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Energy Policy 63 (2013) 11391150

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Energy Policy
journal homepage: www.elsevier.com/locate/enpol

Canadian energy and climate policies: A SWOT analysis in search

of federal/provincial coherence
Camille Fertel b,n, Olivier Bahn b, Kathleen Vaillancourt a, Jean-Philippe Waaub a

GERAD and Universit du Qubec Montral, 3000 Chemin de la Cte St-Catherine, Montral, QC, Canada H3T 2A7
GERAD and Department of Management Sciences, HEC Montreal, Montreal, QC, Canada


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.

art ic l e i nf o

a b s t r a c t

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

This paper presents an analysis of Canadian energy and climate policies in terms of the coherence
between federal and provincial/territorial strategies. After briey describing the institutional, energy, and
climate contexts, we perform a SWOT analysis on the themes of energy security, energy efciency, and
technology and innovation. Within this analytical framework, we discuss the coherence of federal and
provincial policies and of energy and climate policies. Our analysis shows that there is a lack of
consistency 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 a
provincial level without cooperation with other provinces or with the federal government. One way to
improve policy coherence would be to increase the cooperation between the different jurisdictions by
using a combination of policy tools and by relying on existing intergovernmental agencies.
& 2013 Elsevier Ltd. All rights reserved.

Canadian energy and climate policies
SWOT analysis
Federalprovincial governance structure

1. Introduction
Canada has a remarkable energy prole with abundant and
diverse resources. It is also characterized by large inequalities in the
distribution of its resources and a federal structure that imposes
several levels of governance and jurisdiction. Energy and climate
policies are often interrelated; for instance, energy policies encouraging fossil fuel production conict with climate policies aimed at
reducing greenhouse gases. These policies are implemented by both
the federal and provincial governments according to a sometimes
ambiguous distribution of jurisdictions. Moreover, economic and
environmental realities, the diversity of energy sources, and energy
demands vary greatly among Canadian provinces. As a result,
energy and climate policy objectives and the means to reach them
also differ. There is therefore a multiplication of federal and
provincial strategies, sometimes complementary, but often

Corresponding author Tel.: 1 514 340 6053x6910; fax: 1 514 340 5665.
E-mail address: Camille.fertel@gerad.ca (C. Fertel).

0301-4215/$ - see front matter & 2013 Elsevier Ltd. All rights reserved.

contradictory. Indeed, the dual levels of governance lead to specic

issues for the different decision-making entities (Thorlakson, 2003)
and in particular make it difcult to achieve overall coherence in
the various policies. Specically, Canadian provinces are responsible
for the regulation, production, distribution, and planning of their
own energy resources. However, the federal government is
co-responsible for the industrial development of the energy sector
and can support and nance specic activities in the national
interest (Duquette, 1992). It can thus intervene in the areas of
shared authority. This situation may generate political, legal, or
operational resistance from the provincial authorities to the detriment of overall coherence in energy and climate policies.
Several denitions of coherence have been proposed. For
instance, policy coherence is dened by the OECD as the
systematic promotion of mutually reinforcing policy actions
across government departments and agencies creating synergies
towards achieving the agreed objectives (OECD, 2001). Similarly,
Gauttier (2004) presents policy coherence as the achievement of
a synergy between () policies and Missiroli (2001) as a desirable plus that implies positive connections [and is] more about


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

synergy and adding value. In Canada, the NorthSouth Institute

(NSI) (2003) denes policy coherence as policies that are coordinated and complementary or at least not contradictory. The
common elements of these denitions are thus synergies between
policies and implicitly the use of adequate policy instruments to
reach the desired objectives. This could also lead to the more
efcient achievement of the objectives.
The question of policy coherence has been widely discussed, in
particular in the case of the European Union (EU). Indeed, the
distribution of competences between the EU and its state members is characterized by both exclusive jurisdictions (EU or state
members) and shared competences (EU and state members). Such
overlapping of responsibilities may cause coherence problems (see
for instance Missiroli, 2001; Carbone, 2008; Den Hertog and Stro,
2011). Coherence analyses have also been performed on Canadian
development and cooperation policies (NorthSouth Institute
(NSI), 2003) and Canadian energy policies (Conference Board of
Canada, 2004; Valentine, 2010). In the latter case, the analyses
have focused on a specic energy sector. By contrast, the aim of
this article is to evaluate Canadian energy and climate strategies
globally, especially their ability to address the problems that
Canada faces. We will in particular evaluate whether the
decision-making processes used, which involve both provincial
and federal jurisdictions, ensure the coordination and overall
coherence of the policies.
Policy coherence analyses are mainly performed through the
content analysis of laws, jurisdictions, or organizational relationships; 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 climate
policies. The SWOT methodology is a strategic analysis tool that
combines the study of the strengths and weaknesses of an
organization, territory, or sector with the study of opportunities
and threats in its environment. The goal is to help dene a
development strategy (Jackson and Dutton, 1988). Whereas the
PESTEL approach, for example, focuses only on external factors, a
SWOT analysis takes into account both internal and external
factors. It aims to maximize the potential of strengths and
opportunities while minimizing the effects of weaknesses and
threats (Schmoldt and Peterson, 2000). It may also incorporate (as
the PESTEL approach does) economic, institutional, organizational,
and legal elements. It is commonly used in the business sector for
the analysis of management strategies, and it has also been used
for policy coherence analysis by the European Union (EU) or
European Commission (Rantil et al., 2003; European Commission
(EC), 2005). It has recently been used for the analysis of energy
strategies (alone or in combination with other approaches2).
The use of a SWOT approach to analyze policy coherence has
several advantages. First, compared to a simple content (or
discourse) analysis, it allows better-structured qualitative analyses
of predened issues. Second, as already mentioned, SWOT is a
strategic analysis tool focused on change. It is therefore more
dynamic and thus better able to identify changes that improve
policy coherence. Furthermore, compared to a costbenet analysis that assesses a policy mainly from the economic-rationality
point of view in an ex-ante context, SWOT can be used to study the
relevance and coherence of a policy or strategy in an intermediate

