Climate change: Appearance before the Standing Committee – December 14, 2023

Carbon pollution pricing

Q1. What is carbon pricing and why is it important?

• Carbon pollution pricing is widely recognized as the most efficient way to reduce greenhouse gas (GHG) emissions while driving innovation to provide consumers and businesses with low-carbon options.
• The federal government is committed to ensuring that carbon pricing is in place across Canada at a similar level of stringency while ensuring provinces and territories have the flexibility to implement their own carbon pricing systems.
• Carbon pollution pricing is central to Canada’s climate plan and is critical to delivering on Canada’s targets of reducing GHG emissions to 40-45% below 2005 levels by 2030 and reaching net-zero emissions by 2050.

Q2. What is the federal benchmark and what does it do? Why not let provinces and territories decide for themselves how to price carbon pollution?

• The Government’s approach to pricing carbon pollution gives provinces and territories the flexibility to implement the type of system that makes sense for their circumstances as long as they align with minimum national stringency standards, or benchmark criteria.
• The federal benchmark has been updated to ensure that carbon pricing systems are at a similar level of stringency across Canada (2023-2030) and that they continue to drive low-cost emissions reductions required for Canada to build a cleaner, more prosperous economy.
• The federal carbon pollution pricing system applies in provinces and territories that request it or that choose not to adequately price carbon pollution.

Q3. How does carbon pricing impact competitiveness, and what is the impact on Canadian industries?

• Canada’s approach to carbon pollution pricing is designed to mitigate risks of adverse competitiveness impacts.
• Under the federal approach, the Output-Based Pricing System (OBPS) is designed to put a price on the carbon pollution of large industrial facilities, while limiting the impacts of carbon pricing on their ability to compete in the Canadian market and abroad. Carbon costs can affect businesses that conduct activities that are emissions-intensive and highly internationally traded if they compete with similar businesses in countries that do not have carbon pricing in place.
• Instead of paying the fuel charge, an industrial facility in the federal OBPS faces a compliance obligation on the portion of emissions that exceed an annual limit. Covered facilities are required to provide compensation for GHG emissions that exceed their emissions limit and are issued surplus credits if their emissions are lower than the applicable emissions limit. Facilities can sell surplus credits or bank them for use in future years. This approach minimizes the risk that businesses will move from Canada to jurisdictions that do not price carbon.
• Provincial and territorial carbon pollution pricing systems have similar designs to protect against this risk.

Q4. Has the federal government considered implementing border carbon adjustments to help mitigate carbon leakage?

• Avoiding carbon leakage is key to good climate policy. Carbon leakage occurs when companies move to countries with lower climate ambition to avoid carbon costs. The result is that emissions shift from one place to another rather than decline. Canada’s carbon pricing systems are designed to address this risk. The federal Output-Based Pricing System and similar provincial systems are designed to minimize the risk of carbon leakage.
• Another way to address the risk of carbon leakage is with a border carbon adjustment. This can help level the playing field between domestic and foreign producers.
• Canada will continue to explore whether a BCA makes sense in the Canadian context, working with like-minded economies, including the European Union and our North American partners, to consider whether and how this approach could fit into a broader strategy to meet ambitious climate targets while avoiding carbon leakage.

Q5. Why not expand the exemption on heating oil to support affordability?

• This was a targeted temporary suspension as part of a national package of measures designed to help Canadians transition from less environmentally friendly fuels like heating oil as quickly as possible.
• In addition to a temporary suspension of the federal fuel charge on heating oil, this also included:
  • Doubling the supplement to carbon pollution price rebates (Climate Action Incentive Payments) to small and rural communities, from 10% to 20%.
  • Significant investments to help households switch from oil to heat pumps to heat and cool their homes, including through NRCan’s Oil to Heat Pump Affordability program.
• Carbon pollution pricing remains a pillar of the Government of Canada’s Emissions Reduction Plan and is the most cost-efficient way to reduce emissions and incent innovation.

Q6. What is the Government of Canada doing with the revenues it collects through carbon pollution pricing?

• All proceeds from the federal carbon pollution pricing system are returned to the province or territory of origin. Jurisdictions that requested or accepted the application of the federal fuel charge and/or the Output-Based Pricing System (OBPS) can choose to have these proceeds returned directly.
• In jurisdictions where the federal fuel charge has not been requested but has been applied, the majority of direct proceeds are returned to households through Climate Action Incentive payments. Most households will get back more in Climate Action Incentive payments than they pay in increased costs due to the federal carbon pollution pricing system.
• The remaining portion of proceeds will be returned through federal programming to groups that may be disproportionately impacted. This includes returning proceeds to farmers, to Indigenous peoples through co-development of distinctions-based mechanisms, and to emissions intensive and trade exposed small and medium-sized businesses.
• Past backstop jurisdictions where the federal OBPS system was applied but not requested, included Saskatchewan, Ontario, and New Brunswick, as well as current backstop jurisdictions where the federal OBPS system is currently applied, Manitoba, will see proceeds retuned through the OBPS Proceeds Fund to further support industrial decarbonization and clean electricity initiatives.

Q7. What is the Government of Canada’s plan to return fuel tax revenues?

• The federal fuel charge currently applies to the provinces of Alberta, Saskatchewan, Manitoba, Ontario, Nova Scotia, New Brunswick, Newfoundland and Labrador, and Prince Edward Island, and the territories of Nunavut and Yukon. In the provinces, the Government remains committed to ensuring that proceeds are returned to the jurisdiction of origin though a combination of Climate Action Incentive payments and federal programming. The governments of Nunavut and Yukon receive the proceeds directly and have their own programming to return them.
• For the 2023-24 fuel charge year, ninety per cent of fuel charge proceeds are returned via Climate Action Incentive Payments. Remaining proceeds are returned to small and medium-sized enterprises and Indigenous governments. Proceeds relating specifically to the use of natural gas and propane by farmers are returned directly to farmers via a refundable tax credit.
• Budget 2022 announced that Environment and Climate Change Canada will return proceeds through direct payments to support emission-intensive, trade-exposed small and medium-sized enterprises in backstop jurisdictions. The Minister of Finance specified in November 2022 that the Government will return over $2.5 billion through these payments, accounting for fuel charge proceeds collected from 2019-20 to 2023-24.
• Starting in November 2022, Environment and Climate Change Canada implemented an intake to identify qualified organizations to return fuel charge proceeds to eligible small and medium size enterprises. Negotiations with the selected organization are ongoing. Further details on how to apply for payments are expected to be available in early 2024.
• The Government of Canada also remains committed to returning 1% of federal fuel charge proceeds to Indigenous governments and is currently working with First Nations, Inuit, and Métis partners on the approach for distributing these proceeds in each province where the federal fuel charge applies.

