Planned shift from gas to electric heat required to avoid high costs and emissions: report

13 June 2024, OTTAWA—New research published today by the Canadian Climate Institute finds that a system-wide shift from gas to electric heat is the lowest-cost path through the clean energy transition. The report, Heat Exchange: How today’s policy choices will drive or delay Canada’s transition to clean, reliable heat, concludes that provincial government action will be necessary to protect reliability and avoid high costs for consumers as the energy transition accelerates.

The report finds that changing the energy mix for building heat in both homes and businesses—and changing energy infrastructure to support the shift from gas to electricity—will be necessary to reduce emissions from buildings and meet Canada’s climate goals while also minimizing costs. If investment in the gas network continues to grow and gas connections continue to be the default for new buildings, then governments, shareholders, and remaining gas consumers could find themselves on the hook for the costs of overbuilt and underused gas infrastructure, as more people switch to cleaner options.

Heat Exchange presents a case for provinces taking a new approach in planning  and regulating electric and gas utility infrastructure to better protect the public interest, now and in the future. 

FACTS FROM HEAT EXCHANGE

  • In all provinces and scenarios the Climate Institute examined, the lowest-cost pathway to net zero by 2050 for the economy results in electricity becoming the dominant energy supply for building heat. 
  • Reaching net zero emissions in residential, commercial and institutional buildings means substantial declines in gas use in every province—in places like Ontario, gas usage drops between 89 to 98 per cent from today’s levels. In Alberta, demand drops between 70 and 87 per cent. 
  • Today, more than five million homes in Canada (34 per cent) already heat with electricity, mostly baseboards. To meet net zero, 99 per cent of home heating in 2050 is projected to be entirely or mostly powered by electricity, including, in some cases, heat pumps backed up by gas in a hybrid system.
  • Our research found that a cost-effective energy transition in buildings will mean heat pumps are used to heat the vast majority of homes by 2050. While scarce low-carbon gases like biomethane and hydrogen will likely see some use in industrial buildings,they are expected to play only a marginal role in heating commercial and residential buildings.

QUOTES

“Protecting consumers in the energy transition means making electricity the default in new buildings in most cases, instead of gas. While the infrastructure we’re building today will be with us for 40 to 60 years, this research shows that achieving climate goals will mean a shrinking role for gas well before then. A manageable transition that protects affordable and reliable building heating requires provinces to stop expanding gas networks now, and start planning for the future.”
— SACHI GIBSON, RESEARCH DIRECTOR, MITIGATION

“Expanding gas infrastructure to heat buildings today would be like investing heavily in a chain of video rental stores 15 years ago. Energy systems need to plan for the reality that is arriving on our doorstep. The smart approach to protect consumers and ensure affordable, reliable energy in the future is to grow the electricity system—not lock in more dependence on gas.”
— JASON DION, SENIOR RESEARCH DIRECTOR

“Right now, regulators make choices about infrastructure that will affect ratepayers’ costs for decades—but those decisions are not required to factor in climate goals, including reaching net zero emissions. That big disconnect could drive up energy bills in the decades ahead. Provinces need to make forward-looking decisions about energy system investments, and they need to make plans and policies today to protect consumers in the economy-wide energy transition that’s underway.”
— KATE HARLAND, RESEARCH LEAD, MITIGATION

RESOURCES 

Report│Heat Exchange: How today’s policy choices will drive or delay Canada’s transition to clean, reliable heat

Report│Heat Pumps Pay Off: Unlocking lower cost heating and cooling in Canada (September 2023)

Case studies│ Heat Pumps Are Hot in the Maritimes (April 2023), Hybrid Heat in Quebec (April 2023), St Laurent Denied (April 2023)

Blog│Change is in the pipeline: will expanding gas networks leave ratepayers on the hook? (March 2024)

CONTACT 

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

Evidence of progress: Canadian emissions down from peak as economy decouples emissions from growth 

OTTAWA—Dave Sawyer, Principal Economist for the Canadian Climate Institute, issued the following statement in response to the latest greenhouse gas emissions numbers from the federal government’s National Inventory Report (NIR). 

