Welcome to zero. I am aksha throti. This week Canada climate and trouble. Earlier this week, new tariffs imposed by President Donald Trump went into effect. They are astonishing. They imposed twenty five percent duties on Canadian imports to the US, and at the time of this recording, they've already sparked chaos in the markets and provoked retaliation from Canada. It all comes as Canada's government is in the middle of her reconnect The race to replace Prime Minister Justin Trudeau
is fully underway. Next week the governing Liberal Party will announce Trudeau's successor, and before October, if not sooner, the country will have to head for a general election. If the Liberals lose that election, the opposition Conservative Party has promised to dismantle federal climate policies, much like Trump administration
has done in the US. With so much change in the backdrop, last week I got a chance to sit down with Rick Smith, president of the Canadian Climate Institute, to talk about what shaped the country's climate ambitions might take in this new era. We discussed why Canada's oil and gas production has remained so high and what Trump's
moves might mean for Canadian economic and energy policy. He also told me why he expects that meaningful climate policy in Canada will likely come from provinces and municipalities as much as it does from the federal government. Welcome to the Showrick, pleasure to be here.
Now.
We're talking as the Liberal Party is about to elect a new leader and Canada is set to head for a general election sometime before October. Before we get to the complications of now, tell us more about the Canadian Climate Institute, where you've been president for four years. What has it accomplished in its five year life that you are particularly proud of.
Well, we were. I think the aspiration of the organization when it was launched five years ago has been realized, which was to create an independent expert climate change advisor for governments in Canada. So we were originally launched to provide good ideas, good research to our federal government. And since we've been launched, we've grown quite an extensive root
system across the country. We now work with provincial governments, with the municipal governments, with Indigenous nations who have substantial constitutional rights in our country. So we're probably the most quoted climate change research outfit in the country. I'm very proud of the work we do, not just in the area of mitigation, but also adaptation. We have a whole team that worries about wildfires and flooding of course increasingly
prominent climate driven effects across the country. We have a team of researchers that are focused on clean growth and so we're we're you know, as patriotic Canadians, we're interested in providing good ideas as to how the Canadian economy can prosper through this transitional period. And we actually just launched a dedicated Indigenous research unit to work directly with
our indigenous nations. So we've deepened our work across the country, We've expanded it, and I think it's been very helpful to driving a climate progress across the country.
So on zero, we've had the UK's Climate Change Committee feature a few times because it was one of the first ones to be created as part of a country's lead binding climate targets. Now the Canadian Climate Institute is a sister organization, though not a one to one in comparison. Right, the CCC here has quite a bit of power because it can tell a government off by telling them, look, there's a common budget that you've set as a legally
binding goal. You're not on track, and here are the set of policies that are available to you to choose to get back on track. You don't quite have the same ability because of the way you've been created. So what are the differences and how do they manifest in your work?
Yeah, well, you're right. I mean the CCC was created in two thousand and eight, so we're our country is a little bit behind. The Canadian version of the Climate Change Act was adopted in twenty twenty one. Actually, interestingly, we in the CCC and holleague organizations in about twenty four other countries launched an international network together at COP twenty six. What we have in common is we are expert advisors to our resis inspective national governments on climate
policy specifically. And you're right, there are some differences between us. So some of our colleague organizations like the CCC, are creatures of Parliament. Some of our organizations like ours are independent charities. But what we have in common is we have a formal relationship of some sort with our national governments to provide good advice, to track progress and to suggest improvements in terms of getting back on track.
So, talking of progress, the Canadian government under Justin Trudeau has set a goal to reduce its greenhouse gas emissions by forty to forty five percent by twenty thirty relative to two thousand and five levels. And the latest check on emissions that you provided last year through CCI shows that the decarbonization of electricity is going well, but oil
and gas sector emissions are rising. I had the pleasure to interview Justin Trudeau on invitation from the Canadian Climate Institute back in twenty twenty two, and my first question to him was that all the seven countries have grown their economies and reduced their emissions, Canada has not. Its emissions were at that time largely flat. Has there been progress since then?