Q8. What is the OBPS Proceeds Fund, and how much funding is available?

• Launched on February 14, 2022, the OBPS Proceeds Fund is designed to further reduce industrial greenhouse gas emissions and support clean electricity projects. The program has two streams:
  • The Decarbonization Incentive Program (DIP) stream is a merit-based program that incentivizes the long-term decarbonization of Canada’s industrial sectors by supporting clean technology projects to reduce greenhouse gas emissions. Most OBPS regulated facilities can apply and applications are currently being accepted.
• The Future Electricity Fund stream is designed to support provincially managed clean electricity projects and/or programs. Eligible projects will be determined during the negotiation of funding agreements in each jurisdiction. Formal negotiations are underway.
• Available funding depends on the amount of proceeds collected from OBPS regulated facilities during a given compliance period. Approximately $162 million from 2019, $233 million from 2020, and $291 million from 2021 was collected from the federal OBPS during the respective compliance periods. The following table shows the estimated funding available.

OBPS Proceeds Fund: Decarbonization Incentive Program

Province	2019 (in millions)	2020 (in millions)	2021 (in millions)
Manitoba	$5.1	$7.0	$8.3
New Brunswick	$2.7	$3.0	-
Ontario	$68.0	$97.7	$89.8
Saskatchewan	$6.9	$6.4	$10.5

*New Brunswick exited the federal OBPS system in January 2021*

OBPS Proceeds Fund: Future Electricity Fund

Province	2019 (in millions)	2020 (in millions)	2021 (in millions)
Manitoba	$0.3	$0.2	$0.5
New Brunswick	$5.9	$14.1	-
Ontario	$17.0	$19.9	$18.5
Saskatchewan	$56.3	$84.9	$163.2

*New Brunswick exited the federal OBPS system in January 2021*

Q9. How will the Government of Canada return proceeds to provinces or territories that have transitioned out of the federal OBPS and implemented their own carbon pollution pricing system for industrial emitters?

• If a province or territory implements its own carbon pollution pricing system that meets the federal benchmark and transitions away from the federal OBPS, the OBPS Proceeds Fund would continue to support any projects that have been approved for implementation in those jurisdictions. The program would continue in the jurisdictions where the OBPS is no longer in effect until proceeds have been returned.

Q10. How will the Government of Canada return proceeds to Indigenous groups or governments?

• In 2020, Canada committed to work on a distinctions-basis to jointly develop the mechanisms by which 1% of fuel charge proceeds would be returned to Indigenous governments in jurisdictions where the federal fuel charge applies. The purpose of this approach is to provide flexible transfer payment mechanisms that better support investments in self-determined priorities, including Indigenous-led climate action. Officials from Environment and Climate Change Canada are currently working in partnership with First Nations and Métis in the provinces where the federal fuel charge is in effect to finalize the path forward for returning 1% of fuel charge proceeds.

Cap and cut emissions from oil and gas

Q1. What is the approach to cap and cut oil and gas sector emissions?

• Canada is taking action across all sectors to meet its commitment to reduce GHG emissions by 40% to 45% below 2005 levels by 2030 and to reach net-zero emissions by 2050.
• The oil and gas sector is the largest source of emissions in Canada producing 26% of national emissions in 2019. It is also a major employer and contributor to Canada’s GDP.
• On December 7, 2023, the Government published a Regulatory Framework to cap GHG emissions from the oil and gas sector through a cap-and-trade system under CEPA for a 60-day comment period.
• The emissions cap will enable production to increase while ensuring that the oil and gas sector makes the reductions and investments needed to achieve net-zero in 2050.
• It will work together with new and existing policies to reduce oil and gas sector emissions, including carbon pollution pricing, draft oil and gas methane regulations and the CCUS investment tax credit, for example.
• The Government of Canada will continue to engage with oil and gas companies, provinces and territories, Indigenous organizations and other stakeholders as we develop the emissions cap.

Q2. How would an emissions cap affect oil and gas production, exports, and energy security?

• To be clear, the purpose of the emissions cap is to reduce GHG emissions not to cap oil and gas production in Canada.
• The Regulatory Framework, published December 7, 2023, is clear that the proposed emissions cap is designed to ensure predictable emissions reductions while enabling increased production. It is designed to provide the sector with the flexibility to respond to changes in global markets and demand.
• It will ensure that the reductions and investments need to achieve net zero in 2050 are made, which will help support the future competitiveness of the sector.
• We will continue to work closely with provinces and the sector as we develop the details of the regulatory approach and remain attuned to evolving energy security and climate risk considerations.

Q3. Is the oil and gas sector target achievable? If it costs too much won’t it just scare investment away from Canada?

• As proposed in the Regulatory Framework published Dec. 7, 2023, the cap on emissions will set a limit on emissions not on production.
• The design will ensure predictable emissions reductions while enabling increased production, and providing flexibility to respond to changes in global markets and demand.
• The proposed emissions cap level and legal upper bound were designed based on extensive engagement with industry on the technologically achievable reductions in the sector by 2030.
• Proposed compliance options, including offsets and contributions to a decarbonization fund, provide flexibility and certainty.
• The proposed approach will ensure that the reductions and investments need to achieve net zero in 2050 are made, as committed to by many industries within the sector.
• Demand for low carbon fossil fuels is expected to increase over time. Reducing emissions in Canada’s oil and gas sector is expected to help to maintain sector competitiveness.
• The proposed approach is designed to enable increased production in response to global demand, incent investments in decarbonization, and ensure the sector reduces emissions to achieve net zero by 2050.

Q4. What are the most promising decarbonisation pathways for the oil and gas sector?

