Alberta’s latest changes to industrial carbon pricing make MOU commitments harder to achieve

OTTAWA—Dave Sawyer, Principal Economist at the Canadian Climate Institute, made the following statement in response to the Alberta government’s Order in Council to amend the Technology Innovation and Emissions Reduction (TIER) Regulation

“Just one week after the Alberta-Canada Memorandum of Understanding (MOU), Alberta has introduced regulatory changes that will flood the province’s industrial carbon pricing market with credits and further weaken the carbon price signal for major emitters. This moves the system farther from the improvements both governments committed to.

“By issuing new compliance credits for direct investment and reactivating previously used credits, Alberta is adding more supply to an already oversupplied market. These changes work against the direction set out in last week’s agreement, which included commitments to strengthen Alberta’s industrial carbon pricing system. When Alberta first signalled its intent in September, TIER credit prices crashed to below $20. This change locks in that crash, and puts significant downward pressure on future prices.  

“Establishing credits for direct investment risks compromising the credibility of TIER. It could result in crediting investments without evidence they deliver real emissions reductions, or crediting activities that may not reduce emissions at all, while also increasing the oversupply of credits in the system. The amendment also places no practical limits on how many credits can be issued, which amplifies the oversupply challenge.

“In the MOU, the province and the federal government agreed that TIER would ‘ramp up to a minimum effective credit price of $130/tonne’. Achieving this minimum effective credit price by 2030 would require immediate steps to close loopholes in the credit market and address the oversupply of credits that is driving down the value of credits today and reducing the overall effectiveness of the system. Instead, introducing new investment credits increases oversupply, weakens the price signal, and moves Alberta further away from the path needed to reach $130 per tonne. 

“Billions of dollars of investment in low-carbon projects in Alberta depend on strengthening the province’s carbon credit market. These latest regulatory changes are a big step in the wrong direction.” 

RESOURCES

CONTACT

Krystal Northey (Mountain Time)
Public Affairs Lead
Canadian Climate Institute
(226) 212-9883

About the Canadian Climate Institute 

The Canadian Climate Institute is Canada’s leading climate change policy research organization. The Institute produces rigorous analysis, economic modelling, and in-depth research focused on incentivizing clean economic growth and low-carbon competitiveness, reducing emissions and accelerating Canada’s net zero energy transition, and making our economy and infrastructure more resilient to a warming climate.

Indigenous housing inequality in Canada will drive up costs and health risks without policy changes: report

Unhealthy, substandard housing and high energy costs are among the most urgent challenges facing Indigenous people in Canada, yet current measures to close the housing gap fall short due to siloed, complex policies that favour short-term solutions over long-term resilience. New research from the Canadian Climate Institute and Indigenous Clean Energy recommends governments adopt a new approach to prioritize the development of Indigenous housing that’s energy efficient, resilient to climate-related threats, and supports overall well-being.

The report finds that closing the housing gap in First Nations, Inuit, and Métis communities requires smart, co-ordinated policy developed in partnership with Indigenous people. It proposes an innovative “Healthy Energy Homes” policy lens that can be applied to both new builds and deep retrofits in Indigenous communities. The Healthy Energy Homes approach offers actionable policy recommendations to address housing gaps, reduce energy bills and improve health and wellness, while uplifting Indigenous self-determination and advancing reconciliation.

Currently, Indigenous people are almost three times more likely to live in housing that needs major repairs compared to non-Indigenous Canadians. The impacts of climate change such as extreme heat, wildfire smoke, erosion and flooding, exacerbating the divide and exposing Indigenous people to further health risks. 

To address these underlying challenges in the context of climate change, the new report recommends federal, provincial and territorial governments act together and swiftly to deploy Healthy Energy Homes by: co-ordinating and integrating government action, co-developing policies and programs led by and for Indigenous leadership, committing to long-term investment agreements and flexible funding options, measuring the co-benefits of improved housing including well-being, and ensuring funding programs are accessible and responsive to the capacity needs of communities.

Together, these solutions point to a clear path forward. With the creation of the $13-billion Build Canada Homes agency, governments have a chance to meaningfully improve Indigenous housing, wellness, and climate resilience. While success also requires long-term, flexible funding, estimates suggest every dollar invested in Indigenous housing can provide a social return on investment of around $6.79, including an estimated $3.12 in government savings.

QUOTES

“A home is more than a shelter; it’s a gathering place that’s central to a family’s physical, emotional, spiritual, and cultural well-being. Many First Nations, Inuit, and Métis communities are already creating innovative building projects that are climate resilient, energy efficient and support people’s well-being. What’s needed is for all levels of government to remove barriers and co-develop housing policy led by and for Indigenous people.”

