Speed on emissions cap and other key policies will make or break Canada’s climate progress: experts

DUBAI — Rick Smith, President of the Canadian Climate Institute, comments on the federal government’s release of a regulatory framework for the oil and gas sector emissions cap, and the tabling of the 2023 Progress Report on Canada’s 2030 Emissions Reduction Plan (ERP):

On the oil and gas emissions cap framework:

“The approach to capping oil and gas emissions announced today is reasonable and necessary. These regulations should be finalized and implemented without further delay.

“Oil and gas production is the single biggest and fastest-growing source of greenhouse gas emissions in the country, and the stubborn rise in emissions from this sector is wiping out climate progress in other parts of the economy. Capping oil and gas emissions is a critical element of a package of policies that can ensure Canada meets its emissions reduction targets while supporting the competitiveness of the sector.

“Cap-and-trade is a proven, market-based way to encourage companies to take cost-effective steps to reduce their emissions over time. Alternative compliance options give the sector flexibility in meeting global demand while maintaining incentives to reduce emissions. This is a sensible approach, but the government needs to move faster—there’s no need to push off implementation to 2026 or later. We urge the government to quickly finalize important details, such as how methane would be measured and priced under the cap, how to ensure the cap-and-trade system does not weaken the price signal from the existing output-based carbon pricing system for heavy emitters, and how compliance flexibility will be structured. Getting those specifics right will help ensure the regulations can deliver the emissions reductions required to align with Canada’s climate goals.  

“Our analysis confirms that a strong cap on oil and gas emissions is achievable and consistent with increasing oil production, subject to international demand. Industry can meet a significant share of the cap just by complying with newly announced methane regulations, using technologies that are widely available and comparatively cheap. The remainder of the cap can be achieved through a mix of measures, including carbon capture and storage, electrification, fuel switching, and energy efficiency.

“The oil and gas cap announced today will help the oil sands industry, in particular, deliver on its commitment to work toward net zero emissions by 2050. Over time, an increasingly stringent cap on oil and gas emissions can drive innovation to better position Canada’s energy sector to compete in global markets.”

On the 2023 Emissions Reduction Plan progress report:

“More than a year and a half after Canada’s first Emissions Reduction Plan was released, the government’s first progress report demonstrates real action, but acceleration is needed. How quickly the government completes the important policies that remain to be implemented—particularly the oil and gas emissions cap—will determine how close this plan gets Canada to its 2030 emissions target.

“This progress report confirms current and proposed policies are not yet enough to put Canada on track to achieve its 2030 commitment. Yet climate action is not a pass-or-fail test. Every megatonne matters when it comes to reducing greenhouse gasses, and federal policy is heading in the right direction.

“The number of policies that moved from the drawing board into legislation has risen sharply since April of last year. Specifically, Canada put in place Clean Fuel Regulations, stronger industrial and consumer carbon pricing, incentives for zero emissions vehicles, and tax support for low-carbon investments. But climate progress hinges on both policy implementation and real-world results: emissions dropping, new clean energy projects being developed, and everyday climate and cost-saving solutions like heat pumps and EVs taking off. Those are the benefits Canadians will see more of as the big remaining policies in Canada’s climate plan get done.

“This first progress report improves federal transparency and accountability on emissions reductions. Yet 2030 is fast approaching, and the math still doesn’t add up between Canada’s target and where we’re at today. Alongside accelerating federal policy, Canada needs more provincial, territorial, and federal cooperation to hit its target. The combined total of provinces’ and territories’ formal climate commitments equal just half of the emissions reductions needed to reach Canada’s 2030 target. If all orders of government start rowing in the same direction and with similar ambition, Canada’s overall progress will be faster and more cost effective than we’ve seen to date.”

Note: In the coming days, the Canadian Climate Institute will release a comprehensive independent assessment of the government’s Emissions Reduction Plan progress report, which will include detailed emissions modelling and analysis of the expected effectiveness of Canada’s current suite of climate policies.

