SWOT Analysis Energy Policy Canadá

Canadian energy and climate policies: A SWOT analysis in searchof federal/provincial coherence

Camille Fertel b,n, Olivier Bahn b, Kathleen Vaillancourt a, Jean-Philippe Waaub a

a GERAD and Universit du Qubec Montral, 3000 Chemin de la Cte St-Catherine, Montral, QC, Canada H3T 2A7b GERAD and Department of Management Sciences, HEC Montreal, Montreal, QC, Canada

H I G H L I G H T S

We perform a SWOT analysis of the Canadian energy and climate policies. We analyse policy coherence between federal and provincial/territorial strategies. We show that a lack of coordination leads to a weak coherence among policies. The absence of cooperation results in additional costs for Canada.

a r t i c l e i n f o

Article history:Received 10 August 2012Received in revised form5 September 2013Accepted 11 September 2013Available online 4 October 2013

Keywords:Canadian energy and climate policiesSWOT analysisFederalprovincial governance structure

a b s t r a c t

This paper presents an analysis of Canadian energy and climate policies in terms of the coherencebetween federal and provincial/territorial strategies. After briey describing the institutional, energy, andclimate contexts, we perform a SWOT analysis on the themes of energy security, energy efciency, andtechnology and innovation. Within this analytical framework, we discuss the coherence of federal andprovincial policies and of energy and climate policies. Our analysis shows that there is a lack ofconsistency in the Canadian energy and climate strategies beyond the application of market principles.Furthermore, in certain sectors, the Canadian approach amounts to an amalgam of decisions made at aprovincial level without cooperation with other provinces or with the federal government. One way toimprove policy coherence would be to increase the cooperation between the different jurisdictions byusing a combination of policy tools and by relying on existing intergovernmental agencies.

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1. Introduction

Canada has a remarkable energy prole with abundant anddiverse resources. It is also characterized by large inequalities in thedistribution of its resources and a federal structure that imposesseveral levels of governance and jurisdiction. Energy and climatepolicies are often interrelated; for instance, energy policies encoura-ging fossil fuel production conict with climate policies aimed atreducing greenhouse gases. These policies are implemented by boththe federal and provincial governments according to a sometimesambiguous distribution of jurisdictions. Moreover, economic andenvironmental realities, the diversity of energy sources, and energydemands vary greatly among Canadian provinces. As a result,energy and climate policy objectives and the means to reach themalso differ. There is therefore a multiplication of federal andprovincial strategies, sometimes complementary, but often

contradictory. Indeed, the dual levels of governance lead to specicissues for the different decision-making entities (Thorlakson, 2003)and in particular make it difcult to achieve overall coherence inthe various policies. Specically, Canadian provinces are responsiblefor the regulation, production, distribution, and planning of theirown energy resources. However, the federal government isco-responsible for the industrial development of the energy sectorand can support and nance specic activities in the nationalinterest (Duquette, 1992). It can thus intervene in the areas ofshared authority. This situation may generate political, legal, oroperational resistance from the provincial authorities to the detri-ment of overall coherence in energy and climate policies.

Several denitions of coherence have been proposed. Forinstance, policy coherence is dened by the OECD as thesystematic promotion of mutually reinforcing policy actionsacross government departments and agencies creating synergiestowards achieving the agreed objectives (OECD, 2001). Similarly,Gauttier (2004) presents policy coherence as the achievement ofa synergy between () policies and Missiroli (2001) as a desir-able plus that implies positive connections [and is] more about

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Energy Policy 63 (2013) 11391150

synergy and adding value. In Canada, the NorthSouth Institute(NSI) (2003) denes policy coherence as policies that are coordi-nated and complementary or at least not contradictory. Thecommon elements of these denitions are thus synergies betweenpolicies and implicitly the use of adequate policy instruments toreach the desired objectives. This could also lead to the moreefcient achievement of the objectives.

The question of policy coherence has been widely discussed, inparticular in the case of the European Union (EU). Indeed, thedistribution of competences between the EU and its state mem-bers is characterized by both exclusive jurisdictions (EU or statemembers) and shared competences (EU and state members). Suchoverlapping of responsibilities may cause coherence problems (seefor instance Missiroli, 2001; Carbone, 2008; Den Hertog and Stro,2011). Coherence analyses have also been performed on Canadiandevelopment and cooperation policies (NorthSouth Institute(NSI), 2003) and Canadian energy policies (Conference Board ofCanada, 2004; Valentine, 2010). In the latter case, the analyseshave focused on a specic energy sector. By contrast, the aim ofthis article is to evaluate Canadian energy and climate strategiesglobally, especially their ability to address the problems thatCanada faces. We will in particular evaluate whether thedecision-making processes used, which involve both provincialand federal jurisdictions, ensure the coordination and overallcoherence of the policies.

Policy coherence analyses are mainly performed through thecontent analysis of laws, jurisdictions, or organizational relation-ships; see Missiroli (2001), Gauttier (2004), and Smith (2004).Examples include costbenet analysis, multi-criteria analysis(Commission Europenne (CE), 2006), PESTEL (Political, Economic,Social, Technological, Environmental, and Legal) analysis (Henry,2011), and SWOT analysis.

We will perform a SWOT analysis (Strengths, Weaknesses,Opportunities, and Threats)1 of Canadian energy and climatepolicies. The SWOT methodology is a strategic analysis tool thatcombines the study of the strengths and weaknesses of anorganization, territory, or sector with the study of opportunitiesand threats in its environment. The goal is to help dene adevelopment strategy (Jackson and Dutton, 1988). Whereas thePESTEL approach, for example, focuses only on external factors, aSWOT analysis takes into account both internal and externalfactors. It aims to maximize the potential of strengths andopportunities while minimizing the effects of weaknesses andthreats (Schmoldt and Peterson, 2000). It may also incorporate (asthe PESTEL approach does) economic, institutional, organizational,and legal elements. It is commonly used in the business sector forthe analysis of management strategies, and it has also been usedfor policy coherence analysis by the European Union (EU) orEuropean Commission (Rantil et al., 2003; European Commission(EC), 2005). It has recently been used for the analysis of energystrategies (alone or in combination with other approaches2).

The use of a SWOT approach to analyze policy coherence hasseveral advantages. First, compared to a simple content (ordiscourse) analysis, it allows better-structured qualitative analysesof predened issues. Second, as already mentioned, SWOT is astrategic analysis tool focused on change. It is therefore moredynamic and thus better able to identify changes that improvepolicy coherence. Furthermore, compared to a costbenet analy-sis that assesses a policy mainly from the economic-rationalitypoint of view in an ex-ante context, SWOT can be used to study therelevance and coherence of a policy or strategy in an intermediate

or ex-post assessment context. Whereas a costbenet analysiscompares different measures or programs with a common objec-tive, SWOT can verify the coherence of a strategy or policy thatencompasses several parallel objectives. Likewise, multi-criteriaanalysis is mainly used to compare different projects with hetero-geneous measures or impacts and can reveal synergies betweenthese measures (Vaillancourt and Waaub, 2006; Vazquez et al.,2012). It is not generally used to assess the overall coherence of astrategy but rather to evaluate its effects according to severalcriteria.