— Maria Shallard, Director of Indigenous Research, Canadian Climate Institute

“This report shows that improving Indigenous housing policy won’t just lead to better shelter, it will prevent hospital visits, save on energy bills, improve mental health, and support community resilience in the face of climate impacts. Put simply, governments will save money and lives if they adopt these policy changes swiftly.”

— Rick Smith, President, Canadian Climate Institute

“Indigenous Peoples and communities are at the forefront of stepping up to accelerate the energy transition in Canada. Yet housing deserves much more attention. Healthy homes are essential for improving health, tackling climate change, reducing energy costs, and enhancing overall community well-being. We hope this report drives policymakers and financial institutions to recognize the interconnectedness of Indigenous health, energy, and housing; and to encourage collaborative solutions that address the challenges communities face.” 

— James Jenkins, Executive Director, Indigenous Clean Energy

“As the impacts of climate change intensify—and disproportionately impact Indigenous communities—climate resilience and energy-efficiency considerations can no longer be treated as ‘add-ons’ to housing. Closing the housing gap will require governments to support these approaches in new builds and retrofits, while also improving policy co-ordination with Indigenous Peoples.”

— Kayla Fayant, Energy Efficiency Projects Manager, Indigenous Clean Energy

“From Shelter to Strength affirms the Métis Nation’s belief that energy-efficient homes create healthy and safe environments that are essential to the well-being and self-determination of all Indigenous Peoples. By elevating community-led solutions, you are charting a path toward lasting wellness, resilience, and equity. The MNC strongly support the report’s recommendations and congratulates Indigenous Clean Energy, Canadian Climate Institute and the Indigenous Research team, and Shared Value Solutions on this excellent achievement.”

— Métis National Council (MNC)

“A healthy home provides the foundation for health and well-being, yet across Canada people do not have equal access to safe housing. This report is a critical tool for policy makers and an important addition to the body of research that demonstrates the links between housing, health, Indigenous rights and climate.”

— Geri Blinick, RentSafe Project Manager, Canadian Partnership for Children’s Health and Environment

“Across Canada, too many Indigenous children are growing up in homes, schools, and child care settings that undermine their health. This report provides the policy direction governments need to ensure Indigenous children have access to a safe, healthy, and climate-resilient home. It provides an invaluable roadmap to advance health equity and housing justice while honouring commitments to reconciliation and integrating Indigenous knowledge and leadership.”

— Erica Phipps, Executive Director, Canadian Partnership for Children’s Health and Environment

“This report reinforces the principle that housing is healthcare and advocates for holistic, culturally-grounded solutions. It reinforces AHMA’s mission to provide a ‘For Indigenous, by Indigenous’ approach to housing. The report provides evidence that long-term, flexible investments in energy-efficient, climate-resilient homes deliver health, social, and economic co-benefits. By framing housing as a determinant of health and linking it to climate resilience and self-determination, the report strengthens the case for policy reform and funding models that prioritize Indigenous voices, needs, and sovereignty.”

— Sara Fralin, Manager, Engagement and Technical Services, Aboriginal Housing Management Association (AHMA)

Resources

Contacts

Claudine Brulé (Eastern Time)
Lead, Communications and External Affairs
Canadian Climate Institute
(226) 212-9883

Krystal Northey
Lead, Public Affairs
Canadian Climate Institute
(226) 212-9883

About the Canadian Climate Institute 

The Canadian Climate Institute is Canada’s leading climate change policy research organization. The Institute’s Indigenous Research stream develops sound climate policy that is consistent with self-determination by centring Indigenous-led research. The team pursues this work through partnerships with Indigenous-led organizations, such as Indigenous Clean Energy, to amplify Indigenous expertise and knowledge.

About Indigenous Clean Energy

Indigenous Clean Energy (ICE) is an independent, non-profit organization that advances broad, sustainable prosperity by amplifying First Nation, Inuit, and Métis leadership in clean energy projects. Through high-quality, hands-on capacity building, career training, and mentorship, ICE supports Indigenous people in their clean energy journeys while promoting meaningful collaboration with energy companies, utilities, governments, development firms, clean tech innovators, the academic sector, and capital markets.

Federal-Alberta MOU risks unravelling Canada’s climate policy

TORONTO—Rick Smith, President of the Canadian Climate Institute, made the following statement in response to the Memorandum of Understanding (MOU) announced today between Alberta and the Government of Canada:  

“At a time when Canadian climate change policy needed increased certainty, today’s MOU does the opposite. Investor certainty drops when rules become negotiable. Carve-outs for Alberta invite copycat demands from other provinces and territories, and could trigger more policy fragmentation across Canada. 

“With this agreement, the federal government risks doing significant damage to minimum national standards that will have broader impacts on Canada’s climate change efforts. Such standards are essential to maintain economic cohesion and avoid a dysfunctional patchwork of provincial policies with conflicting market signals. Minimum standards also help ensure that provincial efforts add up to shared objectives, such as Canada’s emissions goals.   

