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On Sept. 21, I was invited to testify before the House of Commons Standing Committee on Finance as part of the committee’s deliberations on fiscal federalism. In a rare opportunity, I had a full hour with the committee to share my idea for a new federal transfer and then had a spirited Q&A session with the parliamentarians. Here’s an edited version of what I shared.
Thank you, chair. And good afternoon, honourable members.
Thank you so much for this invitation. I’m delighted for this opportunity to share a new idea with you, a proposal for a new federal institution that I believe speaks to the challenges of fiscal federalism in the context of the climate crisis and the urgent need to transition our economy.
I am joining you from the unceded territories of the Musqueam, Squamish and Tsleil-Waututh Nations, otherwise known as Vancouver.
I am the team lead with the Climate Emergency Unit. I am also the author of the book A Good War: Mobilizing Canada for the Climate Emergency. My book is structured around and draws lessons from Canada’s historic mobilization during the Second World War — an earlier existential threat — and applies those lessons to the climate emergency.
Of course, that earlier mobilization in the face of fascism 80 years ago also had to navigate political differences, the challenges of Canadian Confederation, extraordinary financial challenges, and retool the economy — twice in fact — and an entire workforce needed to be recruited and trained up. Indeed, as challenging as the transition is that we face today to tackle the climate crisis, arguably, the task we undertook then was greater.
The comparison is imperfect, of course, but I draw hope and inspiration from this historic reminder — as we again face the need to retool our economy, as we again face a civilizational threat, and as the future of our children and grandchildren is once again profoundly put at risk. The Second World War story provides a reminder of the extraordinary transformation we are capable of as we rise to this task of our lives.
MP Daniel Blaikie, as I understand, asked for me to be invited here today, and in particular, he wanted me to share an idea from the book that speaks to fiscal federalism in this historic moment. And that is the idea for a new federal transfer, which I call the Climate Emergency Just Transition Transfer.
I should say that the idea for this new transfer came out of a discussion with the president of the Alberta Federation of Labour, Gil McGowan, when I was interviewing him for my book. He was rightly making the case that Confederation needs to recognize and appreciate that certain regions of Canada — notably, the oil-producing provinces — have more heavy lifting to do when it comes to energy and economic transition in the face of the climate crisis. And what we believe is an innovative solution emerged from that discussion.
Why a new transfer?
At the Climate Emergency Unit, we talk about the six markers of emergency — the key policy indicators that a government is genuinely in emergency mode.
The first two of those markers are:
- Spend what it takes to win; and
- Create new economic institutions to get the job done.
- And a third marker, relevant to this topic, is a commitment to leave no one behind.
The problem is that while the federal government has started to take some meaningful climate action, it is not hitting those markers. We are still trying to incentivize our way to victory, and I fear it will not work. We are not on a path to bend the GHG emissions curve at the pace and pitch required.
We are not spending what it takes to win. We are not creating new transformative institutions to get this job done. And, frustratingly, we have yet to make a compelling counter-offer to the thousands of people understandably anxious about what this transition means for their jobs and livelihoods.
In the face of the climate emergency, Canada needs to make an audacious and hopeful offer to those workers and communities whose employment and economic security are currently tied to the fossil fuel industry (and to a lesser extent, the auto industry, steel and concrete industry, agriculture industry, etc., all of which face substantial transition challenges) and to Indigenous communities on the front lines of fossil fuel extraction.
As many have argued, and as promised by the current federal government, we need a Just Transition Act. But we also need this act to be paired with and backed up by a substantial investment in the jobs of the future so that the promise of a just transition is not a hollow one.
A new federal Climate Emergency Just Transition Transfer (JTT) could be specifically linked to funding climate infrastructure projects that would create thousands of jobs, along with training/apprenticeships. Such a transfer could be a mechanism to renew Confederation while rising to the climate crisis.
The JTT should mean that as we embark on this grand transformation, we would be able to say to thousands who currently work in the fossil fuel industry: none of you will be out of work. We need your help to meet this moment. Your skills and strength will be deployed building renewable energy projects, retrofitting buildings, building high-speed rail and public transit, renewing existing infrastructure to make it more resilient to extreme weather, and managing our forests to reduce wildfire risks in the years to come.