See for instance Weihrich (1982), Hill and Westbrook (1997), and Valentin
See for instance Celiktas and Kocar (2009) and Tavana et al. (2012).

or ex-post assessment context. Whereas a costbenet analysis

compares different measures or programs with a common objective, SWOT can verify the coherence of a strategy or policy that
encompasses several parallel objectives. Likewise, multi-criteria
analysis is mainly used to compare different projects with heterogeneous measures or impacts and can reveal synergies between
these measures (Vaillancourt and Waaub, 2006; Vazquez et al.,
2012). It is not generally used to assess the overall coherence of a
strategy but rather to evaluate its effects according to several
SWOT analyses have several limitations. In particular, even if
the analysis is well structured, it is often subjective and a
consensus about its results may be difcult to reach. Moreover,
even if it allows us to identify the strategic axis of a policy with
multiple objectives and complex expected impacts, it simplies
the real problem (Commission Europenne (CE), 2006). Finally, it
can be difcult to distinguish between internal and external
factors, leading to confusion between strengths and opportunities
or between weaknesses and threats.
The internal and external factors should be well dened prior
to the SWOT analysis. Strengths are positive internal aspects
controlled by the organization or country, whereas opportunities
are possibilities offered by the external environment that can be
used to improve the strengths (and reduce the weaknesses).
Similarly, weaknesses are negative internal aspects, whereas
threats are external problems or limitations that can prevent the
success 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 International
Energy Agency (IEA) that refers to the uninterrupted availability
of energy sources at an affordable price.3 For energy efciency, we
use the IEA denition that refers to the way of managing and
restraining the growth in energy consumption.4 The theme
technology and innovation focuses on R&D policies that improve
the sustainability of energy production and consumption. In this
context, the strengths (resp. weaknesses) are economic or political
domestic elements that positively (resp. negatively) impact a
specic theme. Likewise, the opportunities (resp. threats) are
external factors that similarly impact a given theme. We use this
taxonomy to discuss the coherence of federal and provincial
policies 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 on
energy and climate policies at both federal and provincial levels
and in country reports from international bodies such as the IEA.
On the other hand, these themes are common to the intervention
domains of federal and provincial governments, and are at the
interface of energy and climate policies. It is also important to
analyze how energy and climate policies interact. Indeed, in
Canada as in other countries, a commitment to reducing greenhouse gas (GHG) emissions is shaping energy policies, for instance
by mandating that by 2020 90% of all Canadian electricity
generation must be free of GHG emissions (International Energy
Agency (IEA), 2010a) or by mandating the phasing out of coal-red
electricity generation in Ontario by 2014 (Government of Ontario,
2007). Similarly, energy policies such as fossil fuel subsidies or the
extension of the life of coal-red thermal plants (International
Institute of Sustainable Development (IISD), 2010; Canada Gazette,
2012) inuence GHG emission levels.
The remainder of this paper is organized as follows. In Section
2, we analyze the context of Canadian energy and climate policies,


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

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

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


Table 1
Provincial 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
 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)

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. Frontier
lands 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 million
square kilometers.

presenting in particular the different actors involved. Section 3

presents our SWOT analysis and discusses its implications, focusing 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 development and implementation of energy and climate policies, at the
federal and provincial/territorial levels. We then briey present
the energy resources and emission proles of the different
provinces and territories. This leads to an introduction of the
challenges to be explored by our SWOT analysis.
2.1. Key institutional players
Politically, Canada has two main levels of government: federal
and provincial (or territorial). Hereafter, we refer to the provinces
and territories as regions. The jurisdictions are distributed between
these levels of government, and both play an essential role in the
development and implementation of energy and climate policies.
This distribution of jurisdictions is the result of the Constitution
Acts of 1867 and 1982.
An essential characteristic of Canadian federalism is that the
provinces own their underground resources, with the exception of
those found in aboriginal lands and certain federal lands (national
parks). The provinces are responsible for developing and implementing policies within their borders. The territories do not have
their own jurisdictions and do not own their underground
resources but rather assume partial management.5 Table 1 summarizes the federal and provincial jurisdictions.
The provinces are thus responsible for the management of the
natural resources and power plants within their borders. Each
province has a ministry or ofce that considers questions of
energy as well as natural and environmental resources. The federal
government (together with the National Energy Board or NEB) is
in charge of interprovincial and international commerce related to
energy. It is also responsible for programs and policies in the
national interest including national economic development,
energy security, and public health (air and water quality, climate
change issues) and the management of federal lands. The federal
government also maintains a certain control over the resources of
The natural resources of Nunavut and the Northwest Territories are administered by the Federal Department of Indian and Northern Affairs.

the three territories (Yukon, Northwest Territories, and Nunavut)

