How a Joe Biden presidency will change the calculus of Canadian climate policy

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Joe Biden is the next president of the United States. What does that mean for Canada’s climate plans? Adam Radwanski and Sarah Petrevan will answer your questions.

Join us this Thursday at 1:30 p.m. ET

With Joe Biden as its next President, the United States will rejoin the global fight against climate change.

Mr. Biden may not be able to make good on all the climate ambition of his election platform, which included $2-trillion in green spending. If Democrats fail to win control of the Senate, it stands to limit his ability to pass legislation.

But he will still be able to use executive powers and federal agencies to reverse Donald Trump’s slashing of environmental regulations. He will support climate efforts by states and the private sector, rather than actively impeding them as Mr. Trump did. He will return the U.S. to the Paris Agreement, and, per his campaign platform, try to take a global leadership role in setting more ambitious emissions-reduction targets.

Ottawa says asking Joe Biden not to cancel Keystone is ‘top of the agenda’

In the process, Mr. Biden will also change the calculus around Canadian policies to fight climate change.

For the past four years, Prime Minister Justin Trudeau has lacked an ally in the White House who shares his government’s interest in the issue. Mr. Trudeau’s Liberals will be glad for the chance to co-operate on continental efforts, in some cases even being able to follow the Americans' lead.

At the same time, Mr. Biden could also challenge Mr. Trudeau and other Canadian leaders to up their game, including when it comes to competing with the U.S. for clean-technology investment. And the president-elect’s promised push to decrease U.S. reliance on fossil fuels could exacerbate regional tensions in Canada, by adding to the woes of its oil and gas industry.

It remains to be seen how aggressively Mr. Biden, a relative moderate whose sweeping climate agenda partly reflected an attempt to appease Green New Deal Democrats, will try to advance that agenda while also confronting myriad other challenges.

But based on his campaign commitments, there are certainly some specific ways his policies could affect looming Canadian climate-policy decisions, or force previous ones to be revisited:

CLEANER CARS

The clearest example of how Mr. Biden’s win should help Canada significantly reduce its emissions is road transportation.

North Americans drive unusually gas-guzzling cars and light-duty trucks, relative to other countries. One of the best ways to change that is a policy that Canada has long synchronized with the United States: fuel-efficiency requirements for new vehicles.

Mr. Trump rolled back Barack Obama’s ramp up of those requirements, which left Ottawa contemplating whether to break from tradition by setting higher standards than Washington. That might have been necessary environmentally, but would have sparked warnings about losing manufacturing jobs in an integrated auto sector dominated by the U.S. market.

Now, Mr. Trudeau’s government likely won’t have to worry about that. Mr. Biden’s platform promises that, along with various policies to expedite the shift to electric vehicles, he will develop efficiency standards more ambitious than the ones Mr. Obama put in place. He shouldn’t need congressional support to make good on it, so Canada can hold off on going its own way.

A PUSH AGAINST FOSSIL-FUEL SUBSIDIES

Mr. Biden’s plan to cancel the permit for the Keystone XL pipeline has gotten the most attention around potential impacts for the Canadian resource sector. His promise to “demand a worldwide ban on fossil-fuel subsidies” could prove more contentious when it comes to domestic policy.

It’s been debated how much Canada provides that sort of subsidy support currently, with Alberta Premier Jason Kenney calling it “a myth.” But an analysis released this year by the International Energy Agency and the Organization for Economic Co-operation and Development found that federal and provincial governments provide $3.7-billion in direct and indirect oil and gas subsidies annually.

It’s an open question how effectively Mr. Biden will even crack down on subsidies in the U.S., where he will run into stiff Republican opposition, let alone exert pressure elsewhere. But he will at least be less inclined to prop up the struggling oil and gas industry than Mr. Trump was, buoying Canadian environmental groups who oppose doing so here.

TAKING AIM AT METHANE

Another way that Canada could find itself pushed to be tougher toward its fossil-fuel industry is the regulation of methane, an extremely potent greenhouse gas emitted largely through natural-gas extraction, as well as agriculture.

In 2016, Canada, the U.S. and Mexico agreed to aim for a 40-per-cent to 45-per-cent reduction in methane emissions by 2025. Mr. Trudeau’s government has made much more effort to meet that goal than Mr. Trump’s administration, which rolled back methane rules. But Ottawa has been criticized by environmental groups for regulation deals with provinces that, per federal modelling, would achieve only a 29-per-cent cut. (Finalized agreements with Alberta, Saskatchewan and British Columbia were announced last Thursday.)

Mr. Biden has promised to use an executive order to introduce “aggressive methane pollution limits for new and existing oil-and-gas operations.” If that means recommitting to the target, Mr. Trudeau will be under more pressure to do likewise, and to quickly reopen the federal-provincial agreements.

ENVIRONMENTAL PROTECTIONISM

An ambiguous component of Mr. Biden’s climate agenda is his promise to “apply a carbon adjustment fee” – i.e. a tariff – “against countries that are failing to meet their climate and environmental obligations.”

While it’s conceivable that Canada could be targeted by such a measure, the federal government would likely try to work with Washington to make it a continental system (or perhaps a trans-Atlantic one involving the European Union, already designing its own carbon border adjustment).

It’s unclear how serious Mr. Biden is about a mechanism normally meant to work in conjunction with domestic carbon pricing, which is not going to happen nationally in the U.S. any time soon. But it at least points toward a protectionist streak in his climate policy, which Ottawa will need to try to stay on the right side of.

SUSTAINABLE FINANCE

Mr. Biden has promised new requirements for publicly traded companies to disclose climate risks and GHG emissions “in their operations and supply chains,” presumably through the Securities and Exchange Commission. That would be another sharp turn from Mr. Trump, whose administration actively discouraged environmentally minded investing.

Matching new financial-accountability rules in the U.S. would not require a major shift from Mr. Trudeau’s government. It planned to introduce measures along similar lines in its cancelled budget last spring, and made pandemic-relief loans for large companies conditional on climate-risk disclosure commitments.

But Mr. Biden’s plans could light a fire under Ottawa to move more swiftly on comprehensive new rules, and help prompt the federal-provincial collaboration needed to advance that agenda given Canada’s decentralized securities regulation.

CLEAN-TECH COMPETITIVENESS

Canadian clean-technology sectors have recently benefited somewhat from more supportive public policy here than in the U.S. But Mr. Biden’s intent to boost American cleantech, through regulatory levers and whatever green-stimulus funding or tax incentives he can manoeuvre through Congress, may compel this country to move more aggressively to remain competitive in attracting investment and talent.

That includes the wielding of public purchasing power. Canadian governments have been reluctant to tailor procurement processes so their business goes to domestic companies. But they may have to do so when implementing their own stimulus spending, to avoid Canadian industry being at a disadvantage as Mr. Biden’s administration unabashedly supports American green industry.

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