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2006 September Report of the Commissioner of the Environment and Sustainable Development

Main Points

What we examined

This is the annual report that the Commissioner of the Environment and Sustainable Development provides to Parliament on the environmental petitions process as required by the Auditor General Act. This chapter reports on new petitions received between 1 July 2005 and 30 June 2006.

An environmental petition is a letter to the Auditor General on environmental issues, which the Commissioner of the Environment and Sustainable Development directs to the responsible federal ministers for a response.

In keeping with the focus of the Commissioner's report this year on climate change, this chapter also reports on an audit of the federal government's response to a petition concerning the purchase of green power—power derived from low-impact renewable sources of energy, such as wind. We examined actions taken by Environment Canada, Natural Resources Canada, and Public Works and Government Services Canada to purchase green power and help develop markets for green power.

Why it's important

The environmental petitions process, which is administered by the Commissioner on the Auditor General's behalf, is one way Canadians can hold their government to account for its decisions and actions on environmental matters in the context of sustainable development. Among other things, the process allows both citizens and organizations to ask ministers to investigate environmental problems, explain federal policy, and examine the enforcement of environmental legislation. Petitions have resulted in commitments by ministers and action by departments on environmental issues.

Monitoring and auditing petition responses allow us to examine issues brought forward by Canadians that otherwise may not have been drawn to our attention. In our audits of responses, we assess whether federal ministers are meeting their commitments to act on issues raised in the petitions.

The purchase of green power is one of the cornerstones of the federal government's plan to demonstrate leadership in its response to climate change by reducing its own greenhouse gas emissions. In response to a petition in 2002, the government made a commitment to purchase 20 percent of its electricity from green power sources by 2006. The purchase of green power by the federal government can also play an important role in supporting the development of Canada's capacity to produce green power.

What we found
  • Report on the petitions process. Statements and commitments made by federal ministers in response to petitions have addressed important issues raised by Canadians. Since 2001, climate change and air quality issues have been referenced increasingly in environmental petitions received by the Auditor General of Canada. Our review of the government's responses to these petitions indicates that most addressed the petitioners' questions or explained the government's position on the issues raised. However, some responses failed to address the specific questions asked by petitioners. In our annual report, we observe that the clarity of the questions in petitions has improved and that petitions are generating action.
  • Green power purchasing. The federal government has made progress in fostering green power markets in some provinces. However, it has achieved only one third of its objective to purchase 20 percent of its power from green sources by 2006 and has not been contributing as expected to the reduction of greenhouse gas emissions through the Purchase of Electricity from Renewable Resources (PERR) program. Although the PERR program has potential to contribute toward developing green power markets and reducing greenhouse gas emissions, the existing governance of the program remains a key barrier to its success.

The departments and the Treasury Board Secretariat have responded. Environment Canada, Natural Resources Canada, Public Works and Government Services Canada, and the Treasury Board Secretariat have agreed with our recommendation. Their responses follow the recommendation in the chapter.

For a detailed description of the climate change issue, please consult The Commissioner's Perspective, which includes a section called Climate Change—An Overview.

Introduction

5.1 Since 2001, climate change and air quality issues have become increasingly referenced in environmental petitions received by the Auditor General of Canada. These petitions ask questions about federal action and indicate that Canadians are informed and concerned about climate change. In keeping with the focus of the Commissioner's report this year, this chapter highlights petitions and responses on climate change.

5.2 The petitions process is one way that Canadians can hold their government to account for its decisions and actions on environmental matters in the context of sustainable development. Any Canadian resident, organization, business, or municipality can submit an environmental petition to the Auditor General of Canada and receive a response from the responsible federal minister(s).

Petition 158: Subsidies to the oil and gas industry and federal efforts to address climate change

On 3 October 2005, a number of concerned Canadians held a press conference on Parliament Hill to announce that they had filed an environmental petition (Petition 158) concerning federal tax subsidies to the oil and gas industry. The petitioners allege that these subsidies promote greenhouse gas emissions and undermine government spending and regulations aimed at complying with the Kyoto Protocol and dealing with climate change. The petitioners are concerned that Canada cannot meet its climate change commitments unless tax subsidies to the oil and gas industry are eliminated. The petition claims that tax subsidies to the oil and gas industry totalled $8 billion for the period 1996–2002 and that this level of spending has exceeded all government spending to date on climate change.

We forwarded this petition to the Minister of Finance, who is responsible for the management of Canada's financial resources, and to the ministers of Natural Resources, Industry, and Environment, who also play a key role in dealing with climate change. Responses to this petition are available on our Web site.