and over offshore6 production.
The NEB is an independent federal agency whose mandate is to
regulate interprovincial and international aspects of the oil, gas,
and electricity sectors. Its purpose is to regulate pipelines, the
development of energy resources, and energy trading in the
Canadian public interest. However, the NEB has also allowed for
the de-politicization of the development of transport infrastructure (route selection) for oil, gas, and electricity; this infrastructure
is often located along the border with the United States (US)
(Rastgardani, 2005).
Involved in both the energy and environmental sectors, Natural
Resources Canada (NRCan) is the leading federal government
department in the eld of energy policies. It is responsible for
the implementation of federal policies and programs that seek to
enhance the responsible development and use of Canada's
natural resources and the competitiveness of Canada's natural
resources products (Natural Resources Canada (NRCan), 2011).
The energy sector of NRCan is made up of several branches, one of
which is responsible for energy policies, while another, the Ofce
of Energy Efciency (OEE), concentrates on energy efciency.
The federal department of the environment, Environment
Canada (ECan7), coordinates federal environmental policies and
programs. This includes the preservation and improvement of the
quality of the natural environment, the conservation of Canada's
renewable resources, the preservation of water resources, and the
production of weather forecasts. It is also the main leader for the
implementation of the government's Clean Air Agenda (2001) and
is directly responsible for the management of GHG emissions.
The Canadian Nuclear Safety Commission was created in 2000
by the Nuclear Safety and Control Act to replace the Atomic Energy
Control Board founded in 1946. The Commission deals almost
exclusively with the security standards of the nuclear industry and
only rarely addresses challenges related to market or environmental concerns that go beyond the needs of public safety.
Coordination between the federal and regional governments
occurs through ofcial committees as well as informal meetings
and consultations. The Council of Energy Ministers (CEM) is the
Canadian forum for the different federal and regional energy
ministers. In this forum ministers discuss the challenges and
opportunities they face. The Canadian Council of Ministers of the

The energy-resource prospects of the Canadian North and the Arctic could
lead to new challenges for the federal government (exploitation leadership,
negotiations with territories and/or with First Nations).
The ofcial acronym used in Canada is EC. We use here the acronym ECan to
distinguish between Environment Canada and the European Commission.


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

Environment (CCME) is the counterpart of the CEM for environmental issues. In this council the fourteen ministers (from the
federal and regional governments) discuss environmental issues
that require cooperation between governments.
In this context, two elements must be highlighted:

 The existence of a variety of players, at both the federal and

regional levels, involved in environmental and energy issues.

 The potential overlap of jurisdictions, both horizontally (at the

federal level for instance) and vertically (between the federal
and regional levels). As an illustration, there is a potential
overlap between NRCan and ECan (two federal ministries) since
one of the ECan's mandates relates to renewable resources,
including energy resources. Likewise, NRCan is responsible for
the development and use of natural resources, a mandate that
also falls under provincial jurisdiction.
In addition to this diversity of players, there are differences in
the energy-resource endowments of the regions, which strengthen
the need for coherence in energy and climate strategies.
2.2. Energy resources
We now briey present the diversity of the energy-resource
endowments. Canada is one of the largest energy producers in the
world (ranked seventh for oil and electricity and third for natural
gas in 2009) and one of the largest energy exporters (ranked rst
for uranium and in the top ten for coal in 2009) (International
Energy Agency (IEA), 2010b). It is also an importer of energy
products (crude oil, in particular) (Statistique Canada (StatCan),
Canada's energy resources are unevenly distributed across the
country. The majority of the coal reserves and mines are located in
Western Canada. There are also mines in New Brunswick and Nova
Scotia. Reserves also exist in Ontario, Yukon, Newfoundland and
Labrador, and the Northwest Territories.
Canada is ranked second globally, just behind Saudi Arabia, for
its 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 of
conventional oil, mostly offshore. The western regions are the
principal producers/exporters, along with Newfoundland and
Labrador in the east (offshore). The country also imports crude
oil to supply Central and Atlantic Canada, mostly from the North
Sea, the Middle East, and Africa.
Canada was ranked nineteenth for its reserves of conventional
natural gas in 2007 (British Petroleum (BP), 2008). Approximately
half of these reserves are located in the Western Canadian
Sedimentary Basin. The other half is located in currently lessexplored regions such as the High Arctic, the Arctic, and marine
zones off the coasts of the Atlantic Provinces. Despite being a (net)
exporter, Canada also imports natural gas from the US (Natural
Resources Canada (NRCan), 2008). However, the natural gas
market is rapidly evolving. Numerous conventional natural-gas
deposits are in decline while interest in new non-conventional
gases such as tight gas, coal bed methane, and shale gas is
increasing as new extraction technologies render their exploitation feasible (Natural Resources Canada (NRCan), 2008; National
Energy Board (NEB), 2009).
Canada has the largest reserves of uranium in the world and is
one 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 the
production being used as a combustible by Canadian nuclear
power plants).

Projects that promote renewable energies are multiplying at

the regional level. Canada has a large potential for wind energy,
particularly along the eastern and western coasts. In 2012, the
total installed capacity was 5641 MW (representing about 2.3% of
Canada's total electricity demand). More than 6000 MW of windenergy projects are already contracted for the next ve years,
according to the Canadian Wind Energy Association (Canadian
Wind Energy Association (CANWEA), 2012). Hydroelectricity is
highly developed in Canada, with a total production of
363.2 TW h, half of which comes from Quebec. Hydroelectricity
continues to grow in several provinces (especially the Atlantic
Provinces, British Columbia, Manitoba, and Quebec) through the
building of small dams (especially in Quebec). Canada is also
developing its production of biofuels, biomass (mainly from
organic waste and wood waste, in particular in British Columbia),
and tidal energy in Nova Scotia. Tidal energy could also be
developed in other Atlantic provinces but remains marginal for
the moment.
2.3. Prole of GHG emissions
Canadian GHG emissions correspond to approximately 2% of
the world's emissions (Environment Canada, 2011). Its emissions
per capita (16.34 t CO2) are higher than the OECD average (10.61 t
CO2) (International Energy Agency (IEA), 2010b). Despite abandoning the Kyoto Protocol in 2011, Canada maintains an active climate
policy through the signing of the Copenhagen Agreement in 2009,
in which it agreed, along with the US, that by 2020 it would reduce
its GHG emissions by 17% of the 2005 level (to 607 Mt CO2 eq).
At the national level, the most signicant contribution to
emissions comes from the transportation sector (23.3% of total
emissions in 2008). Next are the oil and gas sectors, which include
the production, transportation, transformation, rening, and distribution of oil and gas products (21.5%). They are followed by the
electricity sector (13.3%). Close to two-thirds of GHG emissions are
thus directly related to the energy sector (Environment Canada,
Canada's GHG emissions vary by province, following the
uneven distribution of energy reserves and population as well as
the industrial structure. Alberta (33.4% of total emissions in 2008)
and Ontario (26.0%) have the highest emission levels, but for
different reasons. In Alberta, the emissions are primarily due to the
exploitation of oil and gas. This Albertan sector is forecast to
continue contributing signicantly to Canadian GHG emissions in
the near future (Environment Canada, 2011). In Ontario by contrast, the high emission levels are primarily due to the size of its
industrial sector and are also related to its relatively large population. 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 per
capita are relatively high. Conversely, the Atlantic Provinces and
the Territories are less populated, exploit fewer energy resources,
and have smaller economies. Their emissions are therefore the
lowest (ranging from 2.9% in New Brunswick to around 0.1% in
2.4. Challenges for coherence
Given the different institutional players and the variation in the
energy endowments, emission levels, and socioeconomic contexts,
there could be coherence issues in energy and climate policies.
For instance, Western Canada is endowed with rich fossil
resources but exports the majority of its production to the US,
whereas Eastern Canada imports its oil from Europe and the
Middle East. This situation, due in part to the existing energy
transportation network (developed according to a continentalist

