Just months after the global minimum tax was approved by over 130 countries, the agreement is quickly on its way to becoming a reality. With rules for the tax’s implementation now unveiled and some governments already preparing to bring the tax into effect by next year, what impact could this have for developing countries and how should they prepare?

The global minimum tax was agreed in October 2021 between 136 (now 137) of the 141 countries who are members of the Organisation for Economic Co-operation and Development (OECD)/G20 inclusive framework on tax base erosion and profit shifting (BEPS), capping years of negotiations. The long-anticipated deal is designed to ensure that multinational enterprises (MNEs) will be subject to a minimum 15% tax rate in every country of operation from 2023, thus preventing situations where these MNEs take advantage of differing tax regimes between jurisdictions and effectively avoid paying tax.

While the headlines around the agreement have largely focused on taxing the digital economy, the global minimum tax, which is the second pillar of the overall global tax reform agreement, should have more of an impact on developing countries. It should reduce the use of tax havens by MNEs to shift profits out of their main operating companies. The global minimum tax could also limit tax competition between developing countries in a range of economic sectors, such as mining, manufacturing, or telecommunications, reversing a decades-long “race to the bottom” on corporate taxation.

While the headlines around the agreement have largely focused on taxing the digital economy, the global minimum tax should have more of an impact on developing countries.

Two months after the global minimum tax deal was announced, the OECD published rules for countries to implement it. Some countries are already taking steps to begin implementation as early as next January.

The OECD is eyeing a rapid implementation timeline and plans to release a commentary explaining the recently issued rules in March while launching a related consultation. The consultation is mostly addressed to businesses and tax experts, with the goal of clarifying some of the most complex elements of the global minimum tax rules. The template for global minimum tax rules should not change.

The Potential Impact

The OECD/G20 deal should increase tax collection in most countries, which could be a major step forward in supporting the achievement of the Sustainable Development Goals (SDGs). Target 17.1 of the SDGs, for example, calls upon governments to “strengthen domestic resource mobilization, including through international support to developing countries to improve domestic capacity for tax and other revenue collection.” 

This is an important outcome, given that corporate income taxes can provide governments with crucial revenue for achieving public policy objectives. Corporate income tax rates have been declining for decades because of tax competition. Developing countries in particular rely more heavily on corporate income tax revenue, and given the economic toll of the ongoing COVID-19 pandemic over the past 2 years, these governments need to find resources to finance better physical and digital infrastructure. 

This is an important outcome, given that corporate income taxes can provide governments with crucial revenue for achieving public policy objectives.

However, in practice, the impact of the global minimum tax rules will depend on their interaction with domestic tax policies and on how different countries change their fiscal regimes as a result. 

Firstly, offshore investment centres such as the Cayman Islands, Bermuda, or the British Virgin Islands will have no reason to continue to offer reduced or zero income tax rates to multinational companies. Some countries are already planning to change their headline corporate tax rate. This could make them less attractive for MNEs, possibly leading to a “reshoring” of taxable profit to other countries.

Secondly, developing countries may find that the global minimum tax could actually lead to tax revenue being lost to other jurisdictions. Developing countries are typically not considered tax havens, given that they often have relatively high headline corporate income tax rates. But after decades of giving tax exemptions to specific sectors, investors, or regions, the effective tax rate paid by many large companies can be quite low. Under global minimum tax rules, which set a 15% minimum benchmark, developing countries whose tax incentives lead to an effective tax rate below 15% may find themselves in effect giving up tax revenues to the jurisdiction where the MNE is based. Because the jurisdiction where the MNE is based will be collecting the minimum tax itself, developing country governments might not even be aware that this is happening.

Developing countries should therefore review their domestic tax and investment frameworks to identify and modify those tax incentives that will be affected by a global minimum tax. The timing for this work is crucial, and governments need to start now. Tax incentives are often included in laws, regulations, contracts, or other legal instruments, which may be protected by stabilization provisions. These stabilization provisions often make these tax incentives difficult to change, especially for those investment projects that are already underway. Amending tax or investment laws, as well as sectoral codes, also takes time. Reviewing investment contracts will take even more time, effort, and political capital. 

That is why IISD has joined forces with the International Senior Lawyers Project (ISLP) to publish a guide for policy-makers in developing countries as they consider revising domestic tax incentives that could be affected by a global minimum tax. As the new global tax deal is implemented worldwide, we should ensure that multinational firms pay tax first and foremost in the developing countries where they operate, extract, and generate profits.

For young people actively engaged in fighting the climate crisis, the task can feel overwhelming, especially amid continued warnings that climate mitigation efforts are falling short of the ambition we need to limit global temperature increases to 1.5°C from pre-industrial levels. Yet youth activists are crucial for galvanizing public momentum in support of more ambitious climate action and will have to live with the consequences of today’s decisions. Many of them will also be tomorrow’s policy-makers. 

To discuss how to best support youth activists amid the challenges they face, I sat down with activist and educator Kristina Hunter, who has worked with youth in sustainability spaces for over 20 years. Kristina began her career by teaching environmental science courses at the University of Manitoba, where she mentored many students. In recent years, she has launched her own website featuring online content to support young people who want to be more involved in sustainability. 

Below is our conversation on how youth climate activists can reconnect with their larger movement, beat climate fatigue, and engage with their peers at home and abroad. It has been edited and condensed for clarity.

Learning From Sustainability Mentors

Emily: You started your career as a university professor but have since moved on to creating more online content. Can you tell us what inspired you to move to the bigger platform?

Kristina: Like a lot of people, I was feeling like we’re not focusing on the things we need to focus on. I felt like the earth is on fire and here I am talking about grades. I was lucky enough to talk to people about the environment each and every day, and yet it wasn’t enough of a focus on true action, and I think we also weren’t really respecting the urgency of the situation. 

I was seeing myself heading toward burnout and really seeing my students and others in the industry heading down that path as well. I thought that we need to refocus, and that's why I started a podcast and my own blog and website and online courses.

