Secretary of the Treasury Board appearance before the Standing Committee on Public Accounts (PACP) - Report 2, Greening Government Strategy - October 2022

Background

• The Commissioner of Environment and Sustainable Development tabled his 2022 Reports 1 to 5 on April 26, 2022, and subsequently referred to the Standing Committee on Environment and Sustainable Development (ENVI).
• ENVI studied the reports in one meeting with officials represented from all impacted departments (including Nick Xenos from TBS) on April 28, 2022 alongside the Commissioner. The Committee requested Management Action Plans from all departments, which will be submitted to the Committee at the same time as the submission to the Standing Committee on Public Accounts (PACP).
• TBS was originally invited to appear before PACP on May 31, 2022 before the meeting was postponed.
• Motion adopted by the Committee on October 4, 2022: It was agreed, — That the committee undertake a study on Report 2, Greening Government Strategy, of the Commissioner of the Environment and Sustainable Development and hold a meeting on Tuesday, October 18, 2022.  

Day of – Scenario (OGGO)

• The meeting is expected to begin at 3:30 pm, subject to delays due to votes in the Chamber. The Secretary and TBS official(s) are expected to appear alongside the Deputy Minister of Transport Canada and the Deputy Minister of National Defence, who are also named in the report.
• Officials appearing in person should arrive half an hour early to allow time for security screening.

Briefing Binder

• A binder has been prepared in anticipation of the appearance, which the Associate’s office received a week prior. The binder provides an overview of the audit and an update on the key recommendations from the Commissioner. The binder also includes material on key issues such as the Greening Government Strategy; Greening Procurement; Clean Electricity and Electrifying the fleet.

Other Relevant Information

• The PACP Committee is expected to table its report on Public Accounts 2022 the week of October 17, 2022.
• The Committee has received training on how to evaluate audit reports and generally ask questions relevant to the details of the report. The Committee will also be interested in the specific details in relation to how the Government will implement the recommendations outlined in the report.
• The Committee is expected to meet on the other reports tabled by the Commissioner of Environment and Sustainable Development in the coming weeks.

Issue

On April 26th, 2022, the Commissioner on Environment and Sustainable Development released an audit of the Greening Government Strategy. It included five recommendations for TBS.

Response

• Treasury Board Secretariat is leading the implementation of the Greening Government Strategy towards a 2050 target of net-zero greenhouse gas emissions for federal operations. We are on track to meet this target.
• TBS agrees with four recommendations and partially agrees with the fifth, and is taking action to address them.
• The next update of the Greening Government Strategy, planned for 2023, will reflect actions taken in response to the Commissioner’s recommendations.

Background

In his audit of the Greening Government Strategy, the Commissioner on Environment and Sustainable Development included five recommendations for TBS – TBS agreed with four and partially agreed with the fifth.

The CESD audit recommended that:

1. Recommendation 2.35: TBS should collect and report on all Government of Canada sources of greenhouse gas emissions clearly and comprehensively in an annual summary report.

TBS agreed to an increased scope of reporting to include all key sources via the annual GHG emissions reporting update. This will include more information on Scope 3 emissions. Expanded reporting on Scope 3 emissions has already been added to the website. TBS will also complete consultations and develop an approach on reporting emissions from Crown corporations.

2. Recommendation 2.43: TBS should include additional details about strategic commitments in its next revision of the Greening Government Strategy.

TBS agreed to include additional details related to strategic commitments in the next revision of the Greening Government Strategy.

3. Recommendation 2.53: TBS should develop a comprehensive risk‑management approach that outlines how it will regularly identify, monitor, and mitigate significant risks.

TBS agreed with the need to develop a comprehensive risk management approach that outlines how significant risks will be regularly identified, monitored, and mitigated. This work was already begun in summer of 2021 and will form the basis of work going forward.

4. Recommendation 2.56: TBS should
   1. set a date by which all departments must complete their greenhouse gas emission reduction and net‑zero plans;
   2. require departments to include the milestones identified in the Greening Government Strategy in their plans; and
   3. facilitate independent reviews of departments’ plans to determine whether they are sufficient to meet the 2050 net‑zero target.