You've packed a heck of a lot into that question. Let me let me unpack that a little bit. Let's just start by looking at where Canada is at in terms of decarbonization. Yes, I'm delighted to report that there has been progress since since twenty twenty two. In fact, since two thousand and five, national emissions overall in Canada are down about eight percent according to our calculations. I think we're going to be down again in this next year. So you know, good news. For the first time in
the country's history, we've inflected the carbon curve downward. But if you dig down a little bit, what you see is real differences between sectors. So fantastic news in our electricity sector. For instance, electricity sector emissions down about sixty percent since two thousand and five. Most provinces now off
of coal. Significant uptake of renewables across the country, including in provinces governed by by conservative parties provincially, so great, great things happening, And clearly the regulatory framework driving decarbonization in the electricity sector is largely working. Buildings, some decarbonization happening again, a little bit variable by province. In terms of a transportation decarbonization, some variability by province, a big uptake of electric vehicles in some provinces, not so much
in others. Where we see more progress needed is when it comes to oil and gas industry emissions. So those which increasing, So those emissions are actually increasing about ten
percent up since two thousand and five overall. And you know, interestingly, as we see now emissions going down in other sectors, we see the percentage of oil and gas sector emissions, that chunk of the Canadian emissions pie increasing, and now over thirty percent of national emissions attributable to oil and gas production.
And all this is before Donald Trump took White House, and since his election, of course, there's been a huge amount of focus now in Canada on energy security, on diversification of energy markets, which suggests that more pipelines will be built, perhaps not to the US, but to the East and West coast so that Canada can continue to
export its fossil fuels. How concerned are you that the impact of whatever Trump does is actually going to increase Canada's reliance on extractive industries and further increase oil and gas emissions.
Yeah. Look, it's inarguable that what President Trump is doing, what his administration is doing with respect to climate policy, is uniformly unhelpful. I do think that there's a lot of dust that has to settle over the next few months in terms of the actual impact of these things. You know, unclear, for instance, whether the president's administration can overturn without congressional approval, a lot of the very helpful tax credits in the Inflation Reduction Act. It is unclear
the extent to which the Trump administration can overrule. The two dozen or so US states led by California, New York, some of the biggest states who've served notice that they are going to proceed with ambitious electricity sector decarbonization, electric
vehicle regulated sales targets. The US Climate Alliance states represent about fifty percent of the US population, and what we see at the moment I mean with vehicles in the United States, for instance, is basically a bifurcated market where you have the California led group of states administering a European style ZEV mandate, and then you have the federal government tailpipe standards being followed by the other half of the US economy. You know, of course, the US, like Canada,
is a federal country. States have substantial constitutional authority to regulate in areas relevant to climate policy. So, you know, as unhelpful as the Trump administration wants to be, as much as they want to impede climate progress, I would suggest it's premature to jump to conclusions about how far they're going to get.
But if you're looking at the numbers from two thousand and five, levels emissions are down as of twenty twenty three by eight percent. They need to be down as a legally bound target by forty percent by twenty thirty,
and so the piece has to pick up. But at this point, when the focus is being drawn away from climate and do much more carbon intensive industrial conversation, even if there is no right now on paper direct impact, doesn't that slow down progress at a time and it actually needs to accelerate.
Well, it's certainly not going to help. I mean, you're absolutely right in a fact, according to our analysis, absent adding some new policies to the table, Canada is actually not on track for forty to forty five percent reduction by twenty thirty by our calculation, at the current rate, we're probably headed towards something like thirty five percent or
slightly less. So we've provided to the federal governments over the last couple of years a variety of suggestions in terms of how to accelerate progress, how to both increase the effectiveness of existing policy and add some new policy to the table to get us on track. I do want to underline here the Canada's a federal country, and so one of the things that I suspect you're going to see in Canada over the next few years is
climate change advocates. Regardless of what happens in our federal election, I think there's the acknowledgment in the climate policy community that more attention needs to be put on provincial action, on municipal action, partially because we've had a relatively sympathetic federal government over the last decade, Virtually all of the attention in terms of climate policy has been focused in the federal government, and in our system, there's only so
far the federal government can get in many areas of climate policy and regulation. So in many cases, for instance, the federal government has tried to do something has been taken to court by provinces. That continues. My point here is that even in a Trump era that will extend for some years, there is substantial scope in the United States, in Canada for subnational action, and in fact it's already the case that some of those important subnational actors are
creating cross border cooperation. So Quebec and California for since have long been part of a common carbon credit market, and I suspect we're going to see more of that continental subnational action in the years they had and some of these subnational actors very large. Of course, if California were its own country, it would be the fifth largest economy on the planet. So these are not small actors here, they're consequential.