SWOT analyses have several limitations. In particular, even ifthe analysis is well structured, it is often subjective and aconsensus about its results may be difcult to reach. Moreover,even if it allows us to identify the strategic axis of a policy withmultiple objectives and complex expected impacts, it simpliesthe real problem (Commission Europenne (CE), 2006). Finally, itcan be difcult to distinguish between internal and externalfactors, leading to confusion between strengths and opportunitiesor between weaknesses and threats.

The internal and external factors should be well dened priorto the SWOT analysis. Strengths are positive internal aspectscontrolled by the organization or country, whereas opportunitiesare possibilities offered by the external environment that can beused to improve the strengths (and reduce the weaknesses).Similarly, weaknesses are negative internal aspects, whereasthreats are external problems or limitations that can prevent thesuccess of the implemented policy.

Our SWOT analysis is structured in terms of three themes:energy security, energy efciency, and technology and innovation.For energy security, we use the denition of the InternationalEnergy Agency (IEA) that refers to the uninterrupted availabilityof energy sources at an affordable price.3 For energy efciency, weuse the IEA denition that refers to the way of managing andrestraining the growth in energy consumption.4 The themetechnology and innovation focuses on R&D policies that improvethe sustainability of energy production and consumption. In thiscontext, the strengths (resp. weaknesses) are economic or politicaldomestic elements that positively (resp. negatively) impact aspecic theme. Likewise, the opportunities (resp. threats) areexternal factors that similarly impact a given theme. We use thistaxonomy to discuss the coherence of federal and provincialpolicies and of energy and climate policies.

The choice of themes is motivated by two main considerations.On the one hand, these themes are prominent in the literature onenergy and climate policies at both federal and provincial levelsand in country reports from international bodies such as the IEA.On the other hand, these themes are common to the interventiondomains of federal and provincial governments, and are at theinterface of energy and climate policies. It is also important toanalyze how energy and climate policies interact. Indeed, inCanada as in other countries, a commitment to reducing green-house gas (GHG) emissions is shaping energy policies, for instanceby mandating that by 2020 90% of all Canadian electricitygeneration must be free of GHG emissions (International EnergyAgency (IEA), 2010a) or by mandating the phasing out of coal-redelectricity generation in Ontario by 2014 (Government of Ontario,2007). Similarly, energy policies such as fossil fuel subsidies or theextension of the life of coal-red thermal plants (InternationalInstitute of Sustainable Development (IISD), 2010; Canada Gazette,2012) inuence GHG emission levels.

The remainder of this paper is organized as follows. In Section2, we analyze the context of Canadian energy and climate policies,

1 See for instance Weihrich (1982), Hill and Westbrook (1997), and Valentin(2001).

2 See for instance Celiktas and Kocar (2009) and Tavana et al. (2012).

3 See http://www.iea.org/topics/energysecurity. Accessed on November 2012.4 See http://www.iea.org/topics/energyefciency. Accessed on November 2012.

C. Fertel et al. / Energy Policy 63 (2013) 113911501140

presenting in particular the different actors involved. Section 3presents our SWOT analysis and discusses its implications, focus-ing on the interaction between energy and climate policies. Finally,Section 4 presents concluding remarks and recommendations.

2. Context of energy and climate policies

We rst present the organizational context for the develop-ment and implementation of energy and climate policies, at thefederal and provincial/territorial levels. We then briey presentthe energy resources and emission proles of the differentprovinces and territories. This leads to an introduction of thechallenges to be explored by our SWOT analysis.

2.1. Key institutional players

Politically, Canada has two main levels of government: federaland provincial (or territorial). Hereafter, we refer to the provincesand territories as regions. The jurisdictions are distributed betweenthese levels of government, and both play an essential role in thedevelopment and implementation of energy and climate policies.This distribution of jurisdictions is the result of the ConstitutionActs of 1867 and 1982.

An essential characteristic of Canadian federalism is that theprovinces own their underground resources, with the exception ofthose found in aboriginal lands and certain federal lands (nationalparks). The provinces are responsible for developing and imple-menting policies within their borders. The territories do not havetheir own jurisdictions and do not own their undergroundresources but rather assume partial management.5 Table 1 sum-marizes the federal and provincial jurisdictions.

The provinces are thus responsible for the management of thenatural resources and power plants within their borders. Eachprovince has a ministry or ofce that considers questions ofenergy as well as natural and environmental resources. The federalgovernment (together with the National Energy Board or NEB) isin charge of interprovincial and international commerce related toenergy. It is also responsible for programs and policies in thenational interest including national economic development,energy security, and public health (air and water quality, climatechange issues) and the management of federal lands. The federalgovernment also maintains a certain control over the resources of

the three territories (Yukon, Northwest Territories, and Nunavut)and over offshore6 production.

The NEB is an independent federal agency whose mandate is toregulate interprovincial and international aspects of the oil, gas,and electricity sectors. Its purpose is to regulate pipelines, thedevelopment of energy resources, and energy trading in theCanadian public interest. However, the NEB has also allowed forthe de-politicization of the development of transport infrastruc-ture (route selection) for oil, gas, and electricity; this infrastructureis often located along the border with the United States (US)(Rastgardani, 2005).

Involved in both the energy and environmental sectors, NaturalResources Canada (NRCan) is the leading federal governmentdepartment in the eld of energy policies. It is responsible forthe implementation of federal policies and programs that seek toenhance the responsible development and use of Canada'snatural resources and the competitiveness of Canada's naturalresources products (Natural Resources Canada (NRCan), 2011).The energy sector of NRCan is made up of several branches, one ofwhich is responsible for energy policies, while another, the Ofceof Energy Efciency (OEE), concentrates on energy efciency.

The federal department of the environment, EnvironmentCanada (ECan7), coordinates federal environmental policies andprograms. This includes the preservation and improvement of thequality of the natural environment, the conservation of Canada'srenewable resources, the preservation of water resources, and theproduction of weather forecasts. It is also the main leader for theimplementation of the government's Clean Air Agenda (2001) andis directly responsible for the management of GHG emissions.

The Canadian Nuclear Safety Commission was created in 2000by the Nuclear Safety and Control Act to replace the Atomic EnergyControl Board founded in 1946. The Commission deals almostexclusively with the security standards of the nuclear industry andonly rarely addresses challenges related to market or environ-mental concerns that go beyond the needs of public safety.