TBS agreed there should be a clear timeframe for departments to develop departmental greenhouse gas emission reduction plans and that these plans should be reviewed. The secretariat will update the Greening Government Strategy in fiscal year 2023–24, at which time it will ensure that clear timeframes for real property greenhouse gas emission plans are included.

Additionally, the secretariat will work with National Defence, the Canadian Coast Guard, and the RCMP to ensure the completion of national safety and security fleet decarbonization plans by 2023, as required by the Greening Government Strategy.

5. Recommendation 2.63: TBS should develop an approach to track costs and savings to provide decision makers, parliamentarians and Canadians with sufficient information about the estimated costs and savings to achieve the 2050 net‑zero target. TBS partially agreed with this recommendation.

TBS partially agreed to this recommendation.

The secretariat agrees that the Greening Government Strategy’s 2050 net zero target should be implemented in the most cost-effective manner and that sufficient information should be given to Parliament and Canadians on the approach to measure cost effectiveness.

Treasury Board of Canada Secretariat disagrees that it does not have an approach to tracking costs and savings. The Centre for Greening Government has developed an approach that focuses on ensuring the lowest life cycle implementation costs (including costs and savings over the life of assets) and has developed controls to achieve this objective.

The Commissioner on the Environment and Sustainable Development also released 4 other reports:

Report 1: Just Transition to a Low-Carbon Economy

Report 3: Hydrogen’s Potential to Reduce Greenhouse Gas Emissions

Report 4: Funding Climate-Ready Infrastructure—Infrastructure Canada

Report 5: Carbon Pricing—Environment and Climate Change Canada

Issue

The Centre for Greening Government is responsible for tracking and disclosing government environmental performance information centrally. The CESD Audit of the Greening Government Strategy found that TBS did not report some sources of federal greenhouse gas emissions.

Response

• The Government of Canada has been making greenhouse gas emissions data digitally available to Canadians since 2017.
• The first release of the Government’s GHG emissions inventory included data from 15 departments; we are now reporting emissions to include the 27 departments and agencies that own real property or who own significant vehicle fleets.
• We continue to expand the emissions we report on. For example, in 2018-19, we added GHG emissions from air travel by public service employees. We now also report national safety and security emissions from military, coast guard and police operations.
• Crown corporations, as they are arms-length, are normally not subject to the Treasury Board suite of policies and, hence, are not required to report to TBS on their emissions.  Many Crown corporations have climate change strategies and do publicly report their emissions.
• Over time, we plan to add more procurement data, as well as emissions data associated with employee commuting. We are taking under advisement the CESD’s recommendations for reporting on scope 3 and Crown corporation emissions.

Background

The first release of the Government’s GHG emissions inventory included data from 15 departments and agencies subject to the Federal Sustainable Development Strategy greenhouse gas reduction goal.

Back then, it was a partial inventory of federal emissions from buildings and fleet; however the government was determined to developing a more comprehensive look at its footprint moving forward. We are now reporting emissions from 27 departments and agencies, representing all those that own real property or who own significant vehicle fleets.

Scope 1 GHG emissions are produced by sources that are owned or controlled by the government. For example, the greenhouse gases emitted from the combustion of fuels in vehicles or in buildings.

Scope 2 GHG emissions are those generated indirectly from the consumption of purchased energy (electricity, heating, and cooling).

Scope 3 GHG emissions are indirect such as the emissions produced in the supply chain of the goods and services we buy.

27 federal organizations reported GHG emissions between 2018-19 and 2020-21.

The federal facilities and conventional fleet emissions for fiscal year 2020 to 2021 totalled 1,071 kilotonnes (kt) of carbon dioxide equivalent (CO2 eq), which represents a decrease of 731 kt CO2 eq or 40.6% (excluding National Safety and Security emissions), compared with the baseline year of 2005-06.

Over the last 3 fiscal years, emissions have trended downward for federal facilities, conventional fleet, national safety and security fleet operations and employee work-related air travel. The COVID-19 pandemic was a major driver of year-over-over reductions between 2019-20 and 2020-21, as public health mandates reduced building occupancy, in addition to the use of fleet vehicles and employee work-related air travel.

