Current Policy Projections
With policies implemented as of September 2018, Canada is projected to reach GHG emissions excluding LULUCF of 703–731 MtCO2e in 2020: an increase of 17–21% from 1990 levels. In 2030, emissions are projected to increase by 5–27% above 1990 levels to 630–763 MtCO2e. The projection considers the effects of the cancellation of Ontario’s cap and trade system and support for electric vehicles, but do not take into account recent developments in Alberta.
Canada’s emissions have shown an upward trend from 1990–2007, reaching 744 MtCO2e in 2007. At the beginning of the financial crisis of 2008/9, emissions dropped significantly. In the period from 2010–2013, emissions started to increase again, plateauing in 2014 and 2015, while declining slightly in 2016. Emissions in 2017 rose by 1%, largely as a result of the resumption of production in the oil sands that had been shut down due to wildfires in 2016 (Environment and Climate Change Canada, 2019). With currently implemented policies, emissions could either continue to follow an upward trend or begin to decrease —depending on GDP growth and the development of oil and natural gas prices.
In 2016, Canada published the Pan-Canadian Framework on Clean Growth and Climate Change to effectively combat climate change and move its economy away from fossil fuels (Government of Canada, 2016d). Of central importance in this framework is a federal backstop system or mandatory carbon pricing plan that requires all Canadian provinces and territories to either introduce a cap and trade system, or an explicit price-based system like a carbon tax or a carbon levy and performance-based emissions system by the end of 2018 (Government of Canada, 2016c). The backstopping system’s first component, a carbon levy, is applicable to fossil fuels including liquid fuels, gaseous fuels and solid fuels. The second component, an output-based pricing system, applicable to industrial facilities emitting 50 kilotonnes or more of CO2e per year (facilities in the buildings sector as well as waste and wastewater, will not be subject to the pricing system) (Powell, 2017).
The federal backstop carbon price came into effect in 2019 and applies to four of Canada’s ten provinces, all of which oppose the federal government’s plan: Ontario, Manitoba, Saskatchewan and New Brunswick and will be applied to Alberta in January 2020 (Vigliotti, 2019). The levy will start at of C$20/tCO2eand increase by C$10 every year until it reaches C$50/tCO2e in 2022 (Environment and Climate Change Canada, 2018b). It is expected the tax will raise about C$2.3 billion in 2019 and up to C$5.6 billion by 2022-23. Proceeds will be funnelled back to the governments of participating provinces or residents in the case of the backstop (Carbon Pulse, 2018). The effect of the federal backstop is considered in the CAT planned policies scenario and not the CAT current policy projections.
The Greenhouse Gas Pollution Pricing Act, under which the backstop is enacted, is subject to a number of legal challenges in federal and provincial courts:
- In early May 2019, the Saskatchewan Court of Appeal ruled, in a three to two decision, that the Act was constitutional (Reuters, 2019). Saskatchewan is appealing the decision to the Supreme Court of Canada (Hunter, 2019).
- Closing argumentswere heard by the Ontario Court of Appeal in that province’s challenge to the Act in April 2019 (Perkel, 2019).
- Manitoba filed its own challenge to the Act in Federal Court in late April (The Canadian Press, 2019b). As of early June 2019, a date for the hearing had not been set. The Manitoba case differs in that the province did plan to impose a carbon tax, however at a flat rate that would not increase over time (The Canadian Press, 2019b). In 2017, Manitoba obtained legal advice to the effect that the Supreme Court of Canada would likely uphold the constitutionality of the federal carbon tax, but that it may be possible to challenge the backstop on the basis that the provincial plan would be as effective as the federal approach (Schwartz, 2017). The opinion noted that such a line of argumentation had not been tested before the court.
The Pan-Canadian Framework also proposes complementary actions to further reduce emissions across the economy and also suggests measures to build climate resilience, accelerate innovation, support clean technology and create jobs (Government of Canada, 2016d).