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

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 the
years. It has been largely shaped by major government decisions
that created regulatory organizations such as the National Energy
Board (1959) and departments such as NRCan and ECan. It is also
framed by different agreements. The Western Accord (1985) is an
agreement among the governments of Canada, Alberta, Saskatchewan, and British Columbia regarding the rates of taxation for oil
and natural gas. The Agreement on Natural Gas Markets and Prices
(1985) is another agreement between the same provinces. The
Atlantic Accord (1985) is an agreement between Newfoundland
and Labrador and Nova Scotia for the establishment of offshore
petroleum boards managed jointly by each province and the
federal government. Other agreements are the CanadaUnited
States Trade Agreement (1988) and the North American Free Trade
Agreement (NAFTA) (1992). The latter promotes a single North
American market (Canada, the US, and Mexico) and encourages
investment in the Canadian energy sector. NAFTA is a pillar of the
Canadian energy policy, according to the International Energy
Agency (IEA) (2010a), mainly as far as trade with the US is
Canada's energy strategies result both from past federal decisions and from choices made by the regions for the development
of their resources. For instance, lower federal corporate tax rates in
the oil and gas sectors (compared to other sectors) and the
accelerated capital-cost allowance for the oil sand sector (mining
and in-situ) have enabled Alberta to encourage the exploitation of
its oil sands (International Energy Agency (IEA), 2010a).

logic that supports a large integrated North American market)

introduces an energy imbalance among the regions, in particular
regarding the security of the supply. This imbalance in turn creates
challenges for the development of a coherent energy policy
ensuring a secure supply for Canada as a whole.
The next section presents in detail the different energy and
climate policies and analyzes their level of coherence.

3. Analysis of Canadian energy and climate policies

We rst give an overview of Canadian energy and climate
policies, 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 important
principles (Natural Resources Canada (NRCan), 2011):
1. Competitive markets are assumed to be the most efcient at
regulating prices, supply, demand, and trade, while ensuring a
successful and innovative energy system capable of meeting
Canadian energy needs.
2. Respecting the jurisdictions of provinces and the federal
government is essential; provincial governments manage the
majority of the country's energy resources.
3. When necessary, targeted federal interventions in the energy
trading process ensure that specic energy-policy objectives
are achieved. These objectives often concern public health, the
environment, or safety (the regulation of pipelines); interventions can occur through regulations (standards) or economic
incentives (taxes).

3.2. Canadian climate policies

Canadian climate policy aims to achieve environmental and
economic benets for all Canadians. Canada participates in international climate-change negotiations. In 2002 it adopted the Kyoto
Protocol (United Nations, 1998), imposing a target of reducing its
1990 levels (461 Mt CO2 eq) by 6% by 2012. In 2011 it withdrew
from this agreement. The federal GHG emission reduction targets
are now dictated by the Copenhagen Agreement (United Nations,
2009), signed by Canada in 2009.

Canadian energy policy faces the challenges of ensuring the

ecologically acceptable production and consumption of energy,
supporting a competitive economy via competitive energy prices,
and securing the energy infrastructure. Canada's industry is highly
energy-intensive, and its energy consumption per capita is one of
the highest in the world. To address this situation, the federal
energy policy focuses on reducing energy consumption. This ecoefciency policy supports practices that reduce waste. It also

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


Federal measures
 Regulations for passenger automobile and light-duty truck
 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,
 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

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


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

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



British Columbia

33% below 2007

22%a below 1990

80% below 2007

50% below the

New Brunswick
Nova Scotia
Newfoundland and
Prince Edward Island
Northwest Territories

20% below 2006

15% below 2005
15% below 1990
20% below 1990
10% below 1990
10% below 1990
10% below 1990

80% below 1990

10% below 1990

6% below 1990 (by 2013)

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

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 and
practices. These federal initiatives concern for instance performance standards for new coal-red power plants that have a
direct impact on provincial emissions. The regions have also taken
steps to curb their emissions. These include the scheduled elimination of coal-red generation in Ontario by the end of 2014 and
the cap-and-trade system for GHG emissions to be introduced in
Quebec in 2013 via the Western Climate Initative (WCI).
In addition to federal targets, the regions (excluding Nunavut
and Yukon) have adopted their own targets for emission reduction; see Table 3.
The regional reduction objectives add up to a target of 625 Mt
for 2020. This is slightly higher than the Canadian objective of
607 Mt (see Fig. 1).
Although the federal government establishes objectives for the
entire country, it cannot force regions to reduce their emissions
using tools that fall under provincial jurisdiction. For instance, the
federal government cannot impose electricity tariffs that encourage non-emitting electricity generation sources, because tariff
regulation falls under provincial jurisdiction. The fact that the
cumulative regional targets do not match the federal target
illustrates the lack of coordination between the federal and
regional levels and among the different regions.
In the next two sections, we will further analyze Canadian
energy and climate strategies, in particular performing a SWOT
analysis focusing on the following three issues (common to both
strategies): (1) energy security; (2) energy efciency; and (3)
technology and innovation.

