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Feds put climate on the budget backburner

Shift Storm newsletter—April 2024 edition

June 3, 2024

7-minute read

The following is a re-print of the March 2024 edition of Shift Storm, the CCPA's monthly newsletter which focuses on the intersection of work and climate change. Click here to subscribe to Shift Storm and get the latest updates straight to your inbox as soon as they come out.

After allocating more than $60 billion toward clean economy initiatives in its 2023 budget, the federal government came up much shorter in Budget 2024. There was just $14 billion in net new spending on climate action in this budget of which a mere $2 billion will be spent over the next five years.

Backloading is a widespread and insidious budgetary practice. In short, it allows governments to claim big numbers without being beholden to them until many years down the road. Backloading allows Finance Minister Chyristia Freeland to claim, for example, that the federal government is spending $120 billion on the clean economy, even though, as a new report from Corporate Knights points out, only $34 billion has actually made it out the door to date.

A similar practice is evident in the way governments (and corporations) set climate targets. Achieving net-zero emissions by 2050 is a bold and laudable aspiration, but without frequent interim targets there is little pressure on current leaders to make any meaningful progress.

And if a new government comes along and cancels that proposed spending or abandons those targets altogether, then nothing will have been achieved. Future promises, no matter how grand, are no substitute for meaningful climate action now.

That’s especially true in light of new research (spoiler: see below) that points out the costs of climate inaction will be six times higher by mid-century than the costs of reducing emissions in line with the Paris Agreement. Aggressive spending to decarbonize the economy now is more cost-effective than waiting for climate impacts to get even worse than they are today.

Unfortunately, as we’ll see in this month’s key reads, the oil and gas industry continues to make things difficult for climate action around the world. We need governments to dream bigger and move quicker to set the global economy on a path to true carbon neutrality.

Storm surge: this month’s key reads

Oil sands offer a textbook case study in industry greenwashing

The Pathways Alliance was created in 2022 by Canada’s biggest oil sands producers to advance the fantasy of a net-zero compatible oil extraction industry. From the outset, it was clearly more of a marketing and lobbying campaign than an actual policy plan, and a new article in the journal Energy Research & Social Science, “Greenwashing, net-zero, and the oil sands in Canada,” exposes precisely how the Pathways Alliance has misled the public and politicians about emissions reductions in the oil sands.

There are some really important lessons in the paper for evaluating fossil fuel industry claims more broadly. Here are some of the big ones to watch out for:

  • Selective omission. Oil companies talk about how much their emissions may come down (a number that looks big), but not how high their emissions are to begin with (a much bigger number). They also focus exclusively on upstream production emissions and ignore the emissions from their products being consumed.

  • Misalignment between claims and actions. Despite making environmental responsibility their public face, oil companies continue to invest significantly more money into continued fossil fuel production than they do in emissions reductions or alternative energy.

  • Blame-shifting. Oil companies would like you to know that they’re doing their best! If only regulators and competing sectors and other countries were pulling their weight, too. In reality, oil companies are singularly responsible for climate change and the onus must be on them to reduce emissions first and fastest. New research from the Carbon Majors Database finds that just 57 companies around the world are responsible for 80 per cent of global emissions since 2016.

The paper offers no specific recommendations besides further research, but a common sense first step would be banning fossil fuel advertising, as France has done. The recently proposed private member’s bill C-372 would do just that, though support from the government has not yet been forthcoming.

Meta-analysis of global energy scenarios reveals chronic failure of imagination

Predicting future energy production and consumption is a fraught but necessary task. We need to have a baseline understanding of how energy supply and demand are likely to shift in the coming decades in order to develop the best possible climate policies today.

This newsletter has featured energy scenarios developed by the Canada Energy Regulator and the International Energy Agency, for example, but there are many more out there. And in every case these scenarios make different assumptions about how technology, economics and policy may change in the future.

To smooth out some of those assumptions, the U.S.-based think tank Resources for the Future has attempted to synthesize 16 different energy scenarios in its latest Global Energy Outlook. The results are interesting and useful, but reveal a concerning consensus among energy modelers that fossil fuels have a large role to play in a global net-zero economy.

Every scenario studied in the report assumes “substantial global fossil fuel consumption through at least 2050,” which is only possible in net-zero scenarios due to an extraordinary expansion of industrial carbon capture and direct air capture technologies. The report notes that these technologies are “controversial,” but it does not go far enough in exposing their risks.