“The MOU includes a carve-out for Alberta on the Clean Electricity Regulations and slow walks previous commitments on methane rules. That could trigger a race to the bottom on climate policy where other provinces seek special treatment and side deals over federal laws or regulations they object to. It increases uncertainty for investors looking to electrify their businesses and invest in low-carbon projects, and risks deepening the current fragmentation within the federation. 

“While there are positive elements of this agreement, particularly fixing Alberta’s market for industrial emissions trading, today’s MOU is inconsistent with the federal Climate Competitiveness Strategy released just a few weeks ago. 

“Getting the details right in forthcoming negotiations will be fundamentally important. It is critical that minimum national standards for coal phase-out, clean electricity, enhanced methane limits, and industrial carbon pricing are reinforced or much of Canada’s climate change policy architecture is at risk.

On clean electricity 

“Clean electricity is a major competitive advantage for Alberta and Canada. The Clean Electricity Regulations were already designed to provide the flexibility necessary to account for different provincial realities—reducing emissions while helping to ensure low-carbon electricity remains abundant and affordable as demand grows. 

“Applying the regulations everywhere except in Alberta through a carve-out based on politics rather than evidence is a shortsighted compromise that will increase harmful greenhouse gas emissions. Rather than a formal equivalency agreement, this approach invites other jurisdictions to ask for their own special treatment. It also sets a damaging precedent for other policies where federal minimum standards apply, and risks such policies becoming mired in negotiated exemptions, court challenges, and the erosion of policy coherence and certainty. 

On industrial pricing 

“The commitment to strengthen Alberta’s industrial carbon pricing system and establish a minimum credit price of $130 per tonne is a significant step forward. Doing so would increase and stabilize incentives for reducing emissions and investing in low-carbon projects. It also establishes a precedent for carbon market transparency. Alberta’s industrial pricing system, called TIER (Technology Innovation and Emissions Reduction Regulation), covers roughly 25 per cent of Canada’s total greenhouse gas emissions and modernizing this system is one of the most important and cost-effective steps the province can take to reduce emissions. 

“Yet by framing these elements as part of a negotiated deal with Alberta, the MOU also undermines the credibility of the federal benchmark and backstop as an objective, consistent minimum standard across all provinces. In parallel, the federal government should move quickly to fix the federal benchmark that defines minimum standards for all provincial systems, strengthen the federal backstop, apply it decisively in jurisdictions that do not meet the benchmark, and work with provinces to develop a long-term price trajectory and a nationally consistent price ‘floor’ for industrial emissions credits.

“These changes are essential to bring greater credibility and certainty to carbon markets both now and beyond 2030, so that businesses can make big investments in low-carbon projects. Modernizing industrial pricing systems in these ways would ensure the biggest polluters pay to reduce emissions, while keeping costs low for businesses and having virtually no impact on the cost of living.

On methane emissions

“Delaying the deadline for stronger limits on methane pollution is unnecessary. If there is one no-brainer of climate change policy, it is enhanced reduction of methane emissions from oil and gas. Toughening methane limits represents one of the lowest-cost options available to fight climate change. Stronger methane regulations can build on Alberta’s already impressive record of success, while creating new opportunities for Canadian companies that have been leaders in commercializing technologies to manage methane. Slowing down this important and cost-effective measure risks putting LNG exports and broader trade diversification efforts in jeopardy, as Japan contemplates methane-performance standards and the EU implements them.” 

RESOURCES

CONTACT

Julia Kilpatrick (Mountain Time)
Vice-President, External Affairs
Canadian Climate Institute
(226) 212-9883

About the Canadian Climate Institute 

The Canadian Climate Institute is Canada’s leading climate change policy research organization. The Institute produces rigorous analysis, economic modelling, and in-depth research focused on incentivizing clean economic growth and low-carbon competitiveness, reducing emissions and accelerating Canada’s net zero energy transition, and making our economy and infrastructure more resilient to a warming climate.

climateinstitute.ca

Review of CleanBC provides realistic path to strengthen economy, cut emissions

VANCOUVER — Kate Harland, Research Lead of Clean Growth at the Canadian Climate Institute, made the following statement in response to the release of the CleanBC review by independent experts:

“The CleanBC review offers a clear path forward for British Columbia—and for Canada—to build a cleaner, more competitive economy while driving down emissions and improving affordability. The recommendations in the review  can help B.C. ramp up clean power and electrification through a renewed approach to climate policy that makes it easier for people and businesses to adopt practical solutions. 

“B.C. is not starting from scratch and has a strong policy foundation on which to build. The next step in building B.C.’s clean competitiveness can be a roadmap for B.C. as well as other provinces and territories. 