CONTACT

The Canadian Climate Institute has climate policy experts available to comment on these announcements in Canada and Dubai. To arrange an interview, please contact:

Catharine Tunnacliffe
Communications Director
Canadian Climate Institute
(416) 527-1777
ctunnacliffe@climateinstitute.ca

RESOURCES

Regulating methane is a no-brainer to curb oil and gas emissions

4 December 2023, OTTAWA — Anna Kanduth, Director of 440 Megatonnes, a project of the Canadian Climate Institute, made the following statement in response to Canada’s announcement of draft regulations to reduce methane emissions from the upstream oil and gas sector by 75 per cent below 2012 levels by 2030:

“Reducing methane is an absolute no-brainer in Canada’s fight against climate change. Tough regulations to limit potent methane pollution are widely considered to be the cheapest and easiest way to slash Canada’s oil and gas emissions. 

“Our research has shown that cutting methane emissions 75 per cent below 2012 levels by 2030 would get the oil and gas industry at least a third of the way to the emissions projection outlined in the federal Emissions Reduction Plan—making it easier and cheaper for industry to comply with an oil and gas emissions cap. We urge the federal government to move swiftly to finalize these regulations, to accelerate the fight against climate change while helping Canada’s economy compete in global markets rapidly shifting toward lower-carbon products.

“Reducing methane from fossil fuel operations 75 per cent by 2030 is one of three critical actions the International Energy Agency identified to align the global energy sector with the 1.5℃ goal—and an important measure for the global community to support at COP28. As one of the more than 150 countries that signed a Global Methane Pledge in 2021, Canada is in good company tackling methane. Ramping up ambition on methane alongside major international partners, like the U.S., is good for climate action, cross-border collaboration, and Canada’s economic competitiveness. 

“Achieving a 75 per cent reduction in methane by 2030 is increasingly seen as a floor, not a ceiling, of what’s possible. The federal government has already committed to exceeding this target, and some of the world’s largest oil and gas companies are aiming for near-zero methane by 2030. British Columbia has committed to eliminate nearly all industrial methane by 2035 and Alberta is looking at ways to reach up to 80 per cent by 2030. 

“The newly announced Methane Centre of Excellence is a critical step forward and will help improve the way methane emissions are measured. Industry has made promising strides to reduce methane in the past decade; yet it’s hard to credibly assess how well those efforts are working when research continues to show that actual methane levels are much higher than current estimates. 

“While methane regulations will make a big impact, they won’t singlehandedly bring emissions from oil and gas in line with Canada’s climate goals. That’s why further action—namely, a strong cap on oil and gas emissions—is necessary. Oil and gas is the biggest and fastest-growing contributor to Canada’s greenhouse gas emissions. While some other heavy-emitting sectors are successfully reducing their share, oil and gas emissions just keep rising—putting Canada’s climate targets further from reach, making industry less competitive, and contributing to worsening climate damages and skyrocketing costs for Canadians.”

CONTACT 

Catharine Tunnacliffe
Communications Director
Canadian Climate Institute
(416) 527-1777
ctunnacliffe@climateinstitute.ca

RESOURCES 

B.C. confirms progress toward climate goals in latest accountability report

Anna Kanduth, Director of 440 Megatonnes, a project of the Canadian Climate Institute, made the following statement in response to the release of B.C.’s 2023 Climate Change Accountability Report: 

“British Columbia is walking the talk when it comes to public transparency and accountability on climate action. The release of B.C.’s 2023 Climate Change Accountability report confirms current and proposed policies can get the province 96 per cent of the way to meeting its legislated climate targets. Success now hinges on implementing those policies swiftly and effectively, both to fight climate change and spur clean growth and jobs to keep B.C.’s economy strong and resilient in the decades ahead. 

“Provincial leadership to fight climate change is crucial, and British Columbia is a trailblazer on adopting cost-effective climate policy. B.C. was also one of the first jurisdictions in Canada to adopt climate accountability legislation and provide detailed progress updates. Ongoing, transparent reporting on climate progress is increasingly common among Canadian provinces, and will be critical for accurately measuring where governments are making strides, and identifying priorities for further effort. 

“As the costs and risks of climate-fueled extreme weather keep piling up, governments across the country must continually raise their ambition and strengthen their resolve in fighting climate change. Today’s report confirms B.C. is headed firmly in the right direction—and that further action is needed. Accelerating remaining policies like a strong provincial cap on oil and gas emissions will be necessary to put the province on a path to achieve its 2030 target and drive clean economic growth.” 

