Canada

As its forests burn in a record fire season, Canada’s pace of climate action appears to be moving at a glacial speed. So far, the EV sales mandate is the only major new policy from its 2022 climate plan to be implemented.

While existing measures are starting to pay off, with emissions now firmly on a downward trend, implementing the full 2022 climate plan is critical to closing the gap between current policies and Canada’s 2030 climate target (NDC). To quote the Environment Commissioner: “we cannot afford a fourth decade of failure on climate action." Canada’s overall CAT rating has improved to ‘Insufficient’ due largely to an improvement in Canada’s policies and action, but additional measures beyond the existing climate plan are needed to move towards an (almost) sufficient rating. Canada’s exported emissions from oil and gas are not considered in the CAT’s rating, but are larger than Canada’s domestic emissions when their eventual combustion is taken into account.

Despite record-breaking wildfires devastating the country, ravaging more than twice the area of the previous largest fires of 1989, Canada seems incapable of kicking its fossil fuel addiction. It approved an offshore oil and gas megaproject in April 2022, continues to support the money-guzzling Trans Mountain pipeline, and exported record amounts of coal in 2023.

In many sectors, Canada relies heavily on offsets or uncertain solutions, instead of available proven measures. For its net zero grid as well as its hydrogen strategy, Canada foresees the use of offsets in combination with gas plants with or without carbon capture and storage (CCS). In aviation, reducing demand or shifting to rail could bring early wins which very low-carbon alternative fuels will not be able to match, while in forestry the afforestation programmes need to be accompanied by robust wildfire prevention measures.

Canada’s reclassification of its LULUCF categories early in 2024 has led to a big change in historical LULUCF emissions which now average to a source over the last decade instead of a sink. This change in classification as well as the forest fires and other disturbances, which are not included in Canada’s forestry accounting, highlight the need for significantly more action in this sector if Canada intends to achieve the large sink in 2050 necessary for it to meet its net zero target.

Despite the slow progress in passing additional legislation, Canada is clearly working hard at generating the required political consensus to move climate action forward and ensure long-term stability:

• The new EV sales mandate, targeting 60% of new passenger car and light-duty truck sales to be electric by 2030 is a step in the right direction, however for 1.5˚C compatibility, this target should be set at — or close to — 100% by 2030.
• The carbon pricing scheme, with its steadily increasing price level, is setting clear signals for polluters.
• A multitude of long-term offtake agreements for clean electricity increase investor security and spur growth in the renewable sector.

All eyes will be on additional progress that can be made before the 2025 elections. If the Liberal Party is ousted, Canada risks backtracking on key policy measures and losing many of the recent gains. The Conservative Party has already vowed to scrap the successful carbon pricing scheme which would be a significant step back for Canada.

To move firmly forward on climate action Canada could:

• Ensure that queued policies from the 2022 climate plan are finalised in 2024, including regulations on clean electricity, methane in the waste and oil and gas sectors, green buildings, a phase-out of coal exports and a cap on oil and gas production.
• Stop supporting increases in oil and gas production, with a long-term vision to phase out fossil fuel production altogether.
• Stop enabling coal exports from the US passing through its territory for shipment from Canadian ports.
• Shift focus from unproven technologies like CCS to proven solutions to build a robust decarbonisation path.

Canada risks missing its own climate targets unless these additional measures are implemented quickly.

The CAT rates each country’s targets and policies against (1) its fair share contribution to climate change mitigation considering a range of equity principles including responsibility, capability and equality, and (2) what is technically and economically feasible using modelled domestic pathways which in absence of a better method are based on global least-cost climate change mitigation.

Comparing a country’s fair share ranges and modelled domestic pathways provides insights into which governments should provide climate finance and which should receive it. Developed countries with large responsibility for historical emissions and high per-capita emissions, must not only implement ambitious climate action domestically but must also support climate action in developing countries with lower historical responsibility, capability, and lower per-capita emissions.

The CAT rates Canada’s climate target, policies and climate finance as “Insufficient” overall. The “Insufficient” rating indicates that Canada’s climate policies and commitments need substantial improvements to be consistent with the Paris Agreement’s 1.5°C temperature limit.

Canada’s 2030 emissions reduction target is consistent with 2°C of warming when compared to modelled domestic emissions pathways. If fully implemented, Canada’s current policies are not enough to achieve this target and are only in line with 3°C warming. Canada is also not meeting its fair-share contributions to climate change and, in addition to strengthening its targets and policies, needs to provide additional support to others.