One such measure is the Low Carbon Economy Fund (Environment and Climate Change Canada, 2017b) which will provide C$2 billion (or approx. US$1.6 billion) to support projects that contribute to meeting Canada’s climate targets. The fund has two components: (i) C$1.4 billion will be allocated to support the leadership commitments from provinces and territories on their emission reduction priorities and the commitments they outlined in the Pan-Canadian Framework, (ii) C$0.6 billion will be available for provinces and territories, municipalities, indigenous governments and organisations, businesses and both not-for-profit as well as for-profit organisations to undertake projects that reduce Canada’s GHGs and contribute to clean growth.
In early 2019, Health Canada released a new version of the Canada Food Guide (Government of Canada, 2019a). It is the first time the guide has not included a meat category, instead choosing to focus on “protein foods” (Health Canada, 2019). It recommends choosing plant-based protein more often than other sources. Reducing emissions from agriculture, including through shifting consumer behavior to a more plant-based diet, will be key to meeting the Paris Agreement’s temperature goal.
Canada is also taking actions to reduce HFC emissions. In October 2016, Canada signed the Kigali Amendment to the Montreal Protocol and proposed new regulations to substantially lower HFC emissions (Government of Canada, 2016c). This is a significant move, as HFC emissions in Canada increased tenfold from 1990 to 2012.
Environment and Climate Change Canada (ECCC) prepared a strategy in 2017 to reduce Short-Lived Climate Pollutants (SLCPs) (Environment and Climate Change Canada, 2017c). This strategy aims to complement the actions outlined in the Pan-Canadian Framework for SLCPs mitigation. Canada’s revised NDC also mentions that Canada is taking actions to reduce SCLPs as they contribute locally to Arctic warming. The strategy by ECCC includes enhanced domestic mitigation and scientific work, engagement with the international community, improved coordination between ECCC and the Canadian Government’s activities on the subject as well as collaboration with provincial and territorial governments.
A recent report by the Advisory Council on Climate Action, an advisory body to the federal government, recommended further action be taken in the transport and building sectors (Vrooman & Guilbeault, 2019). These sectors represent a third of the country’s emissions.
June will be a busy month as the federal government seeks to close a number of files ahead of the summer recess and pre-election activities. These include:
- A decision by June 18 on whether or not to proceed with the Trans Mountain pipeline expansion (Natural Resources Canada, 2019). The government purchased the pipeline last year (Harris, 2018).
- Passing legislation to ban oil tanker traffic off the country’s northern west coast. This legislation was a 2015 election promise of the Trudeau government and is currently before the Senate (the upper house of Parliament) (Government of Canada, 2019d, 2019b); and
- Passing legislation on the environmental impact assessment that has been opposed by the oil industry (Government of Canada, 2019c; The Canadian Press, 2019a).
On the provincial level, climate policy has been rolled back in Canada’s two highest emitting provinces following changes in government. Last year, newly elected Premier Doug Ford repealed Ontario’s cap-and-trade programme (The Canadian Press, 2018). In April of this year, Jason Kenny, a former federal minister in Stephen Harper’s government, was elected as Premier of Alberta. As part of the election campaign, Kenny promised to roll back a number of the province’s climate policies including the carbon tax and caps on oil sands emissions, as well as replace the entire Alberta Energy Regulator board and stop leasing rail cars for oil transportation (Bakx, 2019). He also vowed to create a ‘war room’ to support the oil and gas sector. True to his promise, Kenny’s government passed the Carbon Tax Repeal Act on June 3 which repealed the province’s carbon tax effective retroactively as of 30 May 2019 (Government of Alberta, 2019).
It is an open question whether climate change will be a ballot box issue in the upcoming federal election; however political maneuvering around the issue has already begun. The center-left Trudeau government was forced to vote against a motion to declare a climate emergency by the left-of-center New Democratic Party (NDP), which called for adopting a 1.5°C compatible 2030 target, cancelling the Trans Mountain pipeline expansion and eliminating all federal fossil fuel subsidies (Singh, 2019). The government’s own motion to declare a ‘national climate emergency’, which would require the government to meet its current target under the Paris Agreement as well as make deeper reductions in line with the Agreement’s temperature goal, was still being debated by Parliament as of 3 June 2019. The Conservatives, the main rival to Trudeau’s Liberals, have yet to release their climate action plan, but have called the carbon tax ‘a betrayal of Confederation’s early promise’ due to the disunity with the provinces it has caused (Zimonjic, 2019).