How the transfer could be structured
The new transfer should be at least $25 billion a year (representing about one per cent of Canada’s GDP). It could and should fund much of the climate infrastructure needed in the coming years. But the transfer would speak to a climate Confederation conundrum: much of the climate infrastructure needed will logically come under provincial, municipal and Indigenous jurisdiction (energy, transit, housing, etc.), but it is the federal government that has the greatest capacity to pay.
Two features of the JTT would distinguish it from other federal transfers:
- First, unlike most other transfers that allocate funding based on population, the JTT’s distribution should be based on a formula linked to recent GHG emissions in each province (but fixed from that point onward, so that it does not perversely incentivize continued high GHGs). Doing so would recognize that jurisdictions such as Alberta, Saskatchewan and Newfoundland and Labrador face a more challenging task to transition their local economies. For example, as Alberta currently produces 38 per cent of Canada’s GHG emissions, it would receive 38 per cent of the transfer money. Moving forward, the amount of the transfer could be adjusted to reward those who realize the largest reductions in emissions, creating a positive incentive to act.
- Second, rather than this transfer money being handed over to provincial governments, the JTT funds would go to newly established just transition agencies — one in each province and territory — jointly governed by the federal government, provincial/territorial and local governments, and, vitally, Indigenous nations from each province, with civil society representatives too from labour, business and academia/NGOs. This would ensure the transfer money isn't simply absorbed into provincial budgets or used to displace other infrastructure or training funds. It would ensure the money is used for its intended purpose. There are already models for a joint governance structure like this in Canada, such as the port authorities. It may be that a separate transfer should be made directly to Indigenous communities. The benefit of structuring the transfer around local just transition agencies is that it provides assurance that the projects undertaken are sensitive to the realities and needs of each locale. Each province/jurisdiction has its own GHG profile and its own local labour market/training needs and realities. This model would allow for such differences.
There is a long list of worthwhile projects such a transfer could fund. The key is that this transfer would represent real dollars for actual transition and new jobs (not vague assurances and the historic false promises of just transition). And there could be other conditions tied to the transfer: ending fossil fuel subsidies; minimum apprenticeship placements for women and Indigenous people. It could also, over time, be tied to demonstrated reductions in GHGs. An innovation such as this could be a linchpin within an overall transition plan that is fair and just.
Honourable members, another civilizational threat is at our doorstep. You are elected to lead at a historic time. A couple decades from now, you may find yourselves in conversations with your kids or grandkids or nieces or nephews about your time in office. They will be curious. No doubt, you will have things to point to, accomplishments about which you and they will feel a sense of pride.
But then, they will realize that you were elected into leadership in the first half of this pivotal decade, and they are gonna want to know what you did on this file, this task of our lives. Your role in bringing about a truly transformative program like the Just Transition Transfer would be something you could point to with pride.
You have asked me about the costs of taking action versus the costs of inaction. There are many reports detailing the financial costs of inaction. To give you one example, last November in my province, when we experienced the flooding that resulted from the atmospheric river event, the public and private costs were in the billions.
But I want to emphasize the human costs. Again in my province, a year ago last June, over 600 people died in the heat dome event in the space of less than a week — the most deadly weather event in Canadian history. Not to get obscene about this, but they cooked to death in their homes. And a few weeks ago, we saw flooding in Pakistan, which has resulted in a population roughly equal to the entire population of Canada displaced from their homes.
This is only going to get worse. We are on a path where, if we don’t get serious about this, it will be catastrophic and deadly for hundreds of thousands, it is deeply disruptive for everyone else, and as the secretary general of the UN warned again earlier this week, it will be possibly ungovernable.
If we lose this war, nothing else matters.
Thank you.
The video of my full hour with the finance committee, including some vigorous exchanges with a few Conservative MPs on the committee, is available here.
Comments
"If we lose this war, nothing else matters." Truth!
Klein: "Of course, that earlier mobilization in the face of fascism 80 years ago also had to navigate political differences, the challenges of Canadian Confederation, extraordinary financial challenges, and retool the economy — twice in fact — and an entire workforce needed to be recruited and trained up. Indeed, as challenging as the transition is that we face today to tackle the climate crisis, arguably, the task we undertook then was greater.
The war mobilization was not opposed by the Big Banks and Corporate Canada. Or by politicians and parties across the spectrum. Or by industry lobby groups. Or by astroturf groups. Or by extractionist think tanks. Or by science denial outfits. Or by industry-captured regulators. Or by the courts. Or by the RCMP/CSIS. Or by mainstream media. Or by academe. Or by First Nations.
