues in themselves and not resolvable overnight.

Remove the Pressure of Overly Ambitious and Arbitrary Targets

Canada has never met any of the targets set at the international or national levels regarding either the magnitude of emission reductions or the arbitrary dates by which these would be reached. The use of such arbitrary and unrealistic targets should be reduced or avoided. A first step in applying the Copenhagen Consensus’ recognition of the immense difficulty and complexity of achieving an energy transition, along with the need for new technologies whose development does not occur according to a government-controlled timetable, would be for Canada to postpone the “Net-Zero by 2050 goal” to at least 2070 if not 2100.

Adopt a Multi-Goal Framework

Canadian climate policy would henceforth be developed within a multi-goal public policy framework. Rather than making emission reduction the preeminent goal, the federal government would seek to optimize climate policy alongside multiple other public policy objectives including economic prosperity (growth, employment, investment and trade), social harmony, environmental quality, financial responsibility, energy security, defence and promotion of good federal-provincial and international relations, among others.

“Arbitrary targets”: Applying Copenhagen Consensus rational analysis would mean abandoning or postponing Canada’s “Net-Zero by 2050” goal and focusing instead on practical environmental improvement projects. Shown at bottom, the Gold Bar Wastewater Treatment Plant in Edmonton, Alberta. (Sources of photos: (top) JessicaGirvan/Shutterstock; (bottom) Urban Edmonton)

Prioritize the Real Environmental Problems

Despite what one reads and hears in the mainstream media, Canada has very high environmental quality and the areas that need improvement are relatively few. These include solid waste management, sanitation/wastewater treatment and sulphur dioxide emissions per unit of GDP. Most of these are provincial and/or municipal responsibilities, but the federal government can play a role in funding capital investments. Where the federal government has jurisdiction and must regulate, regulatory efforts should focus on addressing tangible environmental problems with practical, cost-beneficial, affordable solutions to further clean up the air, water and soil, and the results should be measured and tracked by comprehensible and publicly available metrics.

Adhere to Technological Realism

A common-sense approach would recognize that energy transitions take a long time. The pace of transition away from fossil fuels must, accordingly, be guided by the rate at which new scientific discoveries can be applied to the development of new products and services and then commercialized to the point of true economic viability. A common-sense policy approach in Canada would abandon the presumption that governments can and should attempt to hasten the technology commercialization process by “picking winners”, granting large subsidies to favoured firms or otherwise trying to centrally plan the changes in the energy economy. Instead, the new approach would entail higher levels of government funding for basic research and development.

The federal government’s 2030 Emissions Reduction Plan could add about $55,000 to the average cost of a new home built in Canada. A new Canadian climate policy would abandon this plan and leave the establishment of building codes, zoning and construction approvals in the hands of provincial and municipal governments.

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Promote Energy Security and Reliability

A new Canadian climate policy would repeal or substantially amend the Clean Electricity Regulations that mandate the elimination of hydrocarbon-based electricity generation by 2035, a goal that this recent study concludes is completely unfeasible. It would also require that future federal or provincial regulation of GHG emissions be based upon a systematic review of the potential impacts on the viability and competitiveness of Canadian industry. Finally, it would eliminate the impending federal cap on oil and natural gas industry emissions (which was unveiled on November 4 and imposes a 35-percent rollback in GHG emissions by 2030) and take other measures to ensure that Canada, which has the world’s third-largest crude oil reserves as well as world-scale natural gas reserves, can continue to increase energy production to meet the needs of domestic and export markets.

The steep cost of compliance: The Justin Trudeau government’s 2030 Emissions Reduction Plan will add an estimated $55,000 to the average price of a new home, pointing to the need to eliminate costly and pointless regulation. (Source of photo: pnwra, licensed under CC BY 2.0)

Reduce Housing Costs

According to the Fraser Institute, the federal government’s 2030 Emissions Reduction Plan could add about $55,000 to the average cost of a new home built in Canada. Even more stringent and costly regulations would undoubtedly follow after 2030 to meet the net zero target. A new Canadian climate policy would abandon this plan and leave the establishment of building codes, zoning and construction approvals in the hands of provincial and municipal governments. This would contribute meaningfully to addressing Canada’s housing affordability crisis.

Legislate Wisely

A new policy would include amending or repealing the Canadian Net-Zero Emissions Accountability Act. The entire law is a litigation “trigger” because it gives climate activist organizations weapons that they can use to engage in “lawfare” – the strategic use of legal proceedings to hinder, intimidate or delay an opponent.

Depoliticize the Regulation of Energy Infrastructure Projects

A new policy would return the regulation of energy infrastructure and rate-making to one that takes place at arm’s length from government political and policy direction. This would require changes to the federal minister’s control of the Canadian Energy Regulator. It would also be highly desirable to reform the system of environmental assessment and review by placing strict time limits on the duration of infrastructure project reviews. Today, regulatory reviews of major energy projects often take five years or longer to complete, and some have taken over 10 years.

The federal Impact Assessment Act (having last year been found largely unconstitutional by the Supreme Court of Canada) would be substantially amended so that the resulting federal law returns to being a review of the national environmental impacts (and any local impacts as these pertain to areas of clearly federal jurisdiction) rather than an exercise in jurisdictional duplication and an assessment of consequences for the entire planet.