Coordination between the federal and regional governmentsoccurs through ofcial committees as well as informal meetingsand consultations. The Council of Energy Ministers (CEM) is theCanadian forum for the different federal and regional energyministers. In this forum ministers discuss the challenges andopportunities they face. The Canadian Council of Ministers of the

Table 1Provincial and federal resource administration.Source: International Energy Agency (IEA) (2010a)

Provincial governments Federal government

Development and management of resources within provincial boundaries Property and civil rights within the province, i.e., environmental, health, safety, land use, consumer

protection, etc Regulation and legislative framework for electricity and natural gas, including in many cases

ownership of Crown corporations engaged in these activities The securing of appropriate economic rent as resource owner from Crown mineral rights and

hydraulic forces Policies in the provincial interest, such as economic development and energy science and

technology Interprovincial trade (excluding energy)

Resource management on no-accord frontier landsa Uranium/nuclear power Interprovincial/international trade and commerce Interprovincial works and undertakings Transboundary environmental impacts Policies in the national interest (economic development,

energy security, federal energy R&D)

a Canada's frontier lands are those lands over which the government of Canada has the right to dispose of or exploit mineral resources, including oil and gas. Frontierlands include all of Canada's offshore areas not within a province, the Northwest Territories, Nunavut, and Sable Island. They cover an area of approximately 10.2 millionsquare kilometers.

5 The natural resources of Nunavut and the Northwest Territories are adminis-tered by the Federal Department of Indian and Northern Affairs.

6 The energy-resource prospects of the Canadian North and the Arctic couldlead to new challenges for the federal government (exploitation leadership,negotiations with territories and/or with First Nations).

7 The ofcial acronym used in Canada is EC. We use here the acronym ECan todistinguish between Environment Canada and the European Commission.

C. Fertel et al. / Energy Policy 63 (2013) 11391150 1141

Environment (CCME) is the counterpart of the CEM for environ-mental issues. In this council the fourteen ministers (from thefederal and regional governments) discuss environmental issuesthat require cooperation between governments.

In this context, two elements must be highlighted:

The existence of a variety of players, at both the federal andregional levels, involved in environmental and energy issues.

The potential overlap of jurisdictions, both horizontally (at thefederal level for instance) and vertically (between the federaland regional levels). As an illustration, there is a potentialoverlap between NRCan and ECan (two federal ministries) sinceone of the ECan's mandates relates to renewable resources,including energy resources. Likewise, NRCan is responsible forthe development and use of natural resources, a mandate thatalso falls under provincial jurisdiction.

In addition to this diversity of players, there are differences inthe energy-resource endowments of the regions, which strengthenthe need for coherence in energy and climate strategies.

2.2. Energy resources

We now briey present the diversity of the energy-resourceendowments. Canada is one of the largest energy producers in theworld (ranked seventh for oil and electricity and third for naturalgas in 2009) and one of the largest energy exporters (ranked rstfor uranium and in the top ten for coal in 2009) (InternationalEnergy Agency (IEA), 2010b). It is also an importer of energyproducts (crude oil, in particular) (Statistique Canada (StatCan),2011).

Canada's energy resources are unevenly distributed across thecountry. The majority of the coal reserves and mines are located inWestern Canada. There are also mines in New Brunswick and NovaScotia. Reserves also exist in Ontario, Yukon, Newfoundland andLabrador, and the Northwest Territories.

Canada is ranked second globally, just behind Saudi Arabia, forits proven reserves of crude oil (International Energy Agency (IEA),2010b). More than 95% of these reserves are located in Alberta(Western Canada) in the form of oil sands; the rest consist ofconventional oil, mostly offshore. The western regions are theprincipal producers/exporters, along with Newfoundland andLabrador in the east (offshore). The country also imports crudeoil to supply Central and Atlantic Canada, mostly from the NorthSea, the Middle East, and Africa.

Canada was ranked nineteenth for its reserves of conventionalnatural gas in 2007 (British Petroleum (BP), 2008). Approximatelyhalf of these reserves are located in the Western CanadianSedimentary Basin. The other half is located in currently less-explored regions such as the High Arctic, the Arctic, and marinezones off the coasts of the Atlantic Provinces. Despite being a (net)exporter, Canada also imports natural gas from the US (NaturalResources Canada (NRCan), 2008). However, the natural gasmarket is rapidly evolving. Numerous conventional natural-gasdeposits are in decline while interest in new non-conventionalgases such as tight gas, coal bed methane, and shale gas isincreasing as new extraction technologies render their exploita-tion feasible (Natural Resources Canada (NRCan), 2008; NationalEnergy Board (NEB), 2009).

Canada has the largest reserves of uranium in the world and isone of the top world suppliers (International Energy Agency (IEA),2010b). Most of the deposits are found in northern Saskatchewan.It is exported mostly to the US, the EU, and Japan (the rest of theproduction being used as a combustible by Canadian nuclearpower plants).

Projects that promote renewable energies are multiplying atthe regional level. Canada has a large potential for wind energy,particularly along the eastern and western coasts. In 2012, thetotal installed capacity was 5641 MW (representing about 2.3% ofCanada's total electricity demand). More than 6000 MW of wind-energy projects are already contracted for the next ve years,according to the Canadian Wind Energy Association (CanadianWind Energy Association (CANWEA), 2012). Hydroelectricity ishighly developed in Canada, with a total production of363.2 TW h, half of which comes from Quebec. Hydroelectricitycontinues to grow in several provinces (especially the AtlanticProvinces, British Columbia, Manitoba, and Quebec) through thebuilding of small dams (especially in Quebec). Canada is alsodeveloping its production of biofuels, biomass (mainly fromorganic waste and wood waste, in particular in British Columbia),and tidal energy in Nova Scotia. Tidal energy could also bedeveloped in other Atlantic provinces but remains marginal forthe moment.

2.3. Prole of GHG emissions

Canadian GHG emissions correspond to approximately 2% ofthe world's emissions (Environment Canada, 2011). Its emissionsper capita (16.34 t CO2) are higher than the OECD average (10.61 tCO2) (International Energy Agency (IEA), 2010b). Despite abandon-ing the Kyoto Protocol in 2011, Canada maintains an active climatepolicy through the signing of the Copenhagen Agreement in 2009,in which it agreed, along with the US, that by 2020 it would reduceits GHG emissions by 17% of the 2005 level (to 607 Mt CO2 eq).

At the national level, the most signicant contribution toemissions comes from the transportation sector (23.3% of totalemissions in 2008). Next are the oil and gas sectors, which includethe production, transportation, transformation, rening, and dis-tribution of oil and gas products (21.5%). They are followed by theelectricity sector (13.3%). Close to two-thirds of GHG emissions arethus directly related to the energy sector (Environment Canada,2011).