CONTACT 

Catharine Tunnacliffe
Communications Director, Canadian Climate Institute
(226) 212-9883
ctunnacliffe@climateinstitute.ca

Fall Economic Statement advances the right clean economy plan at the wrong pace

OTTAWA — Rick Smith, President of the Canadian Climate Institute, made the following statement in response to the federal government’s 2023 Fall Economic Statement:  

“The 2023 Fall Economic Statement confirms the federal government is making headway on measures that will help Canada prosper through the global energy transition. But to deliver the certainty businesses and investors need and the climate results Canadians expect, the pace of implementing crucial policies needs to pick up dramatically. 

“The Statement takes several important steps forward. Follow-through on the promised investment tax credits for carbon capture will help mobilize private capital into a technology that may prove critical for Canada’s cement, chemicals, iron and steel, and oil and gas sectors. Demonstrating progress on carbon contracts for difference through the Canada Growth Fund is a sensible way to create greater certainty for investors looking to get big clean growth projects off the ground. 

“Yet sluggish implementation of other critical policies risks undermining policy certainty and Canada’s ability to compete in global markets. Long timelines on other promised investment tax credits, for example, will impair much-needed investment in hydrogen, clean tech manufacturing, and especially clean electricity. The federal government should prioritize delivering the clean electricity investment tax credit earlier than the end of 2024, the timeline indicated in the Statement. The Statement also proposes additional development and process for the Canadian climate investment taxonomy, a framework already backed by the 25 largest financial institutions in the country, which would provide clarity on investments and assets that are consistent with domestic and global climate commitments. 

“More detail on implementation is also necessary on other actions critical for establishing policy certainty and mobilizing private investment. For example, the Statement proposes to explore options for creating more certainty about future increases to the carbon price, potentially through legislation. Finalizing guaranteed loans for Indigenous communities will accelerate both economic reconciliation and the development of clean growth projects. To support its commitment for future announcements on plans to expedite project approvals, the government should also swiftly introduce changes to the Impact Assessment Act in Budget 2024 to comply with the Supreme Court’s recent decision.  

“Finally, the federal government’s emphasis on building new housing is a welcome step and an opportunity to ensure new homes are built to withstand climate change damages and save Canadians money on energy bills. As the costs of disasters mount, climate-proofing new homes will help keep the cost of living down in the long run. 

“The design, construction, and operation of everything we need to drive Canada’s net zero transition will create hundreds of thousands of skilled, stable, and well-paid jobs—and lay the foundation for a higher-value economy and more prosperous future. Let’s get on with it. We urge the government to go full-throttle in implementing the remaining policies in its Emissions Reduction Plan to set Canada, and Canadians, firmly on the path to compete and prosper in the global energy transition.”

CONTACT 

Catharine Tunnacliffe
Communications Director
Canadian Climate Institute
(416) 527-1777
ctunnacliffe@climateinstitute.ca

Environment Commissioner’s report underscores need for speed on finalizing federal climate policies

OTTAWA—Anna Kanduth, Director of the 440 Megatonnes initiative at the Canadian Climate Institute, made the following statement in response to the sixth report released today by the Commissioner of the Environment and Sustainable Development (CESD) on the Canadian Net Zero Emissions Accountability Act and 2030 Emissions Reduction Plan:    

“The Commissioner’s reports on federal progress to implement its Emissions Reduction Plan (ERP) delivers a clear call to action. The Commissioner’s assessment confirms the current array of federal climate policies are a strong foundation, but progress must accelerate. 

“The report notes policies laid out in the ERP are expected to reduce emissions by 34% below 2005 levels by 2030—though that’s not enough to reach Canada’s 2030 target, it is substantial and encouraging progress. Our independent modelling has found that implementing the policies in development would substantially bend the curve on Canada’s emissions. But it’s crunch time: the federal government must move quickly to finalize the full suite of policies in its plan, and then build on them with stronger or additional measures, to deliver the climate action Canadians expect. 

“Greater transparency about policy implementation progress is essential for accountability and to prioritize course correction. We also agree with the Commissioner that more transparent and detailed modelling would provide greater clarity on expected policy outcomes, and options to accelerate progress. By tracking leading indicators of progress—metrics like investment, alongside emissions levels—governments would better understand where Canada is making headway and where challenges remain. This approach is emerging as a global best practice, and something governments across Canada should work to adopt. 