except that the government is currently studying the possibility of

creating strategic reserves. There are only a few laws8 for emergency procedures and a regulatory agency9 to handle supply
disruption. Security is also an issue in most regional strategies,
but the form and intensity differ according to the different
resource endowments and geographical situations.
The security of the oil supply is more critical in the Eastern and
Atlantic provinces since, despite some offshore production capacity, they depend on foreign imports. Hughes (2010) claims that
this dependence, in particular for the Eastern provinces, presents
the following risks. First, the most politically stable providers have
reached their peak and their production is currently declining
(oil from the North Sea, Norway, and the United Kingdom). They
will therefore struggle to maintain their production and export
levels at competitive prices. Demand is expected to increase in
international markets (Asian markets, in particular), so there will
be increased competition for these regular supply sources and a
risk of price ination. Second, some providers such as Angola,
Niger, and Algeria are politically unstable, which poses threats to
the security of the supply. The Eastern and Atlantic provinces must
therefore diversify their sources, using both stable but declining
sources and politically risky but less expensive sources. These
provinces are also trying to diversify their energy mix by developing local (and if possible renewable) energy resources. This
diversication strategy favors the reduction of GHG emissions by
encouraging the development of energy sources (such as natural
gas, 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, which
will be highly dependent on oil until alternative vehicles (electric
or hydrogen) produced using low or non-emitting sources penetrate 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 one
hand, increased US self-sufciency in terms of fossil fuels (e.g., a
switch from oil to abundant domestic unconventional gas) may
affect the demand for Alberta's oil. Moreover, the uncertainties
surrounding future environmental regulations in the US and other
oil-importing countries may affect Alberta's oil sands exports and
require the province to nd new international markets.11 On the
other hand, a market-diversication strategy that reduces the oil
supply to the US must be carried out within the constraints of
NAFTA, which requires compensation through a proportional
reduction in the domestic supply.
Energy security is a major issue for Canadian energy policies,
but it translates into different strategies depending on whether a
province is a (net) energy exporter or importer. The absence of a
consistent federal policy puts at risk the regions most exposed to
supply or export disruptions.

3.3. SWOT analysis

Table 4 presents our SWOT analysis. It contains elements from
both energy and climate strategies at the federal and regional
levels. We will also present a more detailed study that discusses in
particular the issue of coherence.
3.4. Energy security
Although Canada is a net exporter of energy, it faces some
energy security issues. These issues fall under the federal jurisdiction. However, there is no federal strategy for energy security,

The emergency law for the distribution of energy, the law on emergency
measures, etc.
The Emergency Supply Allocation Board.
The dependence on oil can be explained by lock-in issues relating to the
production and distribution infrastructure for liquid fuels. See, for instance, Pearson
and Foxon (2012); Unruh (2000, 2002); and Unruh and Carrillo-Hermosilla (2006).
The United States has long been our central destination for energy exports.
Americans are excellent customers. But the U.S. no longer enjoys uncontested
dominance 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. market
and improve our bargaining power by cultivating additional markets (Launching
Alberta's Energy Future, provincial energy strategy, p. 16).

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


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

Table 4
Synthesis of SWOT analysis.
 Energy security:
 Energy security:
 Energy security:
 Energy security:
 Important element within the
 Absence of a consistent
 Signicant increase in global energy
 Cost of interprovincial
federal jurisdiction
federal strategy because
transport infrastructure
of lack of coordination
compared to current
 Existence of a regulation agency
 Forecast rise in energy prices
with provincial
relatively low cost of oil
(the Energy Supplies Allocation
 Canada's position on global energy
Board) and of federal legislation
for energy supply
 Importation from
jurisdictions of
politically unstable
 Present in all provincial energy
 Energy efciency:
provincial and federal
 Businesses aware of economic
 Signicant investment to
 Increase in national
advantages gained through efciency
promote diversication of
tensions around
 Lack of infrastructure for
 Policies encouraging the development
exchanges of energy
 Signicant and diversied
 NAFTA requirement to
of energy-efcient technologies that
resource endowment able to
supply the US market
 Dependence of some
stimulate job creation in the context
offset a possible decline in
regions on foreign
of a global economic slowdown
energy imports
sources vulnerable to
 Important element for climate policy
 Slowness of regulatory
processes for the
 Energy efciency:
 Innovation and technology:
implementation of new
 Signicant federal involvement
 International and North American
infrastructure for
 Energy efciency:
in improving energy efciency
transporting energy
(through investments,
 Highly energy-intensive
 Rising prices of energy resources at
standards, regulations, scal
the global level
 Energy efciency:
 Restrictions owing to
 Canada's position on energy
climate prole
 EcoAction programs for the
 Absence of a coherent
technology markets
pomotion and deployment of
national strategy
 Low cost of energy
 Investments in clean technologies (e.
new technologies with
because of lack of federal
 Cost of investment
g., CCS) creating synergies with
improved energy efciency
because of low
climate policy
population density
 Cooperation and shared
 Low energy price
 Consolidation of expertise in
involvement between regions
discourages necessary
unconventional fossil fuel extraction
and the federal government
 Innovation and technology:
 Time needed to develop
and implement new
 Innovation and technology:
 Innovation and technology:
 Large federal investment in
 Absence of coordination
R&D and energy innovation
among provincial and
 Constraints imposed by
federal strategies
the global economic
 Structured federal policy
because of different
slowdown (costs,
 Public-private partnerships at
budget, demand)
the provincial and federal levels
 No incentive for better
 Technological lock-in
interprovincial or
 Lack of long-term vision
for the electricity