“While 2022 emissions are up slightly from the previous year, don’t miss the big picture: national emissions remain 5.9 per cent lower than pre-pandemic in 2019. The economy has grown 3.2 per cent since then, which is clear evidence that Canada continues to decouple emissions from economic growth. Decoupling now needs to accelerate further—more than double—if Canada is to hit its 2030 target.  

“National emissions are now 7.1 per cent below 2005, the baseline year for Canada’s official target of at least 40 per cent reduction by 2030. 

“Today’s NIR is close to the Canadian Climate Institute’s Early Estimate of National Emissions, released last September, which estimated that emissions in 2022 were 6.4 per cent below 2005 levels. 

“The latest national inventory is largely positive, but a few sectors do reveal themselves as a drag on progress. Sectors like electricity lead the pack in terms of reducing emissions. But sectors like oil and gas, heavy-duty vehicles, buildings, and agriculture continue to increase emissions, which offset some of the big gains since 2005. 

“The NIR methodologies are routinely updated with improvements in data and science. This year’s updates led to a significant increase in the scale of methane emissions in Canada. This analytical change coupled with increased oil and gas production means that emissions from this sector are now more significant than ever—31 per cent of the total, almost a third of Canada’s emissions. The importance of cutting methane emissions in the oil and gas sector, a no-brainer for cost-effective climate action, is clear.

“The NIR also holds a warning of climate change variability to come, with agriculture croplands releasing 22 Mt in 2022 due to drought, which limits the ability of soils and crops to sequester carbon. The previous high was 8 Mt released in 2003. The average since 1990 has been -14 Mt, indicating croplands have typically sequestered more carbon than they have released.  

“With eight reporting years remaining before the end of 2030, the clock is ticking loudly in terms of implementing the policies needed to achieve the deep emissions cuts required.”

CONTACT

Catharine Tunnacliffe
Director of Communications
ctunnacliffe@climateinstitute.ca
(226) 212-9883

KEY FACTS

  • The official numbers for 2022 show emissions in Canada were 708 megatonnes (Mt)—7.1 per cent below 2005 levels. 
  • Some of the sectors that have seen emissions reductions compared to 2005 levels included the electricity sector (-59.4 per cent), waste (-3.6 per cent), and heavy industry (-11.5 per cent). Sectors that have increased emissions since that time included oil and gas (+11 per cent), buildings (+4.5 per cent),  and agriculture (+7 per cent). In 2022, transportation emissions increased, bringing them back in line with 2005 levels. 
  • The 2024 NIR introduced several methodological improvements, including how methane is calculated, which led to a significant increase in the scale of methane emissions in Canada. As a result of the methodological changes and recalculations, Canada’s 2030 target is now higher, as the 2005 emissions on which the 2030 target is calculated were revised upwards.
  • The Canadian Climate Institute will release its Early Estimate of National Emissions for 2023 in September 2024. 

RESOURCES

Database: 2022 Early Estimate of National Emissions  (September 2023)
Insight: Emissions from oil and gas, buildings undercut Canada’s climate progress (September 2023)

Insight: Which Canadian climate policies will have the biggest impact by 2030 

Report: Independent assessment shows Canada on track to achieve 85-90 per cent of its 2030 emissions target

Budget 2024 advances climate and clean growth priorities, but risks missing opportunities

TORONTO — Rick Smith, President of the Canadian Climate Institute, made the following statement in response to the release of the 2024 federal budget: 

“The commitments outlined in Budget 2024 will continue to advance climate progress in ways that drive growth and economic competitiveness while keeping energy affordable.  In particular, this budget confirms the federal government is working to implement a range of measures to unlock clean growth and help companies invest in low-carbon innovation, such as investing in critical minerals development, renewable energy, carbon contracts for difference, and various investment tax credits (ITCs).