Most of the questions in the petition were directed to the Minister of Finance. Our initial analysis of the response, indicated that the Department did not specifically address several of the petitioners' questions. The petitioners also contacted our Office concerned that the response from Finance Canada was inadequate and failed to address questions in their petition. We contacted Finance Canada to request that the Department consider revising its response or indicating why in some cases more direct answers could not be provided. The Department provided a follow-up communication noting the limitations that make it difficult for the Minister to comment on possible future changes in tax policy outside the budget process.

5.3 With the consent of the petitioners, all petitions and responses are posted on our Web site, thereby promoting transparency and creating a public record. Exhibit 5.1 provides more information on the petitions process and the role of the Commissioner of the Environment and Sustainable Development, who oversees the petitions process on behalf of the Auditor General of Canada.

For a list of departments and agencies required to respond to environmental petitions, please see our Web site

Focus of the chapter

5.4 This chapter provides an overview of petitions received that deal with climate change. The chapter also reports to Parliament and Canadians on the use of the petitions process and on our monitoring of petitions received between 1 July 2005 and 30 June 2006. Finally, the chapter reports on an audit of a commitment made by the federal government regarding the purchase of green power in response to Petition 55. More details on the objectives, scope, approach, and criteria are in About the Chapter.

Varied concerns about climate change

5.5 Exhibit 5.2 lists the petitions we have received dealing with climate change. These petitions come from individuals, interest groups, and non-governmental organizations.

5.6 The scope and variety of issues covered in these petitions are extensive. For example, petitions have been received from individuals concerned about their personal impact on greenhouse gas emissions, from First Nations concerned about the current impact of climate change on their lifestyle, and from organizations concerned about the government response to the Kyoto Protocol. In addition to raising issues of concern, the petitions pose specific questions for the federal government to answer. The full text of petitions and the responses from ministers are available on our Web site.

5.7 In our review of the responses to the petitions dealing with climate change listed in Exhibit 5.2, we noted that several petition responses from ministers were well-focussed and answered the questions posed or explained the government's position on issues raised by petitioners. For example, the joint response provided to petition 65 (federal funding of hydrogen fuel cell research) and the Environment Canada response to petition 66 (exemption of emissions of car assembly plants from Kyoto Protocol regulations) were complete and informative. However, in our view, a number of the responses failed to fully address the issues raised by petitioners. In some cases, responses provided vague statements of support for environmental causes or summaries of related policy initiatives instead of specific responses to petitioners' questions.

Petition issues addressed in this report

5.8 Some of the petitions noted in Exhibit 5.2 address issues that are covered in our report this year:

  • Petition 63—Ratification of the Kyoto Protocol. In response to this petition, the ministers of Environment and Natural Resources stated that "reports will be made public every two years, outlining the Climate Change Plan for Canada's successes and its evolution as it is adjusted to meet new challenges and opportunities." During the audit of managing the federal approach to climate change, the Chapter 1 audit team found that the first of these promised reports was prepared by the Climate Change Secretariat and issued in June 2003. The Secretariat was disbanded in 2004, and no other comprehensive report on climate change efforts has been issued. The commitment to report on the success of climate change initiatives every two years has not been met.
  • Petition 52Engagement of First Nations in developing climate change strategies; Petition 131Progress on an environmental monitoring plan in Nunavut. These two petitions have links with issues covered in Chapter 2, Adapting to the Impacts of Climate Change.
  • Petition 159—The government's policy on ethanol. This petition relates to the audit of the Ethanol Expansion Program, reported in Chapter 3, Reducing Greenhouse Gases Emitted During Energy Production and Consumption.
  • Petition 55—Purchase of green power. Our findings of an audit of a 2002 commitment made to purchase green power in response to Petition 55 are reported later in this chapter (Chapter 5).
  • In addition, we audited three commitments on the purchase of green power, from the sustainable development strategies of Environment Canada, Natural Resources Canada, and Public Works and Government Services Canada, and our findings are reported in Chapter 4, Sustainable Development Strategies.

Annual report on petitions received (1 July 2005 to 30 June 2006)

5.9 The 1995 amendments to the Auditor General Act require the Commissioner to monitor petition responses from ministers and to report annually to the House of Commons on the number of petitions received, their subject matter, and their status. This annual report also makes a number of observations on the operation of the petitions process in order to highlight good practices and opportunities for improvement.

Petitions addressed wide-ranging issues

5.10 We received 32 petitions this year—a slight decrease from last year. The majority of these petitions came from Ontario, Quebec, and British Columbia (Exhibit 5.3). We noted that although most petitions continue to come from individuals and local or regional coalitions, national organizations also use the petitions process.

5.11 We noted an increase in well-organized, clear petitions this year. Most petitioners supplied background information where this was necessary to understand the context of the petition; in addition, they clearly set out their questions and addressed the petitions to specific ministers. We found that, in general, the clearer the information and questions in the petition, the more specific the response provided.

