Canada can take note from Biden, Yellen

It’s tempting to note similarities between Janet Yellen and Chrystia Freeland. Like Canada’s finance minister, Joe Biden’s choice for

U.S. treasury secretary is the first woman in that job, has her eye on the people hit hardest by the pandemic and seems inclined to spend lots of money getting out of the recession.

Both are ambitious and good communicators, they both think policy should foster inclusive growth, and both champion expansionist fiscal policy, especially during the recession.

Yellen, however, also comes with some solid climatechange credentials that Freeland and her government are only beginning to lay claim to. Together with Biden, who made cutting emissions central to his presidential campaign, and John Kerry, whose reputation as an environmentalist precedes him, the trio sends a strong signal to the rest of the world.

Yellen, who chaired the U.S. Federal Reserve from 2014 to 2018, has been working side by side with Canada’s Mark Carney in leading an international network of former policy-makers, global investors and academics in mapping out a hard-hitting path for countries to dramatically reduce their carbon emissions.

In October, they called on governments to set meaningful carbon prices that climb over time, sending signals to investors that they should dramatically shift their money away from fossil fuels and into economic activity that is compatible with net-zero emissions by 2050.

Policy-makers would also fund research and development and set up an independent council to keep the setting of the carbon price outside the realm of politics. The goal is to make a low-carbon economy embedded in every decision a government or a company makes.

We may be on the cusp of that in Canada, depending on what the federal cabinet does over the coming weeks.

An initial building block to push Canada to a net-zero economy by 2050 came last week with proposed legislation for accountability, requiring the government to state how it will reach interim fiveyear targets starting in 2030.

Critics say the start date is way too far away.

Environment Minister Jonathan Wilkinson is also expected to name an advisory panel any moment now that will act as a foil.

But it won’t be the independent body with teeth that Yellen and Carney have urged. Setting a price on carbon will remain as political as ever.

The more material moves are yet to come.

On Monday, Freeland will present her first accounting of government spending through the pandemic, and will also signal where the Liberals plan to put their budgetary heft as we head, hopefully, toward economic recovery after COVID-19 vaccines make their arrival. She will likely signal that there’s funding on the way for retrofitting homes and for eco-friendly job creation, and perhaps some green infrastructure money, too, as highlighted in the throne speech in September.

Wilkinson will follow up with draft rules to curtail pollutants in fuel.

And, importantly, he’ll also roll out a detailed plan for how Canada will cut its emissions between now and 2030, making up for a long-standing gap between aspiration and action.

Together, the two ministers seem to be heading toward a well-funded plan that would aim to lift Canadians out of recession and cut emissions at the same time — a reflection of what Europe is doing, and what the United States is poised to do under Biden, Yellen and Kerry.

But Canada has been dragging its feet and we start from behind.

We’ve been held back by the fact that we depend on oil and gas for a big chunk of our prosperity, and because we haven’t wanted Canadians to lose business to American firms with lower standards.

Now, as the U.S. is poised to leapfrog us to a low-carbon economy, will Ottawa focus on how to make sure the energy sector comes along for the ride? Retrofitting homes is one thing. Cutting back on emissions in the oilpatch is another.

Canadian Labour Congress president Hassan Yussuff points out that in last year’s election campaign, in addition to committing to net zero by 2050, the Liberals also promised to legislate a “just transition” plan that would give a soft landing to workers in fossil fuels who risk losing their livelihoods. That plan should start now, he says, because retraining and relocating require time.

Economists at the Royal Bank of Canada point to carbon capture and storage as a key technology that can help large polluters change their emitting ways.

But that will require clear price signals and investment from governments.

As Yellen said in October, pointing to rising temperatures around the globe, “We have precious little time to act. We know what we need to do.”

Heather Scoffield is the Ottawa bureau chief and an economics columnist for the Toronto Star