Canada's GHG emissions vary by province, following theuneven distribution of energy reserves and population as well asthe industrial structure. Alberta (33.4% of total emissions in 2008)and Ontario (26.0%) have the highest emission levels, but fordifferent reasons. In Alberta, the emissions are primarily due to theexploitation of oil and gas. This Albertan sector is forecast tocontinue contributing signicantly to Canadian GHG emissions inthe near future (Environment Canada, 2011). In Ontario by con-trast, the high emission levels are primarily due to the size of itsindustrial sector and are also related to its relatively large popula-tion. This latter situation is replicated to a lesser degree in Quebec(11.02%), Saskatchewan (10.3%), and British Columbia (8.9%).Alberta's relatively low population implies that its emissions percapita are relatively high. Conversely, the Atlantic Provinces andthe Territories are less populated, exploit fewer energy resources,and have smaller economies. Their emissions are therefore thelowest (ranging from 2.9% in New Brunswick to around 0.1% inYukon).

2.4. Challenges for coherence

Given the different institutional players and the variation in theenergy endowments, emission levels, and socioeconomic contexts,there could be coherence issues in energy and climate policies.

For instance, Western Canada is endowed with rich fossilresources but exports the majority of its production to the US,whereas Eastern Canada imports its oil from Europe and theMiddle East. This situation, due in part to the existing energytransportation network (developed according to a continentalist


logic that supports a large integrated North American market)introduces an energy imbalance among the regions, in particularregarding the security of the supply. This imbalance in turn createschallenges for the development of a coherent energy policyensuring a secure supply for Canada as a whole.

The next section presents in detail the different energy andclimate policies and analyzes their level of coherence.

3. Analysis of Canadian energy and climate policies

We rst give an overview of Canadian energy and climatepolicies, and we then present and discuss our SWOT analysis.Finally, we present a cross-analysis of the policies.

3.1. Canadian energy policies

The Canadian energy policy is based on three importantprinciples (Natural Resources Canada (NRCan), 2011):

1. Competitive markets are assumed to be the most efcient atregulating prices, supply, demand, and trade, while ensuring asuccessful and innovative energy system capable of meetingCanadian energy needs.

2. Respecting the jurisdictions of provinces and the federalgovernment is essential; provincial governments manage themajority of the country's energy resources.

3. When necessary, targeted federal interventions in the energytrading process ensure that specic energy-policy objectivesare achieved. These objectives often concern public health, theenvironment, or safety (the regulation of pipelines); interven-tions can occur through regulations (standards) or economicincentives (taxes).

Canadian energy policy faces the challenges of ensuring theecologically acceptable production and consumption of energy,supporting a competitive economy via competitive energy prices,and securing the energy infrastructure. Canada's industry is highlyenergy-intensive, and its energy consumption per capita is one ofthe highest in the world. To address this situation, the federalenergy policy focuses on reducing energy consumption. This eco-efciency policy supports practices that reduce waste. It also

supports the deployment in all sectors (industrial, residential,and transport) of more energy-efcient technologies; see Table 2.

This policy results partly from strategies adopted over theyears. It has been largely shaped by major government decisionsthat created regulatory organizations such as the National EnergyBoard (1959) and departments such as NRCan and ECan. It is alsoframed by different agreements. The Western Accord (1985) is anagreement among the governments of Canada, Alberta, Saskatch-ewan, and British Columbia regarding the rates of taxation for oiland natural gas. The Agreement on Natural Gas Markets and Prices(1985) is another agreement between the same provinces. TheAtlantic Accord (1985) is an agreement between Newfoundlandand Labrador and Nova Scotia for the establishment of offshorepetroleum boards managed jointly by each province and thefederal government. Other agreements are the CanadaUnitedStates Trade Agreement (1988) and the North American Free TradeAgreement (NAFTA) (1992). The latter promotes a single NorthAmerican market (Canada, the US, and Mexico) and encouragesinvestment in the Canadian energy sector. NAFTA is a pillar of theCanadian energy policy, according to the International EnergyAgency (IEA) (2010a), mainly as far as trade with the US isconcerned.

Canada's energy strategies result both from past federal deci-sions and from choices made by the regions for the developmentof their resources. For instance, lower federal corporate tax rates inthe oil and gas sectors (compared to other sectors) and theaccelerated capital-cost allowance for the oil sand sector (miningand in-situ) have enabled Alberta to encourage the exploitation ofits oil sands (International Energy Agency (IEA), 2010a).

3.2. Canadian climate policies

Canadian climate policy aims to achieve environmental andeconomic benets for all Canadians. Canada participates in inter-national climate-change negotiations. In 2002 it adopted the KyotoProtocol (United Nations, 1998), imposing a target of reducing its1990 levels (461 Mt CO2 eq) by 6% by 2012. In 2011 it withdrewfrom this agreement. The federal GHG emission reduction targetsare now dictated by the Copenhagen Agreement (United Nations,2009), signed by Canada in 2009.

Table 2Summary of principal regional and federal measures.Source: Environment Canada (2011).

Regional measures Federal measures

Ontario coal phase out for electricity generation Ontario feed-in-tariff energy efciency standards British Columbia carbon tax Alberta industrial regulation Quebec carbon levy Nova Scotia cap on electricity sector GHG emissions Building code regulations Various energy efciency standards and rebates across

regions

Regulations for passenger automobile and light-duty truckemissions

Electricity performance standards Strengthened energy-efciency standards Renewable content regulation for fuels (5% ethanol) EcoENERGY a measures in the following sectors:

Building and housing, Industry and trade, Transport, Energy production, Technology and innovation

National scrappage vehicle program Marine Shore Power Program Exploitation of renewable energy Initiative for ecoagricultural investment in biofuels Development and implementation of technologies

a These measures belong to the EcoEnergy innovation and initiative corresponding to the second phase of Canada's economic action planfor a comprehensive suite of R&D and demonstration projects.


The federal government has taken a series of measures(Table 2) to reduce GHG emissions from the most polluting sectors,including the development of more ecological technologies andpractices. These federal initiatives concern for instance perfor-mance standards for new coal-red power plants that have adirect impact on provincial emissions. The regions have also takensteps to curb their emissions. These include the scheduled elim-ination of coal-red generation in Ontario by the end of 2014 andthe cap-and-trade system for GHG emissions to be introduced inQuebec in 2013 via the Western Climate Initative (WCI).

In addition to federal targets, the regions (excluding Nunavutand Yukon) have adopted their own targets for emission reduc-tion; see Table 3.

The regional reduction objectives add up to a target of 625 Mtfor 2020. This is slightly higher than the Canadian objective of607 Mt (see Fig. 1).

Although the federal government establishes objectives for theentire country, it cannot force regions to reduce their emissionsusing tools that fall under provincial jurisdiction. For instance, thefederal government cannot impose electricity tariffs that encou-rage non-emitting electricity generation sources, because tariffregulation falls under provincial jurisdiction. The fact that thecumulative regional targets do not match the federal targetillustrates the lack of coordination between the federal andregional levels and among the different regions.

