What we examined (see Focus of the audit)

In 2015, more than 80 percent of Canada’s greenhouse gas emissions came from energy production and use. The federal government has recognized that innovation in technology is key to meeting its commitments to reduce greenhouse gas emissions and has taken steps to fund demonstration projects through various initiatives.

This audit focused on whether Natural Resources Canada and Sustainable Development Technology Canada managed demonstration projects in three federal funds for clean energy technologies in compliance with the conditions of the funds. It also focused on whether Natural Resources Canada and Sustainable Development Technology Canada articulated how selected funded projects were contributing to reducing greenhouse gas emissions. The audit examined clean energy technology demonstration projects in three funds.

Why we did this audit

This audit is important because clean energy technologies are a key means of reducing greenhouse gas emissions from energy production and use.

What we concluded

We concluded that Natural Resources Canada and Sustainable Development Technology Canada (SDTC) managed selected clean energy technology projects in compliance with the conditions of the funds. They both had rigorous and objective processes in place to assess, approve, and monitor projects.

We also concluded that Natural Resources Canada and SDTC had articulated the environmental benefits of their funds. SDTC tracked and reported estimated greenhouse gas emission reductions. Natural Resources Canada tracked and reported on the results of completed carbon capture, utilization, and storage projects that it funded but did not consistently track and report this for other projects. Despite the greater uncertainty involved in tracking these results, reporting nationally on results would help ensure they achieve their intended results.

Subsequent event

On 22 March 2017, the federal government released Budget 2017, which identified clean technology and clean energy as one of the government’s innovation priorities. New funding for clean technology companies, notably at the demonstration stage, included

• $400 million over the next five years for the Sustainable Development TechnologySD Tech Fund; and
• $200 million to Natural Resources Canada and other departments to support the development, demonstration, and adoption of clean technologies related to the natural resource sectors.

What we found

Assessing, approving, and monitoring projects

Overall, we found that both Natural Resources Canada and Sustainable Development Technology Canada (SDTC) had rigorous and objective processes in place to assess, approve, and monitor projects.

This finding matters because the government spent significant amounts to fund clean energy technology projects. It is important for the federal organizations involved to demonstrate due diligence in assessing and approving projects.

• Projects were funded through rigorous and objective processes

  Recommendation. Sustainable Development Technology Canada should clearly document the assessment of potential greenhouse gas emission reductions that it undertakes when approving projects that have this as an intended long-term outcome.

  Recommendation. Natural Resources Canada should clearly document its project assessment and approval decisions, to show due diligence in the assessment of potential greenhouse gas emission reductions for demonstration projects that have this as an intended long-term outcome.

Measuring and reporting on results

Overall, we found that tracking and reporting on estimated greenhouse gas emissions from some of the funds that we examined was not sufficient to provide an overall picture of estimated reductions. While reductions from the SD Tech Fund and from the carbon capture, utilization, and storage (CCUS) projects in the Clean Energy Fund were reported, results from other projects in the Natural Resources Canada funds were not reported publicly, even though they were tracked internally in many cases.

This finding matters because tracking and reporting on funded clean energy technologies help to clarify how the funds are contributing to greenhouse gas reductions. Building better data helps to focus these activities and ensure that they achieve intended results.

• Reporting on estimated greenhouse gas emission reductions for some of the funds we examined was insufficient to provide an overall portrait of results

  Recommendation. Natural Resources Canada should report publicly on greenhouse gas emission reductions resulting from all the demonstration projects it funds that are intended to achieve emission reductions.

  Recommendation. Natural Resources Canada and Innovation, Science and Economic Development Canada, in consultation with Environment and Climate Change Canada, should create a plan to measure and report on outcomes for funded clean energy technology demonstration projects that aim to reduce greenhouse gas emissions.

Entity Responses to Recommendations

The audited entities agree with our recommendations and have responded (see List of Recommendations).

Related Information

Report of the	Commissioner of the Environment and Sustainable Development
Type of product	Performance audit
Topics	Air Climate Change Environment Science and Technology
Entities	Natural Resources Canada Sustainable Development Technology Canada
Completion date	15 February 2017
Tabling date	3 October 2017
Related audits

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