• Large-scale deployment of multiple technologies are required for oil sands and other oil and gas producers to reduce GHG emissions.
• Some key mitigation pathways include steam displacement (which includes solvent injections), CCUS, co-generation, electrification, fuel switching and energy efficiency applications.

Clean Electricity Regulations

Q1. Why do we need the Clean Electricity Regulations (CER)?

• An expanded, net zero grid capable of supplying much more electricity than our current grid will be a pre-requisite to achieving a net zero economy by 2050.
• While 84% of Canada’s electricity is currently non-emitting, demand for electricity is expected to increase significantly in the coming decades as our population and economy grow and as Canadians switch to electric vehicles, adopt electric home heating, and use electricity to power industry. To ensure this increased demand does not increase emissions, the Government is implementing a series of measures designed to reduce emissions while ensuring continued access to an affordable and reliable grid.
• The Clean Electricity Regulations (CER) will provide a clear, early signal to enable the electricity system to ensure that happens.
• The Government of Canada is complementing the regulations with a suite of measures to support the clean energy transition, including over $40 billion in investments over the next 10 years through investment tax credits, low-cost financing through the Canada Infrastructure Bank, and other funding announced in Budget 2023.
• All G7 countries have committed to net zero electricity by 2035, and the United States have recently released draft clean power rules and announced investments through the Inflation Reduction Act.
• Creating a clear path forward to net-zero electricity is already helping enhance Canada’s ability to attract industry and investors looking for a clean power advantage. Companies are seeking out places to invest with access to clean electricity. Having clean electricity is a competitive advantage.

Q2. How many GHG reductions will the Clean Electricity Regulations achieve? What other benefits can Canadians expect from these regulations?

• The draft CER, published in the Canada Gazette, Part I, are expected to deliver over 300 Mt of cumulative emissions reductions between 2024 and 2050.The Department will revise this estimate for the final regulations.
• The Government of Canada’s modelling for the draft CER projects close to $29 billion in net benefits between 2024 and 2050 from reduced GHG and air pollution emissions and operational savings from reduced fossil fuel use.

Q3. Will the CER allow the continued use of fossil fuels like natural gas? Why?

• Although the CER would allow some use of fossil fuels like natural gas post-2035, the regulations would shift the mix of generation sources in Canada’s electricity system towards low- or non-emitting sources more quickly and to a greater extent than would be expected without the Regulations.
• A net-zero electrical grid will require a very different mix of generation technologies than have been used in the past, and the CER’s flexibilities would allow natural gas to provide an adequate level of support for reliability and in support of affordability while utilities and system operators make this transition.
• There are many promising emerging non and low-emitting technologies, including energy storage that are not fully yet at commercial scales of deployment. The CER would allow some use of natural gas as backup as these technologies are integrated at a wider scale.

Q4. Why do we need net-zero electricity by 2035, why not by 2050?

• As the Canadian population and economy grow and more Canadians switch to electricity to power their vehicles, heat their homes, and operate their businesses, the total demand for electricity will grow.
• We need to ensure this demand is met with clean electricity.
• The global economy is changing, and clean electricity is in demand as all G7 countries and hundreds of the largest companies in the world commit to net-zero. Investors are turning to countries with non-emitting electricity to meet their own emissions reduction targets and connect to grids that offer reliable and affordable electricity. Building an affordable, reliable, and clean supply of electricity will help Canada remain competitive and attract investments.

Q5. What is the Government of Canada doing to support the transition to net-zero electricity?

In addition to the Clean Electricity Regulations:

• Convening: The Government of Canada is working with provinces, territories, Indigenous peoples, and others to identify and support regional priorities for clean electricity and clean energy. This includes the Canada Electricity Advisory Council, the Indigenous Council for Wah-ila-toos, the Regional Energy Tables and other bilateral forums.
• Funding: the Government has put in place a suite of measures totaling over $40 billion over the next 10 years to support provinces and territories, Indigenous partners, utilities, and industry accelerate progress towards a net-zero electricity sector by 2035.

Supplementary:

• Nearly $3 billion Smart Renewables and Electrification Pathways Program.
• $10 billion in low-cost financing from the Canada Infrastructure Bank for clean electricity projects.
• 15% Clean Electricity Investment Tax Credit – estimated cost of $25.7 billion over the lifetime of the incentive – for eligible investments by taxable and non-taxable entities in certain technologies for the generation and storage of clean electricity and its transmission between provinces and territories.
• 30% Clean Technology Investment Tax Credit for eligible investments by businesses in certain electricity generation and storage equipment, low-carbon heating, and industrial zero-emission vehicles and related charging or refuelling infrastructure.
• 30% Clean Technology Manufacturing Investment Tax Credit for eligible investments in machinery and equipment used to manufacture or process clean technologies, and extract, process, and recycle key critical minerals.
• $520 million for the Clean Energy for Indigenous, Rural and Remote Communities programs for renewable energy and capacity-building projects and related energy efficiency measures across Canada. This includes the complementary Indigenous Off-Diesel Initiative that provides clean energy training and funding for Indigenous-led climate solutions in remote Indigenous communities.
• The Canada Growth Fund is devoting $7 Billion to support clean growth projects by providing carbon contracts for difference.
• Innovation, Science and Economic Development Canada is also investing in clean electricity projects via the Strategic Innovation Fund and Net Zero Accelerator initiative.

Q6. How will the Clean Electricity Regulations impact electricity rates for Canadians?

• Electricity rates are a matter of provincial policy.
• Before finalizing the Clean Electricity Regulations in 2024, the Government of Canada will continue to work with interested parties to refine the design of the CER and address concerns for the reliability and affordability of electricity, while still achieving emissions reductions.
• If provinces choose to take advantage of the Budget 2023 measures, it is projected that the federal government would shoulder significant costs of the CER, potentially minimizing the impacts on ratepayers.
• A recent study on electrification from the Canadian Climate Institute found that on average overall energy costs for Canadians will decline around 12% by 2050. Even with the investments required for household equipment such as heat pumps and electricity grid expansion, the benefits of stable moderate electricity prices will be more than offset by reduced expenditures on costly and unpredictable fossil fuels such as gasoline, diesel, and natural gas.