The Green Party has had some historic wins lately. A second Green Party member was elected in a federal by-election in early May (Zussman & Little, 2019). In April, the Green Party became the Official Opposition in Canada’s smallest province, Prince Edward Island; another first for the party, though some polls had suggested that they could have formed government (Fraser, 2019). Three Green Party members have held the balance of power in British Columbia’s minority NDP government since the province’s 2017 election (Zussman, 2017).
At the international level, Canada is vying for a seat on the UN Security Council for 2021-22 and has stated that climate change would be a key focus of its tenure (von Scheel, 2019).
In 2012, Canada adopted a stringent performance standard for new coal-fired power plants coming online after 1 July 2015 as well as those that had reached the end of their useful life. In December 2018, the government adopted regulations to apply the standard to existing coal-fired power stations, effectively requiring the phasing out traditional1 coal-fired electricity in Canada by 2030 (Government of Canada, 2018e). Canada co-founded the Powering Past Coal Alliance, along with the UK in 2017, to help accelerate clean growth and climate protection through the rapid phase-out of traditional coal-fired electricity (Government of Canada, 2018b). Such developments are critical because to reach full decarbonisation globally, no new coal plants should be built, and coal should be phased out globally by 2050 and in the OECD by 2030.
Despite this phase-out of traditional coal-fired power plants, other developments in Canada suggest that this does not imply a total phase out of all coal-fired power plants. Saskatchewan’s Boundary Dam CCS project is the world’s first and largest commercial-scale coal-fired CCS project. It has the nominal capacity to capture 90% of its GHG emissions, which amounts to around 1 MtCO2eq/year (Government of Canada, 2016b). The project cost a total of C$1.5 billion, including C$240 million in government funding (MIT CC&ST, 2016). The Saskatchewan government decided against retrofitting the two of the site’s other units with CCS in 2018 for economic reasons (CBC News, 2018). At the time, it reiterated its commitment to the technology and said it would study the feasibility of retrofitting another site with CCS. The results of that feasibility have yet to be released (The Canadian Press, 2019c).
Canada adopted performance standards on natural gas-fired power plants in December 2018 (Government of Canada, 2018f). It is anticipated that many of the coal-fired power station affected by the 2030 phase-out, or that are expected to shut down before that date, will be replaced with new natural gas plants or coal-to-gas conversions (Government of Canada, 2018e). The purpose of the natural gas regulations was to provide regulatory certainty around the emissions intensity of these plants and does not represent best available technology standards (Government of Canada, 2018f). The CAT cautioned in June 2017 that natural gas has a limited role to play as a bridging fuel in the power sector and runs the risk of overshooting the Paris Agreement long-term temperature goal and creating stranded assets.
Canada reaffirmed its commitment to reduce methane emissions from the oil and gas sector by 40–45% from 2012 levels by 2025 as part of the Pan-Canadian Framework on Clean Growth and Climate Change and in April 2018, Environment and Climate Change Canada (ECCC) published federal methane regulations (Environment and Climate Change Canada, 2018c). It is estimated that these regulations, which include general requirements for compressors and well completions involving fracking and conditional requirements for other technologies, will result in cumulative GHG emission reductions of 232 MtCO2e between 2018 and 2035 (Powell, 2018). In the same week, Alberta Energy Regulator (AER) issued its own regulations using a performance-based approach. Unless it can be demonstrated that Alberta’s regulations are equivalent to those at the federal level, the federal regulations will apply.
Canada’s oil reserves, in particular oil sands, 97% of which are located in the province of Alberta, contribute to Canada’s role as a global energy supplier (EIA, 2015). Reserves of oil sands in Alberta total about 165.4 billion Barrels (bbl), the extraction of which has been contentious and opposed by environmental and indigenous groups. Despite fierce opposition, the Canadian government purchased the Trans Mountain pipeline in May 2018, in order to facilitate the transport of Alberta’s oil to a port in the Vancouver area and sale to Asia and the United States (Leyland, 2018). The government has indicated that it will decide whether or how to proceed with the pipeline project by June 18 (Natural Resources Canada, 2019).
