The Commissioner's Perspective

Introduction—Climate Change is Upon Us

All Canadians have a stake

The Earth is warming, triggering dramatic changes in climate and weather systems around the world. Climate scientists overwhelmingly agree that carbon dioxide and other "greenhouse gases" released by human activities are generally to blame. Climate change is a global problem with global consequences: The implications are profound. Experts say we need to act quickly and effectively. I believe this is the prudent thing to do.

Canada both suffers from the consequences and is a source of the problem. The impacts are already being felt from coast to coast to coast and in almost every region and in many sectors of the economy. Hundreds of communities depend on natural resource sectors that are sensitive to climate change, such as agriculture, fisheries, and forestry. The impacts are expected to worsen and could include

• the spread of pests and diseases,
• drought in the prairies,
• melting permafrost and destabilized infrastructure in the North,
• rising sea levels and more intense storms on the coasts, and
• more days of extreme heat and smog in large urban centres.

The effects may be worse in other countries, especially in nations with the least capacity to cope. Canada and the world will feel the repercussions of climate change for generations to come.

Relatively speaking, Canada is a major source of greenhouse gas emissions that contribute to climate change. Per capita, Canadians are among the highest emitters in the world. Since producing and consuming energy from fossil fuels accounts for 80 percent of man-made greenhouse gas emissions, experts suggest long-term solutions involve changing to low-carbon economy and energy systems.

As we are an energy-producing and dependent country, climate change goes to the heart of our economy and touches many aspects of our lives, threatening economic costs. It also presents opportunities. For example, developing and deploying new technology will play a key role in building a healthier and more sustainable future. Canadians will have the opportunity to contribute and compete at home and globally. No matter how you look at the situation, the stakes are high for Canada. However, the impact, costs, and benefits of climate change will not be felt or shared equally by all Canadians—there will be economic, social, and environmental winners and losers.

Our findings are crucial to all Canadians

Canadians are aware of and are worried about climate change. The federal government plays a crucial role in addressing climate change on the home and international fronts. Its efforts span numerous federal departments and agencies and cover dozens of programs designed to understand, mitigate, and adapt to climate change. Its actions matter, and its successes and failures have consequences. For these reasons, I decided 18 months ago to devote my 2006 report to auditing and monitoring aspects of the government's approach to climate change (Exhibit 1).

This is not the first time we have audited the topic (Exhibit 2). The response to weaknesses we identified in the past has been disappointing. On the basis of this year's work, I am more troubled than ever by the federal government's long-standing failure to confront one of the greatest challenges of our time. Our future is at stake.

This year's audits started with one government in power and ended in June before the current government had decided the approach it would take to address climate change. This does not affect our findings. Our work is non-partisan and fact-based, and deals with how the government implements its policy choices. Climate change is here to stay, and ours is a message to past, current, and future governments of Canada.

In the following pages, I provide a snapshot of our key audit findings by answering three seemingly simple questions:

• Is Canada on track to meet its emission reduction obligations?
• Is Canada ready to adapt to the impact of climate change?
• Is the government organized and managing well?

Then I reflect on what the government needs to do in areas of energy development, planning, science, and adaptation; governance; and, most importantly, leadership. This year, I have included Climate Change—An Overview with my Perspective. The Overview describes climate change, what can be done about it, and Canada's international and domestic commitments.

Looking Back—Too Little, Too Slow

Canada is not on track to meet its obligations to reduce emissions

Under the Kyoto Protocol, Canada agreed to reduce its emission levels in 2008–12 to 6 percent below those in 1990. The government's own 2004 data revealed that our greenhouse gas emissions were almost 27 percent above 1990 levels and were rising, not declining (Exhibit 3). To many, this is not news. Indeed, it has been widely reported by the government itself. So what is going wrong? Our audits identified several reasons why Canada is not on track to meet the Kyoto targets.

The government has launched several programs that our audits found were reducing greenhouse gas emissions or were poised to reduce emissions in the future. Yet, it has struggled to put in place other key initiatives—most notably, the pivotal Large Final Emitter System and the system for domestic emissions trading. The systems' development has been slow, and many elements critical to their success remain unresolved.

Even if the measures contained in the previous government's 2005 plan had been fully implemented, it is difficult to say whether the projected emission reductions would have been enough to meet our Kyoto obligations. In the fullness of time, some measures may have contributed. Yet, in certain sectors, the measures are not up to the task of meeting the Kyoto obligations. For example, the transportation and industry sectors account for the majority of Canada's emissions—78 percent—but emission reduction measures we examined are not expected to bring emissions below 1990 levels. At best, they might only slow the rate of growth. Given Canada's strong economic growth, especially in energy production, meeting our Kyoto target would arguably have been a challenge even if bolder action had been taken earlier.