5.12 The petitions submitted this year covered a wide variety of topics, including the following:

  • Protection of species and their habitat. Petitions 157A and 157B concern the recovery program for the endangered swift fox; Petition 155 concerns the protection of threatened species of turtles and their habitat in Hamilton Harbour; Petitions 154A and 154B concern the ecological impact of motorized vehicles in the Columbia Wetlands Wildlife Management Area; and Petitions 153A and 153B concern the proposed port expansion at Roberts Bank in British Columbia and federal accountability for conservation and protection of fish, wildlife, and endangered species and their habitat.
  • Federal management of northern transboundary waterways. Petitions 95B and 164 raise concerns about the federal environmental assessment undertaken for the Tulsequah Chief mine and road project in northern British Columbia and the potential risk to fish and wildlife and their habitat. The petitioners allege continuing pollution problems, such as acid mine drainage and water pollution, from the site.
  • Access to information. Petition 152 asks the government to adopt legislation that would give the public better access to information used for decision making, including environmental assessment studies on genetically modified organisms.
  • Canadians' right to a healthy environment. Petition 163 alleges that the right of Canadians to clean water, clean air, and a healthy environment is being violated. The petitioner asks the federal government to confirm this right and to make it explicit in the Canadian Charter of Rights and Freedoms, as has been done in other countries.
  • Listing of used motor oil as a toxic substance. In petition 161, the petitioner asks why used motor oil has not been added to the Canadian Environmental Protection Act, 1999, Schedule 1, List of Toxic Substances. The ministers of Health and Environment indicated their intention to recommend the addition of used motor oil to this list in 2003. The petitioner questions the government's decision-making process and is concerned about how, in the absence of a national standard, current practices for managing and disposing of used motor oil may affect public health and environmental quality.
Most departments responded on time

5.13 This year, most departments responded within the mandatory 120-day timeline (Exhibit 5.4). However, of the eighteen departments responding to petitions this year, seven were late in responding to at least one petition. We noted an increase in requests for extensions, particularly from Environment Canada and the Parks Canada Agency. The Auditor General Act permits extensions to the deadline when it is not possible to reply within 120 days. Petition responses are not considered late if ministers advise petitioners that they require an extension in advance of the due date. However, in a recent case, a department notified the petitioner that it required an extension to the due date for the response but that the response would be provided as soon as possible. The response was subsequently provided 103 days after the original due date. Therefore, where extensions are necessary, we advise departments to specify, where possible, the additional time required to respond, as a courtesy to the petitioner.

5.14 An overview of petitions activity during our reporting period (1 July 2005 to 30 June 2006) is provided in Appendix A. It includes summaries of all new petitions received since 1 July 2005. Please visit our Web site to see all of the updates, and click on the link to the Petitions Catalogue to view the summaries and the full text of petitions and responses.

Petitions are generating action

5.15 Ontario Mid-Canada Radar sites—progress being made. In 2004, the Mushkegowuk Council representing seven northern Ontario First Nations communities submitted a petition (132) asking the federal government to acknowledge its responsibility to participate in the remediation of the Ontario Mid-Canada Radar sites. The Council alleges that the sites were abandoned by the Department of National Defence in the 1960s and are currently discharging contaminants. In its response, the Department noted that although these lands are now the responsibility of the Province of Ontario, as a good environmental steward, National Defence remains open to discussing the cleanup of these sites with the Province. The petitioner remains hopeful that an agreement to remediate many of these sites will eventually be reached.

5.16 Sydney Tar Ponds—environmental review continues. A resident of Cape Breton submitted a petition (140) in April 2005 requesting a joint review panel in the environmental assessment of the remediation plan for the Sydney Tar Ponds. The petitioner has concerns about health impacts of the remediation proposals and asked that the most stringent Canadian cleanup standards apply to the remediation project. The Minister of the Environment responded in August 2005, noting that he had indeed determined that a joint review panel is the most appropriate level of assessment for the proposed remediation project. Correspondence from the petitioner indicated she was pleased to be an active participant in the joint review panel and has since submitted a follow-up petition (140B) on the cleanup standards that will apply to the project.

5.17 Shipping containers—preventive measures taken. In our 2005 Environmental Petitions chapter, petitions 126A and 126B regarding fumigants in shipping containers were highlighted. While working as a shipper and receiver, the petitioner claimed that he opened a pallet and was covered with Dinex—a pesticide no longer in use in Canada. At the time of publication of our report last year, only one of four departments responsible for replying had responded—Human Resources and Skills Development Canada. Since then, we have received the responses from Health Canada, the Canada Border Services Agency, and Transport Canada.

5.18 Before the Transport Canada response was issued, the Chief of Enforcement of the Transport Dangerous Goods Directorate met with the petitioner and several of the parties involved in the incident to discuss the concerns raised in the petitions and review some of the information. In addition, the Canada Border Services Agency investigated the petitioner's complaint but was unable to determine why the shipment in question contained Dinex. The Agency informed the petitioner that it has since taken measures to identify and examine shipments of this nature more closely and release only properly treated shipments. Border staff were also alerted to the possible presence of loose pesticides in similar shipments. The response notes that these petitions raised awareness that pesticides may be improperly used to treat packages arriving from certain areas of the world.

