From the Fraser Institute

By Ross McKitrick

By reforming federal climate policy, Canadians could benefit from increased prosperity and increased competitiveness with the U.S., finds a new study published by the Fraser Institute, an independent, non-partisan public policy thinktank.

“As we approach 2030 with no prospect of meeting Canada’s Paris targets, instead of doubling down on costly and misguided policies that will result in continued failure, the federal government should embark on a new course that offers hope for modest climate successes without sacrificing living standards and prosperity,” said Ross McKitrick, Fraser Institute senior fellow and author of Reforming Canada’s Environment Ministry and Federal Environmental Policy.

The study finds that as a result of the new Trump administration quickly reforming U.S. climate policy, Canada risks a widening competitiveness gap with the U.S.

The study identifies five sensible reforms to Canadian climate policy that would improve competitiveness, achieve realistic emission reductions without compromising economic growth and prosperity:

1. Set realistic timelines for achievable improvements in emission intensity.
2. Eliminate the many costly intrusions of climate policy into unrelated policy areas, from banking to homebuilding to competition policy.
3. Make the federal environment ministry an effective and trustworthy source of unbiased, reliable data on Canada’s environment and climate.
4. Push back against the mission creep in multilateral organizations, especially the Intergovernmental Panel on Climate Change.
5. Extinguish in law all forms of climate liability in order to stop nuisance activist lawsuits.

“The federal government’s climate agenda has adversely affected Canadians’ living standards and the country’s prospects for future income growth,” McKitrick said. “Given all the changes occurring in the U.S., now is an appropriate time to reform federal climate policy to be more effective, and to better serve the needs of Canadians.”

Reforming Canada’s Environment Ministry and Federal Environmental Policy

• With the start of a new Trump administration in the US and the prospects of a change in government in Canada, it is time for a reassessment of how Canada manages its environment and climate change portfolios.
• The US has swung dramatically in the direction of promoting energy abundance and downplaying or setting aside climate goals. Canada risks a widening competitiveness gap with the US if we do not respond appropriately.
• This study outlines key reforms to federal climate policy and the structure of the federal environment ministry, including:
  • Eliminating the current national greenhouse gas (GHG) emissions targets and replacing them with more realistic ones that can be achieved without compromising economic growth and industrial competitiveness.
  • Eliminating the many costly regulatory intrusions of climate policy into unrelated areas, from banking to homebuilding to competition policy, and focusing solely on pursuing cost-effective GHG emissions reductions.
  • Transforming the federal environment ministry into an effective and trustworthy source of unbiased, reliable data on Canada’s environment and climate, rather than relying heavily on speculative climate models.
  • Pushing back against the mission creep in multilateral organizations, especially the Intergovernmental Panel on Climate Change, and working with other like-minded countries, such as the United States, to return these organizations to their historical mandates.
  • Extinguishing in law all forms of climate liability associated with greenhouse gas emissions to prevent activist-driven nuisance lawsuits.

Read the Full Study

Ross McKitrick

Professor of Economics, University of Guelph

From the Fraser Institute

By Jake Fuss and Grady Munro

During its tenure, the Trudeau government rejected any semblance of spending restraint and increased spending (and borrowing) at every turn. However, due to the rising cost of deficits and debt, coupled with pressures to increase spending in neglected areas such as defence, the next federal government—whoever that may be—may finally be forced to find savings and reduce spending.

But where to look?

The government should immediately review all spending on the basis of efficiency, value for money, and the appropriate role of government—similar to the spending review initiated by the federal Chrétien government during the 1990s. Here are some line items ripe for the cutting board.

Regional Development Agencies: The federal government operates seven Regional Development Agencies (RDAs), which deliver financial assistance (a.k.a. corporate welfare) to businesses. Despite spending an estimated $1.5 billion in federal taxpayer money in 2024/25, the RDAs do not provide any widespread economic benefits to Canadians. Instead, they simply redistribute those dollars to private firms and pick winners and losers in the free market. When reporting on the results, the government offers vague platitudes such as “businesses are growing” and “communities are developing economically.”

Government Money for Journalism: In 2024/25 the federal government spent an estimated $1.7 billion to support Canadian journalism including the operating costs (e.g. wages) of newspapers and broadcast outlets such as the CBC. Despite these efforts, and the considerable price tag, hundreds of news organizations have closed since 2020 and layoffs have persisted—largely due to the disruptive effects of the Internet. Simply put, the traditional media sector is in decline, and the government’s costly attempts to reverse this trend have been ineffective.

Federal Support for Electric Vehicle Purchases: As part of its push to reduce emissions, the federal government will spend an estimated $587.6 million to subsidize electric vehicle (EV) purchases in 2024/25. This spending is inefficient and wasteful. EV incentives are expensive—costing a minimum of $177 per tonne of greenhouse gas (GHG) emissions, whereas the federal carbon tax in 2024 was much cheaper at $80 per tonne of GHG emissions.

The 2 Billion Trees (2BT) Program: Ottawa has earmarked $3.2 billion for the program from 2021 to 2031, with expenses in 2024-25 alone estimated at $340 million. While laudable in theory, the program has been poorly executed. In its first two years, the federal government spent roughly 15.0 per cent of the total budget to plant merely 2.3 per cent of the two billion trees. In fact, the 2BT program has used trees planted under a different program to artificially boost its numbers.

Canada Infrastructure Bank (CIB): Established in 2017, the CIB is a federal Crown corporation tasked with investing and attracting investment in Canadian infrastructure projects. Over its more than seven-year lifespan, the CIB has approved approximately $13.2 billion in investments across 76 projects (as of July 2024). In 2024/25, federal CIB funding will equal $3.5 billion. Though multiple problems plague the CIB, chief among them is its inefficiency in advancing projects. As of July 2024, only two CIB-funded projects had been completed. This lack of progress was a chief concern in a previous House of Commons committee report that made the sole recommendation to abolish the CIB.

Strategic Innovation Fund (SIF): With federal grants and contributions, the SIF funds projects based on their purported potential to deliver innovation and economic benefits for Canadians. While Canada certainly suffers from a lack of innovation, this spending (to the tune of $2.4 billion in 2024/25) simply shifts jobs and investment dollars away from other firms and industries—with no net benefit for the overall economy. Similarly, increased government spending on innovation may simply crowd out private-sector investment, leading to no net increase in innovation investment.

Global Innovation Clusters (GIC): The federal government launched the GIC program, like the SIF, to address the lack of innovation in Canada. The government expects to disperse $202.3 million through the GIC in 2024/25 alone, targeting the five “clusters” of business activity the government chose in 2018. But again, because the clusters represent specific industries and technologies (e.g. artificial intelligence, marine technologies, manufacturing), the federal government is incentivizing firms to spend time and resources modifying their businesses to secure grant rather than focusing on the development of new/improved goods and services.

Green Municipal Fund (GMF): The GMF spends federal tax dollars on municipal projects that purportedly accelerate the transition to net-zero greenhouse gas (GHG) emissions. In 2024/25, the federal government will contribute $530 million to the fund. While the fund maintains emissions-reduction targets for projects, several projects approved for funding will not reduce GHG emissions in any measurable way—for example, “climate-friendly” home tours and funding for climate advocacy groups in Ottawa. In other words, the GMF is spending taxpayer dollars on projects that make no apparent progress towards the GMF’s stated goal.

In total, these eight spending initiatives add up to approximately $10.7 billion in potential savings for the 2024-25 fiscal year alone. And remember, these are just the low-hanging fruit. The next federal government can find further savings through a more comprehensive review of all spending.

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Grady Munro

Policy Analyst, Fraser Institute