Ever-shifting responsibilities between federal departments and ministers, turnover of key personnel, and changes from plan to plan (Exhibit 4) have caused delays and a loss of momentum. The government's weak handling of the many transitions that took place over the history of this file has hampered progress.

Lastly, the federal government does not act alone. It has faced—and still faces—considerable challenges in bringing various players onside and in mobilizing concerted action. Achieving success on a problem as pervasive as climate change demands that all levels of government, industry and business groups, science, academia, and civil society organizations collaborate. The reality to date is that some players have been unwilling to do so. Deep divisions and conflicts remain.

Canada is not adequately prepared to adapt to the effects of climate change

Some effects of climate change are inevitable. Yet, the level of attention paid to adaptation pales in comparison with the attention paid to reducing emissions, despite the fact that, in the 1992 United Nations Framework Convention on Climate Change, the government committed to work on both fronts.

The federal government has no overall adaptation plan, and key elements of an effective approach have still to be put in place. Little work has been done to assess how adaptation will affect federal policies and programs. Work on a national adaptation framework (in partnership with the provinces), a federal adaptation strategy, and a climate change science plan for Canada began in earnest, made some progress, and then stalled.

Science and research are the foundation for understanding changes in climatic systems and their impact, and for understanding where we are vulnerable and what we must do to adapt. While investments by the government have built knowledge, significant information gaps still exist. The government has not effectively mobilized and organized its scientific and research activities to ensure that decision makers get the information they need.

The federal government's efforts are not well organized and not well managed

Our audits identified weaknesses in the government-wide system of accountability for climate change. Co-ordinating committees and mechanisms that once existed have been phased out and have not been replaced. A lack of central ownership, clearly defined departmental responsibilities, integrated strategies, and ongoing evaluation systems all point to problems in the government's management of the climate change initiative.

Since 1997, the government has announced over $6 billion in funding for initiatives on climate change. However, it does not yet have an effective government-wide system to track expenditures, performance, and results on its climate change programs. As a result, the government does not have the necessary tools for effective management, nor can it provide Parliamentarians with an accurate government-wide picture on spending and results they have requested.

On the whole, the government's response to climate change is not a good story. At a government-wide level, our audits revealed inadequate leadership, planning, and performance. To date, the approach has lacked foresight and direction and has created confusion and uncertainty for those trying to deal with it. Many of the weaknesses identified in our audits are of the government's own making. It has not been effective in leading and deciding on many of the key areas under its control. Change is needed.

The government has a foundation to build on

I do want to emphasize that a foundation is in place and that it is important to build on it. As noted earlier, our audits identified several positive programs and practices that have either already reduced emissions or hold promise to do so.

Pockets of federal research and support to research networks have helped to gather knowledge on Canada's vulnerability to climate change in areas such as health, coastal zones, fisheries, forests, water resources, and agriculture. Important partnerships have been established. Departments and central agencies are taking steps to organize all federal programs on climate change in a logical way and are developing government-wide tracking and reporting systems. As a result, some foundational learning has taken place and expertise has been built.

There are motivated and talented people in the federal public service. During our audits, we met countless knowledgeable and creative public servants—scientists, program managers, and policy-makers alike—who are committed to success.

Looking Forward—a Massive Scale Up of Efforts is Needed

Canada is at a historic juncture in its climate change file. The current government says it wants to significantly improve the poor track record to date. To do so, it must take immediate and long-lasting action on many fronts. The direction it sets and actions it takes will affect many generations of Canadians. Even though difficult choices and decisions lie ahead, I am optimistic that the government can meet the challenge. In the following pages, I identify five areas that I believe are crucial and where the office will focus its future audit efforts:

• leadership,
• energy and climate change,
• reducing greenhouse gas emissions,
• adaptation, and
• governance and accountability.

Each area is important but the call for leadership applies to them all.

Provide sustained leadership

Successfully confronting the economic, social, and environmental risks and the opportunities posed by climate change requires unprecedented leadership from the highest levels of government, Parliament, and the public service. Transformational change cannot be driven solely from the bottom up. Rather, it requires bold, decisive top-down leadership. Once direction is set, sustained efforts are needed to ensure that it is fully implemented.

Although the federal government has ultimate responsibility for making and meeting international commitments on climate change (such as those included in the Kyoto Protocol), it does not and cannot act alone. It must lead to establish and, in some cases, rebuild strong and long-lasting partnerships with other levels of government, industry, communities, non-government organizations, academia, and others.