Emily: Something unique about your career is that you've dedicated so much of your time to working in a mentoring role, particularly to young people. What inspires you to be that mentor figure?

Kristina: Clearly, they [the young people] do. It’s so exciting and invigorating to be reminded that there are endless possibilities and to be challenged about asking, “Why not”? 

So many of us get stuck in that rut of “This is how we do things” and “This is how the world is.” We need to challenge ourselves and ask why. Why can't we do it differently? That is honestly what keeps me going, and I love being inspired by those young adults who are changing the world. 

I also love helping to give them the tools to be as effective as possible and to do it in a way that protects their own wellness and really understands that yes, it is urgent and serious. But we first need to care for ourselves.

Blending New Technologies and Historical Skills

Emily: Have you noticed any changes in how young environmentalists approach environmental issues, compared to when you got started?

Kristina: I’m so glad you asked this. It’s such an interesting thing to have observed this deepened connection that people have with the broader movement online. I know the social media and online world can be very challenging from a mental health perspective. But the connections that it gives have also been very beneficial in that we are much more connected now to global movements. 

When we see things like protests in Standing Rock, we feel and understand those issues much better because of this connection we can have with them. But young people now are also doing interesting things that some of my colleagues and I had always hoped for. 

They're going back in terms of understanding what was valuable about our historical skills and behaviours, so they’re learning how to preserve food and doing gardening with their grandparents. And these beautiful things are not just a throwback but preserving the heritage and knowledge that we need to capture. That also makes me very hopeful.

Forging Lasting Connections and Preparing for the Long Haul

Emily: I think there's sometimes a stereotype that young people don't care about things that happened in the past, but there really does seem to be a resurgence of recognizing how valuable that knowledge is. Something else that there seems to be a big resurgence of is in awareness in the climate community of activists from different parts of the world being more aware of each other and more willing to work together. What do you think is the driver behind that trend?

Kristina: You know I have seen that, and I have experienced it as well, and I understand this term “global community” on a new level. The pandemic has forced me personally to get online more. I think it's forced a lot of us to get online more, and we have recognized there are ways to forge real relationships, even if you've never met in person. To me, that is one of the upsides of the technology that we have and how we can use it to develop true relationships.

Emily: Something that I’ve heard you say a few times before is that when we take action on these big global issues, especially in sustainability, that we’re running a marathon and not a sprint. Can you explain what you mean by that?

Kristina: When I got into teaching, I really thought that I would be working myself out of a job. We’d educate more people about the problems, and then I wouldn’t need to teach this anymore. It didn’t quite happen that way. By the time I left teaching 20 years later, I was honestly feeling some despair about it all. 

The good thing is that I have seen a huge amount of change in that time. I have seen people really take a deep interest in understanding the root issues and how things are truly interconnected, how sustainability is not separate from equality and issues of racial justice and ecological injustices, and how those all connect and are part of the same issue. 

However, we also know we’re not acting fast enough. It’s definitely been my experience that we are in this for the long haul. And when we recognize that, I think we do things a little bit differently in terms of our own self care.

I think that this is a vital piece that we’re not talking about enough in the environmental movement in the movement of sustainability and justice. Yes, the big changes should have all happened already. We are behind, and it is urgent, and it’s an emergency on all fronts. Yet I think we need to approach it in the sense that we will be working on this for the foreseeable future. In order to do that, we must protect our own personal well-being.

So, how do we get there? It's really not how we sometimes think about self care. It's not about bingeing your show online. It's getting to the heart of what really is good for us. Sleeping right and eating right overlap with what's good for the planet. When we eat whole foods, eat lower on the food chain, that's good for the planet and our bodies. 

We also have to respect that we have a lot to do, but we're already doing good work. For anybody who feels kind of desperate that they’re not doing enough, make a list acknowledging all of the things you are doing that are good for the planet that are also good for yourself. Things that are good for your community, that build social justice. Make that list and refer back to it. We really want to avoid being overwhelmed by grief and be able to keep working at it and not burnout. 

Emily: Thank you so much Kristina for being here. If someone wants to know more about your work or contact you, where can they find you?

Kristina: I have a website—it is https://www.kristinahunterflourishing.com/. I chose the word flourishing because I truly believe that's what we all can do. Humanity can flourish along with the natural world, and to me that's what sustainability is. I also have a podcast called Live. Well. Green. I'd love to connect.

This article was originally published on IISD's SDG Knowledge Hub.

2022 will be a significant year for governing the 2030 Agenda and other global frameworks on protecting the environment. While 2020 was anticipated as a super year for nature, and 2021 was considered all the more crucial for biodiversity after the pandemic froze many global discussions, 2022 now holds the cumulative need for high-level negotiations driven by renewed political will to adequately tackle environmental issues. It also inches the world closer to key deadlines for human and planetary wellbeing.

Due to many pandemic-related postponements–they seem too numerous to count, but the SDG Knowledge Hub’s calendar has been documenting these changes for nearly two years–2022 will bring us twice as many meetings of environmental treaty governing bodies as we would expect during non-COVID times. In addition, several negotiation processes on new frameworks and treaties have reached a point for delegates to conclude their talks and adopt new binding commitments.

The more we look at the calendar, the more it emphasizes the importance of 2022 for global governance decision making.

The more we look at the calendar, the more it emphasizes the importance of 2022 for global governance decision making. Multiple COPs are planned for 2022. While the biodiversity and climate COPs are likely to receive the most media attention, decisions to be taken by the United Nations Convention to Combat Desertification (UNCCD), the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), the Ramsar Convention on Wetlands, and the chemicals and wastes and mercury conventions will all have implications for the success of multilateral environmental efforts.