Our rating of Canada’s policies and action has improved to “Insufficient”. This improvement is due largely to an improvement in Canada’s policies and action, but also to an update of our modelled domestic pathways to the latest pathways assessed by the Sixth Assessment Report of the IPCC (AR6). That said, it is still far from 1.5°C compatibility on a global least cost basis. The “Insufficient” rating indicates that Canada’s climate policies and action in 2030 need substantial improvements to be consistent with limiting warming to 1.5°C. If all countries were to follow Canada’s approach, warming could reach over 2°C and up to 3°C.

If Canada can successfully implement all its planned measures, it would go a long way to closing its ambition gap and its rating would move closer to “Almost sufficient”.

The speed and scale of Canada’s climate policy implementation does not match the urgency of the climate crisis and much more work on this front is required. Emissions in 2030 are projected to be 603 MtCO₂e (excl. LULUCF contributions) or 20% below 2005 levels, lower than our last update, due to the impact of the pandemic and continued policy implementation, but a far cry from the 360 MtCO₂e level needed to be 1.5°C compatible.

Since our last update in December 2022, Canada has continued to advance on implementing its carbon pricing increases through to 2030 and adopted some of its outstanding regulations and codes (EV sales mandate, protocols for the GHG offset programme). However, we are still waiting for other promised regulations and strategies (e.g. 2035 net zero grid, implementation of the thermal coal export ban, green buildings, and fertiliser emissions reduction target).

The country’s only commercial CCS-abated coal-fired power plant continues to face technical and operational problems and serves as a reminder of the dangers of excessive reliance on CCS.

For more detail, see the policies and action section here.

In July 2021, Canada submitted a stronger NDC target. It did not submit a further NDC update since then, contrary to what it agreed to under the Glasgow Climate Pact of 2021.

Canada will cut emissions by at least 40–45% below 2005 levels by 2030, up from the previous target of 30% (incl. LULUCF). While stronger, the target still falls short of the at least 52% below 2005 level (excl. LULUCF) needed to be 1.5°C compatible on a global least cost basis. The CAT rates Canada’s domestic target as “Almost sufficient”. Canada is not on track to meet this target under current policies, nor do its planned policies fully close the gap.

The CAT’s assessment of Canada’s total fair share contribution takes into account its emissions reduction target and its climate finance.

From a fair share perspective, we rate Canada’s NDC target as “Insufficient”, meaning it is at the least stringent end of what would be a fair share of global effort. If all countries were to follow Canada’s approach, warming could reach over 2°C and up to 3°C. Canada needs to strengthen its domestic target and provide additional support for emissions reductions in developing countries to improve on this rating.

Canada’s international public climate finance contribution is rated “Highly insufficient”. The government recently announced a doubling of its climate finance over the next five years. While this is a positive move, Canada retains a poor rating as its contributions to date have been low compared to its fair share. Canada also continues to provide support to fossil fuel developments abroad. To improve its rating, Canada needs to stop funding fossil fuels overseas and accelerate commitments to increase climate finance.

Canada’s climate finance is not sufficient to improve its fair share target rating, and the CAT rates Canada’s overall fair share contribution as “Highly Insufficient”.

Land use and forests in Canada are both a significant source and sink of emissions. Net emissions for land use and forests in Canada are consistently a source, according to the latest national inventory. Underlying this are strong emissions from harvested wood products that are not fully balanced by emission removals in managed forests.

Both the sources and sinks are independently around 25% of economy-wide emissions (excl. LULUCF) and we therefore highlight this sector for Canada. If either of the source or sink components change, net emissions will also change and there is potential for land-use and forests to become either a stronger contributor to overall emissions sources or removals.

Canada passed the Canadian Net-Zero Emissions Accountability Act in June 2021, enshrining its 2050 net zero target into law. Canada updated its long-term strategy in November 2022. The strategy explores a number of different scenarios capable of achieving net zero emissions in 2050, but neither sets a particular pathway for the country to follow nor outlines policies and measures needed to achieve its net zero target. Reliance on LULUCF and CDR could be as high as 45% of Canada’s emissions in 2020 (or 301 MtCO₂e), which calls into question the credibility of the target. Under all scenarios, Canada is still producing and exporting oil and fossil gas in 2050.

We evaluate the net zero target’s comprehensiveness as: “Average”. Full details of the assessment are here.