“While we welcome additional detail on the coverage, timelines, and conditions for accessing the Clean Electricity ITCs, the proposed conditions for access represent a significant missed opportunity. Making access to these ITCs conditional on provincial energy roadmaps—as the Canada Electricity Advisory Council has called for—represents a pragmatic path forward that we hope the government considers as it consults on the final design in the coming months. 

“We’re also pleased to see continued support for electric vehicle charging infrastructure and energy-saving retrofits—investments that will help make life more affordable as Canadians make the switch to cleaner, more efficient energy. However, other measures—such as the commitment to continue working to establish a climate investment taxonomy—are long overdue, and we urge the federal government to move swiftly to implementation. 

“This budget commits the federal government to implement a low-cost national flood insurance program within the next 12 months and invests $175 million over five years in First Nations emergency preparedness for wildfires and other climate disasters. These commitments will boost capacity to address acute climate-related threats to communities across the country. 

“Yet helping communities prepare for escalating climate damages requires sustained focus and investment. Unfortunately, this budget continues a trend of under-investing in crucial preventative measures, such as delivering on federal responsibilities under the National Adaptation Strategy. And despite the significant funding committed to addressing Canada’s housing crisis, this budget misses an opportunity to ensure new homes are built to be more resilient to climate hazards, which will drive up the costs of home ownership over time as climate-fuelled disasters escalate.”

CONTACT 

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

RESOURCES

Industrial carbon pricing the top driver of emissions reductions, new analysis shows

OTTAWA—Climate policies are reducing Canada’s greenhouse gas emissions, and industrial carbon pricing is the single biggest driver, according to new analysis by the Canadian Climate Institute. 

The paper, Which Canadian climate policies will have the biggest impact by 2030?, features the first rigorous analysis attributing emissions reductions to collective and individual climate policies. It examines, first, how policies implemented to date have affected Canada’s emissions trajectory and, second, how major climate policies are expected to impact emissions between 2025 and 2030. 

By 2030, industrial carbon pricing (which includes various types of large-emitter trading systems) is projected to contribute between 23 and 39 per cent (or 53 to 90 Mt) of avoided emissions from all policies implemented to date. And between now and 2030, these large-emitter trading systems—such as Ontario’s emissions performance standard or Alberta’s TIER system—will do more than any other policy to cut emissions, delivering between 20 and 48 per cent of emissions reductions expected from Canada’s Emissions Reductions Plan moving forward. 

Based on modelling by Navius Research, the analysis found that, by 2030, all existing climate policies in Canada combined will prevent 226 megatonnes of carbon pollution—roughly equal to the total annual emissions of Ontario and Quebec. In other words, without the various climate policies provincial, territorial, and federal governments have legislated to date, Canada’s emissions would be more than 40 per cent higher in 2030 than they are currently on track to be. 

Accounting for and addressing counterproductive policy interactions could drive additional emissions reductions. In particular, strengthening large-emitter trading systems can deliver deeper emissions reductions while protecting industrial competitiveness.

QUOTES

“This analysis clearly demonstrates that climate policy is delivering results—with industrial carbon pricing leading the pack. Robust large emitter trading systems are fundamental to any credible climate policy package in Canada.”

—Rick Smith, President, Canadian Climate Institute 

“Any constructive assessment of Canada’s options in tackling climate change should be grounded in credible numbers—and for the first time, it’s clear how individual policies are contributing to Canada’s climate goals. While there’s still work ahead to reach Canada’s 2030 climate target, any backtracking or failure to implement measures that are working today will set back Canada’s progress unless they’re replaced by robust, evidence-based alternatives.” 

—Anna Kanduth, Director, 440 Megatonnes 

“Large emitter trading systems are already the single biggest driver of emissions reductions between now and 2030. Strengthening these systems will reduce emissions even more while protecting investment and jobs in industries competing in a global market moving to net zero emissions.” 