The Centre for Greening Government currently reports Scope 3 emissions for employee work-related air travel and, in response to the audit, has posted a summary of the estimated full life cycle supply chain Scope 3 emissions from procurement.

Working with experts, the government has estimated the embodied carbon footprint of the goods and services bought by its central procurement organizations: Public Service and Procurement Canada and Shared Services Canada. This embodied carbon consists of the greenhouse gases released during the lifecycle of a good or the delivery of a service.

Issue

The CESD audit found that the Greening Government Strategy did not contain sufficient detail about some important strategic commitments (recommendation 2.43), noting that additional information would give Parliamentarians and Canadians a clearer picture of what is to be accomplished.

Response

• The Greening Government Strategy was first released in 2017 and updated in 2020.
• It includes commitments in the areas of real property, mobility and fleets, procurement and climate resilience, as well as a series of cross-cutting commitments in policy and engagement.
• In response to the Commissioner’s recommendation, TBS will include additional details related to certain strategic commitments on the website and in the next revision of the Greening Government Strategy, including on green procurement, clean technology, partnerships, policies and performance measurement.
• This is expected to be completed by March 2024.

Background

The Greening Government Strategy was first released in 2017, and updated in 2020. It includes commitments in the areas of real property, mobility and fleets, procurement and climate resilience.
It also includes cross-cutting commitments in the areas of policy and engagement such as the following:

• continue to align relevant government operations policies to further incorporate greening and climate resilience
• incorporate greening priorities into the responsibilities of senior department officials who would ensure that greening, low-carbon and adaptation are addressed comprehensively in both planning and operations
• creating sustainable workplaces, including through employee mobilization and action
• collaborating and establishing communities of practice with provincial, territorial and municipal governments; Indigenous peoples; industry; academia; and non-profit organizations to achieve common environmental goals
• integrating sustainability planning with local communities
• The Government of Canada will ensure accountability for the government’s environmental performance and is committed to the principles of transparency and open data.
• In order to ensure oversight, the Centre will publicly disclose detailed environmental performance information on government operations, including a complete inventory of federal GHG emissions.

Issue

The CESD recommends (recommendation 2.53) that TBS should develop a comprehensive risk‑management approach that outlines how it will regularly identify, monitor, and mitigate significant risks.

Response

• Treasury Board of Canada Secretariat agrees with the need to develop a comprehensive risk management approach that outlines how significant risks will be regularly identified, monitored and mitigated.
• This work was commenced by the Centre for Greening Government in the summer of 2021 and will be expanded and updated, with interdepartmental input.
• A risk management strategy will be in place by June 2023.

Background

The Centre for Greening Government (CGG) has prioritized action where the greatest emissions are and has worked to address challenges and risks to achieving the Government’s targets.  However, the CGG had not developed/documented a formal risk management framework but has begun one. 
The CESD noted that during their audit, TBS began to document its approach to assessing risk. It created a risk register in which it documented risks and proposed mitigation measures.  However, they found that the register left out risks that some departments—including National Defence —had already identified. They also found that the secretariat did not identify how it would consult departments on their risks in order to come up with a more comprehensive, accurate list of these.

Issue

The CESD audit recommended that TBS should: Set a date by which all departments must complete their greenhouse gas emission reduction and net‑zero plans; require departments to include the milestones identified in the Greening Government Strategy in their plans; and facilitate independent reviews of departments’ plans to determine whether they are sufficient to meet the 2050 net‑zero target.

Response

• The Treasury Board Secretariat (TBS) agrees there should be a clear timeframe for departments to develop departmental greenhouse gas (GHG) emission reductions plans and that these plans should be reviewed.
• TBS will update the Greening Government Strategy in 2023-24, at which time it will ensure that clear timeframes for real property GHG emissions plans are included.

Background

The Greening Government Strategy states that departments will maintain a current, net-zero climate-resilient real property portfolio plan to determine the most cost-effective pathway to achieve net-zero, climate-resilient real property operations by 2050. This includes leveraging opportunities for portfolio rationalization; sharing facilities; maximizing energy efficiency, and switching to lower carbon fuels.