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

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




Each activity (%)

Energy efciency








Fossil fuels: oil, gas, coal

Nuclear fusion and ssion
Hydrogen and fuel cells
Renewable energy sources
Other power and storage technologies
Other cross-cutting R&D

3.5. Energy efciency

Canada is one of the largest per-capita consumers of primary
energy and electricity in the world (International Energy Agency
(IEA), 2010b). The traditional explanations for this are its strong
concentration of highly energy-intensive sectors, cold climate, and
high quality of life together with its low population density.
Canada has large energy resources, and Canadians have until
recently beneted from relatively low energy prices, which tend
to encourage consumption. Nonetheless, Canada has been engaged
for ten years in a policy to reduce energy consumption.12 As a
result, energy consumption increased at a rate of only 1.3% (on
average, per year) between 1990 and 2006, while the GDP
increased at a rate of approximately 3% (on average, per year).
During this process, Canada has acquired expertise in energyefciency indicators. Moreover, efciency improvement is a basic
component of its climate policies because reductions in fossil fuel
consumption decrease emissions.
The most signicant challenge in the implementation of a
global strategy to promote energy efciency is the division of
power between the regional and federal jurisdictions. This situation does not allow the federal government to set national targets
for a reduction in energy consumption. However, the government
has implemented a series of national programs and standards
seeking to improve energy-efciency levels throughout the
The regional governments use these federal tools to complete
and reinforce their own energy-efciency programs. In 2008 the
regions jointly committed to increasing their energy efciency by
20% by 2020. They pursue this objective through improved
building standards, the regulation of energy-intensive products,
tax credits for the residential sector, and proactive policies in
public infrastructure. Three provinces (Nova Scotia, Prince Edward
Island, and Quebec) have created government agencies specically
devoted to the promotion of energy efciency, provincial equivalents to the federal Ofce of Energy Efciency. The importance of
energy-efciency programs differs across provinces according to
the population and the industrial structure. For instance, Alberta
has made energy efciency a priority, before energy security, since
the former limits GHG emissions while sustaining economic
growth and the development of advanced technologies for the
exploitation of the oil sands. Conversely, energy efciency is not a


1995, The Energy Efciency Act, Canada Gazette.


top priority for Quebec: it is the fourth objective (of six) in its
energy strategy. This is because Quebec has a hydro-dominated
power grid and thus benets from one of the lowest electricity
price levels in North America.
Overall, energy efciency is a domain where the federal and
regional governments actively cooperate to achieve their combined objectives. This cooperation exists because it is a winwin
strategy. This may be partly explained by the fact that energy R&D
is mainly supported through federal funding (see Table 5);
whereas the provinces focus on implementation. Energy efciency
also reduces GHG emissions while sustaining economic activity.
Energy efciency is thus an issue where the federal and regional
policies 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 nonnuclear energy technologies, making it one of the largest R&D
investors of the OECD. Its innovation policy aims to make the
production and consumption of energy products more sustainable,
in particular by reducing GHG emissions.13 The federal policy on
energy innovation and technology is developed and implemented
mainly by NRCan and the Nuclear Fission R&D (International
Energy Agency (IEA), 2010a). The NRCan initiatives have nine
priorities and are implemented through three programs. The
Program of Energy R&D (PERD) provides funding to federal
departments and agencies to support their energy research activities. The ecoENERGY Technology Initiative is a component of
ecoACTION encompassing federal actions aiming to improve air
quality and reduce GHG emissions and supporting projects such as
carbon storage and enhanced oil recovery. The Clean Energy Fund
provides funds for large-scale demonstration projects of carbon
capture and sequestration and small-scale demonstration projects
of renewable energy and clean-energy technologies.
The role of the federal government goes beyond nancing
research. It also coordinates and supports regional efforts and
publicprivate partnerships. However, as illustrated in Table 5, the
federal government and the regions do not always have the same
This policy is not considered particularly successful. See Jenkins et al. (2001)
and http://www.theglobeandmail.com/report-on-business/canada-not-an-energysuperpower-report/article4522016/. Accessed on November 2012.

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


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





CAD 45 M

CAD 89 M

CAD 34 M

CAD 26 M

CAD 32 M

Renewable (69%)

Renewable (bioenergy) Oil and gas (49%) Hydrogen (8%)

Energy efciency (16%) Coal (22%)
Renewable (wind)
Renewable (solar) (9%) CCS (9%)
Energy efciency

Fuel cell and hydrogen Oil and gas (72%)

Power and storage
Coal (13%)
CCS (7%)
(bioenergy) (4%)


Energy efciency

Prince Edward
CAD 2.5 M

Nova Scotia
CAD 24 M
Oil and gas (78%)

CAD 0.3 M

Renewable (ocean)

Have provincial R&D institutes.

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

This diversity of priorities can be explained on the one hand, by

the large variation in energy sources, GHG emissions, and socioeconomic 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 have
established R&D institutions while others have not. Generally, the
regions establish their research and innovation priorities by
focusing on their resources and co-nancing projects with the
federal government according to their mutual interests. They have
neither the same priorities nor the same budgets (see Table 6).
However, they all invest in clean technologies to sustain economic
development while reducing the environmental impact.
Overall, beyond their shared interests, the regions have no real
incentive to cooperate with either the federal government or other
regional governments. For instance, for many regions (Alberta, the
Atlantic Provinces, British Columbia, Ontario, etc.) the modernization and reinforcement of the electricity network is essential to
ensure security and efciency. However, projects on smart-grid
technologies and electricity storage are not prioritized at the
federal level. The development of a smart and better interconnected grid should yield decreased consumption and reduced
operational costs. It should also produce better overall system
performance in terms of resource management and GHG emissions, while improving the country's competitiveness in the North
American market. The federal government should therefore harmonize the regional priorities for innovation and technology to
ensure national coherence. This would support its goal of international energy leadership (Khanberg and Joshi, 2012).
3.7. Interactions between energy and climate policies
Canada has a strong energy potential because of its diversity of
resources, a signicant portion of which consists of renewable
resources. This is an asset as it faces the climate change issue.
However, Canada has two internal barriers. The rst concerns the
uneven distribution of the resources across the country. This leads
to different energy situations and emission levels at the regional
level 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 of
jurisdiction, but their respective limits are poorly dened. Provincial governments often take initiatives in areas that are the
responsibility of the federal government. For instance, energy
security falls under federal jurisdiction, but Quebec has made this
This situation creates barriers to policy coherence but yields trade