—Dale Beugin, Executive Vice President, Canadian Climate Institute 

Resources

CONTACT 

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

Alberta’s renewable energy restrictions will throttle a booming industry and drive away investment

Rick Smith, President of the Canadian Climate Institute, made the following statement on the Government of Alberta’s new rules and restrictions for renewable energy development: 

“Today the Alberta government announced sweeping rules and restrictions on future renewable energy development that will throttle a booming industry, increase electricity rates, and drive away investment — both from renewable energy developers and from companies looking to set up shop in provinces with abundant, low-cost, clean electricity. 

“While due diligence is always necessary in regulating energy development, the restrictions announced today are not proportionate to the risks and are at odds with regulations currently applied to other industries in Alberta.

“The 35-kilometre ‘buffer zone’ appears to put a significant constraint on where new renewable energy projects can be located. This new rule will exclude new wind power development in many of the best locations around the province—including areas where wind projects already exist. Further, outlawing renewable energy development on potential agricultural land impedes the rights of rural landowners and municipalities seeking new economic opportunities. Evidence indicates renewable energy and agricultural activities can coexist and help farmers diversify their income.  

“Today’s announcement also puts Alberta’s commitment to net zero emissions by 2050 in question. By severely limiting its options to develop new renewable power, Alberta has chosen a much more difficult and costly path to reducing emissions from its electricity sector.   

“Renewable energy is the cheapest form of power available today, and is expected to continue to grow at a breakneck pace worldwide. By adding significant new red tape and creating unprecedented levels of investor uncertainty to new renewable energy development, Alberta is passing up the opportunity to cut electricity rates and support rural economic development, while tilting the scales in favour of more costly, volatile, and polluting fossil fuel power. 

“This decision will cost Albertans in terms of lost jobs, forfeited investment, and higher electricity rates for decades to come.” 

Quick Facts: 

  • The renewable energy sector is an important growth industry for Alberta and Canada’s clean economy. Last year alone, the sector in Alberta accounted for more than 92 per cent of Canada’s overall growth in renewable energy and storage capacity.
  • As of last year, there were 118 renewable projects in Alberta representing $33 billion of investment and 24,000 job-years that were at some stage of development, according to the Pembina Institute.
  • Reaching Canada’s emissions targets requires a big switch from fossil fuels to clean electricity. The Institute’s research has shown that electrification is core to every conceivable pathway to Canada’s emissions reduction targets. 
  • The International Energy Agency has said that renewable capacity needs to triple worldwide to limit global temperature rise to 1.5° Celsius. At COP28 in December, Canada and other signatories agreed to work toward achieving that goal.   

Resources: 

CONTACT 

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

Changes to regulations add flexibility to build cleaner electricity without bending on reliability

OTTAWA — Jason Dion, Senior Research Director for the Canadian Climate Institute, made the following statement on the federal government’s revised design of the Clean Electricity Regulations: 

“The revised design for the draft Clean Electricity Regulations is a welcome change that will deliver more flexibility for grid operators in order to protect reliability and support affordability for people and businesses. Finalizing the regulations as early as possible would give policy certainty to grid operators, which would help with planning and investment.

“Electrification is critical to Canada’s climate progress and economic competitiveness in the global race to a net zero emissions. In short, Canada needs bigger, cleaner, smarter electricity systems. Businesses are already demanding clean electricity as a prerequisite for investments. 

“The federal government has proposed a new approach to address the feedback and concerns of many stakeholders. A number of experts and organizations, including the Canadian Climate Institute and the Canada Electricity Advisory Council, have called for changes to the existing regulations to add more flexibility. The government’s proposed changes offer a pragmatic balance that will reduce carbon pollution and ensure electricity systems are reliable over time, as more of the national economy electrifies. 

“Now the revised policy design has been released, government should finalize the regulations as early as possible. Time is of the essence: the government should expedite other important pieces of the puzzle, like a shift away from output-based carbon pricing in the sector toward full pricing with revenues returned to ratepayers, as well as finalizing the Clean Electricity Investment Tax Credit.” 