The political and financial inertia and resistance to be overcome in the face of climate change today is far greater. Federal and provincial governments continue to massively subsidize the problem instead of investing in the solution.
Klein's analogy is fundamentally flawed. In WWII Canada mobilized against an external enemy. This time the foe is within. The enemy is not the climate crisis. The enemy is us. The problem and peril is our economic and energy system, our society, and way of life — not someone else's. The climate crisis is a consequence of human activity, the result of human choices, and a symptom of human folly.
Our task is to remake an energy system that took decades to build and all the infrastructure, paradigms, and services that depend on it within three decades. In face of massive internal opposition with deep pockets.
That's it, it's a staggering summary of opposition. But a couple of things that are also salient 1)it's now a consistent majority of the population that want something DONE about climate change and 2)climate change manifestations will continue to move inexorably toward critical mass, dictating their OWN alternate reality in an unprecedented enough way that a "war footing" becomes inevitable.
Also, I think the "Inflation Reduction Act" being named that is instructive here because note how it doesn't even mention climate change, let alone "just transition," the achingly kind and fair aspirations of progressives like Klein that we all actually share but obviously scatter our force.
That intransigent 30% in our population who make up the recalcitrant right, but do indeed have deep pockets? The new reality currently intruding is also affecting investment because that requires a degree of existential calmness that is being seriously shaken now and will probably not let up in the foreseeable future. So when we "follow the money" it's becoming more and more apparent just how "dark" it actually is. Things are shifting accordingly.
It is doubtless a flawed analogy--all analogies are. But it is a USEFUL analogy in a way your critique is not. That is, the analogy focuses attention on the actions needed to get the job done, and on their practicability, and creates positive emotional associations with taking those actions.
Some analogies are apt. Other analogies are false and misleading.
A false analogy fails to account for the relevant differences between the things compared.
As I tried to make clear, Klein's analogy fails to observe the fundamental distinction between external and internal perils. It posits that society is united against a single foe. Inspired by a common purpose.
When in fact the most powerful elements of society across the political spectrum on any number of fronts — industry, corporations, finance, the political elites, the government bureaucracy, law enforcement, justice, the media, are actively opposed to Klein's mission.
While today's infrastructure challenge is daunting, the main obstacle to climate action is political, institutional, and financial. We are a deeply divided society. Climate activists have science and moral rectitude on their side. The other side has all the power and money. If we could all agree on the problem and a course of action, building the necessary infrastructure would be relatively straightforward. We could start tomorrow.
Klein (i.e., his analogy) underestimates the depth of the denial, misapprehends the extent of the opposition to climate action, and misperceives its source. Which is why his agenda continues to fail.
It is naïve, simplistic, and dangerous to suggest that we can simply throw money at the problem — "spend what it takes to win". The other side has far deeper pockets. Corporate Canada dictates the energy/climate agenda, not citizens.
Klein supposes that the federal govt is genuinely committed to climate action but keeps missing its targets merely for lack of the correct action plan. Ottawa has merely to follow Klein's prescription — spend what it takes and create new economic institutions — and all will be well.
In reality, the federal govt's climate plan as dictated by Corporate Canada is to fail. Double down on fossil fuels. Expand markets. Build new fossil fuel projects. Lock in fossil fuels. Funnel public dollars to the fossil fuel industry to keep it afloat. Keep the sunset industry above the horizon at all costs. Delay, delay, delay.
Trudeau (2017): "No country would find 173 billion barrels of oil in the ground and just leave them there."
Klein's misleading analogy fails to reflect our political reality. Prescriptions based on misdiagnosis are unlikely to produce a cure.
It is absolutely true that Fossil Capital, it’s supporters and enablers have immense power and resources at their disposal to extend the fossil era indefinitely. While I agree that Klein’s WW11 analogy has some major flaws, it does highlight the key elements a plan to actually address the climate emergency would have to contain. Of course, that plan is going to be opposed by fossil capital and its friends. But isn’t it important to mobilize people against the fossil block in an effort to force our ruling classes to act like we really are in an existential climate emergency - like they mobilized against the fascist emergency in WW11? A fight for a climate emergency just transition fund and democratic structures to control it, seems like like a useful movement-building demand to me.