In the next two sections, we will further analyze Canadianenergy and climate strategies, in particular performing a SWOTanalysis focusing on the following three issues (common to bothstrategies): (1) energy security; (2) energy efciency; and (3)technology and innovation.

3.3. SWOT analysis

Table 4 presents our SWOT analysis. It contains elements fromboth energy and climate strategies at the federal and regionallevels. We will also present a more detailed study that discusses inparticular the issue of coherence.

3.4. Energy security

Although Canada is a net exporter of energy, it faces someenergy security issues. These issues fall under the federal jurisdic-tion. However, there is no federal strategy for energy security,

except that the government is currently studying the possibility ofcreating strategic reserves. There are only a few laws8 for emer-gency procedures and a regulatory agency9 to handle supplydisruption. Security is also an issue in most regional strategies,but the form and intensity differ according to the differentresource endowments and geographical situations.

The security of the oil supply is more critical in the Eastern andAtlantic provinces since, despite some offshore production capa-city, they depend on foreign imports. Hughes (2010) claims thatthis dependence, in particular for the Eastern provinces, presentsthe following risks. First, the most politically stable providers havereached their peak and their production is currently declining(oil from the North Sea, Norway, and the United Kingdom). Theywill therefore struggle to maintain their production and exportlevels at competitive prices. Demand is expected to increase ininternational markets (Asian markets, in particular), so there willbe increased competition for these regular supply sources and arisk of price ination. Second, some providers such as Angola,Niger, and Algeria are politically unstable, which poses threats tothe security of the supply. The Eastern and Atlantic provinces musttherefore diversify their sources, using both stable but decliningsources and politically risky but less expensive sources. Theseprovinces are also trying to diversify their energy mix by devel-oping local (and if possible renewable) energy resources. Thisdiversication strategy favors the reduction of GHG emissions byencouraging the development of energy sources (such as naturalgas, hydroelectricity, wind, or solar) with few or no emissions.There are thus synergies between energy security strategies(aiming to diversify the energy supply) and climate policies(aiming to reduce emissions and thus fossil fuel consumption).However, there are constraints in the transportation sector, whichwill be highly dependent on oil until alternative vehicles (electricor hydrogen) produced using low or non-emitting sources pene-trate into the mass market.10

For Canada, the security issue is not restricted to the supply.Alberta in particular must secure its energy exports. On the onehand, increased US self-sufciency in terms of fossil fuels (e.g., aswitch from oil to abundant domestic unconventional gas) mayaffect the demand for Alberta's oil. Moreover, the uncertaintiessurrounding future environmental regulations in the US and otheroil-importing countries may affect Alberta's oil sands exports andrequire the province to nd new international markets.11 On theother hand, a market-diversication strategy that reduces the oilsupply to the US must be carried out within the constraints ofNAFTA, which requires compensation through a proportionalreduction in the domestic supply.

Energy security is a major issue for Canadian energy policies,but it translates into different strategies depending on whether aprovince is a (net) energy exporter or importer. The absence of aconsistent federal policy puts at risk the regions most exposed tosupply or export disruptions.

Table 3GHG emission-reduction targets set by regional governments for 2020 and 2050.Source: Compiled using provincial climate strategy documents.

Region Target

2020 2050

British Columbia 33% below 2007 80% below 2007Alberta 22%a below 1990 50% below the

baselineSaskatchewan 20% below 2006Manitoba 15% below 2005Ontario 15% below 1990 80% below 1990Quebec 20% below 1990New Brunswick 10% below 1990Nova Scotia 10% below 1990Newfoundland andLabrador

10% below 1990

Prince Edward Island 10% below 1990Northwest Territories 6% below 1990 (by 2013)

a The alberta climate change action plan's overall target is to reduce GHGintensity, or emissions relative to GDP, by 50% by the year 2020. The 50% target isrelative to 1990 (Bramley, 2002).

8 The emergency law for the distribution of energy, the law on emergencymeasures, etc.

9 The Emergency Supply Allocation Board.10 The dependence on oil can be explained by lock-in issues relating to the

production and distribution infrastructure for liquid fuels. See, for instance, Pearsonand Foxon (2012); Unruh (2000, 2002); and Unruh and Carrillo-Hermosilla (2006).

11 The United States has long been our central destination for energy exports.Americans are excellent customers. But the U.S. no longer enjoys uncontesteddominance in the world's economy. China and India want our energy supplies, too.Alberta has opportunities to reduce our singular dependence on the U.S. marketand improve our bargaining power by cultivating additional markets (LaunchingAlberta's Energy Future, provincial energy strategy, p. 16).


Table 4Synthesis of SWOT analysis.

Strengths: Weaknesses: Opportunities: Threats: Energy security:

Important element within thefederal jurisdiction

Existence of a regulation agency(the Energy Supplies AllocationBoard) and of federal legislationfor energy supply

Present in all provincial energystrategies

Signicant investment topromote diversication ofsupply

Signicant and diversiedresource endowment able tooffset a possible decline inimports

Energy efciency: Signicant federal involvement

in improving energy efciency(through investments,standards, regulations, scalmeasures)

EcoAction programs for thepomotion and deployment ofnew technologies withimproved energy efciency

Cooperation and sharedinvolvement between regionsand the federal government

Innovation and technology: Large federal investment in

R&D and energy innovation Structured federal policy Public-private partnerships at

the provincial and federal levels

Energy security: Absence of a consistent

federal strategy becauseof lack of coordinationwith provincialstrategies

Overlappingjurisdictions ofprovincial and federalgovernments

Lack of infrastructure forinterprovincialexchanges of energy

Dependence of someregions on foreignenergy imports

Slowness of regulatoryprocesses for theimplementation of newinfrastructure fortransporting energy

Energy efciency: Absence of a coherent

national strategybecause of lack of federaltargets

Low energy pricediscourages necessaryinvestment

Innovation and technology: Absence of coordination

among provincial andfederal strategiesbecause of differentpriorities

No incentive for betterinterprovincial orprovincial/federalcooperation

Lack of long-term visionfor the electricitynetwork

Energy security: Signicant increase in global energy

demand Forecast rise in energy prices Canada's position on global energy

markets

Energy efciency: Businesses aware of economic

advantages gained through efciencyimprovements

Policies encouraging the developmentof energy-efcient technologies thatstimulate job creation in the contextof a global economic slowdown

Important element for climate policy

Innovation and technology: International and North American

cooperation Rising prices of energy resources at

the global level Canada's position on energy

technology markets Investments in clean technologies (e.

