Canada needs a new federal Climate Emergency Just Transition Transfer: Seth Klein’s testimony to the House of Commons Standing Committee on Finance
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 is 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.]