Klein’s WWII analogy fails to identify the opposition — and underestimates its power and resistance. The opposition includes the government and bureaucracy responsible for creating a just transition fund and new economic institutions.
The opposition is also structural: companies, industries, governments, and powerful people profit immensely from the market failure at the base of our fossil fuel economy. Can we pay them to give up their profits?
There is no plan to persuade or overcome the opposition. If the political and financial elite are not yet convinced of the need to act, what will persuade them? How many more Canadians must perish? How many more communities must go up in flames?
Klein assumes the powers-that-be will co-operate if we merely hand them a rational plan. If the opposition is not rational — not open to reason or evidence — what others levers can we pull?
I have no objections to a just transition fund, except that Klein's proposal disproportionately rewards the intransigents in Alberta (my province). The O&G industry and its financial backers will not accept a plan or transition that puts them out of business — and they have no interest in moving into renewables.
Prescriptions based on misdiagnosis are unlikely to effect a cure.
Worse, some provinces have worked their butts off, and made considerable gains. When the current Ontario administration came into power, Ontario was on track to reduce its emissions by well over 30% by 2030. Quebec was doing well, along with one of the Atlantic provinces (no longer remember which) and Yukon. Well over half the population of the country lives in those provinces.
It didn't make a ripple in the country's stats. Why? Because of the increases in the two oil-or-nothing provinces.
Giving lotsa money to the big polluting provinces is exactly what we're doing now. And have been for decades. I haven't seen any big improvements.
Alberta, for what it's worth, has quite a lot of clean energy production right now. It's just completely overshadowed by the elephant in the tarsands.
PS: it boggles my mind that the oil mongers keep squealing about "indebting our children's future." There's never been a generation of Canadians who haven't been indebted.
It occurs to me that if someone wanted to do something for "our children's future," they could leave the darned stuff in the ground. You never know who's going to need it in a few hundred years.
I've seen it written nowhere that wherever humans pass, they are honor bound to strip away all resources, everything ever or potentially useful.
Nothing in any of the major religions practised in Canada adheres to that principal. Except for the billionnaires' and corporate religions: profit, profit, profit.
Klein: "And, frustratingly, we have yet to make a compelling counter-offer to the thousands of people understandably anxious about what this transition means for their jobs and livelihoods."
Don't kid yourself. Jobs in the renewables sector won't pay nearly as well.
Oilsands boosters complain that their six-figure salaries for driving truck are not coming back. Five-figure jobs in renewables mean a significant pay cut.
The fossil-fuel industry can afford to pay sky-high wages out of its obscene profits because it externalizes most of its health, climate, and environmental costs. A massive invisible subsidy — on top of billions of dollars in visible subsidies. These costs are downloaded to the public purse, the environment, and future generations. Market failure, in short.
Market failure is the problem we have to solve. A sustainable economy built on sustainable energy systems that incorporate full-cost accounting — whereby producers and consumers pay the full cost of the energy they produce and consume — will never be as profitable and will never pay as well.
Don't make promises you can't keep.
"Clean energy jobs grow, but wages lag fossil sector", (AP, Sep 8 2022)
"Wages in clean energy jobs lag behind those in the fossil fuel industry, where unionization rates are higher and risky work has been compensated with higher pay. The exception is nuclear, due to the highly skilled labor needed."
https://www.nationalobserver.com/2022/09/08/news/clean-energy-jobs-grow…
Klein: "spend what it takes to win and create new economic institutions to get the job done"
Of course, this is what the federal govt would do if it intended to succeed.
The federal govt clearly plans to fail. That's why the basic policy measures essential to success including just transition are not in place.
Who believes that the Liberal Govt really wants to succeed on climate but keeps missing its targets merely for lack of the right action plan?
As if climate activists just gave the Liberal Govt better policy advice, they would gratefully act on it.
The Liberal Govt is misdirected, not incompetent. The people who decide Canada's climate/energy policy (and no, it's not the Ministers of Environment, Natural Resources, or Finance) understand perfectly well what they are doing.
Assuming the Liberal Govt is sincere on climate is a false premise — petitio principii ("begging the question"). A fundamental error.
The Liberals and Corporate Canada clearly do not accept the premise: that Canada must act on the best available science to rapidly reduce emissions in accord with its international commitments.