g., CCS) creating synergies withclimate policy

Consolidation of expertise inunconventional fossil fuel extraction

Energy security: Cost of interprovincial

transport infrastructurecompared to currentrelatively low cost of oilimports

Importation frompolitically unstablecountries

Increase in nationaltensions aroundresources

NAFTA requirement tosupply the US market

Non-conventionalsources vulnerable toenvironmentalregulations

Energy efciency: Highly energy-intensive

country Restrictions owing to

climate prole Low cost of energy Cost of investment

because of lowpopulation density

Innovation and technology: Time needed to develop

and implement newtechnologies

Constraints imposed bythe global economicslowdown (costs,budget, demand)

Technological lock-in

Fig. 1. Canadian emission prole and objectives until 2020 (in Mt CO2 eq). .Source: Environment Canada (2011)


3.5. Energy efciency

Canada is one of the largest per-capita consumers of primaryenergy and electricity in the world (International Energy Agency(IEA), 2010b). The traditional explanations for this are its strongconcentration of highly energy-intensive sectors, cold climate, andhigh quality of life together with its low population density.Canada has large energy resources, and Canadians have untilrecently beneted from relatively low energy prices, which tendto encourage consumption. Nonetheless, Canada has been engagedfor ten years in a policy to reduce energy consumption.12 As aresult, energy consumption increased at a rate of only 1.3% (onaverage, per year) between 1990 and 2006, while the GDPincreased at a rate of approximately 3% (on average, per year).During this process, Canada has acquired expertise in energy-efciency indicators. Moreover, efciency improvement is a basiccomponent of its climate policies because reductions in fossil fuelconsumption decrease emissions.

The most signicant challenge in the implementation of aglobal strategy to promote energy efciency is the division ofpower between the regional and federal jurisdictions. This situa-tion does not allow the federal government to set national targetsfor a reduction in energy consumption. However, the governmenthas implemented a series of national programs and standardsseeking to improve energy-efciency levels throughout thecountry.

The regional governments use these federal tools to completeand reinforce their own energy-efciency programs. In 2008 theregions jointly committed to increasing their energy efciency by20% by 2020. They pursue this objective through improvedbuilding standards, the regulation of energy-intensive products,tax credits for the residential sector, and proactive policies inpublic infrastructure. Three provinces (Nova Scotia, Prince EdwardIsland, and Quebec) have created government agencies specicallydevoted to the promotion of energy efciency, provincial equiva-lents to the federal Ofce of Energy Efciency. The importance ofenergy-efciency programs differs across provinces according tothe population and the industrial structure. For instance, Albertahas made energy efciency a priority, before energy security, sincethe former limits GHG emissions while sustaining economicgrowth and the development of advanced technologies for theexploitation of the oil sands. Conversely, energy efciency is not a

top priority for Quebec: it is the fourth objective (of six) in itsenergy strategy. This is because Quebec has a hydro-dominatedpower grid and thus benets from one of the lowest electricityprice levels in North America.

Overall, energy efciency is a domain where the federal andregional governments actively cooperate to achieve their com-bined objectives. This cooperation exists because it is a winwinstrategy. This may be partly explained by the fact that energy R&Dis mainly supported through federal funding (see Table 5);whereas the provinces focus on implementation. Energy efciencyalso reduces GHG emissions while sustaining economic activity.Energy efciency is thus an issue where the federal and regionalpolicies appear to be quite coherent.

3.6. Innovation and technology

In 2007, Canada spent approximately 0.3% of its GDP(International Energy Agency (IEA), 2010a) on R&D in non-nuclear energy technologies, making it one of the largest R&Dinvestors of the OECD. Its innovation policy aims to make theproduction and consumption of energy products more sustainable,in particular by reducing GHG emissions.13 The federal policy onenergy innovation and technology is developed and implementedmainly by NRCan and the Nuclear Fission R&D (InternationalEnergy Agency (IEA), 2010a). The NRCan initiatives have ninepriorities and are implemented through three programs. TheProgram of Energy R&D (PERD) provides funding to federaldepartments and agencies to support their energy research activ-ities. The ecoENERGY Technology Initiative is a component ofecoACTION encompassing federal actions aiming to improve airquality and reduce GHG emissions and supporting projects such ascarbon storage and enhanced oil recovery. The Clean Energy Fundprovides funds for large-scale demonstration projects of carboncapture and sequestration and small-scale demonstration projectsof renewable energy and clean-energy technologies.

The role of the federal government goes beyond nancingresearch. It also coordinates and supports regional efforts andpublicprivate partnerships. However, as illustrated in Table 5, thefederal government and the regions do not always have the samepriorities.

Table 5Estimated federal energy R&D expenditure per activity type, 2008/2009, in percentages and thousands of Canadian dollars.Source: International Energy Agency (IEA) (2010a).

Activity Federal Regional Total Each activity (%)

Energy efciency 99% 1% 100% 14(90,499) (6,736) (97,236)

Fossil fuels: oil, gas, coal 44% 56% 100% 27(84,455) (107,905) (192,359)

Nuclear fusion and ssion 99% 1% 100% 38(271,666) (26) (271,692)

Hydrogen and fuel cells 91% 9% 100% 5(34,207) (3,311) (37,518)

Renewable energy sources 65% 35% 100% 11(51,458) (27,338) (78,796)

Other power and storage technologies 96% 4% 100% 3(17,396) (760) (18,156)

Other cross-cutting R&D 75% 25% 100% 2(9,376) (3,226) (12,602)

Total 79% 21% 100% 100(559,057) (149,301) (708,358)

12 1995, The Energy Efciency Act, Canada Gazette.

13 This policy is not considered particularly successful. See Jenkins et al. (2001)and http://www.theglobeandmail.com/report-on-business/canada-not-an-energy-superpower-report/article4522016/. Accessed on November 2012.


This diversity of priorities can be explained on the one hand, bythe large variation in energy sources, GHG emissions, and socio-economic situations across the provinces, and on the other hand,by differences in jurisdictional prerogatives and nancial means.Coordination is even more difcult because some provinces haveestablished R&D institutions while others have not. Generally, theregions establish their research and innovation priorities byfocusing on their resources and co-nancing projects with thefederal government according to their mutual interests. They haveneither the same priorities nor the same budgets (see Table 6).However, they all invest in clean technologies to sustain economicdevelopment while reducing the environmental impact.

Overall, beyond their shared interests, the regions have no realincentive to cooperate with either the federal government or otherregional governments. For instance, for many regions (Alberta, theAtlantic Provinces, British Columbia, Ontario, etc.) the moderniza-tion and reinforcement of the electricity network is essential toensure security and efciency. However, projects on smart-gridtechnologies and electricity storage are not prioritized at thefederal level. The development of a smart and better intercon-nected grid should yield decreased consumption and reducedoperational costs. It should also produce better overall systemperformance in terms of resource management and GHG emis-sions, while improving the country's competitiveness in the NorthAmerican market. The federal government should therefore har-monize the regional priorities for innovation and technology toensure national coherence. This would support its goal of inter-national energy leadership (Khanberg and Joshi, 2012).