Q7. How is Canada recognizing the large regional differences in electricity systems?

• The CER will set a technology-neutral emissions performance standard that electricity generation will need to meet by 2035. It will also include various flexibilities so that provinces and utilities can maintain a reliable and affordable supply of electricity.
• There are various low- and non-emitting technologies that will allow provinces with differing access to natural resources to choose the option that works best for them. Alberta and Saskatchewan have great potential for wind, solar, and natural gas with CCS. The Atlantic can explore both onshore and offshore wind. Small modular reactors will work across Canada.
• Opportunities exist for regions to work together to develop interties to move clean power amongst them.
• The Government of Canada is also providing a suite of measures to support the clean energy transition, including over $40 billion in investments over the next 10 years through investment tax credits, low-cost financing through the Canada Infrastructure Bank, and other funding announced in Budget 2023.

Q8. What is the status of the CER and next steps?

• Apart from the highly politicized responses from the Alberta and Saskatchewan Premiers, ECCC has received substantial feedback and constructive suggestions for making improvements from provinces and utilities on the draft Regulations. We are seriously exploring the constructive amendment proposals to ensure grid reliability and affordability.
• I plan to issue a public update in early 2024 to share the key changes I am considering.
• I plan to finalize the regulations next year after the U.S. finalizes its clean electricity regulation in the spring.
• Irrespective of the CER, reports conclude that Canada will need a grid that is at least 2 times larger by 2050 than today’s. We are prepared to invest but we need to make sure that the build out is clean and avoid stranding assets in future years as we transition to a net zero future.

Clean Fuel Regulations

Q1. When did the Clean Fuel Regulations come into force?

• The Clean Fuel Regulations came into force in June 2022. The reduction requirements under the Regulations started on July 1, 2023.

Q2. What do the Clean Fuel Regulations cover?

• The Regulations aim to reduce greenhouse gas emissions from liquid fossil fuels used in Canada for transportation, i.e. gasoline and diesel. The Regulations require liquid fossil fuel suppliers to reduce the lifecycle carbon intensity of the fuels they produce and import for use in Canada. A lifecycle approach accounts for emissions across all stages of fuel production and use, from extraction through processing, distribution, and end use.

Q3. Do the Clean Fuel Regulations duplicate what would be achieved by carbon pollution pricing or the oil and gas cap?

• The Clean Fuel Regulations complement carbon pricing.
  • Carbon pricing sends a broad signal across the economy to spur the lowest cost reductions wherever they may be found.
  • The Clean Fuel Regulations complement these general signals by sending a targeted incentive to drive transformational changes along the lifecycle of liquid fuels for longer-term capital investments such as carbon capture and storage.
  • Actions taken under the Clean Fuel Regulations can also reduce the overall emissions of a refinery helping it to meet compliance under other provincial or federal regulations like the Output-Based Pricing System.
• As the oil and gas emissions cap is designed, it will take into account the Clean Fuel Regulations.
• The price on carbon, Clean Fuel Regulations, and the oil and gas emissions cap are needed to help meet Canada’s current 2030 GHG emission reduction target under the Paris Agreement target, and to put Canada on a path towards achieving the goal of net-zero emissions by 2050.

Q4. What does success look like for the Clean Fuel Regulations?

• The Clean Fuel Regulations are expected to result in significant GHG reductions (up to 26 Mt in 2030) by lowering the lifecycle carbon intensity of gasoline and diesel used in transportation. In addition, the Regulations will drive innovation and support sustainable jobs across multiple sectors of the economy, including in clean technology and low-carbon energy sectors such as biofuels and hydrogen.
• Other jurisdictions that have adopted a low-carbon fuel standard such as California and B.C. have seen increases in low-carbon intensity fuel production and consumption.

Q5. What is the status of the credit market? Are there enough credits available for compliance?

• The Clean Fuel Regulations credit transfer market is operating as expected.
• On a national level, the market is well placed for compliance with the 2023 reduction requirement.
• The Department estimates that more than twice the credits required for compliance will be created prior to the deadline to demonstrate compliance.
  • This estimate is based on credit creation data to date, as well as the expected credit roll-over from the Renewable Fuel Regulations which preceded the Clean Fuel Regulations.

Q6. When will ECCC publish CFR market data to provide more information for regulated parties and investors?

• ECCC understands the importance of market information to investors and regulated parties.
• ECCC is continuing to analyze credit creation and other market data and determine appropriate and valuable information to provide publicly. Timing and content for public reporting on credit market information will be available in the coming months as more complete data surrounding the market becomes available.

Q7. What is ECCC’s view on the price adjustment that some Atlantic Provinces have included in their retail regulated fuel prices in response to their analysis of the compliance costs associated with the Clean Fuels Regulations?

• The CFR does not set a price, instead it requires fuel suppliers to reduce the lifecycle carbon intensity of the gasoline and diesel they produce and import for use in Canada.
• Price impacts will depend on the choices of the regulated parties in the oil and gas sector, each of which have the flexibility to find the most cost-effective approaches that work best for them, whether investing in cleaner production or blending with biofuels.
• While reduction requirements under the CFR started on July 1, 2023, refineries have until July 1, 2024, to achieve their 2023 compliance obligation which is designed to be minimal in the early years.
• The Government of Canada expects the oil and gas sector, which has made record profits in recent years, to do their fair share with respect to the climate change crisis.

Clean technology

Q1. Why is clean technology important for reducing emissions and the transition to net-zero?

• Meeting Canada’s climate commitments set out in the Canadian Net-Zero Emissions Accountability Act hinges on a transition to clean technologies across every economic sector, shifting from carbon-intensive technologies to those that can significantly reduce or eliminate greenhouse gas emissions from process and practices.
• Reaching net-zero by 2050 requires current clean technologies to be deployed on a greater scale in parallel with the development of emerging technologies. In 2021, the International Energy Agency (IEA) estimated that emerging technologies would be needed for up to half of the emissions reductions required to achieve net-zero emissions by 2050. In its latest 2023 outlook, the IEA has estimated that this has already been reduced to 35%. This shows both the rapid pace of change and the enormous opportunity that remains.