“The costs of climate change are hitting Canadians harder than ever, and the urgency to accelerate Canada’s clean energy transition is only increasing. All governments across the country have a role to play in building a prosperous net zero economy and working toward Canada’s climate targets. There’s no time to lose.”  

Contact

Krystal Northey 

Canadian Climate Institute 

250-818-3748

Resources

440 Megatonnes pathways tracker: Is Canada on track? 

Oil and gas emissions will overshoot 2030 goal without tougher regulations

Four insights about the future of electricity in Canada

A closer look at provincial and territorial climate targets

B.C. can remain economically robust and competitive—by sticking with the carbon tax

Dale Beugin, carbon pricing expert and Executive Vice President of the Canadian Climate Institute, made the following statement about the B.C. carbon tax:  

“Provincial leadership to fight climate change is crucial, and British Columbia has been a trailblazer on climate policy that supports clean economic growth while keeping costs low for people. After 15 years, the B.C. carbon price is the gold standard in cost-effective climate policy.  

“Study after study after study has shown B.C.’s carbon price works—all while B.C.’s economy has grown faster than any other province. British Columbians would have much to lose by throttling this momentum. 

“Eliminating or diluting the B.C. carbon tax would create economic uncertainty, reduce competitiveness, and set B.C. back in reducing emissions. The province would need to find other policies that reduce emissions in order to stay competitive in a global economy that is rapidly moving to net zero. Alternative policies would have higher costs, fewer emissions reductions, or both.  

“Climate change isn’t going away—as this summer’s record wildfires and extreme weather have shown, the damage is getting worse. Not only is climate change making weather-related disasters more frequent and severe in B.C., it’s also making life less affordable. Climate-related damages increase the average Canadian household’s cost of living by $700 each year.

“Carbon pricing is B.C.’s best and most cost-effective tool to reduce greenhouse gas emissions that cause climate change. It gives businesses and households across the province an incentive to switch to cleaner fuels and use energy more efficiently.

“Climate action needs to be affordable for people, and B.C.’s carbon-pricing system is designed to address this priority. Many British Columbians receive money back in rebates through the Climate Action Tax Credit. 

“By continuing to lead the country on climate action through robust, cost-effective climate policy like the carbon price, British Columbia can continue to reduce emissions while maintaining a strong and competitive economy for people.”  

CONTACT 

Catharine Tunnacliffe
Communications Director
Canadian Climate Institute
(416) 527-1777
ctunnacliffe@climateinstitute.ca

Exempting home heating oil from carbon pricing introduces uncertainty and will make the transition to clean energy more expensive

In response to the federal government’s energy affordability announcement today, Dale Beugin, Executive Vice President of the Canadian Climate Institute, made the following statement: 

“The federal government’s decision to temporarily exempt home heating oil from carbon pricing introduces uncertainty to Canadian climate change policy. It sends the signal to emitters—and investors—that policy can be weakened in the future, diluting the carbon price’s effectiveness in driving the long-term, low-carbon investments required to reduce emissions.

“As many families struggle to make ends meet, keeping energy affordable is essential. The steps the government is taking to help more households switch from costly heating oil to cleaner and lower-cost heat pumps will tangibly reduce the cost of living for many families. That’s a good thing. Offering additional rebates to rural households will also help reduce expenses and encourage more people to switch to lower-cost clean energy solutions. However, those measures could and should have been complements to a broad and robust carbon pricing policy, rather than substitutes. 

“In the long run, shifting from oil heating to heat pumps will help fight climate change and save Canadians money. A broad, stable, and predictable carbon pricing system is the most cost-effective way to drive those changes. Diluting it will ultimately make the transition to cleaner energy more expensive.”

Resources: 

Blog: “Carbon pricing exemptions are the wrong way to keep energy affordable,” 17 October 2023.

Report: Clean electricity, affordable energy, June 2023

Report: The State of Carbon Pricing in Canada, June 2021.

Emissions from oil and gas, buildings undercut Canada’s climate progress, estimate finds

28 September 2023, OTTAWA— Emissions from oil and gas and buildings continued to rise in 2022, undercutting Canada’s progress reducing emissions overall, according to a new independent estimate from 440 Megatonnes, a project of the Canadian Climate Institute. 