Integrate energy and climate change

The government cannot effectively address climate change without considering changes in the way Canadians produce, distribute, and consume energy. And we cannot secure our energy future without considering climate change—these issues are unavoidably linked. Any new approach must confront this reality.

First and foremost, the government needs to clearly state how it intends to reconcile the need to reduce greenhouse gas emissions against expected growth in the oil and gas sector. And Canada's oil and gas industry is booming. Greenhouse gas emissions in the oil and gas sector have increased over 50 percent since 1990. Emissions from expanded Western oil sands operations could double between 2004 and 2015. This increase in production could counter efforts to reduce emissions in other areas of society unless options such as new technology are developed and put into widespread use.

The federal government also needs to define how and to what extent it will support energy conservation and efficiency; and alternative sources of energy, including wind, solar, biomass, and others. The government is already supporting the diversification of energy in selected sectors. We found, for example, that the federally funded Wind Power Production Incentive stimulated investment in wind energy (Exhibit 5). Yet this program is operating in the absence of overall direction for the wind sector. Indeed, government support to various alternative sources of energy is occurring in the absence of an overall direction for energy development in Canada.

Develop a plan to reduce greenhouse gas emissions

The government urgently needs a believable, clear, and realistic plan to significantly reduce greenhouse gas emissions. It must establish and commit to short- and long-term national goals: a short-term focus to maintain priority, urgency, and momentum and a long-term one to provide the certainty that supports capital investments that will last for decades. The current government has announced that Canada cannot realistically meet its Kyoto target. If so, then new targets should take its place. In this vein, the government must make a concerted effort to slow the rate of growth of greenhouse gas emissions, ensure that emissions reach their peak as soon as possible, and then achieve substantial reductions in absolute levels of emissions.

There are no magic formulas or quick fixes, however. To achieve success, the government must use a mix of tools and measures, including regulations, financial incentives, market-based emission trading mechanisms (linked to global ones), technology development and deployment, investments in infrastructure, public education, and others. The measures it takes should

• rest on solid economic, environmental, and social analyses;
• tackle major sources of greenhouse gas emissions in every sector and focus efforts on the highest priorities;
• have clear, numerical targets to reduce emissions; and
• ensure that the different programs capitalize on departmental strengths and areas of expertise and complement one another to form a cohesive whole.

The climate change plan needs to fit into a broader federal plan for the environment and sustainable development (Exhibit 6).

Push ahead with adaptation

Adaptation is fundamentally about protecting the economic and social well-being of Canadians, by helping to improve their ability to cope with a changing climate. There is a compelling case for government action and yet, it has been neglected in efforts to date. Instead of being an afterthought, it should be a prominent part of government plans. Failing to adequately invest in this area will undermine Canada's ability to make wise decisions.

While there are knowledge gaps, they are not the real obstacle; enough has been learned for adaptation to proceed. The government must better prepare for the impacts of climate change on federal programs, the economy, and society. It should

• examine how climate change will affect individual federal programs and departments and make the required modifications,
• develop an action plan that cuts across all departments,
• work with other levels of government to develop clear priorities, and
• find new ways to connect researchers with decision makers.

Assure governance and accountability

Planning, management, and performance go hand in hand. A good plan is important, but so is taking action and assuring results. Effective governance and accountability are fundamental in all policy areas and are especially crucial elements of complex, horizontal, long-term files like climate change. Our audits show that the government's approach to climate change needs to pay much more attention to

• establishing clear roles, responsibilities, and authority for all federal departments and agencies;
• designing and putting in place mechanisms to co-ordinate federal activities across departments and agencies;
• tracking expenditures and performance against agreed-upon targets and reporting this information to Parliament and Canadians; and
• monitoring, on an ongoing basis, the performance of all programs, to learn what works and to retain and improve the programs that provide cost-effective, clear results.

The Treasury Board Secretariat, the Privy Council Office, and the Department of Finance must play a strong role.

A Final Word—Finding Lasting Solutions

The government's response to climate change will be a critical test of its commitment to sustainable development. Reducing our greenhouse gas emissions and adapting to present and future effects of climate change are challenging tasks. It is a long-term journey, and there may be blind alleys and false starts along the way. Canadians should be able to expect their federal government to stay the course until lasting solutions are found. It is in our own best interest.

The government accepted all of the recommendations we made in the following chapters. The government has indicated that it is working on a new plan to address climate change and thus did not provide detailed responses to all of the recommendations. In the new plan, I expect the government to provide a description of how it has taken our recommendations into account, and to so inform Parliament and the Canadian public.