Q2. What are some of the critical clean technologies in achieving Canada’s 2030 targets and net-zero by 2050?

• Many of the clean technologies needed to achieve our 2030 targets are already commercially available - but we will need to scale up these solutions.
• Canada has an important clean electricity advantage with an 82% non-emitting grid. Renewable energy technologies and interties will help further clean the grid, and Canada is developing a Clean Electricity Standard to ensure we transition to a net-zero energy grid nationally by 2035. A clean grid can lay the foundation for electrification of many applications across the economy and help reduce our use of fossil fuels.
• Accelerating our transition to zero-emission vehicles will be critical and we’ve set a target to transition to 100% zero-emission vehicles for cars and light trucks by 2035.
• Electrifying heat in buildings is also a significant opportunity which can save consumers money in the long-run and is being advanced through the Canada Greener Homes Grant and Oil to Heat Pump Affordability Program.
• Carbon capture, utilization and storage and clean hydrogen are emerging technologies that will be required to help decarbonize hard-to-abate industrial sectors such as cement, steel and chemicals, as well as the oil and gas sector.

Q3. What challenges do clean technologies face?

• There are numerous challenges that impact the pace and scale of clean technology adoption and innovation. Clean technologies can be more expensive, incurring higher capital costs than their equivalent emissions-intensive options, which means a mix of incentives, carbon pricing, and/or regulations are needed to encourage sufficient private sector investment and public uptake.
• Given the relatively early stage of the transition in most sectors, clean technologies are also confronted by uneven supply chains and enabling infrastructure; these require time to build out before widespread adoption and cost reductions can take hold.
• Moreover, there tends to be a general lack of awareness among stakeholders about clean technology solutions or the necessity of shifting towards them.
• We also know that emissions from some sectors are harder to abate than others, for example, emissions from heavy industry, oil & gas, medium- and heavy- duty freight, aviation, etc.
• However, the Government of Canada is working to address these challenges, for example, the 2030 ERP contains a series of measures designed to support emissions reduction in all sectors of the economy, including hard-to-abate sectors. These include helping industries to adopt clean technology in their journey to net-zero emissions, such as carbon capture, utilization and storage (CCUS) technologies, developing and implementing regulations, including carbon pricing, methane regulations and the Clean Fuel Regulations, and developing an emissions cap for the oil and gas sector.

Q4. How is the federal government supporting clean technology in Canada?

• The Government of Canada has made significant investments since 2016 to accelerate clean technology deployment and development, with investments of over $120 billion in clean growth and other emissions reduction measures.
• Over the past three years alone, more than 90 clean growth projects valued at a total of more than $50 billion, including private investment, are underway or will soon move forward into construction across Canada.
• Prominent federal measures, such as the Canada Growth Fund, the Strategic Innovation Fund – Net Zero Accelerator, the Energy Innovation Program and the Low Carbon Economy Fund, are propelling clean technology research, development and demonstration (RD&D) in emerging innovations and de-risking investment in clean technology deployment to guide decarbonization across industries.
• Underlying regulations and investment tax credits are also providing clear signals across the innovation continuum. Beyond this, the Government continues to undertake numerous enabling actions to encourage clean technology development and adoption, including the activities of the Clean Growth Hub, Clean Technology Data Strategy, and Clean Technology and Climate Innovation Strategy.
• The support to date from the Government of Canada, provinces and the private sector is supporting the development of critical technologies, but not to the point of market saturation where supports are no longer needed.
• The Government of Canada estimates that between $125 to $140 billion in annual private and public investment across all levels of government is needed to reach net zero by 2050, but currently, only $15 to $25 billion is being invested each year. Given the fiscal support already provided by the Government of Canada, it is increasingly important for business, investment, and financial sector leaders to respond to the strong market signals that have been put in place.

Q5. What is the size of Canada’s clean tech sector?

• Clean technology in Canada has been growing in economic importance over the last decade. Canada’s total clean tech market was estimated at $31.6 billion in 2020, with approximately $10.6 billion in exports and $16.2 billion in imports.
• The environmental and clean technology sector grew at 25% from 2012 to 2019, outpacing the overall Canadian economy.
• Clean technology now employs more than 211,000 Canadians, and the number of jobs is expected to grow by almost 50% by 2030.
• In Canada, clean tech companies operate across diverse sectors in the economy, from transportation, industry, buildings, and energy to waste and agriculture. Notable clean technology sectors in Canada include clean fuels, rare earth minerals, clean electricity, industrial decarbonization, methane abatement, clean transportation technologies, and energy-efficient equipment.
• According to EDC, key clean tech exports include transportation and vehicle technologies, energy efficiency technologies, clean energy equipment such as wind and solar parts and biofuel technologies. The U.S. remains the main export market for Canadian clean tech producers.
• Canada is home to thousands of clean tech firms with annual revenues worth over $17 billion. The sector is predominantly composed of small- and medium-sized enterprises (SMEs).
• In 2023, 12 Canadian companies were named to the Global Cleantech 100 list, second after the United States.

Q6. Why does clean tech/climate innovation matter to Canadians?

• Clean technology offers significant benefits to Canadians, from environmental benefits to cost savings and clean air, to more than 211,000 well-paying jobs. Creative solutions and innovative technologies are key to helping the world tackle climate change (e.g., electric vehicles, renewable energy, energy efficient heat pumps, etc.), plastic waste, and other environmental challenges we face.
• The global clean technology market is set to exceed $3.6 trillion by 2030, and there is an enormous opportunity for Canadian businesses in clean technology to grow and capture a large share of global markets while improving environmental outcomes.
• Canada is well-positioned to be among the leaders in this area. Canadian clean technology companies receive international recognition for their innovations every year. Canadian ingenuity is creating electric transit buses and carbon-free aluminum.
• By developing and adopting clean technologies, companies and industry can better control costs, meet new regulatory requirements at home and abroad, improve global competitiveness and reduce impacts on climate, water, land and air. Canadians have the opportunity to build on our strengths as innovators and producers of clean technology solutions to help Canada transition to a resilient and prosperous clean growth economy.

UN Conference on Climate Change: COP28

Q1. What are Canada’s goals for COP28 and how will they be achieved?