To date, 8 of 27 departments have created emission reduction plans for government‑owned real property. However, these plans accounted for 81% of total emissions from departments and TBS did an overall plan that included estimates for the remaining 19%.

Issue

The CESD recommended that TBS should develop an approach to track costs and savings to provide decision makers, parliamentarians and Canadians with sufficient information about the estimated costs and savings to achieve the 2050 net‑zero target. TBS partially agreed with this recommendation.

Response

• The Greening Government Strategy net-zero 2050 target should be implemented in the most cost-effective manner.
• Greening federal operations, including buildings and fleet, requires upfront capital investments which can be more expensive than higher polluting status quo options. However, greening investments are typically partially or fully offset by operational savings over time, especially when the full cost of carbon is considered.
• The Centre for Greening Government has developed an approach to tracking costs and savings that focuses on ensuring the lowest implementation and life-cycle costs (including costs and savings over the life of assets) and has developed controls to achieve this objective. 
• Greening costs and savings are integrated into, and a minor part of, overall capital expenditures on real property and fleet. Implementing life-cycle cost analysis with controls at the beginning of projects is an efficient means to achieve greening outcomes at the lowest cost.    
• The Treasury Board Secretariat will publish more information on this approach to tracking costs and savings for Canadians by Winter 2023.

Background

TBS has a range of mechanisms to address the cost-effective implementation of the Greening Government Strategy. Specifically, the Centre for Greening Government (CGG) implements a 3-step approach to costing greening:

• Estimate the life cycle costs and savings of major projects and initiatives e.g., portfolio plans
• Provide guard rails and guidance to ensure cost-effectiveness e.g., life-cycle cost analysis methodology for individual RP projects incl. shadow price of carbon, tool for fleet life-cycle cost analysis
• Track strategic initiatives specific to greening e.g., renewable electricity procurement, Low-Carbon Fuel Procurement Program, Greening Government Fund, public accounts expenditures as needed

In addition, departments report to Parliament on their capital expenditures through the main estimates and public accounts and on overall progress on greening their operations through their Departmental Sustainable Development Strategies. Greening costs and savings are integrated into, and a minor part of, overall capital expenditures on real property and fleet.

Separating the greening components from the capital investment components for all capital expenditures would be extremely resource intensive and after the fact. Implementing life-cycle cost analysis with controls at the beginning of projects is an efficient means to achieve greening outcomes at the lowest cost.    

With 32,000 buildings, 23 million square metres (m2) of floor space, approximately 20,000 engineering assets, and 39 million hectares of land, the Government of Canada owns and manages the largest fixed asset portfolio in Canada. The government spends approximately $10 billion annually to administer this portfolio, the replacement value of which is estimated in the order of $100 billion. TBS hired a consultant to aggregate the results of department plans to determine that the incremental cost to achieve net-zero real property Government of Canada operations by 2030 is $3 billion or about 3% of the replacement value of the portfolio.

The CCG has also conducted consultant studies with the Canadian Greening Building Council  which demonstrate the cost-effectiveness of zero carbon buildings and the value of deep energy retrofits for existing buildings. Any major building retrofit must undertake a GHG life-cycle costing analysis which incorporates a shadow price on future carbon emissions. This methodology ensures best value to the crown on significant long-term investments. All new federal buildings must be net-zero emissions, best value implementation options are selected using life-cycle costing.

For conventional fleet operations, the CGG has conducted life-cycle cost assessments which determined it is more cost-effective for the government to procure electric vehicles. Over the life-cycle of government ownership of conventional fleet vehicles, typically 7 years, the cost of operating electric vehicles are already below those of internal combustion vehicles.

Issue

The Government of Canada is the largest public procurer in Canada, and is well-positioned to leverage its procurement power to stimulate market demand for low-carbon products (e.g., low-carbon concrete) and Canada's emerging clean technology sector.