Furthermore, the United Nations Environment Assembly (UNEA) will consider the governance of marine plastics and a new science-policy interface on chemicals, among other agenda items. A new marine biological diversity of areas beyond national jurisdiction (BBNJ) treaty nears the final stage of negotiations. If adopted, governance arrangements for the conservation and sustainable use of BBNJ will be subject to this new global framework. The UN Ocean Conference will seek to keep a holistic focus on oceans. And preparations for the first meeting on water policy at the summit level in over 40 years–which will take place in March 2023–will be in full force.

In smaller rooms around the UN, consultations will be held on a set of proposals offered by the UN Secretary-General in September 2021 to help the UN face new challenges and achieve ‘Our Common Agenda’ over the next few decades. The report’s recommendation to hold a summit on transforming education is already in motion for September 2022. On the environmentally focused proposals in the report, intergovernmental consultations are scheduled for 3-4 March.

We also enter 2022 as perhaps the true start of the Decade of Action on the SDGs and the Decade on Ecosystem Restoration.

This is not all the year holds in store. We also enter 2022 as perhaps the true start of the Decade of Action on the SDGs and the Decade on Ecosystem Restoration. The July 2022 session of the UN High-level Political Forum on Sustainable Development (HLPF) will provide a platform for judging how much progress is needed on a shorter timeline and exchanging proposals on the best way to do it. Among the SDGs being considered in depth this year are Goal 14 (life below water) and Goal 15 (life on land). The overall theme for the session puts these ambitions into their challenging context: ‘Building back better from the coronavirus disease (COVID-19) while advancing the full implementation of the 2030 Agenda for Sustainable Development.’

The HLPF is the apex of the international governance arrangements for the SDGs and 2030 Agenda, and it recently underwent a review itself. This year’s Forum will be the first chance to see the effects of these shifts, including the guidance that:

• voluntary national reviews (VNRs) presented during the HLPF should identify not only achievements and success factors, but also challenges and gaps
• discussions should focus more on the availability of data and national capacities for data collection
• the HLPF should provide stronger analysis of interlinkages across the SDGs and their targets, including policy implications of synergies and trade-offs, and more attention should be paid to local efforts to advance the SDGs, and the outcomes of the regional forums.

Regional meetings and workshops in preparation for the HLPF will begin in March.

2022 is an important anniversary year, arriving 50 years after the UN Conference on the Human Environment in Stockholm that resulted in the creation of the UN Environment Programme (UNEP).

And finally, 2022 is an important anniversary year, arriving 50 years after the UN Conference on the Human Environment in Stockholm that resulted in the creation of the UN Environment Programme (UNEP), and 30 years after the UN Conference on Environment and Development in Rio de Janeiro. These conferences led to the recognition of sustainable development, defined as the intersection of environmental, social, and economic development, and marked its growing importance for global governance.

From ENB’s 30th anniversary on 2 March, UNEP’s 50th anniversary celebrations immediately after, to Stockholm+50 in June, we will examine how global environmental governance works, how it has evolved, and where we stand heading into the next 50 years.

At IISD’s Tracking Progress program, our job in helping sustainable development policymakers to track global policymaking processes will be more important than ever. We anticipate many of the dates and locations of the events we have flagged above will be adjusted as the pandemic evolves, so check our events calendar frequently.

A new sense of urgency for climate action is being felt all around the world. We spent the past year watching climate disasters cause heartbreaking scenes of destruction, all the while continuing to deal with the global COVID-19 pandemic. Other impacts of climate change—like rising sea levels, intensifying droughts, and irregular rainfall patterns—are harder to see and not as prominent in the media, but they are increasingly putting communities and ecosystems at risk as well.

These stories and images were backed by the latest science last year. In August, the Intergovernmental Panel on Climate Change (IPCC) report confirmed that some climate impacts are inevitable and irreversible. It raised alarm bells and confirmed that we cannot afford to delay our efforts to prepare for and protect ourselves against what’s to come. This means accelerating national efforts to put adaptation at the heart of decision making, which is exactly the goal of the NAP Global Network, which brings together adaptation policymakers from developing countries and donor agencies. 

The National Adaptation Plan (NAP) is a critical tool in the fight against climate change, using research and on-the-ground analyses to plan for adaptation efforts that will generate the most sustainable, just, and cost-effective solutions.

With the International Institute for Sustainable Development (IISD) hosting its Secretariat, the NAP Global Network supports developing countries throughout the NAP process to accelerate the implementation of adaptation actions around the world. While reflecting on the past year’s progress in our work, it’s clear that the momentum being built for climate action will continue into the new year, and NAPs will have a big role to play.

- Anne Hammill, Senior Director, Resilience, International Institute for Sustainable Development, NAP Global Network Secretariat.
 

10 Countries Submitted Their National Adaptation Plans in 2021

Despite contributing the least to climate change, developing countries suffer the most from its impacts. Developing country governments are witnessing first-hand the importance of developing an effective NAP that identifies different risks and priority actions for addressing them.

“I hope that this plan will be a cornerstone in the policy framework of reducing the risks of climate change and increasing the resilience towards it, continuously, for the benefit of present and future generations,” said Sheikh Abdullah Ahmad AlHumoud AlSabah, Chairman of the Board and Director General of Environmental Public Authority (EPA), in the foreword of Kuwait’s NAP—the development of which was led by the EPA.

For example, Albania has made progress on preparing for climate change impacts through its NAP process, including by implementing priority activities with a focus on gender equity and ecosystem-based adaptation.

In the last year, 10 countries submitted their NAP documents to the United Nations Framework Convention on Climate Change (UNFCCC), including six countries that we, through the NAP Global Network, have worked with on technical assistance and peer learning. As more and more countries submit their NAPs, we expect governments to increasingly focus their support requests on how to implement these plans.

“The support we provided for South Africa’s adaptation cost estimates and their resource mobilization strategy, or Peru’s efforts to ensure a participatory NAP development process, are important pieces of their transition from planning to implementation,” said Hammill.

This substantial number of submitted NAP documents is an exciting achievement, as it doubles the previous record for NAPs filed in a single year (in 2019, five NAPs were submitted to the UNFCCC). Between the NAP Global Network’s country partners and other nations working on their adaptation plans, we can expect more submissions to follow in 2022.