• Canada will use COP28 to advocate for an ambitious global climate response that strengthens mitigation, adaptation and finance and advances biodiversity and pollution reduction goals, to accelerate the transition toward a low carbon and climate resilient world. Ambitious action now will help avoid the worst impacts and costs of climate change to the lives and livelihoods of Canadians.
• COP28 is a critical moment to respond to the latest science and maintain the credibility of the Paris Agreement. COP28 success will be defined by the global stocktake, which will collectively assess progress towards achieving the Paris Agreement goals. A successful outcome would be to see all Parties commit to additional actions to align collective efforts with the Paris Agreement’s temperature, resilience, and support goals. For example, Canada will call on countries to reaffirm their resolve to keep the 1.5C temperature goal in reach, peak emissions by 2025 and triple global uptake of renewable energy.
• Canada will use the conference to showcase its leadership and innovation to strengthen domestic and international collaboration to build the economy of the future. Canada will host a pavilion at COP28, which will showcase a whole-of-Canada approach to climate action and leadership on the world stage; and provide a hub for networking and stakeholder engagement.

Q2. How big is the delegation? How much has the Government spent on COP28? How can you justify the cost of Canada’s participation?

• The Canadian delegation to COP28 is comprised of 714 participants. The Government of Canada is committed to taking a whole-of-government, whole-of-society approach to climate action. Participation of Canadians from all parts of the country and all sectors of the economy is essential to shaping global and local climate solutions at a critical moment for the future of the climate.
• We do not discriminate against any one sector in our economy from participating, not when we are asking every sector to collaborate on achieving emissions reductions on the road to net-zero.
• Canada benefits directly from the participation of a broad range of Canadian actors at COP. This paves the way for new partnerships, new opportunities, new ideas and solutions to reach Canada’s climate goals for 2030 and 2050 and builds a prosperous economy.
• As the event is still taking place, a final costing is not possible; however, every effort has been made to reduce costs. Within the Canadian delegation, the federal government is responsible for the travel costs of federal officials as well as a small number of representatives from civil society, Indigenous organizations, youth, parliamentarians and under-represented communities. Provincial and territorial delegations, as well as business, are responsible for their own costs.

GHG offset

As per the Greening Government Strategy, Departments are contributing to the Greening Government Fund (GGF) based on their air travel emissions. The GGF aims to incentivize lower-carbon alternatives to government operations by providing project funding to federal government departments and agencies to reduce GHG emissions in their operations. The contribution rate is based on a 3-year average and is $50 per tonne of CO2 equivalent.

The 2023 Progress Report on the 2030 Emissions Reduction Plan

Q1. What are the highlights of the 2023 Progress Report on the 2030 Emissions Reduction Plan?

• The 2030 ERP, released in March 2022, is being actively implemented and is delivering emissions reductions. The 2023 Progress Report highlights the progress made so far, including:
  • Policies and Regulations
    • Finalizing the Clean Fuel Regulations that established requirements for producers and importers to reduce the carbon intensity of gasoline and diesel;
    • Releasing Canada’s Methane Strategy with the objective of reducing domestic methane emissions by more than 35% by 2030, compared to 2020;
    • This week we published strengthened oil and gas regulations that make Canada the first country in the world to set a target for reducing methane emissions by at least 75% from 2012 levels by 2030;
    • Launching formal engagement on two potential regulatory options to cap and reduce oil and gas sector GHG emissions;
    • This week we published a framework for capping emissions from the oil and gas sector, another world first;
    • Releasing the Carbon Management Strategy;
    • Releasing proposed Clean Electricity Regulations to achieve a net-zero grid by 2035;
    • Releasing proposed regulations for new light-duty vehicles with requirements that at least 20% of new light-duty vehicles offered for sale be zero-emission vehicles by 2026 and increase annually to at least 60% by 2030 and 100% by 2035.
  • Investments
    • Releasing Powering Canada Forward, a vision for an affordable and reliable clean electricity future in Canada and committing over $40 billion in clean electricity investments over the coming decade;
    • Distributing $124.8 million through the Agricultural Climate Solutions: On-Farm Climate Action Fund to support farmers to adopt and implement immediate on-farm beneficial management practices that store carbon and reduce GHG emissions;
    • Investing $165.4 million to enable the establishment of a Green Shipping Corridors Program, which will support demonstration of next-generation technologies to reduce emissions from marine vessels and enable decarbonization of port operations;
    • Distributing $79.2 million through the Agricultural Clean Technology Program for research, innovation, and adoption of clean technology that will drive sustainable growth in the agriculture sector;
    • Announcing the government’s plan to build a clean economy, including the introduction of five investment tax credits aimed at spurring the shift to a low-carbon economy and the establishment of the Canada Growth Fund, a $15 billion arm’s length public investment vehicle that will help attract private capital to build Canada’s clean economy; and,
    • Committing $29.6 million to support the advancement of an Indigenous Climate Leadership Agenda in partnership with First Nations, Inuit, and Métis.
  • Actions
    • Increasing the national carbon pollution price and, in provinces where the federal fuel charge applies, continuing to return fuel charge proceeds to households through Climate Action Incentive payments to help make life more affordable for Canadians while recognizing the cost of polluting;
    • Launching Canada’s GHG Offset Credit System, finalizing regulations, and publishing two protocols to incentivize emission reductions from landfills and refrigeration systems (with more protocols under development);
    • Launching the incentives for Medium- and Heavy-duty Zero-Emission Vehicles (iMHZEV) program to make these vehicles more affordable for Canadian businesses and organizations and accelerating the safe deployment of zero-emissions trucks in Canada through the Zero-Emission Trucking Program;
    • Publishing a discussion paper on the Canada Green Buildings Strategy, releasing a What We Heard report and Summary of Engagement with Indigenous Partners and launching the Code Acceleration Fund and the Deep Retrofit Accelerator Initiative;
    • Launching the Regional Energy and Resource Tables to bring the federal government together with individual provinces and territories, in collaboration with Indigenous partners — and with the input of key stakeholders — to advance the top economic priorities in the energy and resource sectors in each of Canada’s regions and accelerate their comparative advantage in a global shift to net zero.