The Early Estimate of National Emissions for 2022 shows that Canada’s total emissions increased 2.1 per cent from the previous year, an increase of 14.2 megatonnes of carbon dioxide-equivalent (Mt CO2e). Despite the slight increase observed in 2022, overall emissions were 6.3 per cent below 2005 levels. Canada’s official emissions target for 2030 is 40–45 per cent below 2005 levels.  

Emissions from oil and gas production and buildings accounted for nearly three quarters (72 per cent) of the total increase in 2022 and continued a longer-term trend of steadily rising emissions from both sectors. The rise in emissions from buildings was largely due to increased heating demand from a colder winter. Both sectors have seen substantial increases in carbon emissions since 2005, in contrast with sectors like electricity where emissions have decreased 56 per cent since that time. 

Overall, strong economic growth and an increase in energy intensity pushed emissions up in 2022 by a combined total of 37.1 Mt CO2e from the previous year. Offsetting this increase was the impact of climate policy and market drivers, including clean energy technology deployment, which reduced emissions by 22.9 Mt, resulting in an overall net increase of 14.2 Mt. 

The overall increases underscore the need for policy action and coordination at both a federal and provincial level. These include rapidly finalizing and implementing the forthcoming emissions cap for oil and gas, methane regulations, the Clean Electricity Regulations and Green Building Strategy, among others. Previous Institute analysis completed in 2022 concluded that quick and effective implementation of the federal government’s 2030 Emissions Reduction Plan, along with further provincial and territorial action, put Canada’s targets within reach. An updated analysis will be released later this year. 

By providing this Early Estimate of National Emissions eight months ahead of Canada’s official National Inventory Report, the Institute aims to support more timely and evidence-based decision making about Canada’s climate progress.  

The 2021 emissions estimate from 440 Megatonnes was in line with official data later released by the federal government as part of its national inventory. 

QUOTES

“Our Early Estimate of Canada’s 2022 emissions shows that climate policy and clean technology are cutting emissions —but that progress is being swamped by the continued rise in emissions from oil and gas and buildings. Acting quickly to cap emissions from oil and gas, reducing methane leaks and expanding clean electricity will accelerate our progress, while building a more prosperous and competitive future for Canada.” 

– Rick Smith, President, Canadian Climate Institute

“This Early Estimate was conceived to improve decision-making by tracking Canada’s climate progress as close to real-time as possible. The 2022 Estimate shows some sectors are a bigger cause for concern than others. When emissions from just two sectors, oil and gas and buildings, account for nearly three-quarters of the total increase in emissions last year, policy action for those sectors should be a top priority for all governments in Canada.” 

– Dave Sawyer, Principal Economist, Canadian Climate Institute

CONTACT 

Catharine Tunnacliffe
Communications Director
Canadian Climate Institute
(416) 527-1777
ctunnacliffe@climateinstitute.ca

RESOURCES

Public funds for CCUS must advance Canada’s long-term climate and economic goals

OTTAWA — Jonathan Arnold, Clean Growth Research Lead with the Canadian Climate Institute, made the following statement in response to the federal government’s new carbon management strategy.

“The new federal carbon management strategy underscores that carbon capture, utilization, and storage (CCUS) technologies could play a pivotal role in reducing emissions in hard-to-abate sectors, such as cement, chemicals, iron and steel, and oil and gas. But Canada’s pursuit of CCUS must not detract from the resources and momentum behind deploying the range of solutions that are cost-effective, available and reliable today—including renewable energy, batteries and storage, energy efficiency, electric vehicles, and heat pumps. 

“High-emitting industries may need to invest in CCUS to stay competitive in the global race to net zero. But making CCUS commercially viable and scalable will take an unprecedented amount of private capital in a short time frame, and success is not guaranteed. 

“As governments across the country work toward Canada’s 2030 and 2050 climate goals, and as global markets accelerate toward a low-carbon future, any additional public investments in CCUS should be targeted, temporary, and transparent. 

