Renewing confederation as we rise to the climate emergency: a modest proposal

By Seth Klein

Premiers Jason Kenney and Scott Moe want to re-open equalization. It’s one of the prairie premiers’ core demands for a “new deal” with Canada. But that’s super messy. And besides, the equalization formula isn’t the problem; it’s more or less operating as intended, helping to ensure all provinces have equivalent capacity to fund similar levels of public services. Alberta has plenty of revenue capacity to fund its public programs. As the latest Alberta budget itself boasts, if Alberta taxed individuals and corporations at rates comparable to other provinces, it would have “at least $13.4 billion more in taxes.”

That said, Alberta and Saskatchewan do have a legitimate case on a related point. When it comes to taking action on the climate emergency, it is true that some provinces, particularly Alberta and Saskatchewan, are going to have to do more heavy lifting to reduce Canada’s greenhouse gases (GHGs). This transition will be more challenging and disruptive in those places. About 38% of Canada’s GHGs are from Alberta and about 11% derive from Saskatchewan, far more than their respective shares of the Canadian population. Climate action in a province like BC is going to be a big task, but it won’t require a fundamental reconfiguration of the province’s industrial and employment make-up; the same is not true in a province like Alberta.

So, instead of revising the equalization formula, what if we created a new federal transfer to the provinces linked specifically to climate action and just transition. We could call it the “Climate Emergency Just Transition Transfer.” It could fund both job-creating green infrastructure projects and training/apprenticeships. It could represent a way to renew confederation while rising to the climate challenge.

The annual amount of the total transfer program would be subject to negotiation, but it should be large – enough to signify that our country is ready to treat the climate crisis as the existential threat it is. Something in the range of $10-20 billion a year, perhaps more. But the transfer’s distribution could be based on a formula linked to recent GHG emissions in each province (but fixed from that point forward, so that it does not perversely incentivize continued high GHGs). If Alberta is currently responsible for about 38% of Canada’s GHGs, it would receive 38% of the transfer money. Alternatively, the formula could be linked to how many people are currently employed in the oil and gas sector; again, the bulk of the support would go to the regions where it is most needed.

But here’s the catch. The federal government should not simply hand the money over to provincial governments. Instead, we should establish new just transition agencies – one in each province – jointly governed by the feds, provincial and local governments, and, vitally, Indigenous nations from that province, and with civil society representatives too from labour, business, and academic/NGO experts. 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 structure like this, such as Port Authorities. We might want to require that provincial co-governance be linked to cost-shared contributions.

We can all easily imagine a long list of worthwhile infrastructure and training/apprenticeship projects that this transfer money could fund – public transit expansion, building retrofits, renewable energy projects, oil well reclamation, electric charging infrastructure, methane capture, high-speed rail, etc. The key would be that it would represent real dollars for actual transition and new jobs (not vague assurances and the historic false promises of just transition).

The transfer could include a “good jobs guarantee” for current energy workers. And there should be other conditions tied to the transfer: ending fossil fuel subsidies; minimum apprenticeships for women and Indigenous people; and minimum royalty rates (so it is not a subsidy for under-taxing the fossil fuel companies). Additionally, moving forward, the transfer should be tied to demonstrated reductions in GHGs – it makes little sense to fund climate action if a province is engaged in activities that simultaneously increase emissions.

Potentially, the funding for such a program could be drawn mainly from ending fossil fuel subsidies and new taxes on fossil fuel companies. In essence, this would see the oil and gas industry itself contributing to much of the cost of this necessary transition.

There is a lot of bad blood in our confederation debates at present, and some of it seeks to take us in the opposite direction of what this historic moment demands. We need to rapidly decarbonize our economy. But we also need to recognize how hard this will be, particularly for some regions, and approach this task with understanding. That’s always been the challenge of confederation. A proposal such as this – linking the calls for a “Green New Deal” with those for a “New Deal” in confederation – might be just the ticket.