Not only is there a good chance that carbon capture technologies will never be viable at the promised scale, but their very existence introduces enormous moral hazard into the climate policy discourse. In short, every oil-producing company and country is saying that carbon capture will solve their emissions problems down the road, which is then used as an excuse for business-as-usual fossil fuel production in the near term.

There may yet be some residual fossil fuels in the global energy mix by mid-century, but they should not be a focal point of our clean energy strategy. To that end, more modelers should explore 100 per cent renewable energy scenarios.

Research radar: the latest developments in work and climate

Sustainable Jobs Act continues its long march into law. The federal government’s long-awaited just transition legislation, Bill C-50, finally passed third reading in the House of Commons this month and is now working its way through the Senate. Aliénor Rougeot at Environmental Defence has put together a helpful article, “Everything You Need to Know About the Sustainable Jobs Act,” that breaks the legislation down. While this bill will not tackle emissions or create green jobs directly, it will create an important framework for ensuring that workers have a seat at the table for managing the clean energy transition moving forward.

Climate crisis carries US$38 trillion price tag. A paper in the journal Nature by German academics, “The economic commitment of climate change,” estimates that the world has locked in at least an 11 per cent global income reduction within the next 26 years due to climate change, but that figure could be as high as 29 per cent depending on the level of climate (in)action. According to the authors, the cost of doing nothing is six times higher than the cost of limiting global warming to 2°C above pre-industrial levels. Unfortunately, as is so often the case when it comes to the climate crisis, these costs will be borne disproportionately by low-income countries in the Global South, who see a permanent reduction in income twice that of richer countries at high latitudes.

State ownership makes fossil fuels phase-outs more likely to succeed. Back in January, we discussed Colombia’s ambitious plan to wind down oil and gas extraction and scale up clean alternatives. The Transnational Institute has published a new piece of research, “State-Run Oil Companies and the Energy Transition,” which dives into that case study in more detail. The most important takeaway? Colombia’s transition away from oil extraction is made significantly more likely to succeed because the state owns most of the oil industry. Public ownership enables a managed decline in production—a big benefit for workers and communities—while simultaneously sidestepping the kind of corporate obstructionism with which we are so familiar in Canada. Food for thought!

Unions can better involve and support women in a just transition. The Norwegian Confederation of Trade Unions has published a new report, Women and Just Transition, that shines a much-needed light on the gender dimensions of our changing energy systems. Besides offering a useful historical overview of the exclusion of women in this space, the paper lays out a clear and practical agenda for unions (and other institutions) to bring women back into the fold. Among other recommendations, the paper calls for increased internal capacity for gender-based analysis, more gender-sensitive training and educational materials, and better representation of women in just transition processes.

The only thing standing between the finance system and a just transition is capitalism. The Just Transition Finance Lab is a new think tank based out of the London School of Economics. Their inaugural report, Transforming the financial system to deliver action, argues that global finance can be leveraged to advance a justice-oriented climate transition but must overcome major barriers, such as vague metrics for progress, inadequate regulation and recalcitrant senior leadership. I’m glad people are working on these issues, but I’m generally skeptical that financial institutions will suddenly see the light in the absence of very heavy-handed interventions from states. The financial system is simply not set up to value justice or the environment, and the soft-touch approach of the modern ESG movement isn’t moving the needle fast enough.

Workers on the front lines of climate change need better protections. The International Labour Organization published Ensuring safety and health at work in a changing climate, which finds that 70 per cent of workers around the world are now exposed to excessive heat every year—a 35 per cent increase since 2000. Unsurprisingly, those workers are more likely to be economically disadvantaged and otherwise vulnerable. The ILO concludes that many current occupational health and safety structures are not sufficient for the growing risks associated with extreme weather.

Extreme heat makes food more expensive. Scholars writing in the journal Communications Earth & Environment find that unusually hot summers have contributed directly to rising food prices around the world. The paper, “Global warming and heat extremes to enhance inflationary pressures,” warns that extreme heat alone is likely to cause global food prices to increase by one to three per cent per year moving forward. Although not discussed in the paper, this is a major equity issue as the cost of food is felt disproportionately by the poor both between and within countries.

Climate change is making it harder to extract oil and gas. Most oil and gas production requires huge amounts of fresh water, so the fact that climate-related drought conditions in Alberta and BC are putting fracking operations at risk this summer is sadly ironic. The 2024 Energy, Oil, and Gas Price Forecast from consultancy Deloitte outlines the threat for Canadian producers, who may be forced to—gasp!—start using more recycled water.

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