Response

• The Greening Government Strategy includes commitments to green procurement of the highest emitting goods and services that the Government buys including buildings, fleet, fuel and electricity.
• The Treasury Board Secretariat is working with departments to operationalize green procurement in key areas of emissions consistent with the Greening Government Strategy and the Policy on Green Procurement. 
• The Government has estimated the embodied carbon footprint of the goods and services bought by its central procurement organizations, Public Service and Procurement Canada and Shared Services Canada and they are published on its website.
• Specific procurement requirements for government operations include that new buildings must be zero-carbon, 75% of vehicle purchases must be zero-emission or hybrid, and 100% of electricity purchases must be clean. We have also created a fund to support the purchase of low-carbon fuel to lower the carbon emissions of the national safety and security fleet.
• To address emissions from construction materials, the government has initiated, through the National Research Council, the low-carbon assets through life cycle assessment initiative, to support the selection of materials and designs that offer the lowest carbon footprint for construction materials.

Background

We buy environmentally friendly goods and services by considering environmental performance over the entire life cycle of goods and services purchased, along with other criteria such as price, availability, quality and performance.

The Centre for Greening Government is collaborating with departments and agencies to green their procurement and meet the commitments of the Greening Government Strategy and the Policy on Green Procurement by:

• Implementing the procurement elements of existing greening government initiatives and commitments (ex: Low Carbon Fuel Procurement Program, the purchase of clean electricity)
• Estimating the carbon footprint of federal procurement
• Promoting the use of environmentally preferable goods.
• Integrating environmental considerations in the procurement process - from planning phase to final disposal.
• Developing new procurement standards for the disclosure and reduction of embodied carbon in structural material and incentivizing large suppliers to disclose emissions and set reduction targets
• Forming coalitions with other major public buyers both nationally and internationally (e.g. Greening Government Initiative)
• Promoting circular procurement. Public Services and Procurement Canada has developed two programs promoting circular economy:
  • Computers for Schools: refurbishing equipment for reuse by schools across Canada.
  • GCSurplus: equipment in working condition can be sold for reuse to the public.
• Promoting green procurement through the Greening Government Fund. There are currently two projects underway to improve green procurement:
  • a project to establish the data and guidelines needed to buy lower-carbon construction materials (lead by the National Research Council)
  • a pilot that measures greenhouse gas emissions associated with priority goods and services. (lead by Public Services and Procurement Canada)

Issue

The Greening Government Strategy commits to using 100% clean electricity by 2022, where available, and by 2025, at the latest, by producing or purchasing renewable electricity. On average nationally, based on the clean electricity available on the grid and our Renewable Energy Certificate purchases, 86% of our electricity consumption in FY2020-21 came from clean electricity.

Response

• The Greening Government Strategy commits to using 100% clean electricity by 2022, where available, and by 2025, at the latest, by producing or purchasing renewable electricity.
• The government reports the emissions associated with the generation of electricity used in its facilities.
• Nationally, Canada has a relatively clean electricity grid, but GHG emissions from electricity generation vary from province to province. Some jurisdictions generate electricity from carbon emitting fuels such as coal and natural gas.
• In the four jurisdictions with the highest emitting grids (Alberta, Saskatchewan, Nova Scotia and New Brunswick) the Government is working with electricity providers in each jurisdiction to procure clean electricity from non-emitting, renewable energy sources such as wind and solar.
• In other jurisdictions, the Government is procuring Renewable Energy Certificates that ensure that clean electricity is put on the grid to displace the emissions from our electricity use.

Background

The Greening Government Strategy commits to using 100% clean electricity by 2022, where available, and by 2025, at the latest, by producing or purchasing renewable electricity.

The 4 provinces with the highest emitting grids are Alberta, Saskatchewan, Nova Scotia and New Brunswick. To implement this commitment, unique approaches are required as each province and territory have different regulatory frameworks and delivery models (public/private/both sector).

In Alberta there is an open market for electricity. The Request for Proposal (RFP) was issued by Public Services and Procurement Canada (PSPC) on behalf of departments to procure electricity. The RFP closed at the end of January and bids received are being evaluated.

