Policies
Five bold policies for a stronger Canada
It is increasingly clear that to truly keep our communities safe and prosperous into the future, all orders of government must do much more to stop the climate crisis from worsening and to accelerate the transition to a cleaner economy. A more active partner in Ottawa is needed to ensure we can reduce greenhouse gas emissions and build out a fossil fuel-free economy across the country—priorities that successive federal governments have committed to but not sufficiently delivered over the past two decades.
As local leaders, we call on the federal government to think bigger and get bolder on climate action. A more ambitious climate and clean economy strategy will reduce the costs of climate change for cities, towns, and rural communities, improve affordability in our communities, and ensure local and national economic prosperity into the future. It is a nation-building effort that will benefit everyone from coast to coast to coast.
The following five ideas can move us in the right direction. This is not an exhaustive list of the actions the federal government must take, nor is it a substitute for the important work all orders of government are already pursuing to mitigate and adapt to climate change. Instead, these are big, practical projects that would significantly move the needle on climate action and economic resilience in Canada—now and for generations to come.
Build a national clean electricity grid
Electrification is the future of the Canadian economy. We must double or even triple total electricity generation capacity to meet the growing demands of electrified vehicles, buildings and industry—a project that will create 60,000 jobs in the electricity sector in the process. We also require more interconnections between regional electricity systems to ensure reliability and to bring down costs for power consumers.
Championing interties between provinces and territories is a clear federal responsibility and it is essential for unlocking many of the benefits of a clean electricity grid for individual communities. Accelerating the buildout of a clean, east-west-north electricity grid will make Canada more resilient in the face of uncertainty from our trading partners. Unlike oil pipelines, which run through communities without offering them any direct benefits, electricity grids also create new economic opportunities for the communities and businesses that plug into them.
A public-led buildout of transmission infrastructure on a national scale will require an investment on the order of $30 billion over the next few decades. Not only will it pay for itself, since electricity transmission is revenue-generating infrastructure, but it will also unlock significant additional public and private investment in new clean electricity generating capacity from Canada’s vast reserves of solar, wind, geothermal, tidal and hydro power—benefits already being realized by many Indigenous communities.
Build two million non-market, energy-efficient homes
Communities across the country are grappling with an unprecedented housing crisis driven by high prices, high rents and rising utility bills. Canada must build close to six million new homes by 2030 to meet demand, and a significant proportion of those homes must be non-market units to ensure affordability for households of all income levels.
The federal government was once a leader in building non-market housing, but relatively few public housing units have been built in the past 30 years. Building new homes using modular, energy efficient designs is an opportunity to improve affordability and reduce emissions. Publicly-led investments can also reinforce smart urban planning by targeting new homes in walkable, transit-linked communities and avoiding areas with known flood and fire risks.
A target of building at least two million affordable and sustainable units over the next few years would make a meaningful difference in the market while strengthening community resilience and sustainability.
Building new public housing comes with upfront costs, but it also creates new public assets, so the net fiscal cost is neutral to positive. It would also create significant spin-off benefits for workers and industries throughout the construction supply chain.
Retrofit all low-income homes and multi-unit residential buildings
The climate and affordability benefits of energy efficiency are not limited to new builds. Retrofitting the existing building stock presents an enormous opportunity to lower costs, reduce emissions and create jobs in every community in the country.
Historically, federal retrofitting programs have been either underfunded or too short lived to drive widespread improvements in energy efficiency across the country. They have also disproportionately benefited higher-income households in single-family homes, while low-income households and multi-unit residential buildings have been neglected.
The federal government can kickstart a major renovation wave by subsidizing energy-efficiency improvements of multi-unit residential buildings. The federal government can go even further for households experiencing energy poverty by making energy efficiency and heating electrification retrofits completely free. Both priorities could be realized with total program spending of about $2 billion per year.
Mass retrofitting will create hundreds of thousands of jobs in the buildings trades. In addition, the need for heat pumps and other clean technologies presents a domestic manufacturing opportunity. Federal government procurement could be leveraged to create stable demand for made-in-Canada materials and models.
Build a national high-speed rail and intercity bus system
National rail was the backbone of Canada’s 19th century economy. National high-speed rail could be the backbone of the 21st century. Yet Canada is decades behind our international peers in rolling out high-speed rail infrastructure. A fast, dedicated passenger rail system has the potential to replace many short-haul flights and private vehicle trips between cities.