More Technical Support Requests for Adaptation Than Ever

In 2021, the NAP Global Network received 47 requests for short-term technical assistance—more than all the previous years combined. These requests are sent through the Country Support Hub. Our Secretariat’s researchers and policy advisors have worked with 45 countries since the Hub’s launch in 2016.

With funding from Germany and the United Kingdom, the NAP Global Network worked with 20 countries in preparing their first Adaptation Communication (ADCOM) to the UNFCCC after sending out an open call for requests in May. By compiling and analyzing information on adaptation progress, priority actions, and support needs, a country’s ADCOM is an important resource for elevating the profile of adaptation. It is also a valuable input for the upcoming global stocktake under the UNFCCC, which will assess how the Paris Agreement has been implemented to date and is slated for late 2023. 

These efforts will continue in 2022, and we expect a surge of ADCOM submissions to take place before the call for inputs into the global stocktake closes next year.

Other results from the NAP Global Network’s technical support requests from last year included:

• Burkina Faso’s first NAP progress report, which identifies lessons learned and recommendations for future actions, and assesses results from adaptation efforts in each sector.
• A national gender advisor assisting the government of Côte d’Ivoire in mainstreaming gender considerations into climate action.
• A new analysis led by the government of the Republic of the Marshall Islands that explores opportunities and challenges in integrating gender equality and human rights objectives in the NAP process.

Informing the Way Forward

The NAP process enables countries to manage systematically the climate risks they face, while doing so in a way that advances a range of other development priorities. This year, our researchers conducted deep dives on different themes to help governments use their NAP processes to address and elevate these priorities when building climate resilience.

• We reviewed 19 NAP documents to provide guidance on how to use the NAP process to scale up ecosystem-based adaptation measures when building resilience to climate change.
• We provided recommendations on how countries can create opportunities for diverse stakeholders at all levels—from citizens and local organizations to sub-national and national policymakers—to collaborate in an inclusive NAP process.
• We examined how sexual and reproductive health and rights (SRHR) have been treated in NAP processes to date, finding that while governments are prioritizing adaptation in the health sector in their NAP processes, there has been limited attention to SRHR in overarching NAP documents so far.

Donors Committing Funding for a New Era of Adaptation Efforts

At the 2021 UN Climate Change Conference (COP 26), the NAP Global Network received new funding from Canada, the United States, Germany, Ireland, and the United Kingdom to increase support for national adaptation planning and action in developing countries. This announcement highlighted how much NAP processes are valued and recognized for their role in building a resilient future.

With this new funding and the momentum built from the past year, our team at the NAP Global Network Secretariat, hosted by IISD, is ready for the work ahead and excited to see real change as NAPs start being implemented around the world.
 

This originally appeared as an op-ed by Business Day on December 9, 2021, and is reprinted below with permission.

On the margins of the 2021 UN Climate Change Conference (COP 26) in Glasgow, a group of developed countries, including France, Germany, the UK, and the US, pledged to mobilise $8.5bn (R131bn) over the next few years to help South Africa move away from coal and speed up its transition to a low-carbon economy.

The partnership is potentially excellent news. If successful, it will serve as a model for climate progress, ensuring that the costs of the energy transition and climate change are split in a more equitable way between developing countries facing high bills, and developed countries bearing the responsibility for most carbon emissions in the atmosphere.

Reactions to the announcement have ranged from cautious optimism that international climate finance may finally deliver transformational funding to strident opposition to foreign governments interfering in South Africa's domestic energy policy. Still, the majority agree the deal lacked detail and clarity on what exactly it would deliver.

No matter what it says, though, one thing should be clear: these funds cannot be used to support gas projects and unwittingly kick-start a whole new fossil fuel industry in South Africa. But as it stands, this dangerous outcome remains a possibility.

The deal stated that the money would help accelerate the development of renewable energy, electric vehicles, and hydrogen, and would support coal workers facing job losses due to plant closures. However, it also noted that state-owned power utility Eskom would have access to financing to decommission — or repurpose — part of its fossil fuel-based electricity fleet. And Eskom — whose total generation fleet of 46GW includes 39GW of coal-fired capacity — has not explicitly ruled out a conversion of existing coal plants to gas-fired units. 

Advocates of gas might argue this is a good idea as gas plants are generally thought to emit less carbon than coal, and repurposing coal plants might be quicker than developing new gas-fired plants. Yet, the long-term effects of investing in gas would be detrimental.

While carbon emissions from gas-fired plants are indeed considered to be lower than coal, emerging evidence on emissions due to methane leakage across the gas supply chain — from production and transport to final burning — shows that coal-to-gas switching cuts the emissions 0% to 30% at best, making the technology dirtier than previously believed, and perhaps no better than coal at all.

In addition, developing gas infrastructure would put the next generation of gas workers and their communities in the same challenging position that coal workers are experiencing today. Gas assets are likely to become stranded and unable to operate due to worsening economics and tightening emissions standards long before the end of their technical lifespan. The new climate finance for South Africa is meant to deal with precisely these kinds of issues, by accelerating, not hindering, a just transition. Imagine the irony if, instead, it was used to create the same problem for the next generation of workers.

Finally, as more than 20 countries recently pledged to end fossil fuel finance abroad, support for gas projects is becoming harder to find, which is weighing heavily on the economic viability of the gas sector — from exploration and production, to pipelines and power stations.

This is not to say that no gas investment should be allowed to take place in the country at all, but simply that there is no reasonable justification for including gas-fired generation among the projects funded by climate finance. Truly low-carbon technologies, such as renewable electricity generators, green hydrogen, and storage technologies, are available and should be at the centre of any serious climate-financed investment package.

