Act would require ministries, Crown corporations to set national targets for emissions reductions
On Nov. 19 the federal government introduced Bill C-12, the Canadian Net-Zero Emissions Accountability Act, which aims to address climate change and fulfil Canada’s obligations under the Paris Agreement.
The bill would require national greenhouse gas emission reduction targets for the milestone years of 2030, 2035, 2040, and 2045, concluding in a national net-zero emission target by 2050; an emissions reduction plan to be established with respect to the targets for each milestone year; and establishing an advisory body to provide advice with respect to achieving net-zero emissions by 2050 and matters referred to it by the minister of the environment.
Bill C-12 will “place into law Canada’s commitment reach net-zero carbon emissions,” says Janis Sarra, principal co-investigator of the Canada Climate Law Initiative and professor at the Peter A. Allard School of Law at the University of British Columbia; “and we made that commitment internationally and also domestically.”
The bill will “require government ministries and Crown corporations to set national targets for emissions reductions,” she says, “and it's supposed to be based on the best available science … Plus, it creates mechanisms to keep the government accountable.”
Canada was one of 197 countries that in December 2015 adopted the Paris Agreement, which entered into force a year later. Under the agreement, Canada committed to reducing its greenhouse gas emissions by 30 per cent below 2005 levels by 2030.
Bill C-12 aligns with the Canada Climate Law Initiative’s objectives in that it sets targets and requires annual reporting by the minister of finance, says Sarra; “and in our view that’s the first step to catching up with many other countries that have already implemented or are implementing these changes.”
Although “the entire country is not aligned” behind this bill, Sarra predicts there will be tremendous support for it from business and particularly institutional investors, who want to get ahead of the financial risks of climate change by setting meaningful targets, and then by holding government and business accountable.
“This bill, I think, is a step towards trying to get us ahead of that, by the government saying, ‘we can show leadership in our own house.’”
The bill would require Crown corporations and all government ministries – which are significant producers and acquirors of goods and services, and which contract a lot with the private sector -- to require in its procurement policies that companies demonstrate a commitment to net-zero emissions. Although the bill is directed at government and contains no immediate requirements for Canadian industry, its message is that “net-zero emissions are possible, even for a carbon-intensive country,” Sarra adds.
And the changes can’t be implemented by government alone, says Carol Hansell, senior partner at Hansell McLaughlin Advisory Group in Toronto who advises boards, management teams, institutional shareholders and regulators on legal and governance challenges.
“Businesses will need to consider what steps the government might be taking in order to achieve the targets,” she says. For example, will there be incentives to develop certain modes of transportation that have less of carbon impact? Will home builders consider constructing garages with chargers for electric vehicles?
“There will be innovation and developments in order to respond to the government’s commitment to reduce carbon emissions,” says Hansell. A board or management team looking at their strategic plan must therefore ask if this will change their ability to realize on their strategic plan. Businesses will also consider whether opportunities are presented for them; for example, some industries may see their costs reduced, and there may be windows to expand existing business or develop new lines of business. For the latter, a company will need to consider whether it is is properly resourced to realize on those opportunities.
Although no targets have been set for now, “industry should be looking at this,” she says.
And some provinces are already reacting, “Alberta in particular, to say, ‘we will do this in a way that’s right for Alberta.’ … The challenge with climate change risk is that you can’t contain the solution in one place,” she adds.
“So how do we develop a strategy that works from the local level and the business level, but meets our commitment to contribute to a world that will be liveable in 2050?”