Point taking that provincial governments can do a lot, but when you do have climate policies at the federal level, they can add up to how much more provinces can do. Now, one of Trudeau's signature climate policy was to put a price and pollution and then give most of that money back to citizens. So the poorest people would get more money back from the government than they would potentially spend on higher costs and goods, and richer people who have
more carbon intensive lifestyles will pay more. All the leaders in Canada who are now wanting to be power, we have the Liberal Party that's going through its own election that'll get concluded sometime in March, and then the Parliament will come back and at some point there will be a general election. All the leaders who want to be in power in Canada are now promising in one form or the other to roll back some of the price
on pollution. Can you talk through what type of rollback are we likely to see.
We've in the last couple of years in our country, we've kind of backed ourselves into this strange cul de sac when it comes to climate policy. By our institute's calculations, best case scenario, the contribution of the Canadian consumer carbon price to emission reductions by twenty thirty is at best
ten percent. And yet, for a variety of reasons, political and otherwise, the debate surrounding the fate of the consumer carbon price has probably occupied I don't think it's an exaggeration to say that ninety five percent of the entire climate changesscussion in our country has swirled around this one policy for at least two years, and we need to
get out of that. One of the things we've done over the last couple of years is pointed to the fact that we need to focus on climate policy progress across a range of policies, and there are many other policies that are far more consequential in terms of emission reduction, name the industrial carbon price probably thirty to forty percent of the solution by twenty thirty, partially because it just captures it applied to a much larger basket of emissions
than the consumer carbon price. Continued electrification across the country penetration. You know, various policies meant to expedite the uptake of electric vehicles are methane regular because, partially because of oil and gas sector so large, methane regulations a huge part of the solution by twenty thirty. So there's probably a couple of dozen other policies that are important in terms of progress by twenty thirty that are relatively unexamined in
the public debate, and that needs some improvement. And so if you know, obviously it's not ideal if the country moves off of consumer carbon pricing in an age when affordability concerns animate all aspects of politics. I'm not sure it's surprising, to be honest, but there are other policies that are far more important.
So if the industrial carbon price is going to do so much of the heavy lifting going into twenty thirties, I know you can't comment on specific political parties, but at least one of the major parties, the Conservatives, are trying to push back against any form of carbon pricing which might even weaken the industrial common price.
Right. Well, it's actually the industrial carbon price is actually quite a different system in our country than the consumer price now, I think it's important to note here that industrial carbon pricing, unlike consumer carbon pricing, has not been the topic of raging public discussion over the last few years. And one reason is that industrial carbon pricing was invented at a provincial level and then spread across the country.
And this trajectory of public policy, or the move from a province to a national level phenomenon, is actually a hallmark of enduring, sometimes enduring Canadian public policy. This is what happened with our medicare system, our public healthcare system, for instance. So I think there's some basis to believe
that industry. There's many heavy emitting industries across the country that are quite supportive of industrial carbon pricing because one of the things it does is create a lucrative credit market, and those credits now exist on balance sheets right across the country. So industrial carbon pricing, which only applies to exporting industries so there is no interface with Canadian consumers, meant to both reduce emissions and increase the competitiveness of
Canadian industry. So I think that's a winning argument.