Resources: 

CONTACT 

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

Clean growth and climate policy experts available to comment at GLOBE Forum 2024

VANCOUVER, February 12, 2024 —Experts from the Canadian Climate Institute are available to speak with media during GLOBE Forum 24 .

WHAT: Institute experts will participate in plenary sessions and panels. They are also available to comment on Canada’s climate policy progress and issues such as:

  • Incentivizing clean economic growth and low-carbon competitiveness
  • Reducing emissions and accelerating Canada’s net zero energy transition
  • Making our economy and infrastructure more resilient to a warming climate.

Please see our web page for additional resources and details. The Canadian Climate Institute will also be present in the Reaching Destination Net Zero Hub Space, where media are welcome to drop by throughout GLOBE Forum.

WHEN: February 13-15, 2024.

Note: Climate Institute experts are also available for interviews before or after these dates, and with journalists not accredited to GLOBE Forum 24.

WHO:

Rick Smith, President, Canadian Climate Institute
Areas of expertise: Canada’s progresstoward net zero emissions, affordability and the energy transition, clean growth and competitiveness, and general climate policy priorities.

Dale Beugin, Vice President
Areas of expertise: clean growth, carbon pricing, contracts for difference, clean electricity, Canada’s progress towards net zero, and affordability and the energy transition.

Jonathan Arnold, Acting Clean Growth Director
Areas of expertise: clean growth, Canada’s response to the U.S. Inflation Reduction Act, and competitiveness in the global energy transition.

Jason Dion, Senior Research Director
Areas of expertise: the switch from fossil fuels to clean power, inter-governmental cooperation to expand and upgrade electricity systems, and net zero pathways for Canada. 

Kate Harland, Research Lead, Mitigation
Areas of expertise: climate policy and responsible innovation, economic analysis, building heat.

Sarah Miller, Research Lead, Adaptation
Areas of expertise: the costs of climate change in Canada, the National Adaptation Strategy and Action Plan, climate-related disaster response, building heating and cooling.

RESOURCES

Globe Forum 24 program

CONTACT

Janina Stajic
Communications Manager
Canadian Climate Institute
250-618-2360
jstajic@climateinstitute.ca

Electric vehicle regulations will cut emissions and give drivers more choice

OTTAWA — Anna Kanduth, Director of 440 Megatonnes, a project of the Canadian Climate Institute, made the following statement on the release of federal government’s Electric Vehicle Availability Standard:

“Canada’s new Electric Vehicle Availability Standard will reduce emissions by helping more drivers get behind the wheel of an electric or plug-in hybrid car. Such policies are a practical and proven way to fight climate change while making it easier for people across Canada to buy the electric car they want, when they want it.

“The transportation sector is the second-largest source of greenhouse gas emissions in Canada, and more than half of those emissions come from cars and light-duty trucks. Helping drivers switch to EVs will help drive down transportation emissions, but long wait times and scarce supply often lead more people to stick with fossil-fuelled vehicles, even when an EV might be their first choice. These new regulations will help shorten wait times for cleaner, more efficient vehicles by increasing EV supply in all provinces and territories.

“More than a dozen countries have policies requiring new vehicle sales to be 100 per cent electric by 2035 or sooner. Canada’s new regulations are similar to measures announced or implemented in the European Union, the U.K., and several U.S. states. They also build on the success of Quebec and B.C., where zero emission vehicle sales regulations have helped increase the supply and sale of electric vehicles compared to provinces without this type of policy support.

“Zero emission vehicle regulations work, and they can even help save drivers money. Sales data from B.C. shows more than 26 per cent of new cars and trucks are already zero emission vehicles. Across Canada, sales of electric vehicles continue to rise, and a zero emission vehicle regulations mandate will only further strengthen this continued growth by ensuring people throughout the country have more options when choosing their next vehicle.”