the rst of six objectives in its energy strategy.15 In fact, there is no

integrated national energy strategy, and the climate policy is
merely a juxtaposition of ill-coordinated measures and objectives.
This is due in part to the commitment of the present government
to a confederation that promotes provincial jurisdiction and
relationships between private contractors and local governments.
Consequently, energy and climate policies sometimes lack coherence, even at the provincial level, and thus cannot be fully efcient
at the national level.
There are two challenges to the better integration of energy
and climate policies. First, the objectives of the federal energy
strategy must be consistent with the overall emission reduction
objectives. Second, regional strategies should not conict with
those of other regions or with the national interest. From this
point of view, the climate change issue presents a new opportunity
for mutual coordination and the reinforcement of the energy and
climate strategies, particularly in terms of security, efciency, and
A better coordination of energy and climate policies would
allow potential synergies. As already mentioned, policies that
increase security by diversifying the energy mix (with more
renewables) favor a reduction in emissions. Investments in
energy-efcient technologies or in R&D into lower-emission technologies also contribute to the objectives of climate policies. The
integration of these different policies can only improve their
overall efciency, in particular in terms of costs.
Naturally, a better integration within a given policy type would
also be benecial. Let us consider climate policies. There is
currently a lack of coherence and integration: the federal government has dened national targets for emissions, but each province
works toward its own objectives in a voluntary manner. It is logical
to have different provincial targets because the marginal abatement costs vary. For instance, British Columbia and Quebec benet
from a large endowment of renewables, and their abatement costs
are lower than those of Alberta, where the economy is more
dependent on fossil fuels. However, this absence of coordination
introduces a risk of missing the federal target and does not
guarantee that the reduction is achieved at the lowest (overall)
cost. The federal government could in theory compel the provinces
to cooperate on the development of an overall strategy. According
to the constitution, the federal government has all powers
necessary for performing the obligation of Canada or of any
province (), towards foreign countries, arising under treaties
(Government of Canada, 1867/1982). This power could have been
applied to coerce the provinces to implement suitable policies to


Quebec and Climate Change, a Challenge for the Future (2006).


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

fulll Canada's obligation under the Kyoto Protocol. Moreover, the

federal government has authority over transprovincial environmental governance (residual power). According to the Canadian Environmental Protection Act (CEPA) (Government of Canada, 1999) it also
has the mandate to regulate transboundary pollution (considered
potentially dangerous). Given the potentially harmful consequences
of anthropogenic climate change, GHG emissions16 could fall under
this legislation. To date, this authority has not been exercised.
According to Braun et al. (2002) and Valentine (2010), this
absence of federal action can be explained by the ability of the
provinces to oppose by legal, political, or administrative means
(thrust and riposte) any federal strategy that coerces them to
collaborate on a national climate (or energy) strategy. For instance,
the Canadian constitution forces the federal government to ensure
equal opportunity and to reduce the disparity of opportunity among
the provinces. Thus, any federal policy that reduces GHG emissions
by making the use of fossil fuels more expensive could legally be
challenged by a province dependent on fossil fuels. Such a policy
would affect the competitiveness of the province (increasing its
production costs) and would create a disparity of opportunity.
A more efcient way to proceed would be to negotiate emission
reductions between the federal government and the regions. This
negotiation could apply various rules to distribute the reduction
efforts such as grandfathering (considering the level of emissions
in previous years), emissions per unit of GDP, and emissions per
capita. One of the difculties of this exercise is that the longerterm benets associated with a low-emission economy, such as
public health benets, are difcult to estimate (being in part
collective or public benets). But such a collaborative approach
would increase the likelihood that the federal target can be
achieved via the reductions made by the regions. For instance,
the establishment of a Canada-wide market of emission permits
would enable both the achievement of the overall reduction target
and overall economic efciency (as reductions should occur in the
regions where they are relatively inexpensive).
Another challenge is to harmonize the short-term perspectives
of energy policies (often subject to market forces) with the longerterm perspectives associated with climate policies (since climate
change is a long-term issue). Decision makers are thus confronted
with the need to develop integrated energy and climate policies
that have different time horizons.
Given the reliance of federal policy on the energy markets
(which are mostly globalized, the exception being the electricity
market), the current Canadian strategy seems to be driven by the
immediate exploitation of a maximum of the resources according
to price and availability. This generates short-term economic
benets (e.g., jobs, tax revenue, and royalties). Indeed, whereas
in some countries state organizations participate in or even
control energy production, Canada has been open since 1990 to
foreign investors in gas and oil production (International Energy
Agency (IEA), 2010a), and its fossil fuels are mostly exploited by
private companies. Moreover, Canadian energy policy focuses on
leveraging private investments.
This kind of policy requires suitable measures to channel such
private investments towards the highest public benet, since there
are some issues that market forces and private interests fail to take
into account. More precisely, the market forces may fail to take into
account the multiple externalities (positive and negative) related to
energy production, transformation, or consumption. For instance, in
the absence of clear climate change regulations, the private agents
will not integrate the damage costs related to global warming into
their economic calculus. The federal government should thus