3.7. Interactions between energy and climate policies

Canada has a strong energy potential because of its diversity ofresources, a signicant portion of which consists of renewableresources. This is an asset as it faces the climate change issue.However, Canada has two internal barriers. The rst concerns theuneven distribution of the resources across the country. This leadsto different energy situations and emission levels at the regionallevel and thus different objectives in terms of, e.g., energy security,R&D, and emission reduction.14 The second barrier is institutional.The Canadian constitution distinguishes between two levels ofjurisdiction, but their respective limits are poorly dened. Provin-cial governments often take initiatives in areas that are theresponsibility of the federal government. For instance, energysecurity falls under federal jurisdiction, but Quebec has made this

the rst of six objectives in its energy strategy.15 In fact, there is nointegrated national energy strategy, and the climate policy ismerely a juxtaposition of ill-coordinated measures and objectives.This is due in part to the commitment of the present governmentto a confederation that promotes provincial jurisdiction andrelationships between private contractors and local governments.Consequently, energy and climate policies sometimes lack coher-ence, even at the provincial level, and thus cannot be fully efcientat the national level.

There are two challenges to the better integration of energyand climate policies. First, the objectives of the federal energystrategy must be consistent with the overall emission reductionobjectives. Second, regional strategies should not conict withthose of other regions or with the national interest. From thispoint of view, the climate change issue presents a new opportunityfor mutual coordination and the reinforcement of the energy andclimate strategies, particularly in terms of security, efciency, andinnovation.

A better coordination of energy and climate policies wouldallow potential synergies. As already mentioned, policies thatincrease security by diversifying the energy mix (with morerenewables) favor a reduction in emissions. Investments inenergy-efcient technologies or in R&D into lower-emission tech-nologies also contribute to the objectives of climate policies. Theintegration of these different policies can only improve theiroverall efciency, in particular in terms of costs.

Naturally, a better integration within a given policy type wouldalso be benecial. Let us consider climate policies. There iscurrently a lack of coherence and integration: the federal govern-ment has dened national targets for emissions, but each provinceworks toward its own objectives in a voluntary manner. It is logicalto have different provincial targets because the marginal abate-ment costs vary. For instance, British Columbia and Quebec benetfrom a large endowment of renewables, and their abatement costsare lower than those of Alberta, where the economy is moredependent on fossil fuels. However, this absence of coordinationintroduces a risk of missing the federal target and does notguarantee that the reduction is achieved at the lowest (overall)cost. The federal government could in theory compel the provincesto cooperate on the development of an overall strategy. Accordingto the constitution, the federal government has all powersnecessary for performing the obligation of Canada or of anyprovince (), towards foreign countries, arising under treaties(Government of Canada, 1867/1982). This power could have beenapplied to coerce the provinces to implement suitable policies to

Table 6Provinces reporting R&D expenditure on clean-energy technology, 2008/2009a.Source: International Energy Agency (IEA) (2010a).

British Columbian Albertanb Ontarion Quebecn Saskatchewann Prince EdwardIsland

Nova Scotia NewBrunswick

CAD 45 M CAD 89 M CAD 34 M CAD 26 M CAD 32 M CAD 2.5 M CAD 24 M CAD 0.3 M

Fuel cell and hydrogen(93%)

Oil and gas (72%) Renewable (69%) Renewable (bioenergy)(60%)

Oil and gas (49%) Hydrogen (8%) Oil and gas (78%) Renewable(100%)

Power and storage(3%)

Coal (13%) Energy efciency(29%)

Energy efciency (16%) Coal (22%) Renewable (wind)(12%)

Renewable (ocean)(22%)

CCS (7%) Renewable (solar) (9%) CCS (9%)Renewable(bioenergy) (4%)

Energy efciency(8%)

n Have provincial R&D institutes.a All utility RD&D expenditure is captured under industry expenditure.b Does not include the Shell announcement of CAD 1.34 billion for CCS projects in Alberta (September 2012).

14 This situation creates barriers to policy coherence but yields tradeopportunities. 15 Quebec and Climate Change, a Challenge for the Future (2006).


fulll Canada's obligation under the Kyoto Protocol. Moreover, thefederal government has authority over transprovincial environmen-tal governance (residual power). According to the Canadian Envir-onmental Protection Act (CEPA) (Government of Canada, 1999) it alsohas the mandate to regulate transboundary pollution (consideredpotentially dangerous). Given the potentially harmful consequencesof anthropogenic climate change, GHG emissions16 could fall underthis legislation. To date, this authority has not been exercised.

According to Braun et al. (2002) and Valentine (2010), thisabsence of federal action can be explained by the ability of theprovinces to oppose by legal, political, or administrative means(thrust and riposte) any federal strategy that coerces them tocollaborate on a national climate (or energy) strategy. For instance,the Canadian constitution forces the federal government to ensureequal opportunity and to reduce the disparity of opportunity amongthe provinces. Thus, any federal policy that reduces GHG emissionsby making the use of fossil fuels more expensive could legally bechallenged by a province dependent on fossil fuels. Such a policywould affect the competitiveness of the province (increasing itsproduction costs) and would create a disparity of opportunity.

A more efcient way to proceed would be to negotiate emissionreductions between the federal government and the regions. Thisnegotiation could apply various rules to distribute the reductionefforts such as grandfathering (considering the level of emissionsin previous years), emissions per unit of GDP, and emissions percapita. One of the difculties of this exercise is that the longer-term benets associated with a low-emission economy, such aspublic health benets, are difcult to estimate (being in partcollective or public benets). But such a collaborative approachwould increase the likelihood that the federal target can beachieved via the reductions made by the regions. For instance,the establishment of a Canada-wide market of emission permitswould enable both the achievement of the overall reduction targetand overall economic efciency (as reductions should occur in theregions where they are relatively inexpensive).

Another challenge is to harmonize the short-term perspectivesof energy policies (often subject to market forces) with the longer-term perspectives associated with climate policies (since climatechange is a long-term issue). Decision makers are thus confrontedwith the need to develop integrated energy and climate policiesthat have different time horizons.

Given the reliance of federal policy on the energy markets(which are mostly globalized, the exception being the electricitymarket), the current Canadian strategy seems to be driven by theimmediate exploitation of a maximum of the resources accordingto price and availability. This generates short-term economicbenets (e.g., jobs, tax revenue, and royalties). Indeed, whereasin some countries state organizations participate in or evencontrol energy production, Canada has been open since 1990 toforeign investors in gas and oil production (International EnergyAgency (IEA), 2010a), and its fossil fuels are mostly exploited byprivate companies. Moreover, Canadian energy policy focuses onleveraging private investments.