“For more than a decade, B.C. has taken action to fight climate change, all while building one of the strongest economies in the country. Without smart climate policy, B.C. risks undercutting its goals of building a cleaner, more competitive economy. The CleanBC review offers a range of policy choices the government can take to create a better path ahead for people and communities across the province.”

KEY FACTS

Several specific recommendations from the CleanBC review emerge as priorities:  

  • The review rightfully highlights strengthening industrial carbon pricing, as a priority. Addressing oversupply of carbon credits is a necessary step to creating strong incentives for investment in low-carbon projects.
  • It also recommends strengthening targets for methane reductions, a sensible approach for more low-cost reductions from a growing source of emissions.    
  • Recommendations to expand the low carbon fuel standard and introduce more stringent rules around renewable natural gas can improve the effectiveness and credibility of an existing policy that is already working to reduce emissions and attract investment. 
  • B.C. also has an enormous advantage with its clean and affordable hydro-electric grid and is taking big steps to expand its supply of low-cost renewable power. The report recommends building on this critical asset as the province electrifies more of its economy in the near future. 
  • Utilities and their regulator (the BC Utilities Commission) need clear policy and integrated, forward-looking energy planning that treats electricity and gas as parts of a connected system. The report outlines how this can be accomplished in a more co-ordinated manner across BC Hydro, gas utilities, and the BC Utilities Commission. Research from the Canadian Climate Institute has shown that planning for the transition away from gas heating in buildings can reduce risks of leaving utility customers on the hook for higher costs in the future.
  • The panel’s recommended changes to the electric vehicle mandate are also practical and would continue to support the increase of EV model options for lower cost for more people across the province. 
  • Recommendations to track a broad set of real-world metrics can also help the province navigate a path for net zero by 2050. 
  • Giving new resources and accountabilities to the independent Climate Solutions Council could likewise improve public transparency and accountability. 

RESOURCES

CONTACT

Krystal Northey
Lead, Public Affairs
Canadian Climate Institute
(226) 212-9883

About the Canadian Climate Institute 

The Canadian Climate Institute is Canada’s leading climate change policy research organization. The Institute produces rigorous analysis, economic modelling, and in-depth research focused on incentivizing clean economic growth and low-carbon competitiveness, reducing emissions and accelerating Canada’s net zero energy transition, and making our economy and infrastructure more resilient to a warming climate.

Swift follow-through on climate policy is key to unlock investment in nation-building projects

OTTAWA — Dale Beugin, Executive Vice President of the Canadian Climate Institute, made the following statement in response to the federal government’s latest additions to the list of nation-building projects: 

“The latest round of major projects signals the federal government aims to compete in the global energy transition by supporting industrial electrification and expanding critical minerals mining in partnership with Indigenous peoples. As Canada looks to reduce its domestic emissions and grow its exports in markets beyond the United States, aligning robust climate policy with emerging economic opportunities is essential for Canada’s future competitiveness.

“To realize the low-carbon growth potential of several projects announced today, the federal government should move swiftly to implement the core policies underpinning its climate competitiveness strategy—such as strengthening industrial carbon pricing, finalizing methane regulations for oil and gas, and putting clean electricity tax incentives and regulations on the books. Prioritizing implementation of these policies can create the certainty required to mobilize private investment into major projects and will help align economic development with Canada’s climate goals. 

“In particular, building out bigger, cleaner, smarter electricity systems across the country will be necessary to deliver on Canada’s emissions goals and to attract investment in large projects looking for access to abundant clean power. 

“Today’s announcement, combined with the recent commitment to the Critical Minerals Sovereign Fund, offers significant potential to accelerate critical minerals development in the country, which is a multi-billion dollar economic opportunity. Canada has the raw materials the world needs to transition to cleaner, electric technologies and these actions show the government is serious about positioning Canada as a leader in this sector. 

“Moving forward with the North Coast Transmission Line, in partnership with First Nations, marks a significant investment in connecting industry across northern B.C. with the clean electricity they need to grow. On a cautionary note, however, recent commitments to expand Canadian liquefied natural gas (LNG) production will increase domestic emissions with no guarantees that LNG exports will reduce emissions abroad. The exact size and scope of these impacts will be determined by the stringency of climate policies that have yet to be finalized, which further underlines the urgent need for policy implementation.” 

