Canada

Canada aims to cut emissions by at least 40–45% below 2005 levels by 2030. It submitted a stronger target in 2021, but did not revise its target further in 2022, contrary to what it agreed under the Glasgow Climate Pact of 2021.

The inclusion of LULUCF in Canada‘s NDC and uncertainties in the data for the sector lead to an unclear and difficult to quantify reduction target for the rest of the economy.

Canada leaves the door open to supporting mitigation efforts abroad through the use of internationally transferred mitigation outcomes (ITMOs).

Under its domestic climate legislation, Canada is required to set its 2035 target by 1 December 2024.

Canada passed the Canadian Net-Zero Emissions Accountability Act in June 2021 which enshrines its 2050 net zero target into law. Canada updated its long-term strategy in October 2022.

In July 2021, Canada submitted its updated NDC, where it strengthened its emission reduction target from a 30% reduction below 2005 levels by 2030 to at least 40-45% (Government of Canada, 2021c). The inclusion of the reference to ‘at least’ suggests that Canada may exceed this target. We calculate that this target equates to an emissions level in 2030 of 377-494 MtCO₂e once the contribution from its land sector has been excluded. This is around 20 MtCO₂e higher than our previous estimate as Canada has increased its expected (emissions-reducing) contribution from the land sector and updated its historical emissions. The range has also widened due to the significant change to land sector emissions in Canada’s 2024 inventory which casts doubts on the possibility of this sector contributing the envisaged larger-scale emissions reductions in Canada’s climate plan.

The focus of Canada’s emissions reduction target is on cutting emissions domestically; however, in its NDC submission, Canada leaves the door open to supporting mitigation efforts abroad through the use of internationally transferred mitigation outcomes (ITMOs). Canada is working on its policy towards international carbon credits (Environment and Climate Change Canada, 2022a).

* Includes market credits of 0.6 MtCO₂e. Note that due to the uncertainty on the LULUCF contribution to achieving the target, we rate the middle of the uncertainty range around the 40% reduction target, which is estimated at ~455 MtCO₂e

** Before September 2021, all CAT ratings were based exclusively on fair share and only assessed a country’s target. We are showing how it would have been rating under our current system for the sake of comparability.

Analysis of earlier NDC developments:

• 12.07. 2021 – Canada submits its updated NDC
• 22.04. 2021 – Canada announces a stronger NDC target

The CAT rates NDC targets against each country’s fair share contribution to global climate change mitigation, considering a range of equity principles including responsibility, capability, and equality. The CAT also rates NDC targets against indicative national emissions from global least-cost emissions pathways (called modelled domestic pathways). For assessing targets against the fair share, we consider both a country’s domestic emission reductions and any emissions it supports abroad through the use of market mechanisms or other ways of support, as relevant.

Canada has indicated that it will use market mechanisms to achieve its target, but has not provided full details on the extent of this usage with regard to internationally transferred mitigation outcomes (ITMOs). For the first time, Canada has been explicit about the amount of international credits from the US regional Emissions Trading System (ETS) that it intends to use for its target – it is a small amount 0.6 MtCO₂e. We have rated its NDC target without credits from the US ETS against global domestic pathways and the NDC target with credits from the US ETS against our fair share metric.

The CAT rates Canada’s domestic target as “Almost sufficient” when compared to modelled domestic pathways and as “Insufficient” when compared to its fair share emissions allocation (“fair share target”).

The “Almost sufficient” rating indicates that Canada’s domestic target in 2030 is not yet consistent with the 1.5°C temperature limit but could be, with moderate improvements. If all countries were to follow Canada’s approach, warming could be held below—but not well below—2°C. In the graph above, the ‘domestic target gap’ shows the difference between where Canada’s updated NDC target is and where it would need to be to be 1.5°C compatible based on global least cost modelling.

We rate Canada’s 2030 target as “Insufficient” when compared with its fair-share emissions allocation. The “Insufficient” rating indicates that Canada’s NDC target in 2030 needs substantial improvements to be consistent with its fair share to the global mitigation effort to limit warming to1.5°C. Canada’s target is at the least stringent end of what would be a fair share of global effort, and is not consistent with the 1.5°C limit, unless other countries make much deeper reductions and comparably greater effort. If all countries were to follow Canada’s approach, warming would reach over 2°C and up to 3°C.

To close the ‘fair share gap’ Canada either needs to begin supporting emission reductions abroad (on top of its domestic reductions, not as a means to reach its current NDC target level) or increase its provision of climate finance.

Canada’s international climate finance is rated “Highly insufficient” (see below) and is not enough to improve Canada’s fair share rating.

Canada’s international public climate finance contribution is rated “Highly insufficient.”

In June 2021, Canada announced a doubling of its climate finance commitment to CAD 5.3bn over the next five years (Government of Canada, 2021d). The support will cover mitigation, adaptation and loss and damage measures (Government of Canada, 2022d). While the doubling of future climate finance commitments is a positive, Canada’s CAT climate finance rating is still “Highly insufficient” as its contributions to date (OECD, 2022) have been low compared to its fair share. The CAT weighs absolute contributions the highest amongst the four elements we assess.

Canada remains committed to the collective goal of USD 100bn a year in climate finance for developing countries through 2025. However, the USD 100bn goal on its own is insufficient in the period post-2020.

Canada is making progress on reducing support for fossil fuel development abroad, but a complete phase-out by 2030 looks unlikely.

At COP26, Canada agreed to “end new direct public support for the international unabated fossil fuel energy sector by the end of 2022”, but it kept the door open to allow for exceptions under certain circumstances (Government of Canada, 2022p; UK Government, 2021) . Its export credit agency claims to be implementing this ban and to not renew unabated fossil investments upon maturity, but foresees this natural turnover to only lead to a 15% reduction in their oil and gas financing by 2030 (Export Development Canada, 2023)

To improve its rating, Canada needs to stop funding fossil fuel overseas completely and accelerate commitments to increase climate finance.

We evaluate the net zero target as: Average.

Canada passed the Canadian Net-Zero Emissions Accountability Act in June 2021 which enshrined its 2050 net zero target into law (Government of Canada, 2021e). Canada updated its long-term strategy in October 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 the policies and measures needed to achieve its net zero target. Reliance on LULUCF and CDR by 2050 could be as high as 45% of Canada’s emissions in 2020 (or 301 MtCO₂e). Under all scenarios, Canada is still producing and exporting oil and gas in 2050.

For our full analysis of the net zero target, click here.