5.19 Environmental charge—audit of invoices conducted. In petition 139, received in March 2005, the petitioner alleges that a laundry service company was using chemicals that had harmful effects on the environment and that the company had been billing federal departments for an "environmental charge" not provided for in its contracts. This petition was sent to Agriculture and Agri-Food Canada, Environment Canada, Public Works and Government Services Canada, and the Treasury Board Secretariat. Upon receipt of the responses to the petition, the petitioner subsequently sent additional letters to each minister requesting further investigation into this matter.

5.20 The laundry service company maintains that the allegations regarding the use of harmful chemicals are false. The Canadian Food Inspection Agency, which reports to Parliament through the Minister of Agriculture and Agri-Food, conducted an internal audit of the invoices that it received from this company to confirm the eligibility of payments made. The audit found that the "environmental charge" on several of the invoices was legitimate; however, certain invoices associated with a specific contract did include ineligible environmental charges. The internal audit determined that no ineligible charges were paid by the Agency. The Canada Food Inspection Agency has indicated that a summary of the internal audit that occurred as a result of the petition will be available on its Web site.

5.21 Ski plans in national parks—working with the petitioner. In September 2005, Environment Canada and the Parks Canada Agency provided a joint response to petition 143. The petitioner posed a series of questions about long-range ski plans in national parks. After the petitioner received the response, he contacted our Office and the Parks Canada Agency to express his concerns about the response. Officials from the Agency spoke with the petitioner and modified some sections of their response. Instead of the petitioner submitting a follow-up petition and waiting 120 days for another response, the Agency addressed several of the petitioner's concerns. The petitioner was pleased with the comprehensive nature of the Agency's overall response, although some concerns remain. The revised response can be found in our Petitions Catalogue on our Web site. (See photograph)

5.22 Comprehensive responses—detailed information offered. This year we received a number of comprehensive responses to petitions. Two examples are provided in the following two paragraphs.

5.23 In November 2005, nine departments provided an informative and substantive joint response to petition 152. The petitioner questioned why Canada had not adopted legislation similar to the United Nations Aarhus Convention, which would allow for a citizen's right to fully access environmental assessments concerning genetically modified organisms. The departments responded by providing clear information about the process currently in place for Canadian citizens through the Access to Information Act. Throughout the response, the departments provided Web links and references and explained the exceptions contained in the Act, allowing for quick verification and further guidance. In addition, the Canadian Food Inspection Agency posted this response on its Web site.

5.24 Environment Canada also provided a comprehensive response to petition 155 concerning the protection of threatened species of turtles and their habitat in Hamilton Harbour. This response provides detailed information on the application of the Species at Risk Act and clarifies the federal role in environmental assessments where a species at risk is affected. In particular, the response provides helpful information on how to request an investigation under the Species at Risk Act.

Some opportunities for improvement in responses and petitions exist

5.25 Departments need to be explicit in their responses about questions they cannot address. The petitions we received this year contained a wide variety of questions and were therefore often sent to more than one department for response. Where departments choose not to respond jointly, we urge them to be explicit about questions being addressed and questions that could not be addressed. For example, if a specific question does not fall within the mandate or jurisdiction of the responding department, this should be stated. Explaining clearly why specific questions cannot be addressed in the response can help avoid follow-up petitions and further requests for clarification.

5.26 Our review of petition responses indicates that most responses to petitions provide complete answers to the questions raised. However, as discussed in paragraph 5.7, some responses fail to address the questions raised by the petitioner or instead respond with vague statements of support for environmental causes. These responses often result in follow-up petitions and/or petitioners who question the transparency and accountability of the government. We review petition responses to ensure that all of the questions posed by petitioners have been addressed. Occasionally, our Office receives correspondence from petitioners who are dissatisfied with the response they received from the minister(s). If petitioners wish to submit this type of correspondence, we encourage them to send it to both the responsible minister and the Commissioner of the Environment and Sustainable Development in a timely manner.

5.27 Petitioners are taking advantage of the guidance tools. Our Web site offers information on the petitions process and guidance on how to submit a petition. An environmental petitions template is now available, explanations and facts about the process are provided, and an on-line listing of petitions and responses is also accessible on our Web site. In the on-line Petitions Catalogue, potential petitioners can search by issue to determine if a similar petition has already been submitted. An existing response to an older petition may answer their questions or clarify the federal role, thereby eliminating the need for a petition or helping the petitioner to pose different questions about the same environmental matter.