In the spring of 2018, the IEA published a report “Energy Efficiency Potential in Canada to 2050” that was drafted in cooperation with Canadian stakeholders (IEA, 2018). The report describes how final energy savings of 1.9% annually on average can be achieved through 2050 with current policies and feasible energy efficiency investments and measures. The authors conclude that a 96 PJ of energy savings would result from an additional USD 1 billion invested in energy efficiency and that energy-related CO₂ emissions could decline by 30% by 2050.
1 | Traditional coal-fired electricity does not use carbon capture and storage (CCS) to capture carbon dioxide and store it.
In July 2018, Canada amended its carbon pricing backstop plan for the industry sector, which was originally proposed in January 2018. The change aims to reduce the impact of the carbon tax on heavy industry by increasing subsidies on production and thereby reducing the competitive risk of certain industries (Dawson & Thomson, 2018). It was originally proposed in January 2018 that companies will be taxed if they emit more than the 70% of the benchmark for average emissions but in the summer the benchmark was increased to 80%, essentially allowing companies to emit more without being taxed. For heavy industries, such as cement, iron & steel manufacturing, and lime and nitrogen fertilisers, the threshold increases to 90% of their average industrial emissions (Connolly, 2018).
There have been some positive developments in Canada in the transport sector; though more work is needed. Canada has adopted sales targets for zero-emissions passenger vehicles of 10% by 2025, 30% by 2030 and 100% by 2040 (Transport Canada, 2019). To reach full decarbonisationof the road transport sector worldwide, the last fossil fuel car should be sold before 2035. In the 2019 Federal Budget, the Canadian government allocated CAD $300 million to support consumers and businesses to purchase zero-emissions vehicles (Transport Canada, 2019). The Advisory Council on Climate Action has recommended that the government follow up on these initiatives by imposing supply commitments on car manufacturers (Vrooman & Guilbeault, 2019). Quebec has had such a standard in place since 2018 and British Columbia adopted standards in May of this year (Government of British Columbia, 2019; Government of Quebec, n.d.). Not all developments were positive. Ontario’s Electric and Hydrogen Vehicle Incentive Program was cancelled and incentives are winding down as a result of the cancellation of that province’s cap-and-trade programme in July 2018 (Ontario Ministry of Transportation, 2018).
In November 2016, the Canadian government also announced that it will develop clean fuel standards, in consultation with provincial and territorial governments, to reduce emissions from fuels used in transportation, buildings and industry (Government of Canada, 2016c). Final regulations for liquid fuels are to be published in 2020 and final regulations for gaseous and solid fuel streams are the be published in 2021 (Government of Canada, 2018a). Canada has various policies in place to reduce emissions from the transport sector. Fuel economy standards for light and heavy-duty vehicles are aligned with federal-level regulations in the US. Canada has also implemented regulations requiring renewable fuel content of 2% for diesel and 5% for gasoline. Released in 2018, Canada established more stringent greenhouse gas emission standards beginning with the 2021 model year for on-road heavy-duty vehicles and engines as well as new emission standards applicable to trailers hauled by on-road transport tractors for which the manufacture is completed on or after 1 January 2020 (Government of Canada, 2018d).
In September 2018, the Canadian Government completed consultations on the mid-term evaluation of Canada's 2014 light-duty vehicle GHG emission regulations for the 2022–2025 model years (Government of Canada, 2018c). The consultation addressed issues such as cost savings, the cost of compliance, the competitiveness of the Canadian auto industry, and Canada's commitments under the Paris Agreement and the Pan-Canadian Framework on Clean Growth and Climate.
Canada’s forests cover more land area and store more carbon than the forests of almost any other country. Managed forests in Canada total approximately 226 million hectares or 65% of Canada’s total forest area, this includes all forests under direct human influence and including forests managed for harvesting, forests subject to fire or insect management, and protected forests, like those found in national and provincial parks. (Natural Resources Canada, 2018a). Net emissions totalled 78 MtCO2e in 2016, which is the result of 20 MtCO2e of removals from human activities and 98 MtCO2e of emissions from large-scale natural disturbancessuch as from fires. In 2017 5,611 forest fires resulted in 3.4 million hectares being burned, almost 1 million hectares more than in an average year (Natural Resources Canada, 2018b). Data for 2018 is not yet available.