So let there be no mistake. Substantial volumes of gas-powered generators that have not been fitted with carbon capture and storage technology to stop the emissions from entering the atmosphere are not compatible with net-zero emissions pathways. Gas can no longer be seen as a “bridge fuel'” between coal and renewable technologies as the latter are now cost-competitive with thermal plants. To qualify for climate finance, projects should generate close to zero carbon emissions, rather than represent a self-claimed improvement on coal, which, for gas plants, is likely to be marginal, or even negative, depending on gas-related methane emissions. 

The next step for the climate finance partnership is to establish a task force and determine an unambiguous action plan. It is vitally important that these climate funds are not the catalyst for the development of a fossil gas industry in South Africa. The task force should explicitly rule out substantial investments in fossil fuel-based projects to ensure that these funds support workers and communities while building a climate-safe future for all South Africans.

Today, the Canada Energy Regulator (CER) published its flagship Canada Energy Future 2021 report, the federal government’s most important source of energy supply and demand forecasts. This information is critical for guiding public and private sector decision making. But there is a major catch: the forecasts in this report fail to provide the information that policy-makers and the business community need to transform Canada’s climate ambitions into concrete action. This is crucial for ensuring that Canada is able to do its part alongside other countries to help keep global average temperature increases below 1.5°C from pre-industrial levels. 

Reaching climate targets requires the right information

As part of its national contribution to help meet the Paris Agreement target of limiting temperature rise to 1.5°C, Canada has committed to reaching net-zero emissions by 2050. In the nearer term, Canada has also pledged to slash emissions by 40–45% by 2030, relative to 2005 levels. 

Reaching these targets requires scaled up policy action from federal and provincial governments and business action from the private sector. Having the right information to guide these policies and decisions is a critical piece of this puzzle. 

The Canada Energy Future 2021 report acknowledges that more work is needed to transform Canada’s energy system to meet net-zero targets but fails to provide the critical scenarios that could help guide us there. The report includes two core models (the Evolving Policies and Current Policies Scenarios), which provide energy sector projections to 2050 based on different levels of policy ambition to mitigate climate change. 

A discussion of net-zero goals is also included but is not fully modelled with in-depth supply and demand projections to the extent of the two core scenarios. The report does provide some net-zero modelling for the electricity sector, projected to 2050, but does not provide an in-depth core scenario.

Canadian governments and businesses need a fully modelled scenario to 2050 for our energy sector in line with the Paris Agreement’s 1.5°C target.

Canadian governments and businesses need a fully modelled scenario to 2050 for our energy sector in line with the Paris Agreement’s 1.5°C target. Without this scenario, public and private actors lack the information they need to make economic decisions to ensure Canada can decarbonize effectively and in a way that supports a just transition as it joins other countries in moving toward net-zero emissions.

Catching up with the global conversation

In this 2021 report, the CER has updated its Evolving Policies Scenario, which integrates announced federal, provincial, and municipal climate policies and charts a forward-looking forecast to 2050. However, this scenario assumes that Canada’s oil production will peak at 2.1 billion barrels/year in 2032, and its natural gas production will peak at 5,657 billion cubic feet/year in 2040. 

These production levels are entirely misaligned with a net-zero world. The Production Gap 2021 Report indicates that governments worldwide plan to produce more than twice the amount of fossil fuels than would be consistent with a 1.5°C scenario in 2030. Other governments are already addressing this gap. The Beyond Oil and Gas Alliance, launched by Denmark and Costa Rica at COP 26, brings climate leaders together who have committed to phasing out fossil fuel production. We are seeing this leadership in Canada already; Quebec has joined the initiative, announcing plans to ban new fossil fuel exploration and production licences. 

CER’s Evolving Policies Scenario does define the gap between current policy trajectories and Canada’s stated ambitions for both 2030 emissions reduction targets and the longer-term goal of net-zero emissions by 2050. The Evolving Policies Scenario indicates that fossil fuels will still make up the majority of Canada’s energy mix in 2050, which is out of step with net-zero goals. 

Neither of CER’s scenarios integrate net-zero targets as a starting point, and so there are outstanding questions on how Canada can meet its Paris Agreement obligations. The CER scenarios are widely used by policy-makers and the private sector, but these models are out of step with the policy decisions that Canada needs to make. So now we need the CER to contribute to climate ambition by guiding decision-makers on how to chart that path to net-zero. A fully modelled scenario aligned with the Paris Agreement goals is critical for assessing government spending and providing Canadian businesses with the tools they need to assess climate risk.  

The CER already has other examples to draw from on how to do this. The International Energy Agency’s (IEA) Net Zero by 2050 report, as well as its recent World Energy Outlook, foregrounded net-zero by 2050 goals, illustrating a global roadmap for oil, gas, and renewable energy. These reports, released in 2021, were groundbreaking developments in charting energy futures—and Canada should follow their lead. Canada needs a similar domestic scenario that charts a pathway to the deep decarbonization of our energy system. 

Providing certainty for investors, policy-makers

The CER’s attention to Canada’s updated climate policies (including updated carbon pricing) in the 2021 report is welcome, but it demonstrates the need for more thorough analysis in 2022 and beyond. A fully-modelled 1.5°C scenario would provide certainty to investors, reduce the possibility of stranded assets, and help us close policy gaps. Without this scenario, Canadian firms and investors could make choices that increase financial risk, given that the risks of continuing investment in fossil fuels will not be properly quantified. 

Canadian governments need this scenario to help them make policy that supports a just transition and economic diversification.

Canadian governments need this scenario to help them make policy that supports a just transition and economic diversification. This data will help inform where federal and provincial governments should (and should not) be investing public money. Recent federal commitments to establish an oil and gas emissions cap, along with Canada’s decision to join several other countries at COP 26 in pledging to phase out international public finance for fossil fuels, are important steps. But rolling out effective policy to meet these pledges would benefit from clearer data about how Canada’s energy sector must transform to meet net-zero by 2050.

The IEA’s recent reports underscore the urgency of ending investment in new coal, oil, and gas production—as well as the opportunities that exist for scaling up the use of renewables and improving energy efficiency. But we need to know what levels of fossil fuel production are consistent with reaching our net-zero targets and minimizing economic risk.

