Ottawa's $8B climate fund failing to attract largest emitters, watchdog says

One of the biggest government initiatives to encourage manufacturers to decarbonize is failing to attract the largest emitters, says Ottawa's environmental watchdog.

The government's $8 billion program, intended to help the largest-emitting manufacturing industries reduce their emissions, has failed to entice them, says a report released Tuesday morning by Jerry DeMarco, the federal commissioner of environment and sustainable development.

Of Canada's top 55 emitters, only two have signed contribution agreements so far with the federal government under its Net Zero Accelerator initiative, the report says. About a dozen other large emitters applied for the initiative but the federal government has not yet signed agreements with them.

"For the companies applying for funding, the audit found the application process to be very lengthy and complex," a news release from the environment commissioner stated.

"The companies reported spending an average of 407 hours to complete their applications, and the department took an average of 20 months to get a contribution agreement finalized and signed."

The report did not name the companies, but firms in the steel, aluminum and chemical industries have applied for this federal government program.

The Net Zero Accelerator fund is an Innovation, Science and Economic Development initiative designed to work with industry to help Canada achieve its 2030 climate targets. 

Among other shortcomings, the audit found that the multibillion-dollar low-carbon fund "did not track the … overall value for money in reducing greenhouse gas emissions."

The report also found issues with accounting for greenhouse emissions reductions and a lack of adherence to greenhouse gas reporting standards.

The Liberal government called the report helpful and said that work is underway to implement its recommendations. 

The parliamentary secretary to the environment minister, Adam van Koeverden, said the program has helped steel companies like Hamilton's ArcelorMittal Dofasco reduce greenhouse gas emissions. 

The company received $400 million to transition to electric arc furnaces, which use scrap metal, electricity and natural gas to make steel instead of coal and iron ore.

Algoma Steel also received $420 million for a similar project in Sault Ste. Marie, Ont.

"Developing steel greener and cleaner and with a lower carbon footprint is an essential part of ensuring that we are fighting climate change and reducing emissions right across various sectors and industries," said van Koeverden.

DeMarco also released four other reports. They found Ottawa had not developed a strategy for the agriculture sector to contribute to Canada's 2030 and 2050 climate targets.

No plan to tackle agriculture emissions: audit

The agriculture sector accounts for 10 per cent of Canada's emissions, the audit says, and its emissions have been increasing since 1990. But the government hasn't come up with a plan to help sector reduce its carbon footprint and contribute to the country's climate goals. 

While Agriculture and Agri-Food Canada has launched programs, funding delays have resulted "in recipients missing a growing season," says a news release from the commissioner.

"The department has so far achieved less than 2 per cent of its 2030 overall greenhouse gas reduction target," it said.

The Liberal government said Tuesday that it is developing an agriculture strategy but didn't say when it would deliver.

The commissioner also concluded that Ottawa was moving too slowly to adopt low-carbon construction materials, particularly steel and concrete.

The audit notes that the federal government, as one of the country's largest buyers, has hoped to use its purchasing power to buy building materials with a lower carbon footprint for almost two decades. That could happen directly through the construction of federal projects or through funding public or private infrastructure projects.

But years after signalling its commitment to greener construction, the audit reports that Ottawa has established standards only for ready-mix concrete.

"This slow pace of change is concerning because steel production typically emits high amounts of greenhouse gases and is widely used in major construction projects," said DeMarco in a media statement. 

Praise for tackling plastic pollution

Environment and Climate Change Canada received some high marks for its actions on tackling plastic waste. 

Ottawa has set a target of achieving zero plastic waste by 2030 by creating a system where no plastic ends up in landfills. Instead, plastic items are to be reduced, repaired/reused, recycled or remanufactured. 

The audit found that most of the projects to eliminate plastic waste have begun achieving results and meeting targets.

But the audit found it was not clear whether the government was achieving its ultimate goal of eliminating all plastic waste by 2030. The audit found a three-year delay in collecting and reporting data, or missing data on what happens to plastic waste.