Canada’s current climate plan is ineffective and wasteful

Article submitted by The MacDonald Laurier Institute

Alternative approaches will not only reduce emissions more efficiently but will provide socio-economic benefits beyond Green-House Gas mitigation.

OTTAWA, ON (June 27, 2023): The federal government has committed to reduce its greenhouse gas emissions by 40 to 45 percent below 2005 levels by 2030 and has spent or committed over $113 billion in climate related initiatives. Yet, Canada will still likely miss its 2030 emissions target by 48 percent. The government risks heavily indebting Canadians without meeting its climate goals.

In this new MLI paper – Maximizing value, minimizing emissions: The cost-effective path for Canada’s climate agenda, Senior Fellow Jerome Gessaroli proposes a climate policy based on international collaboration that would be more cost-effective than policies the government has implemented to date.

“A marginal cost analysis of methane abatement projects shows that it is possible for Canada to reduce its GHG emissions in a more cost-effective way by looking further afield to other countries than by focusing only on domestic projects.”

According to Gessaroli, Canada, along with numerous other countries, has yet to tap into the potential benefits of international cooperation. By leveraging comparative advantages such as technologies, lower costs, and mitigation opportunities, countries can join forces to reduce GHG emissions beyond their territorial borders. Recognition and encouragement of emissions reductions resulting from international collaboration, as outlined in Article 6 of the 2015 Paris Agreement, can lead to more effective climate outcomes compared to domestic initiatives.

Of particular significance is Article 6.2, which allows countries to voluntarily collaborate on GHG emissions reduction and receive credit for reductions achieved outside their political boundaries. Canada can leverage Article 6.2 by engaging in cooperative arrangements with foreign countries to share costs or exchange technical capabilities for mitigation benefits. By doing so, Canada can reduce global emissions while receiving credit toward its formal climate targets under the Paris Agreement.

“The projects can lead to further international collaboration and partnerships in other areas,” writes Gessaroli.

“And depending upon the project, local benefits such as job creation, worker training, enhanced water quality, more efficient water usage, and greater agricultural productivity are possible extras over and above the emissions mitigation.”

Regrettably, the federal government appears to show limited interest in utilizing Article 6.2 to meet greenhouse gas emission goals. With a range of abatement technologies across multiple sectors, Canada possesses the means to facilitate substantial GHG emission reductions in other countries, thereby helping to meet our own climate objectives.

The report concludes by urging the federal government to rethink its climate spending priorities and prioritize policies that deliver the greatest GHG abatement outcomes at the lowest cost. By embracing international collaboration and actively pursuing cooperative climate initiatives, Canada can significantly contribute to global emissions reductions while simultaneously reaping socio-economic benefits.

To learn more, read the full paper here:

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Jerome Gessaroli is a senior fellow with the Macdonald Laurier Institute. He writes on economic and environmental matters, from a market-based principles perspective. Jerome teaches full-time at the British Columbia Institute of Technology’s School of Business, courses in corporate finance, security analysis, and advanced finance. He was also a visiting lecturer at Simon Fraser University’s Beedie School of Business, teaching into their undergraduate and executive MBA programs.

The Macdonald-Laurier Institute is the only non-partisan, independent national public policy think tank in Ottawa focusing on the full range of issues that fall under the jurisdiction of the federal government.

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Published on March 26, 2025

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By Jake Fuss and Grady Munro

Canadians will head to the polls on April 28 after Prime Minister Mark Carney called a snap federal election on Sunday. As the candidates make their pitch to try and convince Canadians why they’re best-suited to lead the country, Trump’s tariffs will take centre stage. But while the tariff issue is important, let’s not forget the other important issues Canadians face.

High Taxes: As many Canadians struggle to make ends meet, taxes remain the largest single expense. In 2023, the latest year of available data, the average Canadian family spent 43.0 per cent of its income on taxes compared to 35.6 per cent on food, shelter and clothing combined. High personal income tax rates also make it harder to attract and retain doctors, engineers and other high-skilled workers that contribute to the economy. Tax relief, which delivers savings for families across the income spectrum while also improving Canada’s competitiveness on the world stage, is long overdue.

Government Debt: At the end of March, Canada’s total federal debt will reach a projected $2.2 trillion or $52,094 for every man, woman and child in Canada. The federal government expects to pay $53.7 billion in debt interest costs in fiscal year 2024/25, diverting taxpayer dollars away from programs including health care and social services. The next federal government should rein in spending and stop racking up debt.

Red Tape: Smart regulation is necessary, but the Canadian economy is plagued by a costly and excessive regulatory burden imposed by governments. Regulatory compliance costs the economy approximately $12.2 billion each year, and the average business dedicates an estimated 85 days towards compliance. The next federal government should cut undue red tape and make Canada an easier place to do business.

Housing Affordability: Canadians across the country are struggling with the cost of housing. Indeed, Canada has the largest gap between home prices and incomes among G7 countries, and rents have spiked in recent years in many cities. In short, there’s not enough housing to meet demand. The next federal government should avoid policies that stoke further demand while working with the provinces and municipalities to remove impediments to homebuilding across Canada.

Collapsing Business Investment: Business investment is necessary to equip workers with the tools, technology and training they need to be more productive, yet business investment has collapsed. Specifically, from 2014 to 2021, inflation-adjusted business investment per worker fell from $18,363 to $14,687. Declining investment has helped create Canada’s productivity crisis, which has led to a decline in Canadian living standards. Clearly, Ottawa needs a new policy approach to address this crisis.

Declining Living Standards: According to Statistics Canada, inflation-adjusted per-person GDP—a broad measure of living standards—dropped from the post-pandemic peak of $60,718 in mid-2022 to $58,951 by the end of 2024. The next government should swiftly reverse this trend by enacting meaningful policy reforms that will help promote prosperity. The status quo simply will not suffice.

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