What Canada and the international community need

The CER should publish, on an annual basis, a fully modelled scenario in line with warming of 1.5°C. This scenario must include net-zero emissions by 2050 in Canada’s energy sector and should use an oil price in line with recent analysis from the IEA. Like the IEA, such a scenario must be the central scenario in future Energy Future reports.

People across Canada need to know how our energy systems can transform to create the future we want. Canadian policy-makers and businesses deserve guidance on how and where they need to go to reach national climate goals. The CER can provide this critical guidance and help Canada chart its path to a climate-safe future where workers and communities thrive. This can also send an important signal to other countries also looking for models on how to decarbonize quickly, effectively, and in line with a just transition.

The below paragraphs are from an op-ed published by The Economic Times website on December 3, 2021, and are reprinted with permission.

On November 11, at the recently concluded UN Climate Change Conference (COP 26) in Glasgow, the Beyond Oil and Gas Alliance (BOGA) was launched: a diplomatic initiative led by Denmark and Costa Rica to bring together ambitious governments committed to phasing out oil and gas production. In the aftermath of COP 26, India has been singled out for its resistance to international pressure on coal. But what stance would India adopt on the new oil and gas focused alliance?

To answer this question, we first need to understand why BOGA was created, and what it aims to do. The alliance is driven by the scientific consensus that there is no room left for fossil fuel expansion. This was a central focus of the Production Gap report, co-sponsored by the UN Environment Programme (UNEP), which found that countries plan to produce 120% more fossil fuels by 2030 than would be consistent with limiting global warming to 1.5°C. Similarly, IEA analysis has highlighted that no new development of fossil fuels is possible if we are to reach net-zero carbon emissions by 2050.

Read the full op-ed at The Economic Times website.

Nature-Based Solutions at COP 26 

At the Glasgow Climate Change Conference in November, the UK Presidency highlighted the role that nature could play in helping solve the climate crisis by making it one of the conference’s key action items and themes. A myriad of side events and announcements held on the first-ever “Nature Day” elevated the prominence of nature-based solutions, also known as NbS, within the UN Climate Change venue. Supporters see this new wave of recognition as a promising step toward bridging the climate and biodiversity agendas while also setting the scene for the second part of the UN Convention on Biological Diversity’s (CBD’s) Conference of the Parties (COP 15) in 2022.

But against this backdrop of growing popularity was criticism that NbS could provide a “false solution” that is susceptible to green-washing and may undermine local communities' rights. By the end of the Glasgow talks, all references to NbS were scrubbed from the final Glasgow Climate Pact due to the strong objection of some of the parties and observer constituencies. The same objections were raised during the preparation of the Kunming Declaration, released in October 2021 during the first part of the CBD’s COP 15: NbS was opposed as a “contentious concept.”  It remains to be seen if NbS will be included in the final text of the Post-2020 Global Biodiversity Framework, expected in May 2022. 

What Are the Concerns? 

COP 26 has proven that NbS remains a polarizing concept. The perceived risks can be summarized in three main points:

NbS is perceived as a human-centric ideal that ignores the fundamental value of nature. 

Due to the relative newness of the concept and its scope, many have argued that the underlying logic of NbS to protect, conserve, and restore nature as a means to protect human interests ignores that nature has value in its own right, independent of human uses. For example, Bolivia argued during the recent COP 26 negotiations that the proposed language on NbS for the final Glasgow Climate Pact “assumes that nature is only in service of people’s needs, but nature has an intrinsic value. It is sacred. That must be reflected.”

Insufficient involvement of all relevant stakeholders could contribute to continued exploitation in developing countries. 

Indigenous Peoples and civil society argue that NbS may be used as a promotional tool, enabling the privatization of nature and its commodification through market-based mechanisms. This has led to concerns that the possible negative effects that NbS may cause effects for one group might be ignored, given its benefits for other stakeholders. Similarly, some are wary that key societal protection standards like proper consultation and engagement; free, prior informed consent; and the involvement of local communities in decision making will be reduced to formalities and box-ticking, rather than being implemented in a meaningful way. 

There is the potential for NbS to be misused as offsetting. 

NbS projects have been used to help achieve a wide range of policy objectives, such as flood control and freshwater management or the restoration and sustainable use of farmlands. However, recent attention to NbS (predominantly tree planting) within the climate community as a climate-mitigation solution, supported by optimistic studies on estimates around carbon sequestration, has led to widespread criticism that the benefits of NbS are being oversold.

More specifically, critics warn that NbS could be treated as a carbon-offsetting option that would enable the private sector to claim net-zero or carbon neutrality, while letting these companies avoid much-needed emissions cuts. It could also cause companies to neglect efforts to invest in developing better, more climate-friendly technologies. 

Working Together for Climate, Biodiversity, and People 

These concerns are well-justified. However, we must acknowledge that when implemented correctly, NbS can be highly effective in building long-term resilience for nature and people. It is a valuable asset in our toolbox for linking biodiversity and climate and addressing these twin crises. But how do we get it right? 

We reviewed several principles, guidelines, and standards developed by research institutions and organizations. Among these were the International Union for Conservation of Nature’s Global Standard on NbS, the World Bank’s NbS guidance, the Oxford Nature-Based Solutions Initiative’s Four Guidelines for NbS, World Wide Fund for Nature’s enabling conditions for NbS, and the recently published NbS Youth Position. 

Based on this review, we summarize three key principles below that are crucial for guiding NbS implementation.

Principle 1 – Nature for nature’s sake 

The commodification of nature (and the human-centred view of our relationship with it) has led to our current state of environmental degradation. Policy-makers and practitioners of NbS must recognize the intrinsic value of healthy ecosystems and vibrant biodiversity—not merely their contributions to human and societal goals. 