In Saskatchewan, SaskPower is a Crown corporation. SaskPower signed a Memorandum of Understand (MOU) with PSPC in February to deliver 25% Solar (First Nations provided) in 2022 and 75% wind starting 2024 to federal government facilities.

In Nova Scotia, Nova Scotia Power is responsible for approximately 95% of the province’s electricity production and distribution. In August 2019, Public Services and Procurement Canada’s Atlantic Region, on behalf of the Government of Canada, entered into an ‘Agreement for Implementation to Purchase Net-New Renewable Electricity’ with the Province of Nova Scotia to acquire clean electricity for federal Crown facilities in the province. Subsequently the province has created the Nova Scotia Green Choice Program for clean electricity procurement and will be launching the Request for Proposals process in early 2023.

In New Brunswick, discussions underway between PSPC and NBPower with the province participating. A framework has been established but no formal agreement at this point.

Outside of Alberta, Saskatchewan, Nova Scotia and New Brunswick, provincial electric grids are very clean. The strategy to address any remaining emissions from electricity use in these locations (and the relatively little electricity used in the territories) is to buy Renewable Energy Certificates (RECs) to displace this dirty power. This means that clean, renewable electricity would be injected into the grid by the supplier of the RECs, and the Government of Canada would be credited with the associated GHG emission reduction. PSPC is reviewing the REC procurement strategy while also considering options for securing RECs sourced from Indigenous businesses.

Issue

The Government of Canada has set a goal of having a 100% electric light-duty fleet by 2030, and is charting a path to achieve that target.

Response

• Through the Greening Government Strategy, the Government of Canada has committed that at least 75% of new light duty fleet vehicle purchases will be zero emission vehicles (ZEVs) or hybrid vehicles (HEVs) with a priority for ZEVs, with the objective that the government’s light-duty fleet comprises 100% ZEVs by 2030.
• Departments have made good progress on these commitments and are on track to achieve the 2030 objectives where there are electric options. Based on preliminary reporting, of the 17,800 vehicles in the federal conventional light-duty fleet approximately 10% were HEVs (about1,700 vehicles) and 4% were ZEVs (about 700 vehicles) as of March 31, 2022.
• The rate of ZEV adoption is constrained by their availability and supply. Currently, suitable ZEV options exist for less than one third of the vehicle types used by the Government of Canada, and global supplies are limited with many manufacturers focussed on supplying retail customers.
• Annual federal purchases of ZEVs have more than doubled over the past two years and will continue to increase rapidly as supply chains improve and new models become available.
• Major fleet-owning departments are developing detailed roadmaps to our 2030 target.

Background

The federal land fleet is comprised of ~30,000 light duty vehicles and ~19,000 commercial, off-road and specialized vehicles.  The fleet is divided into 2 categories:

1) The federal National Safety and Security (NSS) Fleet includes the aircraft, marine vessels and tactical land vehicles owned or leased by DND, the RCMP and the Coast Guard that have an explicit national safety or security function;

The GGS light-duty fleet purchase and fleet composition targets do not apply to the NSS fleet. By 2023, NSS fleet departments will develop Operational Fleet Decarbonization Plans that outline how they will reduce their emissions from operations in line with the overall 2050 target.

2) The conventional fleet includes the aircraft, marine vessels and land vehicles owned or leased by federal departments, agencies and other government organizations that are not part of the NSS Fleet.  The target applies to this category of on-road fleet.

The rate of ZEV adoption has been constrained by the market availability and supply of suitable vehicles that meet operational requirements. Limited ZEV options currently exist for the larger vehicle types (e.g., vans, pick-up trucks) that make-up the majority of the light-duty fleet, and supplies are limited due to ongoing global supply chain issues. Given these constraints, some ZEV manufacturers are prioritizing retail customers which further limits the GoC’s access. TBS anticipates that ZEV purchases will increase rapidly over the next 1-3 years as supply chain issues resolve and more suitable options become available in the market.

Despite their higher initial purchase cost, over the life-cycle of government ownership of conventional fleet vehicles, typically 7 years, the cost of purchasing and operating most electric vehicles are is already below those of comparable internal combustion engine vehicles.