“To help ensure public dollars only go to projects aligned with Canada’s long-term economic and climate goals, Canada should move forward with adopting a transparent and rigorous funding framework. Developing this type of framework can help direct scarce public dollars toward sectors and projects that have high growth potential in a net zero future. Such a framework could also use the proposed climate investment taxonomy—supported by Canada’s 25 largest financial institutions—to evaluate public investments in CCUS and whether they align with Canadian climate targets. 

“CCUS may prove to be a crucial tool to cut emissions, and there are cases where it makes sense to put additional public dollars toward scaling up the technology. What’s more important, however, is that Canada continues to develop a strong foundation of climate policies—such as the proposed oil and gas cap, clean electricity regulations and closing loopholes in industrial carbon pricing. These policies create the market signals necessary to mobilize private capital, drive innovation, and accelerate the development of new climate solutions that can benefit Canada and the world.”

Background: 

Media release: Canada’s new climate investment taxonomy framework critical to securing competitiveness, achieving targets, experts say

Opinion: Cash flow modelling shows that governments must walk a fine line on supporting carbon capture and storage at oilsands facilities

Report: Canada’s Net Zero Future

Discussion Paper: Canada’s oil and gas sector, the road to net zero and regional fairness 

CONTACT 

Catharine Tunnacliffe
Communications Director
Canadian Climate Institute
(416) 527-1777
ctunnacliffe@climateinstitute.ca

Heat pumps are lowest-cost option for heating and cooling most households, new research finds

21 September 2023, OTTAWA—New research by the Canadian Climate Institute finds that heat pumps are already the lowest-cost way for most households across Canada to heat and cool their homes. 

The new report, Heat pumps pay off: Unlocking lower cost heating and cooling in Canada, examines the cost of heating and cooling options across building types in Vancouver, Edmonton, Toronto, Montréal, and Halifax. It compares the costs of different heat pump configurations against gas furnaces and air conditioning.

The research finds that heat pumps beat gas furnaces and air conditioners on cost in most cases. On average, the lifetime cost of a standard heat pump with electric backup is 13 per cent less than a gas furnace with air conditioning. This is in part driven by the high energy-efficiency of heat pumps, which are up to five times as efficient as gas furnaces, providing significant savings on energy bills.

In addition, those in the market for new heating or cooling appliances can use a new online calculator developed by the Institute (www.heatpumpcalculator.ca) to find out the lowest-cost option for their situation. The calculator provides detailed information that shows how heat pumps stack up against alternatives in each of the five cities modelled—both in terms of costs and emissions impact. 

Heat pumps are a vital technology for reducing climate pollution in Canada’s buildings and protecting people from extreme heat. They are highly energy efficient, run without burning fossil fuels, and double as a cooling technology, which will become increasingly important as extreme summer heat becomes more frequent.

The new report includes policy recommendations targeting barriers that are holding households back from installing a heat pump. These recommendations include maintaining existing government policies and rebates, streamlining supports for consumers, establishing maximum indoor temperature limits and cooling requirements, and requiring non-polluting, high-efficiency heating and cooling technologies in new buildings in regions where they are already cost-competitive. 

QUOTES

“We crunched the numbers and found that heat pumps are a lower-cost option than gas heating with air conditioning for most Canadians across the country. Heat pumps are a cost-effective way to stay warm in winter and cool in summer, all while lowering harmful emissions.” 

—Sarah Miller, Research Lead on Adaptation, Canadian Climate Institute

“Heat pumps offer a lower-cost way to heat and cool most  homes in Canada—beating out gas and air conditioning dollar-for-dollar. Canada has an incredible opportunity to help people save on energy bills, reduce climate pollution, and provide life-saving cooling in extreme heat like we saw this summer.”

—Rick Smith, President, Canadian Climate Institute 

“This new report and online calculator provide a detailed and very useful picture of how heat pumps compare to other heating and cooling systems across Canada. Installers and manufacturers are well-placed to accelerate uptake so that more households benefit from low-cost heating and cooling that reduces emissions and protects against extreme heat. ” 

—Martin Luymes, Vice President of Government and Stakeholder Relations, The Heating, Refrigeration and Air Conditioning Institute of Canada

CONTACT 

Catharine Tunnacliffe
Communications Director
Canadian Climate Institute
(416) 527-1777
ctunnacliffe@climateinstitute.ca

RESOURCES