5.28 We have continued to encourage petitioners, to the best of their ability, to ensure that the facts provided in their petitions are correct. Allegations without appropriate supporting documentation or references make it difficult for departments to determine if the petitioners' concerns are based on fact. Also, petitioners are discouraged from including material that they are aware has confidentiality concerns.

5.29 The petitions process has evolved considerably since its creation in 1995. Since that time, a variety of sectors, including universities and environmental organizations, have used the environmental petitions process. Petitions are being referenced by parliamentarians and senators and by other provincial and international organizations, such as the Commission for Environmental Cooperation and the Environmental Commissioner for Ontario.

5.30 It has been 10 years since the first petition was submitted in October 1996. Next year, the Commissioner plans to include in her annual report to Parliament a retrospective on petitions. It will look at the evolution of the process over the last 10 years and observe whether government action in response to petitions has resulted in improvement to the environment and sustainable development in Canada. We want to continue to encourage Canadians to voice their concerns through the petitions process—to foster change and make a difference now and for the future.

The government's purchase of green power—an audit of a petition response

Background

Green power is important in dealing with climate change

5.31 Electricity generation is one of the largest sources of atmospheric emissions in Canada. Conventional electricity generation from fossil fuels produces atmospheric emissions, such as nitrogen oxides, sulphur dioxide, and particulate matter. These emissions are associated with a variety of health effects and environmental impacts. According to Canada's 2004 greenhouse gas inventory, about 17 percent of total greenhouse gas emissions were from electricity generation. The use of green power replaces electricity generated by fossil fuels, thereby reducing greenhouse gas emissions.

Green power

Electricity generated by green power has two key characteristics:

  • It is produced from renewable energy sources such as wind, sun, small scale hydroelectric plants, wood waste biomass, and landfill gas.
  • Its production has low adverse environmental impacts.

5.32 At the 2004 International Conference for Renewable Energies, representatives from 154 countries, including Canada, reaffirmed their commitment to substantially and urgently increase the share of renewable energy in the total energy supply. They underlined the need for regulatory and policy frameworks that support the development of markets for renewable energy, recognizing that renewable energies can significantly contribute to mitigating greenhouse gas emissions, reducing harmful air pollutants, and creating new economic opportunities.

5.33 The federal government established a formal green power purchasing program. One of the tools that the federal government has used as part of its climate change strategy is to purchase electricity produced from renewable energy sources to power its own facilities through its Purchase of Electricity from Renewable Resources (PERR) program. By paying a premium for renewable energy, and entering into longer-term agreements with power producers, the federal government seeks to increase the demand for green power. This in turn leads to the building of more facilities that generate green power and an increase in the availability of green power to other potential customers.

5.34 The objective of the PERR program is to purchase electricity from emerging renewable sources in order to reduce greenhouse gas emissions associated with federal operations, and to help develop and expand the market for green power in Canada. All green power that the federal government purchases through the PERR program must be certified through an independent organization.

Certification of green power

Green power for the PERR program is certified through Environment Canada's Environmental Choice Program. This certification program ensures that the federal government is purchasing electricity that is

  • derived from renewable resources with low adverse environmental impacts; and
  • generated from new facilities and/or refurbished facilities (that first began generating new or incremental electricity on or after 1 April 2001).

5.35 Pilot agreements were a first step in purchasing green power. Between 1997 and 2001, Environment Canada and Natural Resources Canada established pilot agreements to purchase green power over a 10-year period in Alberta, Prince Edward Island, and Saskatchewan. (See photograph)

5.36 In 2001, the federal government established an interdepartmental management committee to implement the PERR program. The management committee has representatives from Natural Resources Canada (NRCan), Environment Canada, and Public Works and Government Services Canada (PWGSC), and it operates by consensus decision making. NRCan provides technical advice on renewable energy policy and market development capabilities. Environment Canada provides program analysis, particularly in the areas of green power certification and the calculation of credits for reductions in greenhouse gas emissions. PWGSC is responsible for preparing requests for proposals and negotiating contracts.

5.37 The PERR program is one of the cornerstones of the federal government's plans to reduce its own greenhouse gas emissions and lead the action on climate change. The Federal House in Order initiative (FHIO) expects the program and the pilot projects in Saskatchewan and Prince Edward Island to contribute 45 percent of its remaining emissions reduction target. However, funding for the PERR program runs out prior to the 2010 FHIO target date, and the government recognizes that the program will need to be extended to contribute to the FHIO target as expected at that time.