After the break, more of my conversation with Rick Smith of the Canadian Climate Institute by the way. If you've been enjoying this episode, please take a moment to rate and review the show on Apple and Spotify. It helps other listeners find the show if it wasn't already. The twenty twenty three record breaking wildfires in Canada showed people the scale and the intensity that climate driven extreme weather events can bring. At the CCI, you also look at
how Canada can adapt to climate change. Adaptation is often the forgotten cousin in the climate equation. People only think really about reducing emissions. How is Canada doing on the adaptation front?
The adaptation is an increasing part of the debate in our country. In the last few years, the table has been completely reset in terms of the public understanding of climate driven extreme weather. Last summer alone, over a few days in August in southern Quebec, that province saw devastating flooding and actually the most expensive natural disaster in Quebec's history. Last August, in the west of our country, the beautiful, world renowned mountain town of Jasper essentially burned to the
ground because of raging wildfires. The first stage of rebuilding that town almost a billion dollars Canadian. One of our strong partners of the Canadian Climate Institute is the Canadian
insurance industry. The insurance industry fascinating to work with because as an industry there's structurally risk averse, but yet because of the product that they sell, they're being forced to grapple on a daily basis with the realities of climate change, the measurable realities of climate change, in a way that no other industry is, and so we work with them increasingly.
And the Insurance Bureau of Canada calculated twenty twenty four to be the most expensive year in Canadian history, over eight billion dollars in insured losses across the country, mostly from climate driven weather. So you know whether it's wildfires in the west of our country flooding in the east. In some parts of our country over the last couple years, there's been both flooding and wildfires at the same time, as happened in Halifax in our East coast two years ago.
This has transformed the Canadian understanding of climate change and in a very short period of time, rendered what used to be a kind of notional discussion of effects our children and grandchildren might have to deal with sometime down the road into a far more urgent discussion of you know, the security of my family and of my neighbor's family,
and of our communities. So, you know, I think climate change in our country has been permanently moved from an environmental policy pigeonhole into a far more powerful public policy discussion, you know, in the same space that you see healthcare, crime, these other far more approximate threats to human security. You know. Does that mean that, you know, every decision maker across the country is motivated to make the right decisions on
climate policy every day of the week. No, but it's always there, kind of lurking under the surface, a risk to be managed by political leaders. I think that's where we're at in our country when it comes to climate change. And so we spend a lot of time at our institute trying to quantify the damage of wildfires and flooding, how to come up with policy solutions to keep Canadian communities safer, and it's become a fundamental part of our argument.
That's too often the climate change discussion is dominated by a fixation on the alleged costs of taking action and climate change, when in fact, the increasing measurable costs or the cost of our inaction and we're seeing that across Canada every day.
Now, Canada and the US share the longest undefended border in the world. Canada has the US as its largest trading partner. Most of Canadian oil is going into the US. The connections run deep, not just culturally, but at an economic and at a carbon level. And so there is a very real danger that what happens in this administration derails Canada's climate plant. How are you going to start advising whichever politicians take power in the next government to deal with the Trump threat?
The speed with which the Canadian national debate has changed since January twentieth. This is just unbelievable, since since Trump's inauguration and the focus of the national debate now is fully how to ensure the success of the national economy, given the United States has revealed itself within a matter of weeks to be a difficult partner to be polite. If the debate is as broad as the future of the Canadian economy, there are many carbon relevant factors to
contribute there. Of course, one of them is that as Canada asks itself, okay, well, where if we can't reliably trade with the United States, to the extent that we have in the past, and we need to start accelerating trade with other countries around the world. Well, lo and behold, it turns out that a lot of those potential trading partners are implementing carbon border adjustments. Yeah, there is rapidly decard urbanizing.
There was a joke made about Canada joining the EU.
Well, yes, it turns out Canada had a very low level conflict with Denmark a few years ago that resulted in a very small island in the Arctic being divided in two. And Canada turns out shares a one point five kilometer border with Denmark on Hans Island in the Arctic. And so there's been actually a lot of somewhat serious suggestion in the Canadian in the Canadian media that we should look at joining the EU.
Well, it turns out technically the European Union has never defined what Europe really means geographically, and so yeah, it might just happen.