A common-sense climate change policy would also streamline, limit the scope of and quicken the currently often 10-year-long environmental assessment process. Shown, the LNG Canada project in Kitimat, B.C. under construction, January 2024. (Source of screenshot: Northcoast Drone/YouTube)

The principle of “whoever hears the evidence should decide” would be brought back into the law, with an appeal to the courts on a question of law only and an appeal to the federal Cabinet on a question of policy. This is how the Canadian Radio-television and Telecommunications Commission (CRTC) has worked for several decades.

The arbitrary and harmful bans on oil tanker traffic on the Pacific Coast and on new hydrocarbon exploration and development in Canada’s Far North would be removed.

Promote Federal-Provincial Harmony

In the pre-2000 period, federal climate policy explicitly recognized that measures should not entail undue costs and burdens on any region or province. This went out the window in the Trudeau era and became a leading cause of federal-provincial discord. A new policy would re-institute this as a cardinal principle. Among other things, it would also be essential to ensure that there was ample coordination and consultation with all affected provinces before any new international commitments were made.

Focus on harmony: To promote more efficient cross-border trade, Canada’s regulatory standards should align with those of the U.S. The incoming Donald Trump Administration is likely to discard electric vehicle mandates and “clean” fuel standards, policy shifts that will affect Canada. (Sources of photos: (top) AP Photo/Evan Vucc; (bottom) Sundry Photography/Shutterstock)

Harmonize Canadian and United States Regulatory Regimes

It would be recognized that to facilitate more seamless cross-border trade with Canada’s largest trading partner, the United States requires that regulatory standards and codes developed in Canada, especially involving the regulation of fuel efficiency/emissions intensity of vehicles and appliances, be closely aligned with U.S. federal standards. It is widely expected that the incoming Trump Administration will discard electric vehicle mandates and “clean” fuel standards, policy shifts that clearly will affect Canada. Although this is not to suggest that Canada allow its policies to be dictated by the U.S., close attention should be paid.

Facilitate Truly Responsible Investing

Canada has committed to adopting the new Sustainability Disclosure Standard under International Financial Reporting Standards (IFRS), which imposes mandatory sustainability-related disclosure and climate-related financial disclosure. These and similar regulatory initiatives are increasing the burden on Canadian firms to report not only their own estimates of GHG emissions but also to try to guess those of their suppliers and customers. This is absurd on its face and creates another trigger for endless litigation when such guesses turn out wrong, prompting accusations of fraud. A new Canadian climate policy would severely restrict the use of such accounting measures.

Fairly soon, the current Official Opposition is likely to take on the responsibility of actually governing. To respond effectively to the economic and political threats posed by climate catastrophism, advocates of policy change must go beyond merely targeting individual policies for cancellation based on complaints about the harm they do.

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Build Adaptation and Resilience

A new Canadian climate policy would place greatly increased, perhaps primary, emphasis on measures to increase the resilience of Canadian infrastructure and economy to future climate changes. Adaptation measures can avoid or reduce adverse future impacts by, for example, changing human behaviour in advance, such as land use rules that prohibit construction of buildings in flood-prone areas, or by taking actions to protect valued resources, communities and landscapes. Many adaptation measures also increase resilience towards climatic variability such as droughts and storms, making them potentially attractive policies even in the absence of long-term human-induced changes. They can pay dividends to society even if all the concerns about climate change turn out to be greatly exaggerated.

A new climate change policy should include measures to increase the resilience of Canadian infrastructure and the economy to future climate changes. Shown, (at top) a storm in coastal Nova Scotia; (at bottom) flooding in B.C.’s Lower Mainland. (Sources of photos: (top) The Canadian Press/Andrew Vaughan; (bottom) The Canadian Press/Jonathan Hayward)

Who Might Implement the Copenhagen Consensus in Canada?

It is clear that the Trudeau government is incapable of such a significant policy reform as summarized above. It is at least conceivable that, were Trudeau to be replaced before the next election, his successor might consider some of these measures; conceivable, but not likely. Most probably, the task of implementing such broad policy changes would fall to a new Conservative federal government. The party’s promises to “Axe the Tax” correctly address the mounting public concern about the impact of carbon taxes on the cost of living and competitiveness of Canadian business, as well as the unfairness with which they have been applied.

Fairly soon, however, the current Official Opposition is likely to take on the responsibility of actually governing. To respond effectively to the economic and political threats posed by climate catastrophism, advocates of policy change must go beyond merely targeting individual policies for cancellation based on complaints about the harm they do. They must think through what a realistic, credible, politically palatable – and cost-effective – climate policy framework would look like. The time to start is now.

*Cost-benefit analysis is a tool economists use to compare the estimated costs and benefits (or opportunities) associated with a proposed undertaking. It involves tallying up all the current and projected long-term costs and benefits, estimating the financial equivalent of those for which dollar equivalents are not available, and converting everything into present-value terms using discount rates. If the costs outweigh the benefits, then the decision-makers should rethink whether to proceed.

Robert Lyman is a retired energy economist who served for 25 years as a policy advisor and manager on energy, environment and transportation policy in the Government of Canada.

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