5.38 The federal government has made commitments to purchase green power. In its Government of Canada Action Plan 2000 on Climate Change, the federal government made a commitment to purchase 20 percent of its electricity (calculated at about 450 gigawatt hours or 450 million kilowatt hours per year) from green power sources by 2006 and to foster the development of green power markets. It repeated this commitment in its 2002 Climate Change Plan for Canada, and again in its response to an environmental petition submitted to our Office in 2002 by Greenpeace Canada and the Toronto Environmental Alliance (petition 55). Environment Canada, Natural Resources Canada, and Public Works and Government Services Canada have made related commitments in their sustainable development strategies. In August 2005, the PERR management committee extended the timeline for achieving the target from 2006 to 2008. We audited the extent to which the federal government has met its commitments to purchase green power and to develop green power markets.

Did you know?

The amount of electricity that a federal office building housing 2,500 employees consumes per year: about 13.5 gigawatt hours. This is enough electricity to power close to 1,350 average Canadian homes annually.

Developing green power is a challenge when the energy sector is changing rapidly

5.39 As provinces deregulate their energy markets, the stakeholders are changing and the rules for purchasing power are shifting. Provincial governments are also now supporting green power. In general, green power is still more expensive to produce than power from coal or natural gas. However, the costs of conventional energy are rising and the costs of generating green power are generally falling, making green power economically feasible where conditions are suitable. The PERR management committee indicates that a lack of green power capacity in particular provinces has also been a constraint in developing new markets. The rapidly changing markets, stakeholders, and prices have created genuine challenges for the PERR program.

Observations and recommendations

The federal government has fostered the development of green power in provinces where agreements were initiated

5.40 The federal government has purchased green power over the past decade. Agreements are in place in Alberta, Prince Edward Island, and Saskatchewan to purchase a total of 57.4 gigawatt hours of green power annually. A 2004 agreement in Ontario contracts for an additional 90 gigawatt hours a year. All of the agreements support the development of green power markets in these provinces. For example, the federal government was the first major customer for green power in Alberta, where about 2.7 percent of electricity is now generated from certified green sources. Provincial officials and green power producers credit the federal government with being a catalyst for this activity.

The Government of Alberta is purchasing over 90 percent of its electricity for its own use from green power sources

In 2003, the Government of Alberta committed to increasing its purchase of green power to 90 percent of its total electricity consumption beginning 1 January 2005. According to provincial officials, in 2005 the Government of Alberta consumed 215 gigawatt hours of certified green power from wind and biomass sources through contracts with ENMAX Energy Corporation and Canadian Hydro Developers Inc. The ENMAX contract is for 10 years, and the contract with Canadian Hydro Developers Inc. is for 20 years.

Alberta government officials estimate that this commitment to purchase green power will result in the reduction of about 215 kilotonnes of greenhouse gases annually.

The federal government has not met its targets for purchasing green power and is not contributing as expected to the reduction in greenhouse gas emissions

5.41 A total of $75 million has been allocated to the PERR program and related pilot projects since 1997. According to information provided by departments, only $11 million had been spent as of March 2005, with an additional estimated $19 million committed in signed agreements. There are still no agreements in place to purchase green power in British Columbia, New Brunswick, Newfoundland, and Nova Scotia, although the program was intended to offset current high-emission electricity, such as electricity from coal generation, in these provinces.

5.42 At the time of our audit, the federal government had reached about one third of its goal to purchase 20 percent of its electricity from green power sources. Agreements are in place to purchase 147.4 gigawatt hours per year of the 450 gigawatt hours per year it committed to purchase by 2006 (Exhibit 5.5). We noted that in setting the target for purchasing green power at 450 gigawatt hours per year (in Action Plan 2000), the government used a figure that did not include electricity used in buildings it was leasing. According to information provided by Natural Resources Canada, at that time leased buildings accounted for about one fifth of federal electricity use. Therefore, the government did not base its target of 450 gigawatt hours per year on the total amount of electricity it uses, but only on the electricity it purchases for the buildings it owns.

5.43 Although one of the objectives of the PERR program is to reduce greenhouse gas emissions from federal operations by 235 kilotonnes, program managers could not direct us to a current or consistent measurement of greenhouse gases reduced through the program. The most recent information available from the Federal House in Order initiative (2003–04) indicates that the PERR program has contributed only 25 of the targeted annual 235 kilotonnes of emission reductions. We found that PERR program managers use more specific methods of calculating the reduction in emissions and report that the program has achieved 46 kilotonnes of emission reductions based on the same contracts. Even using the most optimistic estimate provided, it is clear that the PERR program is not contributing as expected to the reduction in greenhouse gas emissions from federal operations.

5.44 In its 2005 climate change plan (Project Green), the federal government committed to significantly greater reductions from its own operations (1,000 kilotonnes annually), separate from the existing FHIO target of about 1,200 kilotonnes. Natural Resources Canada officials told us that as a result, the success of the green power purchasing program is increasingly critical in achieving the expected reduction in emissions.