 – 30 – 

Resources

MEDIA CONTACTS

Claudine Brulé (Eastern Time, English / français)
Lead, Communications and External Affairs
(226) 212-9883

Krystal Northey (Mountain Time, English)
Lead, Public Affairs
(226) 212-9883

About the Canadian Climate Institute 

The Canadian Climate Institute is Canada’s leading climate change policy research organization. The Institute produces rigorous analysis, economic modelling, and in-depth research focused on incentivizing clean economic growth and low-carbon competitiveness, reducing emissions and accelerating Canada’s net zero energy transition, and making our economy and infrastructure more resilient to a warming climate. 

climateinstitute.ca

Canadian climate policy experts available for interviews at COP30 in Brazil

The Canadian Climate Institute’s President, Rick Smith, is attending the 30th United Nations climate change conference (COP30) in Belém, Brazil, from November 13 to the 19.

Institute spokespeople will be available in Brazil and Canada to provide analysis and commentary for media on a range of topics including:

  • Canada’s climate policy progress and its role at COP30
  • Canada’s climate competitiveness strategy and how climate policies position the country in the global race towards decarbonization
  • International metrics of success in the energy transition
  • Global decarbonization efforts reshaping trade and investment
  • The Canadian Climate Institute’s participation in the International Climate Councils Network (ICCN)
  • The impact of climate change on extreme weather and disasters affecting communities and infrastructure across Canada

-30-

About the Canadian Climate Institute

The Canadian Climate Institute is the country’s leading climate change policy research organization. We produce rigorous analysis, economic modelling, and in-depth research focused on incentivizing clean economic growth and low-carbon competitiveness, reducing emissions and accelerating Canada’s energy transition, and making our economy and infrastructure more resilient to a warming climate. 

Additional Resources

Media Contacts 

For an interview request or for background information, please contact: 

FACT SHEET: Why industrial carbon pricing costs consumers next to nothing

Download the fact sheet

Industrial carbon pricing systems are Canada’s most important policy lever for cutting carbon pollution and creating a competitive clean economy with low costs for businesses and big incentives for investment in low-carbon projects. These systems are also designed to cost next to nothing for Canadian consumers. 

The Canadian Climate Institute has done extensive research and modelling quantifying the effects of this policy. This fact sheet outlines how and why industrial carbon pricing has virtually no impact on the day-to-day expenses of average Canadians: 

  1. Industrial carbon pricing costs Canadian consumers next to nothing—and in some cases even provides benefits.
    • Our research shows that industrial carbon pricing systems have an impact of around zero per cent on household consumption, a measure of income, in 2025. These costs are projected to remain very low and reduce consumption by just a tenth of one per cent by 2030.
    • In some cases, industrial carbon pricing—also called large-emitter trading systems—provides small net benefits for consumers, largely because of provisions in Alberta’s system that can reduce the cost of electricity.
This graph shows that industrial carbon pricing systems have negligible or even positive effects on household consumption.
  1. Industrial carbon pricing applies to goods sold on international markets where most price increases aren’t passed on to consumers.
    • Most companies that participate in industrial carbon pricing systems sell a significant portion of their products in other countries. 
    • About 50 per cent of the output of Canada’s large emitters is exported, and some industries export much more, which lowers costs on consumers. For example, the oil sands send closer to 80 per cent of production abroad. 
    • In addition, these exported products are sold on global commodity markets, which set the price paid and further limits the amount passed on to consumers.
  2. Industrial carbon pricing has essentially no impact on the price of food and the agricultural sector. 
    • Our modelling, done in partnership with Navius Research for the Independent Assessment of Carbon Pricing Systems shows that industrial carbon pricing has near zero overall impact on households’ spending on food. 
    • The same analysis projects that the cumulative GDP impact on the agricultural sector would be 0.08 per cent by 2030.
    • Farmers don’t directly pay the industrial carbon price and there are almost no costs to pass through the supply chain on to consumers. 
  3. Costs for consumers are virtually nothing, because industrial goods have only a small impact on the price of finished consumer products.
    • Industrial carbon pricing does not apply directly to individual consumers—only to the largest emitters of greenhouse gases in the country, like oil sands facilities, steel mills, and cement plants. 
    • Industrial carbon pricing has modest or negligible increases in the cost of industrial goods such as steel, which represent only a small portion of the final cost of consumer products people buy in Canada.
    • For example, research finds that industrial carbon pricing that applies to the highest emitting steel plants in the country would still only add $0.12 to the cost of a refrigerator, and under $3 to the cost of a pickup truck.  
  4. Industrial carbon pricing is low-cost for businesses, which also limits costs passed on to consumers.
    • Industrial carbon pricing is designed to contain costs because industries only pay for emissions that exceed a specified limit, and if they outperform the limit they earn credits that they can sell for cash.
    • Industrial carbon pricing imposes much lower costs on total emissions than consumer carbon pricing, around $10 or less per tonne of emissions against a carbon price of $95 per tonne. At worst, these costs add roughly the price of a Timbit per barrel of oil, while some industries are even able to earn money, on average.