Q2. Are we on track to meet our 2030 target?

• When the 2030 ERP was released, we set a 2026 interim objective that serves as a mid-point check-in between now and 2030. We are on track to meet and surpass the interim objective.
• The modelling released today shows that current measures will get us to 36% reductions by 2030 and there are credible scenarios to close the gap.
• The ERP Progress Report includes over 30 potential emissions reduction opportunities. These are in the early stage, but we will be working to advance these as we work towards closing the gap to 2030.
• This is consistent with the projections laid out in the 2030 Emissions Reduction Plan.
• In 2015, Canada was trending to exceed 2005 emissions levels by 9% by 2030, but we have successfully bent the emissions curve and are now projected to be 36% below 2005 levels with a commitment to reaching a reduction of at least 40%. This is clear evidence that since 2015, the Government of Canada has dramatically reduced emissions while building an economy based on good-paying jobs and clean air.
• The 2023 Progress Report contains over 140 ERP measures, with 18% in the development or initiation phase, 78% in active implementation, and 4% concluded (no longer in effect). While Canada’s modelling illustrates a pathway to reaching the 2030 target, Canada has more work to do and is committed to:
  • Sustained implementation of the 2030 ERP – including releasing the Green Buildings Strategy and developing climate plans for the marine, rail, and aviation sectors;
  • Exploring promising opportunities to further drive emissions reductions;
  • Strengthening collaboration with existing and new partners; and
  • Continuing to drive progress on enabling measures such as the creation of new jobs and skills training opportunities, sustainable finance, and clean tech that will be necessary to achieve emissions reductions and economic opportunities.
• While emissions are going down, Canada is moving up the innovation curve supporting the most promising decarbonization technologies, including industrial electrification, carbon capture and storage, and hydrogen. The potential for Canada to lower emissions while remaining globally competitive is at our doorstep.
• Remaining globally competitive requires two key criteria – ensure we have clean electricity to attract global companies and ensure the oil exported from Canada is as clean as possible. In 2023 we introduced draft Clean Energy Regulations and a regulatory framework to cap emissions from the oil and gas sector, measures designed to meet those criteria and cement Canada’s position as a clean economy leader at home and on the global stage.
• In fact, Canada is implementing over 140 measures ranging from regulations to funding programs, to research and training. The policies that are debated in the media are just a fraction of the myriad programs that the transition to net zero – from households to businesses to provincial and territorial governments.
• The Government of Canada continues to consult with partners and stakeholders on key measures to drive down emissions. We will provide an update on the implementation status of ERP measures in future progress reports in 2025 and 2027 as required under the Canadian Net-Zero Emissions Accountability Act.
• The Government of Canada expects that complementary climate actions from the provinces and territories, municipalities, Indigenous peoples, businesses, and individuals – as well as the acceleration of clean technology innovation and deployment – will lead to further emission reductions in the lead up to 2030.

Q3. Why hasn’t Canada ever met a target?

• In 2015, we told the world we would reduce our emissions by 30% below 2005 levels by 2030. We are on track to surpass that. We now have a target of 40-45% below 2005 levels by 2030. And in 2024 we will set a new 2035 target. This is not the sign of failure – this is a sign of determination to do the best we can to provide safety and security.
• We do not rest on our laurels or stop when the easy work is done. Getting to net zero requires constantly reaching to do better. That is what we do.

Q4. Does the Progress Report contain new or modified measures to help achieve the 2030 target?

• The Progress Report provides an update on the progress that has been made since the release of the 2030 ERP in March 2022, and which federal measures and strategies have been implemented.
• The Progress Report does not constitute a revised emissions reduction plan. Measures contained in the report are part of the 2030 ERP.
• The Progress Report identifies over 30 opportunities the Government of Canada is pursuing to help ensure Canada is on track to meet its 2030 target and is on the road to net zero by 2050, such as: implementing the $15 billion Canada Growth Fund to spur private sector investment in the clean economy and net zero projects.
• The 2030 ERP is an evergreen plan, which can adjust over time to help achieve the 2030 target. We know that we need action across the entire economy involving a whole-of-society approach, and the Government of Canada will continue to identify and respond to new opportunities in collaboration with partners.

Q5. Are there any sectors where reducing emissions is more difficult than expected? If so, what solutions are being considered?

• We already know that emissions from some sectors are hard to abate, for example, emissions from heavy industry, oil & gas, medium- and heavy- duty freight, aviation, etc.
• The 2030 ERP contains a series of measures designed to support emissions reduction in all sectors of the economy, including hard-to-abate sectors. These include helping industries to adopt clean technology in their journey to net-zero emissions such as carbon capture, utilization and storage (CCUS) technologies, developing and implementing regulations, including carbon pricing, methane regulations and the Clean Fuel Regulations, and developing an emissions cap for the oil and gas sector.
• The Government of Canada is also pursuing a number of opportunities which will help reduce emissions in hard-to-abate sectors, including:
  • Continue to use the Strategic Innovation Fund to support industry on the road to net zero and promote clean economic growth, providing significant funding to develop and adopt new low-carbon technologies and processes;
  • Continue to develop climate plans for marine, rail, and aviation sectors;
  • Explore opportunities to deploy charging and hydrogen refueling stations for medium- and heavy-duty zero-emission vehicles;
  • Develop and implement a Sustainable Aviation Fuels (SAF) Blueprint;
  • Explore various approaches in the agriculture sector to help promote the sustainability of the sector, increase clean technology use, and address barriers of adoption/extension and knowledge transfer.
• The Government of Canada recognizes the role of the private sector in making investment decisions that may have an impact on efforts to reduce emissions from industrial activity. The government is committed to working closely with businesses to help ensure that the decisions made today will position Canada to prosper and succeed in the growing global low-carbon marketplace, reduce emissions, and set Canada firmly on the road to net zero.

Q6. Canada’s emissions increased from 2020 to 2021. Do we expect this trend to continue?