Program governance has led to missed opportunities for action and delays in achieving results

5.45 We recognize that external factors, such as changing provincial electricity markets, changing energy prices, and the federal spending restrictions in place following the climate change review announced in Budget 2005, have created some challenges for the PERR program. However, it is our view that the existing governance of the program remains a key barrier to its success. Progress has slowed since the interdepartmental management committee was put in place in 2001, few results have been achieved, and required program evaluations have not been done.

5.46 Given that three departments with different mandates are equally responsible for management of the program, it is important that clear terms of reference are in place for the management committee. Terms of reference would clarify mechanisms for decision making and therefore enable the management committee to function effectively in the fast-changing environment in which it must operate. We found that there were no terms of reference in place and decisions were being made by consensus. In our opinion, the lack of clear guidance for a management structure involving three departments with different mandates and expertise has contributed to the management committee's slow pace in achieving results.

5.47 Following the establishment of pilot agreements, the PERR program's resources and targets were identified in 2001 without taking into account that the PERR management committee, and the supporting PWGSC contracting authority, had a considerable amount to learn about green power purchasing. The management committee has taken a long time to proceed with green power purchases. There have been periods in which the committee did not meet for over a year—periods in which key decisions needed to be made. For example, one of the program objectives is to purchase new green power from emerging sources, but the committee is still defining what this means in practice.

5.48 A critical factor in energy suppliers' willingness to enter into agreements is the length of term of the agreements. We found that, at the price premiums offered by the federal government, energy suppliers look for multi-year agreements, sometimes covering at least 10 years, in order to finance the development of new facilities. However, at the outset of the program, funds were allocated for only five years—to March 2006, although funds were later rolled forward to March 2009. For many years, the committee discussed its inability to secure long-term contracts. In addition, the federal government entered into agreements with provincially and privately owned utilities, indicating an intent to purchase green power over a 10-year period. However, only in the fall of 2005 did the management committee make a business case to the Treasury Board Secretariat to significantly extend the funding to secure long-term contracts. This business case was not approved at this time as the Treasury Board required additional information.

5.49 The PERR management committee indicates that the spending restrictions in place on climate change programs (as a result of Budget 2005) are responsible for the loss of green power purchase opportunities that would have brought the total green power purchased closer to the target. We found that while these spending restrictions may have had an impact on a recent opportunity to purchase power in Alberta, the PERR program has had funding in place since 2001 and has been unable to deliver the expected results during that time.

5.50 While the management committee has tracked the purchase of green power in gigawatt hours, it seldom gives a clear picture of the progress the program is making. It did not formally evaluate the lessons learned in the pilot agreements, nor did it evaluate the program itself, as required. In addition, it has not formally assessed the program's impact on the development of the green power market against the specific targets it identified at the outset of the program.

The government has not developed a vision for the future of green power purchasing and market development

5.51 The PERR program is part of the Federal House in Order initiative intended to reduce the greenhouse gas emissions from the government's own operations by 31 percent by 2010—to show federal leadership in addressing climate change to other sectors of the economy and to the Canadian public. However, the federal government's existing approach for purchasing green power extends only to 2008–09, when the funding expires. Therefore, the continued contribution of the PERR program to reducing greenhouse gas emissions from federal government operations remains unclear. Furthermore, current spending restrictions resulting from the climate change review create uncertainty around the opportunities to enter into long-term contracts. Other potential means for developing future strategies for purchasing green power include the new federal Policy on Green Procurement and a national renewable energy strategy, currently under discussion by federal and provincial energy ministers. (See photograph)

5.52 Some provinces are currently ahead of the federal government in developing plans for green power production and purchasing. This also points to a need for the federal government to reassess its objectives and priorities to foster green power markets where none had existed before.

5.53 In summary, the federal purchase of green power is an important part of the government's plan to reduce greenhouse gas emissions from federal operations. The federal pilot projects for purchasing green power had some successful initial results fostering the development of green power in Canada. However, when the PERR program was initiated and the management committee was established in 2001, progress slowed, due in large part to an ineffective management structure. The program has not met its targets for amounts of green power purchased or for the expected reduction of greenhouse gas emissions. Nor has it met its full potential to accelerate the development of green power capacity across Canada. In light of the current energy environment, it will be important for managing departments to consider how the program would contribute to a vision for renewable energy in Canada.

5.54 Recommendation. Natural Resources Canada, Environment Canada, and Public Works and Government Services Canada, in consultation with the Treasury Board Secretariat, should establish an appropriate management structure (for example, identification of a lead department) to manage the Purchase of Electricity from Renewable Resources program. The appropriate management structure should

  • review program objectives and priorities for the purchase of green power within the context of broader initiatives such as the Green Procurement Policy, the national renewable energy strategy currently under discussion, and the Federal House in Order commitment to reduce greenhouse gas emissions in federal operations;
  • set appropriate targets and timelines;
  • secure funding for an appropriate period of time to enable suppliers to finance the development of new green power facilities; and
  • report on progress annually to Parliament and to the public.