Background:

  • Electric Vehicles are central to Canada’s energy transition:
  • Global demand for electric vehicles is growing rapidly:
    • Last year, more EVs were sold in China than in the rest of the world combined, with all-electric vehicles making up 22 per cent of all passenger vehicle sales in the country.
  • Charging infrastructure is critical
    • Canada is rapidly expanding its EV charging network—but that expansion will need to keep up with accelerating demand for EVs.
  • Without zero emission vehicle regulations, it’s likely EVs would continue to be hard to buy in many provinces:
    • Our research shows the federal sales regulations will make it easier for drivers in all provinces to get behind the wheel of a zero emissions vehicle.
    • Without a federal policy, British Columbia and Quebec—the only provinces with sales mandates—would continue to see the majority of national ZEV sales, while other provinces face limited supply.
  • Zero emission vehicle regulations can save people money:
    • Analysis by Clean Energy Canada of popular Canadian EV models showed nearly all of them had cheaper ownership costs than equivalent gas-powered vehicles, often by $10,000 or more.
    • The California Air Resources Board estimates buyers of a 2026 EV would save $3,200 over 10 years; buyers of a 2035 EV would save $7,600 over 10 years.

Independent assessment shows Canada on track to achieve 85-90 per cent of its 2030 emissions target

OTTAWA— In a new independent assessment  of the federal government’s 2023 Emissions Reduction Plan progress report, the Canadian Climate Institute finds the country has made big strides cutting emissions, but that more and faster progress is needed to put the country on track to its 2030 target. 

Current policies are working—Canada is on track to achieve between 85 and 90 per cent of its 2030 emissions target. The Institute’s assessment includes modelling that shows emissions would be 7 per cent higher today, and 41 per cent higher by 2030, without climate actions taken to date by all levels of government since 2015.

Canada is also making substantial progress in implementing policy. Since the release of the national climate plan in March 2022, several major policies have either been put into law or moved closer to implementation, including the Clean Fuel Regulations, updated carbon pricing, draft Clean Electricity Regulations, and the proposed oil and gas emissions cap.

Despite these signs of progress, Canada is projected to fall short of its 2030 target without further action. Even after the implementation and tightening of current and proposed policies, emissions are expected to be 34 to 36 per cent below 2005 levels by 2030, short of the national target of at least 40 per cent by that time. The analysis also shows emissions declining 19 per cent below 2005 levels by 2026, within striking distance of the government’s interim objective of 20 per cent for that year.

To close the gap, the assessment recommends that all orders of government, including provinces and territories, quickly implement remaining policies, strengthen existing ones, and introduce new actions.

Top priorities previously identified by the Institute that require quick action include strengthening the large-emitter credit-trading systems, implementing the proposed Clean Electricity Regulations with some improvements, finalizing a strong oil and gas emissions cap, and accelerating nature-based climate solutions. In addition, quick action on the federal government’s forthcoming Green Buildings Strategy can help address rising emissions from the building sector. The independent assessment identifies additional options for strengthening existing policies and adding new ones to close the gap.

The Climate Institute also found that the federal government’s progress report provides enhanced transparency and accountability on emissions projections and policy implementation in Canada, though there is room for continuous improvement. Future reports should include more detailed updates on policy progress, including next steps on implementation and an assessment of whether a policy is on track. The government should also track a more comprehensive set of indicators of progress, such as technology deployment, infrastructure build out, and investment—whether within the formal progress report, or alongside it.

QUOTES

“Efforts to reduce emissions have made some big strides, and the whole country now needs to keep building momentum by implementing stringent policies as planned. We can’t afford any backsliding or delay. The best way to do that is for the provinces and territories to cooperate with each other, and with the federal government, to hit the target.”

—Dave Sawyer, Principal Economist, Canadian Climate Institute

“Climate action is not a pass or fail test—every megatonne of emissions reduction matters. It’s encouraging to see effective policy starting to make big cuts to our emissions now and into the future. However, 2030 will be here before we know it, and provincial, territorial, and federal governments will need to finalize developing policies, strengthen existing policies, and implement new measures to hit our mark.”

—Anna Kanduth, Director, 440 Megatonnes

Resources

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

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
(226) 212-9883
ctunnacliffe@climateinstitute.ca

RESOURCES