Right, Well, so there you go. So we you know, we we speculate on geopolitics on this podcast as well. But but you know, so are there are many complicated questions bound up with this raging national debate about the future of the Canadian economy. But it it can't escape the notice of Canadian decision makers that regardless what Donald Trump is doing over the next couple of years, the medium and longer term decarbonization trajectory in the world is set.
So a couple of weeks ago we saw seventy five percent of German voters supporting political parties promising massive climate change progress. The trajectory is set in Europe, it's set in the United Kingdom. We work with colleague organizations all over the world and so we're intimately familiar with what the decarbonization debate looks like in the two dozen major economies around the world. And yes there are hiccups, Yes there are stops and starts, but the trajectory is clear.
I mean, decarbonization is an industrial imperative. This is the case that we and many others will be making in Canada, is that it's in the best interest of the Canadian economy to figure out how to compete with China when it comes to the manufacture of electric vehicles, to ensure or that we are mining critical minerals in Canada, to ensure that we are doubling down on perhaps the greatest Canadian industrial asset, which is dispatchable clean power at a
time when the world desperately needs that, and every major investor in the world is looking is looking for that in jurisdictions in which they invest, And so there are some of Canada's most important assets revolve around the building blocks of decarbonization and we need to exploit those in the years ahead.
Well, the last time Trump came to power, there were climate leaders like Trudeau and Germany's Angela Merkel, uk Is David Cameron and later Theresa May who were there to act as a force against the climate backlash that happened in the first term. This time around, there are few climate leaders in power. Trude is about to leave his position, and there are fewer climate forward parties in the ascendency
around the world. So how exactly can leaders who understand the climate challenge meet the electorate at this moment and convince them enough that action on climate change is in their self interest so that they can get elected to power.
Well that one of the advantages that we have now versus in Trump's first term is that some of the technology that we advocate for has matured and is cheaper than ever before, and So one of the things that we've measured across our country, for instance, is the relative affordability of low emitting electrical options like heat pumps electric vehicles.
If you're do an apples to apples comparison heat pump versus fossil fuel heating, in most Canadian cities, heat pumps are the clear winner in terms of being a better deal for consumers. Why. Well, because they're more efficient machines. They're just better machines. Nobody has ever bought a heat pump and said, Wow, I really regret this. I want to go back to my clunky old furnace right Like,
they're just better machines. And maybe I'm saying this as a gen X or who's lived through the transition from cassette tapes to CDs to streaming, and from rotary dow phones to mobile phones. Sometimes the new machines are just better.
It's true of electric cars too.
It's true of electric cars too. I mean, anybody who's driven an electric vehicle thinks the pickup's incredible, the handling is incredible, They're they're amazing. They're better machines. So I'm optimistic that this argument about affordability quite often, I think cuts against the grain for a lot of environmental policy experts. I think quite often as environment environmental policy people, we
default to kind of hair shirt arguments. People to turn down the thermostat and wear a sweater and suck it up because it's going to be good for them. You know, at this moment in time, electric vehicles, heat pumps, these machines that are the foundations of a low emission's future. In many ways, they sell themselves and in fact are so much cheaper than the fossil fuel alternatives, even in completely deregulated marketplaces like Texas and Alberta on our continent.
The only two fully deregulated electricity markets on the continent are in those two jurisdictions. And guess what when everything else is cleared away, when the only thing that matters is how much you can build your project for when the system is completely technology agnostic, the technologies that wind are wind and solar, because there's so much cheaper and that's why Texas is building some much wind and solar,
and until recently Alberta was as well. So you know, in the years ahead, even with Trump creating, you know, whatever mayhem he tries to create. We have affordability arguments on our side, and we also have arguments about competitive necessity on our side. If North America wants to build the cars of the future at a time when fifty percent of cars in China are electric, we need to get a move on in terms of electric vehicle manufacturing.
It's it's a competitive necessity, and so we need to resist this kind of future of luddism that that Trump is trying to drag us into.
Well, you're in for a political ride this year, Rick, But thank you for coming on the shoe and giving us a taste of what might be coming in Canada on the climate front.
Yeah, thank you, Thanks for having.
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