Canada: departure of finance minister suggests Trudeau will pursue ‘green’ recovery plan

With a projected C$343bn (US$260bn) Covid-shaped deficit, a collapsing oil and gas sector, and a province on the verge of bankruptcy over a botched energy project, Canada is at a crossroads.

Does it pursue an ambitious “green” post-pandemic economic recovery plan that goes against the wishes of a number of influential and powerful industries – not to mention several provincial leaders – or does the tenuous Justin Trudeau-led minority government freeze in the headlights?

The apparently acrimonious departure of the finance minister, Bill Morneau, late on Monday, suggests Trudeau has made his choice.

Over his five-year tenure, Morneau was seen by many Canadians as taking a conservative approach to spending on environment – and more recently, on Covid relief. Trudeau, in contrast, made environmental promises a centerpiece of last year’s re-election campaign. It was inevitable that the two would eventually arrive at an impasse.

Now, Trudeau’s right-hand woman Chrystia Freeland will take over the finance portfolio in addition to her role as deputy prime minister. As one of the key architects of the new Nafta agreement, Freeland has experience marrying economic objectives to broader social and environmental goals, making her better-positioned to carry out Trudeau’s environmental promises.

But the road ahead still won’t be easy., said Bruce Laurie, the president of the environmental thinktank the Ivey Foundation as well as a member of a taskforce advocating for a green post-Covid recovery.

“When you have politicians in three or four provinces that are just emerging from climate denialism, and a system of federation where the provinces at the end of the day have almost full responsibility for environmental, resource and energy decisions, it creates a virtually unmanageable country,” he said. “That’s a bigger challenge than Morneau and finance.”

Canada’s post-pandemic recovery is creating a moment of reckoning, one in which Trudeau has to decide whether to pursue his ambitious green aspirations even if they come at a political cost.

For years, he has been accused of talking out of both sides of his mouth when it comes to energy, investing in solar, wind and hydro but also building new pipelines.

Under the Paris agreement, Canada vowed to reduce greenhouse gases by 30% below 2005 levels by 2030 – a goal that will probably be impossible to meet with so much of the economy presently relying on Alberta’s oil sands. It will be even tougher if the Trans Mountain, Coastal GasLink and Keystone XL pipelines go ahead.

Kyla Tienhaara, the Canada Research Chair in economy and environment and an assistant professor in environmental studies at Queen’s University, told the Guardian that a majority of Canadians still support federal investment in green sectors such as wind and solar energy despite the country’s deficit.

Further, Tienhaara said Alberta’s recent economic hardship is not purely a consequence of Covid: companies such as Shell have been leaving the region for years.

“That’s because the oil there is very costly to extract, both environmentally and economically. It’s the first type of oil that is going to go in the transition, and the transition is inevitable. Renewable energy is just becoming so much more economically sensible,” she said.

Laurie, meanwhile, has briefed key Liberal caucus ministers on his taskforce’s “five bold moves” to make sure Canada’s post-Covid recovery is as sustainable and resilient as possible. The reception was positive, he said, and Trudeau is “100% committed” to acting on climate change.

The challenge is rounding up the cavalry – and making a decision about Morneau is essential to a strong showing, especially in Trudeau’s minority government.

This is the time, said Lourie, for the Liberals to show leadership by pitching an economic model that delivers on the country’s environmental responsibilities.