Additional Resources

Ontario aims to drop climate targets and action plans as climate-fuelled extreme weather intensifies

OTTAWA — Rick Smith, President of the Canadian Climate Institute, made the following statement in response to the Ontario government’s proposed legislative amendments, outlined in the 2025 Ontario Economic Outlook and Fiscal Review, to repeal sections 3-5 of the 2018 Cap and Trade Cancellation Act, which requires the province to set emissions reduction targets, develop a climate change plan, and report on progress toward those goals:

“Ontario’s decision to repeal the legislated requirement to set emissions-reduction targets, develop and publish credible climate plans and measure progress toward its climate goals is regrettable, and will create less certainty for Ontarians and companies doing business in the province. 

“It’s unclear how Ontario expects to achieve measurable results on reducing emissions and accelerating low-carbon competitiveness without setting a credible climate target or a plan to achieve it. 

“Reducing Canada’s emissions is a shared responsibility for governments across the country. The Canadian Climate Institute’s research shows that climate progress is most effective when both provincial and federal governments take accountability for setting credible targets and developing and executing credible action plans. Publishing progress reports along the way is also an essential tool to keep the public informed on what’s working and where more action is needed.  

“Put simply, what you don’t measure, you can’t manage. It’s disappointing to see Ontario walking away from basic transparency and best practices for tackling climate change. 

“This decision is especially puzzling as Ontarians face escalating disruption and costs from climate-fuelled flooding, wildfires and extreme heat. This summer alone, the province experienced one of its worst wildfire seasons on record, burning an area almost seven times as large as the previous year and blanketing major urban centres with wildfire smoke. Toronto also saw a record number of extreme heat days this year, threatening Ontarians’ health and productivity.  

“While the Trump administration may be stepping back from climate action, the rest of the world is moving full speed ahead with the energy transition. If Ontario wants to succeed in diversifying its markets and expanding trade with regions beyond the United States such as Europe and Asia, it must keep pace by investing in clean energy technologies and implementing a credible climate plan that supports competitiveness and affordability.”

 – 30 – 

MEDIA CONTACTS

Claudine Brulé (Eastern Time, English / français)
Lead, Communications and External Affairs
(226) 212-9883

Krystal Northey (Mountain Time, English)
Lead, Public Affairs
(226) 212-9883

About the Canadian Climate Institute 

The Canadian Climate Institute is Canada’s leading climate change policy research organization. The Institute produces rigorous analysis, economic modelling, and in-depth research focused on incentivizing clean economic growth and low-carbon competitiveness, reducing emissions and accelerating Canada’s net zero energy transition, and making our economy and infrastructure more resilient to a warming climate. climateinstitute.ca

Budget 2025 takes clear steps to strengthen Canada’s climate competitiveness

OTTAWA — Rick Smith, President of the Canadian Climate Institute, made the following statement in response to the federal government’s Climate Competitiveness Strategy outlined in Budget 2025:

“The global economic activity generated by decarbonization is one of the greatest opportunities of this century. Canada’s Climate Competitiveness Strategy, announced by the federal government today, is a good first step toward ensuring Canada can succeed in this context. If Canada aims to double non-U.S. exports over the next decade, it will be critical to increase trade with Europe, Asia, and the Americas—all of which continue to take strong action to accelerate the shift to renewables, electric vehicles, and other low-carbon electric technologies.

“The budget proposes actions and delivery timelines to bolster Canada’s climate competitiveness—especially on core policies such as industrial carbon pricing, stronger methane regulations, sustainable investment guidelines, and tax credits for expanding clean electricity. We look forward to working with the federal government to ensure these essential policies result in more abundant and affordable energy, attract new investment to Canadian industries, support more well-paying jobs and economic growth across the country, and help make communities more secure and resilient.

“Swift implementation of climate competitiveness priorities will define how Canada succeeds or fails. In the absence of some remaining details, policy uncertainty persists, undermining Canadian firms’ ability to attract investment.”

KEY POLICY DETAILS

For the last six months, the Climate Institute has emphasized the importance of several climate and competitiveness priorities. This budget addresses each of them, with varying levels of detail: 

Industrial carbon pricing:

Modernizing industrial carbon pricing remains one of the most important things the federal government can do to reduce emissions while keeping costs low for businesses and having virtually no impact on the cost of living. Doing so requires fixing problems with provincial carbon credit markets, and creating certainty around carbon markets beyond 2030 so that businesses can make big investments in low-carbon projects. 

Critically, Budget 2025 makes a clear commitment to bring more certainty to industrial carbon pricing. It commits to fixing the federal benchmark (which defines minimum standards for provincial systems), improving the federal backstop (which will be decisively applied in jurisdictions that do not meet the benchmark), and developing a long-term price trajectory. The details and specifics of these changes will make or break this policy’s effectiveness, both for the climate and competitiveness. We look forward to contributing to the government’s efforts to improve this critical policy tool.