This kind of policy requires suitable measures to channel suchprivate investments towards the highest public benet, since thereare some issues that market forces and private interests fail to takeinto account. More precisely, the market forces may fail to take intoaccount the multiple externalities (positive and negative) related toenergy production, transformation, or consumption. For instance, inthe absence of clear climate change regulations, the private agentswill not integrate the damage costs related to global warming intotheir economic calculus. The federal government should thus

intervene to internalize these (external) costs using, for instance,economic instruments such as a Canada-wide cap-and-trade systemfor GHG emissions. Another potential market failure concerns theenergy technology and innovation strategy. According to Khanbergand Joshi (2012), when it comes to the development of technologieswith highest public benet, a double market failure is at playthedifculty of privately capturing all the benets of energy R&D and thedifculty of internalizing the cost of pollution. Private interests mayalso fail to capture the full scope of the public benets related to thedevelopment of cleaner technologies. The authors show that energyR&D creates positive externalities, known as spillover. This impliesthat the public benets from energy R&D over time exceed theprivate benets; as a result the incentive for a private agent to investis minimized. Khanberg and Joshi (2012) consider public investmentaway to bridge the gap between public and private interests (see alsoGallagher et al., 2006).

The lack of coordination between energy and climate policies, thelack of cooperation between federal and regional governments, andthe short-term funding and overall poor performance (Khanberg andJoshi, 2012) of the Canada energy R&D strategy explains the observedtendency to exploit non-renewable resources in a short-term waywithout considering the long-term impact and public benets.Furthermore, except for the Heritage Fund of Alberta.17 there is nomechanism to reinvest governmental revenue (from taxes androyalties) to generate revenue beyond the resource exhaustion date,as observed in Kuwait and Norway for instance. As an example of alonger-term perspective (see for instance Vivien, 2009), a patrimonialmanagement strategy could be adopted, in which energy resourcesare regarded as common resources and are exploited at a rate thattakes into account the interest of future generations. This approachprovides a displacement from the usual debate on resource appro-priations. The appropriation issue is usually addressed in terms of thepublic or private property right (Alchian and Demsetz, 1973).Following Vivien (2009), this opposition can be overcome using thenotion of common property, for which collective rules to shareresources in a long term perspective can be dened (Ostrom,1990). A longer-term perspective will help to align resource exploita-tion (and to some extent the associated energy strategies) with thetime horizon usually adopted by climate strategies and thus improvethe overall coherence of the energy and climate policies.

4. Concluding remarks and recommendations

Canada's greatest strength in terms of energy and climatepolicies is its rich endowments of natural and energy resources,renewable or otherwise. Abundant and diversied, these resourcesplace Canada in an enviable situation in terms of energy securityand in a leading role on the international energy scene. However,these resources are unequally distributed across different regions.

Our SWOT analysis of the Canadian energy and climate policieshas shown that there is a lack of consistency between federal andregional strategies. There is no coordinated national energystrategy beyond a reliance on market forces, which leads to a lackof overall coherence. In particular, there is no long-term strategyfor sustainable resource management. Instead, the main decisionvariables are market prices and availability (production), sinceresource exploitation is mainly conducted by private companies.The provinces thus have little control over resource exploitationbeyond the imposition of taxes and royalties.

16 Even if GHG are not considered pollutants they might cause harmful effects,as suggested by Valentine (2010).

17 The Heritage fund of Alberta was created in 1976 by the Alberta savings trustfund act. Originally established for future generations, today the fund createsincome used to support health care, educational programs, and investment insustainable energy systems.


In terms of climate policy, Canada committed itself to reducingits GHG emissions as early as 1997 (the date of the adoption of theKyoto Protocol, ratied by Canada in 2002). Canada then adoptedthe Copenhagen Agreement in 2009 and withdrew in 2011 fromthe Kyoto Protocol, aligning itself in terms of GHG targets with theAmerican climate policy. This federal position conicts with that ofthe provinces that have intensied their efforts to curb emissions.British Columbia, Manitoba, Ontario, and Quebec have joinedCalifornia in the WCI with the goal of coordinating their climatechange decisions and implementing a common GHG emissionreduction strategy (within an emission trading system). Thissituation highlights the lack of coherence of the federal andprovincial climate policies and is likely to exacerbate their poten-tial for conict.

Our analysis has also shown that there are coordination issueswith the energy and climate policies, although Canada couldbenet from a better integration of these policies. The only realconstraints are the federal and provincial environmental regula-tions and social acceptability restrictions. Canadian federalism,which gives much power to the provinces, prevents the federalgovernment from having any real power over regional policy andfrom promoting cooperation among regions, both of which arenecessary for political leadership. In fact, cooperation (and truecoherence) occur only for the measures that all actors (govern-ments, companies, consumers, citizens) benet from adopting,such as the energy efciency measures that are importantcomponents of the energy and climate policies.

Following Valentine (2010), two strategies could be implemen-ted to improve the overall coherence of the energy and climatepolicies at the federal and regional levels. The rst is to createincentives for energy rms to collaborate with public actors(Valentine, 2010). Such collaboration would also benet otheraspects such as energy security and innovation (R&D) strategies.Reinforcing publicprivate cooperation would be particularlyappropriate for Canada since its energy sector is characterized bya diversity of private actors cooperating with public agents.

The second strategy is a combination of policy tools to facilitatecollaboration between the federal and provincial governments.Programs that combine several policy instruments often deliverenhanced results. For instance, to support the regulatory activitiesof the Canadian Environmental Act of 1999, the federal govern-ment undertook a PR campaign explaining its impact and askedthe CCME to develop national strategies, norms, and guidelines tobe used by environment ministries across the country. Thanks tothis combination of policy tools, the Act has been implementeddespite its potential overlap with provincial jurisdiction. TheConference Board of Canada (2004) and Valentine (2010) alsounderline that inter-agency cooperation is probably the best wayto enhance the coherence of energy and climate policies. The CEMand CCME could develop collaborative strategies leading to uniedpolicy approaches. More precisely, to enhance the coherence ofenergy and climate policies, the federal government could attri-bute GHG emission quotas to the provinces that fulll theCanadian objective (using its residual power over interprovincialenvironmental governance). This strategy could involve the CEMand CCME in the negotiation of the implementation details whileminimizing provincial opposition (e.g., by developing commonground on burden sharing that takes into account the cross-cutting issues discussed in this paper). Improvement in the policycoherence should also benet both the public and private sectors(Conference Board of Canada, 2004).

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Canadian energy and climate policies: A SWOT analysis in search of federal/provincial coherenceIntroductionContext of energy and climate policiesKey institutional playersEnergy resourcesProfile of GHG emissionsChallenges for coherence

Analysis of Canadian energy and climate policiesCanadian energy policiesCanadian climate policiesSWOT analysisEnergy securityEnergy efficiencyInnovation and technologyInteractions between energy and climate policies

Concluding remarks and recommendationsReferences

Documents

SWOT Analysis Energy Policy Canadá