Such a system should be supported by reinvigorated regional bus networks that connect smaller communities to rail hubs. The failure of private bus companies to deliver reliable, affordable rural bus service demands a public alternative.
The recent announcement of Alto, a high-speed rail line in the Toronto-Québec corridor is an important step forward, but the project will only serve one part of the country and will not be supplemented with bus services outside of existing urban transit networks. Alto also relies on a public-private partnership model that has failed to deliver reliable, affordable rail service in many of our cities.
A publicly-owned high-speed rail service, backed by regional bus networks, would be a true nation-building project offering widespread benefits to every community along its east-west-north routes. Ensuring all new trains and buses are electric would maximize the climate benefits. Moreover, demand for new electric trains and buses presents a clean manufacturing opportunity that can be realized through a combination of public investment in manufacturing capacity and regulatory requirements for domestic content.
Implement and fund a national resilience, response and recovery strategy
The tragic destruction of Lytton, Jasper, Fort McMurray and Slave Lake lays bare the real human costs of climate change. While these communities are among the hardest hit, they are sadly not alone. Fires, floods, storms and other extreme weather events are creating enormous costs for communities in every part of the country—and it is only going to get worse. Without urgent global action to tackle climate change, Canada is on track for $100 billion per year in climate damages by mid-century.
The federal government has the financial capacity to help communities invest in resilience, but current federal spending on climate adaptation is too low by an order of magnitude. Every dollar spent on proactive climate adaptation saves the economy $13 to $15 in avoided future costs, so there is no reason to short-change ourselves.
The federal government can also play a larger role in ensuring communities recover quickly and completely from disasters. When support is inadequate, disaster-struck communities risk an economic spiral that can increase the total cost and timeline for recovery. Having one federal minister responsible for disaster response and recovery is an important place to start. The federal government also requires the bureaucratic capacity to coordinate response and recovery efforts involving multiple levels of government and other public and private actors.
How we pay for it
Strengthen the polluter pays principle
Canadian law requires polluters to pay for the costs their products impose on society—usually through extended producer responsibility programs or direct payments to governments. If a pipeline spills, for example, the pipeline operator is responsible for cleaning it up. However, the principle has not yet been fully applied in the climate context. The fossil fuel industry is the single largest driver of carbon pollution in Canada, accounting for nearly a third of Canada’s total greenhouse gas emissions, but it is not held accountable for its full share of climate damages.
One option for applying the polluter pays principle to fossil fuel producers is through a climate damages tax—a surcharge or additional royalty on oil, gas and coal production. Revenues generated through the system could pay directly into the national resilience, response and recovery fund. Depending on the level of the tax, it could redirect billions of dollars from polluting activity toward the safety and security of communities.
Repurpose fossil fuel production subsidies
From 2021 to 2023, the latest year for which data are available, the oil and gas industry in Canada booked total profits of $138 billion even as it underpaid for its fair share of climate action. Yet the fossil fuel industry also receives extensive financial support from the federal government. Subsidies range from direct investments in infrastructure such as the Trans Mountain Expansion pipeline to federal loan guarantees and other public financing delivered through Crown corporations such as Export Development Canada. These subsidies function as a negative price on carbon, which incentivizes additional pollution.
While figures vary from year to year, total federal subsidies to the oil and gas industry amounted to at least $75 billion over the past five years—an estimate that does not account for loopholes in the industrial carbon pricing system worth around $3 billion per year. Ending all of these supports would free up billions of dollars per year in public revenues that could be redirected toward a cleaner economy.
Establish a public development bank
In addition to direct federal spending, the federal government has an important role to play in accelerating low-carbon, job-creating investments through strategic public finance. Unlike Germany, China, Brazil and many other countries, however, Canada lacks a true national development bank. Instead, existing federal Crown corporations mainly support and leverage private, profit-seeking investments. A public development bank focused on public interest climate projects could significantly increase access to capital for municipalities and other community groups.
The bank would require an initial public capitalization in the billions or tens of billions of dollars. However, as a lender and asset holder, the bank would be revenue-generating for the federal government while accelerating publicly-owned and community-led decarbonization efforts across the country.