Departments' response. Natural Resources Canada, Environment Canada, and Public Works and Government Service Canada agree that an appropriate management structure reflecting the Commissioner's recommendations should be developed for any future program involving the purchase of renewable electricity by the Government of Canada.

The Treasury Board Secretariat's response. The Treasury Board Secretariat supports the establishment of an appropriate governance structure for the management of the Purchase of Electricity from Renewable Resources program and will respond to proposals from Natural Resources Canada, Environment Canada, and Public Works and Government Services Canada to establish such a structure. The Treasury Board Secretariat will respond in a timely manner to proposals received from the three departments.

Conclusion

5.55 The environmental petitions process is one way Canadians can hold their government to account for its decisions and actions on environmental matters in the context of sustainable development. Currently, the Auditor General receives numerous environmental inquiries throughout the year, many of which result in the submission of a petition. Our monitoring of petition responses indicates that the clarity of questions posed in petitions has improved and a number of petitions have resulted in the responsible departments taking action to address the issues.

5.56 Auditing petition responses allows us to examine issues brought forward by Canadians that may not otherwise have come to our attention. Our audit of the federal purchase of green power found that the Purchase of Electricity from Renewable Resources program had some successful results during its pilot phase in supporting the development of green power in Canada. However, the federal government has achieved only one third of its objective to purchase 20 percent of its power from green sources by 2006 and it is not contributing as expected to the reduction of greenhouse gas emissions. Although the PERR program has potential to contribute to the development of green power markets and to the reduction in greenhouse gas emissions, the existing governance of the program remains a key barrier to its success. The federal government has yet to consider if and how the program would contribute to a vision for renewable energy in Canada.

About the Chapter

Objectives

The objective of this chapter is to inform Parliament and Canadians on the use of the petitions process and our monitoring of commitments and statements made in response to petitions.

Each year since 2003, as part of our monitoring function, the petitions chapter has reported on audits of statements or commitments made by departments and agencies in response to petitions. We audit selected petition responses in order to determine if ministers and departments were doing what they said they would do in response to petitioners.

The objective of our petition response audit this year was to determine the extent to which the federal government has met its commitments to purchase, by 2006, 20 percent of its electricity from low-impact renewable power sources, and to develop green power markets to reduce greenhouse gas emissions.

Scope and approach

To determine which petition response to audit, we identified petitions received that dealt with climate change and greenhouse gas emissions up to June 2005. We reviewed all the responses and identified statements and commitments made by ministers and then ranked them according to a number of criteria, including materiality/significance of the issue, sensitivity of the issue, risk, federal mandate, availability of evidence and objectivity of information about the issue and the commitment made, auditability, and timeliness. Based on this analysis, the commitment selected for audit is from a joint government response to petition 55 in 2002, which states:

The Government of Canada has committed to purchase, by 2006, 20 percent (or approximately 450 gigawatt-hours) of its electricity consumption as qualifying low-impact renewable power having an acceptable certification such as under the Environmental Choice Program. Developing green power markets will reduce a broad range of emissions commonly found in association with electricity generation using fossil fuels.

The entities audited include Environment Canada, Natural Resources Canada, and Public Works and Government Services Canada, which together manage and monitor the Purchase of Electricity from Renewable Resources (PERR) program. We conducted interviews and field work to determine the extent to which the commitments were being met. We collected data and evidence of implementation of the commitments, along with appropriate documentation. In addition, we examined three sustainable development strategy commitments related to our audit objective, and the results of this work are presented in Chapter 4, Sustainable Development Strategies.

Criteria

Our audit was based on the following criteria:

We expected the program to have achieved intended results.

We expected federal government departments to have fair and reliable information on the results achieved by the programs for which they are responsible.

Audit work completed

Audit work for this chapter was substantially completed on 14 June 2006.

Audit team

Principal: John Affleck
Director: Kimberley Leach

Christine Allen
Amélie Bernard
Jacquelyn Davy
Sébastien Defoy
Roberta Hawkins
Josée Petitclerc
Carolyn Pharand
Erin Windatt

For information, contact Communications at 613-995-3708 or
1-888-761-5953 (toll-free).


Definition:

Federal House in Order initiative (FHIO)—The Government of Canada's plan for reducing greenhouse gas emissions from its own operations. The initiative helps to show Canadians that the federal government is demonstrating leadership in reducing its own greenhouse gas emissions that affect climate change. The government is working to reduce its emissions by 31 percent (about 1,200 kilo-tonnes) from 1990 levels by 2010. The initiative reported that, from 1990 to 2002, it achieved a total reduction of 24 percent by reducing energy use and switching to energy sources that were producing less greenhouse gas in the government's buildings and fleets. The PERR program is expected to contribute almost half of the remaining 7 percent of emission reductions required to meet the FHIO target. (Return)