Methane regulations for oil and gas:

We support the government’s commitment to finalize enhanced rules to reduce methane emissions for the oil and gas sector. Oil and gas emissions remain a barrier to Canada’s overall climate progress and make up nearly a third of the country’s greenhouse gases. Stronger rules to reduce methane pollution would build on an impressive record of success in provinces like B.C., Alberta and Saskatchewan, and create new opportunities for Canadian companies that have been leaders in commercializing technologies to manage methane. And methane represents some of the lowest-cost emissions reductions available. 

Clean Electricity Investment Tax Credit: 

Budget 2025 explicitly recognizes the importance of dramatically increasing investment into Canada’s electricity system, and commits to introduce legislation soon implementing the Clean Electricity Investment Tax Credit to support provinces in upgrading and expanding their electricity grids, as well as enhancements to existing tax credits. We also support the decision to maintain the federal Clean Electricity Regulations, which will help accelerate the transition to clean, reliable power. Low-carbon electricity is already a major Canadian competitive advantage, and making sure electricity remains abundant and affordable will be essential for future competitiveness as demand continues to grow.

Climate Investment Taxonomy:

Importantly, the Budget recommits Canada to finalizing a national climate investment taxonomy (referred to as “Made-in Canada Sustainable Investment Guidelines”) for the financial sector by the end of 2026. The voluntary guidelines will provide much-needed criteria to help investors evaluate material risks and opportunities from transition. Budget 2025 also notes the government’s intention to explore a Sustainable Bond Framework in support of issuing both green and transition bonds to be aligned with a Canadian taxonomy, further mobilizing investment to support the transition.

Electric Vehicle Availability Standard: 

While Budget 2025 notes that the national Electric Vehicle Availability Standard is currently under review, we urge the federal government to maintain the core elements of the policy, to help increase Canadians’ access to high-quality, lower-cost electric vehicles. The federal government should follow through on its commitment to bring clarity and transparency to any change to the policy within the following weeks. 

Resilient communities and infrastructure: 

Budget 2025 makes little mention of how the federal government will support provinces and communities in making infrastructure more resilient to climate-fueled extreme weather. Investing in adaptation is not a ‘nice to have’—upgrading infrastructure for current and future extreme weather will be crucial to saving billions of dollars in costs from disrupted trade and other economic impacts, and should be a key component of any climate competitiveness strategy. 

In particular, the announcement of $51 billion for a new Build Communities Strong Fund should be carefully designed to ensure that projects funded through this program do not make Canada more vulnerable to climate change. Funded projects should both strengthen resilience by building infrastructure that can withstand a harsher and more volatile climate, and avoid encouraging new development in areas that are—or will become—unsafe from threats such as flooding and wildfire. 

Critical minerals: 

Budget 2025 explicitly tackles some of the concerns the Climate Institute raised in our report, Critical Path, which called for policy to de-risk investment in Canadian critical minerals projects. The Budget responds to this concern by committing $2 billion dollars in a new Critical Minerals Sovereign Wealth Fund to make strategic investments in critical mineral projects and companies. This approach, if well-implemented, will unlock private investment in Canadian projects to help seize a growing opportunity in the global energy transition, while also protecting the economic security of Canadian electrification supply chains. 

Indigenous housing: 

Budget 2025 commits to addressing the unique and persistent housing and infrastructure challenges facing Indigenous communities. It commits to work with Indigenous leadership in developing Build Canada Homes to ensure it meets First Nations, Inuit, and Métis identified needs and priorities. It also confirms $2.8 billion for urban, rural, and northern Indigenous housing as well as an increase in the Canada Infrastructure Bank’s target for investments in Indigenous infrastructure from at least $1 billion to at least $3 billion. As it implements these changes, the federal government should work to link these actions with both reconciliation and climate objectives.  

RESOURCES

CONTACTS

Claudine Brulé (Eastern Time)
Lead, Communications and External Affairs
Canadian Climate Institute
(226) 212-9883

About the Canadian Climate Institute 

The Canadian Climate Institute is Canada’s leading climate change policy research organization. The Institute produces rigorous analysis, economic modelling, and in-depth research focused on incentivizing clean economic growth and low-carbon competitiveness, reducing emissions and accelerating Canada’s net zero energy transition, and making our economy and infrastructure more resilient to a warming climate. climateinstitute.ca

2024 emissions estimate shows progress stalled, Canada’s 2030 climate target out of reach

OTTAWA — Canada’s emissions progress flatlined in 2024, according to the latest Early Estimate of National Emissions (EENE) from 440 Megatonnes, a project of the Canadian Climate Institute. With emissions essentially unchanged from 2023, at 694 megatonnes of carbon dioxide-equivalent (Mt), the new data shows that previous years’ improvements have stalled.     