While this might sound abstract for practitioners, the bottom line for good NbS design hinges upon an understanding of why we are doing it in the first place: the multiple benefits, not just for protecting human lives and livelihoods, but also for preserving healthy ecosystems for all species. The emphasis of the 2021 Dasgupta Review on valuing nature capital in its own right should guide all NbS practices, thereby avoiding the narrow monetization of ecosystems, and prohibiting NbS projects that undermine ecological capital (such as planting a single species of trees in a forest restoration project). 

Principle 2 – Rights-based, inclusive, and participatory implementation 

Stringent and robust social safeguards are essential for delivering NbS projects that are just, equitable, and inclusive. This entails respecting human rights and the rights of Indigenous Peoples, as well as local communities, at the earliest stages of NbS. It also means creating partnerships and ownership among diverse actors to design NbS that reflect the needs, priorities, values, and knowledge of the local beneficiaries. Decision-makers and practitioners must adhere to free, prior, and informed consent of Indigenous Peoples, local communities, and vulnerable groups when designing NbS, which would, in turn, create an enabling environment for working together and generating local benefits. 

Principle 3 – NbS are only a part of the answer 

Relying solely on NbS will not help us solve the climate and biodiversity crises altogether. For NbS to be effective and sustainable, they must be accompanied by rapid emission reductions from sectors like energy, industry, transport, and land use. These emissions cuts must also be implemented alongside other policies to protect our ecosystems. Sustainable consumption and production of natural resources, a rapid and just transition to renewable and clean energies, and proactive adaptation measures are key for a global transformation in which NbS are one building block to build resilience of local communities and protect lives and livelihoods. Recognizing the limitations of NbS and the need for rapid decarbonization also prevents its “misuse” and ensures accountability.

Getting the Debate Right

It is vital to understand that the concept of NbS goes far beyond a single focus (e.g., mitigation or a single ecosystem). Rather, it draws attention to established and new approaches (ecosystem-based adaptation, water resource management, green and blue infrastructure) and puts them under one umbrella. Ideally, this will generate new momentum and increased visibility among a wide range of policy actors of nature’s potential contributions to adaptation, disaster risk reduction, biodiversity conservation, and much more.

At the same time, NbS is not a perfect concept. Fundamentally, criticisms of the NbS concept stem from a lack of globally recognized standards and principles guiding its implementation. This vacuum opens NbS up for harmful interpretations and misguided applications. 

This means credibility is key. A crucial aspect of our work on NbS is to acknowledge these criticisms and jointly advocate with the above organizations for clear and coherent principles, safeguards, and ecological integrity and social standards for implementation. By doing so, we hope to help make it possible to deliver effective and sustainable NbS that produce equitable benefits for people and nature. 

For too long, the way we produce and consume products has unintentionally harmed people and the planet. The processes through which commodities such as tea leaves are plucked by farmers in India and transformed into the steaming mug of tea served in your local Starbucks can often contribute to social and environmental problems like climate change, biodiversity loss, and inequality.

As consumers, we have the power to influence the way products are made, transformed, transported, and sold. By choosing sustainably grown products, we can motivate producers, manufacturers, and retailers to adopt and invest in more sustainable practices. Likewise, these actors must play a role—alongside bodies that set voluntary sustainability standards (VSSs)—in educating consumers and making sure we have the information we need to make informed choices.

Sustainable consumption trends in Asia and beyond

Global consumption of sustainably produced products such as coffee, cotton, palm oil, and tea is increasing, according to the findings from the International Institute for Sustainable Development’s (IISD) commodity series reports and IISD’s contribution to the International Trade Centre’s State of Sustainable Markets reports. This encouraging trend is driven by factors such as changing consumer preferences, reputational risk management and marketing opportunities for businesses, as well as an increase in supportive regulatory frameworks and export promotion measures from governments.

Emerging and developing countries, particularly in Asia, represent the largest consumer base for many of these commodities, but demand for sustainable products there remains low.

However, this growth in demand comes mainly from Europe and North America. For some commodities, like coffee and tea, the supply of VSS-compliant products still outpaces demand. Emerging and developing countries, particularly in Asia, represent the largest consumer base for many of these commodities, but demand for sustainable products there remains low. There are many reasons for this, ranging from the higher price of products that comply with VSSs to a lack of awareness among buyers, consumers, and government officials on the sustainability issues affecting commodity production.

Promising initiatives aimed at boosting sustainable consumption in Asia

In September, IISD and Evidensia organized a webinar that brought together various actors—from buyers and producers to VSS representatives—to discuss initiatives aimed at increasing sustainable consumption in Asia.

Many of these projects focus on improving the transparency and accountability of sourcing practices within supply chains and enhancing the credibility of product sustainability claims. For example, One Planet Network’s Consumer Information Programme provides reliable sustainability information on goods and services to help consumers make more informed choices. The World Wildlife Fund has done research on traceability in palm oil supply chains to help companies and consumers better understand where their products come from and how they affect forests, as well as promote accountability in the sector. And VSSs like the Global Organic Textile Standard (GOTS) provide labels that reassure consumers that their products have met measurable social and ecological criteria throughout their life cycle.

We also heard examples of how organizations are seeking to raise consumers’ awareness about the implications of their buying habits. For example, the Eco-fair project runs campaigns and offers online training to promote sustainable consumer choices in Vietnam. Similarly, the Trustea Sustainable Tea Foundation is developing a consumer outreach campaign on sustainability. The Sustainable Coffee Platform of Indonesia (SCOPI) aims to promote sustainable coffee production and consumption through partnership and collaboration.

Where do we go from here?

While these initiatives are encouraging, the journey has only just begun. To further boost sustainable consumption in Asia, we need to work together across all sectors.

Standard-setting bodies and other supply chain actors can improve product traceability and offer credible and transparent information to consumers on product sustainability so they can make better choices in the market. They can also help educate consumers on the true social and environmental costs of commodity production and the impacts our purchases can have on people and our planet.