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

intervene to internalize these (external) costs using, for instance,

economic instruments such as a Canada-wide cap-and-trade system
for GHG emissions. Another potential market failure concerns the
energy technology and innovation strategy. According to Khanberg
and Joshi (2012), when it comes to the development of technologies
with highest public benet, a double market failure is at playthe
difculty of privately capturing all the benets of energy R&D and the
difculty of internalizing the cost of pollution. Private interests may
also fail to capture the full scope of the public benets related to the
development of cleaner technologies. The authors show that energy
R&D creates positive externalities, known as spillover. This implies
that the public benets from energy R&D over time exceed the
private benets; as a result the incentive for a private agent to invest
is minimized. Khanberg and Joshi (2012) consider public investment
a way to bridge the gap between public and private interests (see also
Gallagher et al., 2006).
The lack of coordination between energy and climate policies, the
lack of cooperation between federal and regional governments, and
the short-term funding and overall poor performance (Khanberg and
Joshi, 2012) of the Canada energy R&D strategy explains the observed
tendency to exploit non-renewable resources in a short-term way
without considering the long-term impact and public benets.
Furthermore, except for the Heritage Fund of Alberta.17 there is no
mechanism to reinvest governmental revenue (from taxes and
royalties) to generate revenue beyond the resource exhaustion date,
as observed in Kuwait and Norway for instance. As an example of a
longer-term perspective (see for instance Vivien, 2009), a patrimonial
management strategy could be adopted, in which energy resources
are regarded as common resources and are exploited at a rate that
takes into account the interest of future generations. This approach
provides a displacement from the usual debate on resource appropriations. The appropriation issue is usually addressed in terms of the
public or private property right (Alchian and Demsetz, 1973).
Following Vivien (2009), this opposition can be overcome using the
notion of common property, for which collective rules to share
resources in a long term perspective can be dened (Ostrom,
1990). A longer-term perspective will help to align resource exploitation (and to some extent the associated energy strategies) with the
time horizon usually adopted by climate strategies and thus improve
the overall coherence of the energy and climate policies.

4. Concluding remarks and recommendations

Canada's greatest strength in terms of energy and climate
policies is its rich endowments of natural and energy resources,
renewable or otherwise. Abundant and diversied, these resources
place Canada in an enviable situation in terms of energy security
and 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 policies
has shown that there is a lack of consistency between federal and
regional strategies. There is no coordinated national energy
strategy beyond a reliance on market forces, which leads to a lack
of overall coherence. In particular, there is no long-term strategy
for sustainable resource management. Instead, the main decision
variables are market prices and availability (production), since
resource exploitation is mainly conducted by private companies.
The provinces thus have little control over resource exploitation
beyond the imposition of taxes and royalties.
The Heritage fund of Alberta was created in 1976 by the Alberta savings trust
fund act. Originally established for future generations, today the fund creates
income used to support health care, educational programs, and investment in
sustainable energy systems.

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

In terms of climate policy, Canada committed itself to reducing

its GHG emissions as early as 1997 (the date of the adoption of the
Kyoto Protocol, ratied by Canada in 2002). Canada then adopted
the Copenhagen Agreement in 2009 and withdrew in 2011 from
the Kyoto Protocol, aligning itself in terms of GHG targets with the
American climate policy. This federal position conicts with that of
the provinces that have intensied their efforts to curb emissions.
British Columbia, Manitoba, Ontario, and Quebec have joined
California in the WCI with the goal of coordinating their climate
change decisions and implementing a common GHG emission
reduction strategy (within an emission trading system). This
situation highlights the lack of coherence of the federal and
provincial climate policies and is likely to exacerbate their potential for conict.
Our analysis has also shown that there are coordination issues
with the energy and climate policies, although Canada could
benet from a better integration of these policies. The only real
constraints are the federal and provincial environmental regulations and social acceptability restrictions. Canadian federalism,
which gives much power to the provinces, prevents the federal
government from having any real power over regional policy and
from promoting cooperation among regions, both of which are
necessary for political leadership. In fact, cooperation (and true
coherence) occur only for the measures that all actors (governments, companies, consumers, citizens) benet from adopting,
such as the energy efciency measures that are important
components of the energy and climate policies.
Following Valentine (2010), two strategies could be implemented to improve the overall coherence of the energy and climate
policies at the federal and regional levels. The rst is to create
incentives for energy rms to collaborate with public actors
(Valentine, 2010). Such collaboration would also benet other
aspects such as energy security and innovation (R&D) strategies.
Reinforcing publicprivate cooperation would be particularly
appropriate for Canada since its energy sector is characterized by
a diversity of private actors cooperating with public agents.
The second strategy is a combination of policy tools to facilitate
collaboration between the federal and provincial governments.
Programs that combine several policy instruments often deliver
enhanced results. For instance, to support the regulatory activities
of the Canadian Environmental Act of 1999, the federal government undertook a PR campaign explaining its impact and asked
the CCME to develop national strategies, norms, and guidelines to
be used by environment ministries across the country. Thanks to
this combination of policy tools, the Act has been implemented
despite its potential overlap with provincial jurisdiction. The
Conference Board of Canada (2004) and Valentine (2010) also
underline that inter-agency cooperation is probably the best way
to enhance the coherence of energy and climate policies. The CEM
and CCME could develop collaborative strategies leading to unied
policy approaches. More precisely, to enhance the coherence of
energy and climate policies, the federal government could attribute GHG emission quotas to the provinces that fulll the
Canadian objective (using its residual power over interprovincial
environmental governance). This strategy could involve the CEM
and CCME in the negotiation of the implementation details while
minimizing provincial opposition (e.g., by developing common
ground on burden sharing that takes into account the crosscutting issues discussed in this paper). Improvement in the policy
coherence should also benet both the public and private sectors
(Conference Board of Canada, 2004).
Alchian, Demsetz, 1973. The property right paradigm. Journal of Economic History
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