Corporate Canada is banking on fossil fuel expansion and climate action failure. The Liberal Party is Corporate Canada's front office. The people who decide Canada's climate/energy policy — and staunchly oppose Seth Klein's goals and agenda — are unelected and unaccountable.
Klein: "…Certain regions of Canada — notably, the oil-producing provinces — have more heavy lifting to do when it comes to energy and economic transition in the face of the climate crisis.
"…The new transfer should be at least $25 billion a year (representing about 1% of Canada’s GDP).
"…For example, as Alberta currently produces 38% of Canada’s GHG emissions, it would receive 38% of the transfer money."
Seth Klein proposes sending $9.5 billion a year to Alberta. 38% of the Climate Emergency Just Transition Transfer (JTT) (aka "Justin Trudeau Transfer") for 12% or one-eighth of Canada's population. What could be wrong with that?
Alberta's energy industry, now swimming in cash, is uniquely positioned to pay for its own decarbonization and transition, assuming it wants to go that route. Which it doesn't.
The Govt of Alberta, now awash in O&G royalties and taxes, is also uniquely positioned to pay its own way. Per capita, this is by far the richest province in Canada, remember.
PM Trudeau has long insisted that fossil fuels will pay for the transition:
"There is growth to be had in the oilsands. They will be developing more fossil fuels while there's a market for it, while we transition off fossil fuels." (2016)
"Our challenge is to use today's wealth to create tomorrow's opportunity." (2016)
Then-Natural Resources Minister Jim Carr: "Our plan is to use this time of transition to Canada's advantage by building the infrastructure to get our resources to global markets and using the revenues to invest in clean forms of energy." (2018)
When the IPCC issued its latest report, then-Environment Minister "Wilkinson reaffirmed Canada's commitment to phasing out fossil fuels and achieving net zero carbon emissions by 2050, but said achieving that target will require money generated by fossil fuels."
"Ottawa says it must maximize revenue from the Trans Mountain pipeline to fight climate change" (CBC, 2021)
Ottawa is already shovelling billions of dollars in subsidies into the pockets of Alberta's energy industry for emissions reduction (carbon capture, SMRs, and grey/blue hydrogen), clean-up, and reclamation.
Now we are supposed to give them more?
If Alberta, 1/8 of the population, gets 38% of the Climate Emergency Just Transition Transfer, that leaves 62% of the transfer for 7/8 of the population.
Alberta would get 3.2x its population share of the transfer.
The rest of Canada would get 0.7x its population share of the transfer.
Climate justice?
Yep. It'd have to be renamed Just a Transition Transfer ... 'cuz there's nothing just about it.
A really frustrating thing is happening here - AGAIN!! All this nit-picking about specific wording and phrases does NOTHING to address the issues that Seth has brought up!!! The need to act is CRYSTAL CLEAR!! The central government is in the ONLY position to put legislation and money into place to GET THE JOB DONE!!
So how about just seeing the simple truths here and GET BUSY?!!
It IS frustrating: frustrating that sane and level heads aren't in charge. Nothing about whether you and I agree or not, or Messrs. Pounder or Klein, makes a whit of difference. Because we don't get to decide anything that counts. Some {maybe most) of us have already done what we can, or are moving along. None of us are in charge of sitting on the oil cos till they holler Uncle.
Since before Covid, pretty much everybody here, has been making the point that nothing much has been done, and it's gotta be the feds at the wheel. The climate star feds in last place now in the climate race, since Australia seems to be pulling up its socks a bit.
That doesn't make the central part of his piece anything but one more of the perpetual "reset the beginning to now" moves. It began some time ago. If you have to apportion it such that the sector that's eaten the lion's share continues to be accorded that privilege, it must at least be recognized that ppl who've made 6 figures doing basically minimum wage work (cuz tarsands), define them*selves* as "worth that much," therefore ipso facto by cosmic mandate it must go on forever.
I've lived through several population employment downswings. There's nothing special about being the most polluting industry ever on earth that should exempt that industry from the change that goes along with change, which is about the only thing one can count on in life. Things change. Regardless of whether those affected like it. And no one likes it when their new job pays less. But it's a fact of life. Live with less. Sooner or later, most of us have to.
They'll have to move to where the work will be next. That's also been a fact of life since at least the mid 60s.
And if Alberta needs $$, maybe they could institute a sales tax. Like the rest of us.