To further boost sustainable consumption in Asia, we need to work together across all sectors.

Finally, governments can consider the role of regulatory frameworks and policies in enforcing more sustainable practices across supply chains. They can also help make sustainable products more affordable by offering monetary incentives to consumers or taxing products that do not comply with sustainability requirements.

Globally, we produce more sustainable products, such as coffee and tea, than we consume. Given the size of its consumer base, Asia must play a big part in closing the demand gap and achieving broader systemic change in sustainable consumption patterns worldwide.

This blog was originally published by Evidensia and reprinted on the IISD main website and the IISD State of Sustainability Initiatives website with permission. The author would like to thank Jennah Landgraf for her contributions to this blog and Cristina Larrea and David Perri for their valuable feedback on earlier drafts of this blog.

Young people in Canada have set their sights on revolutionizing climate action. The new generation of activists is going beyond the traditional avenues of protest and is now engaging directly with policy and power structures. There is much we can learn from the efforts of young climate activists, both in Canada and abroad.

Over the last couple of months, I have had the privilege of meeting with some of Canada’s dedicated young climate activists to hear about their goals and tactics. I have heard from young people who are striking from school, communicating directly with policy-makers, rallying to change the legal voting age, and even going directly into damaged ecosystems to begin restoration work themselves.

Katia Bannister: Combining advocacy and ecological restoration

One of these activists is British Columbia’s Katia Bannister, a teenager who has already dedicated most of her life to nature and the environment. Katia became involved with nature from a young age, thanks to her ethnobotanist mother. “There are photos of me as a one- and two-year old strapped into a baby backpack accompanying my mom as she did fieldwork,” reminisced Katia as we spoke to her. 

As Katia grew older and became more aware of the climate crisis, her love of nature spurred her to action. Over the last several years, Katia has participated and been a leader in some very high-profile advocacy, including the Friday strikes from school (initiated by Greta Thunberg) and the Vote16 movement, which aims to lower British Columbia’s legal voting age to 16. Katia is also the current co-leader of the Cowichan Valley Earth Guardians Crew, which works to create inter-generational change on environmental issues. 

At the moment, Katia’s biggest project is engaging directly with ecological restoration work, going out into damaged ecosystems to pull invasive weeds and propagate native plants. “Ecological restoration is tangible, place-based, and rewarding. It helps to contextualize our personal and collective relationships with the Earth,” explained Katia as she recounted her experience restoring an abandoned railroad site. “I planted riparian plants to strengthen the banks of the estuary, a place that had endured decades of degradation. It was exciting, tangible, and interesting.” 

“Ecological restoration is tangible, place-based, and rewarding. It helps to contextualize our personal and collective relationships with the Earth."

Katia Bannister

After hearing Katia describe her own experiences, I asked her what other Canadians of all ages could do to get involved and make a difference. She told us, “Research potential opportunities to do restoration work in your community. Connect with local conservation organizations. Get out there and get your hands dirty.” 

Sara Campbell: Blending justice issues with climate action

Across Manitoba, Sara Campbell has been involved in environmental and social justice issues since childhood. “I was involved in social justice activism work from a young age with the support of my family,” she explained. Sara is now the Outreach and Education Assistant at the University of Winnipeg’s Campus Sustainability Office. She has been a leader on multiple different sustainability-based projects throughout her life, but Sara’s intersectional activism targets climate justice by centring issues of poverty and injustice as key to reducing our carbon footprint. “Housing is a main determinant in stability and health,” Sara said. “Buildings are also a large opportunity to reduce our emissions to prepare for the pre-existing and upcoming climate realities ahead.” According to Sara, climate justice cannot be achieved in isolation. The various other socio-economic issues that plague our society are inherently intertwined with the climate crisis.

“Buildings are also a large opportunity to reduce our emissions to prepare for the pre-existing and upcoming climate realities ahead.”

Sara Campbell

Sara’s activism goes well beyond traditional methods of protesting. Sara engages directly with policy-makers and has even made policy recommendations at the provincial level of government to former Manitoba premier Brian Pallister. Her proposed policy outlines a method for implementing a basic income program in Manitoba that she believes to be feasible and necessary. “Basic income would substantially improve quality of life to allow people the chance to get out of ‘survival mode’ and to move forward,” Sara told us. 

I concluded our interview by asking Sara: if she could send one message to her fellow activists, what would it be? Her response was simple and clear: “To my fellow activists: We need you. Life is not a game. Be a good ally. Listen. Amplify voices. Step back. Stand up. Keep going. Let’s do this.”

Time to give youth a real say

It is becoming increasingly clear that young people in Canada are done with waiting for older generations to make changes for them. In a recent global survey, 65% of youth respondents said that governments were failing them when it comes to climate action, and three quarters said they thought the future was frightening. This reality has become especially apparent since COP 26 in Glasgow this year, where youth from around the world made their presence known, by protesting portions of the agreement they felt were insufficient, proposing their own ideas, and pressuring negotiators not to lose steam. 

There is a strong appetite from young people to be included in major climate decisions, but there is still more to be done to include youth in decision making. In Canada, we have yet to see meaningful inclusion of youth in federal- and provincial-level decision making, and those reluctant to engage young people in these processes often cite immaturity or lack of life experience as their reason. However, it is clear by the words and actions of the youth who attended COP 26 this year, as well as the youth I have had the privilege of working with myself, that their contributions can help transform climate ambition into concrete climate action. 

We have just achieved an important milestone with the culmination of COP 26, but it is by no means an endpoint. As much as Canada has work to do, there are other countries where youth engagement is just as much, if not more of an issue. The dedicated activists we have in Canada provide us with an opportunity, which the wider policy community needs to help translate into action. If Canada takes youth voices seriously, we could become a role model for countries worldwide in youth engagement for climate action, perhaps even working with other nations to ensure youth voices are heard. We have mountains ahead of us that need to be moved, and if we want this planet to stand a chance in the face of climate change, it is time to give youth a real say.