Further, emissions trends indicate Canada’s 2030 emissions reduction target is now out of reach given weakening policy momentum across the country. That’s despite years of disruptive and costly wildfires, extreme weather and other climate-related disasters that increasingly threaten Canadians’ security and drive up the cost of living.

The 2024 early estimate finds that Canada’s emissions remained just 8.5 per cent below 2005 levels, roughly the same level they were at in the previous year. While some sectors—including electricity and buildings—continued to cut emissions in 2024, progress was modest and more than countered by rising emissions from oil and gas, particularly oil sands production. Overall, oil and gas emissions rose 1.9 per cent and accounted for 31 per cent of the national total in 2024.

Emissions trends show Canada’s emissions are on track to be just 20 to 25 per cent below 2005 levels in 2030. This outcome falls far short of the legislated target of a 40 to 45 per cent reduction in emissions, and well below what could have been achieved if governments across the federation had implemented climate policies as announced. Achieving Canada’s 2030 target would require emissions reductions of roughly 40 Mt per year—well beyond current trends.

Recent federal and provincial policy setbacks have put Canada’s progress in tackling climate change and spurring low-carbon competitiveness in jeopardy. Setbacks include the repeal of the consumer carbon tax, delays to federal and provincial electric vehicle policies, and weakened industrial carbon pricing in several provinces. In addition, market trends—including the planned expansion of liquefied natural gas production—could further lock in emissions-intensive growth for years to come, putting even the 2035 target in peril.

Protecting Canadians from the damaging effects of climate change, and aligning Canada’s emissions with its international and legislated commitments will require a substantive policy reset by federal, provincial, and territorial governments. Shared policy priorities should include action to modernize industrial carbon pricing, finalization of new methane regulations for oil and gas, investment in clean electricity, and making cleaner fuels and vehicles more affordable and widely available, among others.

QUICK FACTS

  • Canada’s emissions in 2024 are estimated at 694 megatonnes of carbon dioxide-equivalent (Mt), or 8.5 per cent below 2005 levels.
  • Oil and gas: Emissions rose 1.9 per cent from the previous year, driven by a 3.4 per cent increase in oil sands emissions.
  • Transportation: Emissions dropped 0.7 per cent, continuing a modest downward trend from 2023.
  • Buildings: Emissions declined 1.2 per cent, a slower pace than the previous year due to a colder winter.
  • Heavy industry: Emissions fell 1.2 per cent, showing signs of decarbonization progress despite uneven results across sub-sectors.
  • Electricity: Emissions dropped 1.9 per cent to 59 per cent below 2005 levels, reinforcing the importance of coordinated federal and provincial policy and technology improvements.
  • Climate change makes wildfires bigger, hotter, and more frequent. So far in 2025, wildfires have consumed a total area of 8.7 million hectares, over two and half times the size of Vancouver Island. Communities not typically known for wildfire activity, including in Atlantic Canada, now face record drought conditions and increasing fire risks.
  • Damages from extreme weather events in 2024 shattered records for the costliest year in Canada, at more than $8.5 billion in insured losses.

QUOTES

“After yet another summer of terrible wildfires, extreme weather, and rising costs, Canadians would be right to expect their governments to take more action to fight climate change, not take their foot off the accelerator. Instead, the latest emissions data confirm that two decades of climate progress is in jeopardy without a policy reboot from governments right across the country. With emissions flatlining and important policies being scaled back, Canada’s 2030 target is now out of reach—and the longer we take to get back on track, the more Canadians will pay the price.”
 — Rick Smith, President, Canadian Climate Institute

“2025 is Canada’s fork in the road on climate. All the signals indicate Canada’s emissions momentum is going the wrong way as policy effort slows. After years of hard-won progress by federal, provincial, and territorial governments, emissions look set to return to growth, putting the 2030 target out of reach. The choices governments make this year will decide whether we lock in decline or drift upwards. As rising climate damages and looming Trump tariffs threaten our stability and competitiveness, Canada needs a thoughtful, longer-term cooperative approach to carbon policy across the federation.”
 — Dave Sawyer, Principal Economist, Canadian Climate Institute

RESOURCES

MEDIA CONTACTS

Claudine Brulé (Eastern Time)
(226) 212-9883
cbrule@climateinstitute.ca

Krystal Northey (Mountain Time)
(226) 212-9883
knorthey@climateinstitute.ca

440 Megatonnes is a project of the Canadian Climate Institute, Canada’s leading climate change policy research organization. We produce rigorous analysis, economic modelling, and in-depth research, and have experts available to comment on topics including: low-carbon competitiveness, the costs of climate-related disasters, Canada’s progress in reducing emissions, and policy priorities for the incoming federal government.