• The emissions increase between 2020 and 2021 is a result of a rebound in activities following the COVID-19 pandemic. We expect the rebound will end over the short-term, following which Canada will go back to its downward trajectory of emissions reductions.
• The COVID-19 pandemic impacted all aspects of the lives of Canadians, including the sectors that drive Canada’s economy. With the temporary closure of many businesses across the country in 2020, Canada saw lower economic activity which resulted in emissions reductions on a trajectory not previously foreseen.
• In 2021, Canada’s economy saw an historic rebound with people returning to work, and goods and services being bought and provided throughout the country. With this return of economic activity came an increase in emissions.
• Moving forward, Canada’s emissions are projected to continue to decrease over the next decade. The implementation of the 2030 ERP is a cornerstone of emissions reductions. Plans, programs, and policies are in place to ensure that economic growth continues while emissions continue to fall for continued economic prosperity alongside a low-carbon future.

Modelling

Q7. Why did the 2030 ERP project a 36% decline, the 2022 Biennial Report project (cited by the CESD) 34%, and the ERP Progress Report project 36%?

• All of these numbers are correct. The models used to project emissions levels in 2030 use guidelines and data that change over time, which changes the results.
• To be consistent with the rest of the world, and meet our international commitments for reporting, Canada follows the UNFCCC modelling guidelines. When their experts improve the guidelines, we adopt them, which can change the model results. As well, model results can change as a result of the data that informs the model, including forecasts for future energy demand and production. For example, the global demand for oil could go up or down. These fluctuations can change the results of the model.

Q8. Does this mean the model is not good?

• On the contrary, this means the model is very good. Models cannot predict the future, they can only provide an estimate based on the best available information at the time. By constantly improving how emissions are counted and the quality of the data, our projections can become more accurate. We expect to see more of this in the future, which is why Canada produces emissions projections every year instead of every two years as required by the UNFCCC.

Q9. Is the recently announced emissions cap in the model?

• Oil and gas companies will reduce emissions through the use of CCUS, electrification of their facilities, and reducing methane emissions. Some of these are already in the model so we do not expect the cap to move the dial a whole lot. However, the emissions cap does ensure that emissions from the oil and gas sector do not increase without affecting production.
• The cut-off for inclusion of measures in the latest projections was August 2023. The projections do not reflect decisions made after that date.
• But it is worth noting the framework we announced this week acts as an assurance or sort of guarantee that the emissions cuts for the sector we modelled in the ERP actually come to pass.

Q10. What is the modelling approach used to project GHG emissions until 2030?

• ECCC updates Canada’s GHG emissions projections annually reflecting the latest historical data and up-to-date future economic and energy market assumptions. As such, projections can fluctuate over time because of changes in the historical data and assumptions.
• Canada’s most recent projections report, Canada’s Greenhouse Gas and Air Pollutant Emissions Projections 2023, published in December 2023, presents Canada’s GHG and air pollutant emissions projections to 2035.
• As was the case with the emissions projections for Canada’s 2030 Emissions Reduction Plan, the report presents projections using two approaches—a “bottom-up” approach (represented by the Reference Case and Additional Measures scenarios), and a “backcasting” approach where emissions are capped at the level needed to achieve the 2030 target of 40 per cent below 2005 emissions.
  • Projections in the “bottom-up” Reference Case include federal, provincial, and territorial policies and measures that were in place as of August 2023 and assume no further government action. They also include the accounting contribution from the Land Use, Land Use Change and Forestry (LULUCF) sector.
  • The “bottom-up” Additional Measures scenario includes all federal, provincial, and territorial policies and measures from the Reference Case as well as those that have been announced but have not yet been fully implemented. This scenario also includes the accounting contribution from the LULUCF sector, in addition to the impact of credits purchased under the Western Climate Initiative, Nature-Based Climate Solutions, and Agriculture Measures.
  • The backcasting scenario is an illustrative scenario which is based on all policies and measures included in the Additional Measures scenario and is calibrated to achieve the 2030 target of 40 per cent below 2005 levels. The results from the backcasting scenario should not be interpreted as signaling policy intentions, but rather as an illustration of what the modelling framework suggests are economically efficient opportunities to reach pre-determined emission reductions.

Q11. Environmental groups say that the Carbon Capture, Utilization and Storage (CCUS) tax credit is yet another subsidy. Why are you putting that in place?

• All of the major global decarbonisation studies indicate that CCUS will play a critical role in enabling the transition to a net zero economy. According to the International Energy Agency’s (IEA) Net‐Zero Emissions by 2050 scenario, 15% of global emission reductions will rely on CCUS, and the technology needs to be scaled up to 190 times what is captured today.
• CCUS is a particularly significant opportunity for Canada given our existing experience and expertise with the technology. Projections show it will play a critical role in enabling a prosperous net-zero economy in Canada by 2050, but that will be one among many elements needed.
• CCUS will be needed for three reasons in particular:
  • It can help us tackle emissions from the toughest-to-abate but crucial sectors of Canada’s economy (such as process emissions, oil and gas, and heavy industry);
  • enable low-carbon pathways like hydrogen; and
  • deliver negative emissions to support carbon dioxide removal.
• Canada is implementing a number of measures to help drive the market for CCUS including federal and provincial carbon pollution pricing regimes, the federal Clean Fuel Standard, as well as a new Investment tax credit for CCUS.
• Through Budget 2021, the Government of Canada committed to providing $319 million to support research and development to improve the commercial viability of CCUS technologies. This funding will help Canada achieve its goal of net zero by 2050 while being a supplier of choice for cleaner energy and innovative new technologies around the world.
• Budget 2022 proposes a refundable investment tax credit for businesses that incur eligible CCUS expenses, starting in 2022. The investment tax credit would be available to CCUS projects to the extent that they permanently store and captured CO₂ through an eligible use. The CCUS investment tax credit is a part of the government’s broader plan to work with industry towards the goal of decarbonization, including through initiatives like the Clean Growth Fund and Net-Zero Accelerator.

Electricity and clean energy

Q12. How is the Government of Canada supporting the further adoption of clean energy?

• The Emissions Reduction Plan sets out continued and enhanced support for the deployment of commercially ready renewable energy technologies to support grid decarbonisation through an additional $600 million investment in the Smart Renewables and Electrification Pathways Program.
• Investments in emerging technologies such as geothermal and tidal power, small modular reactors (SMRs), carbon capture, utilization and storage (CCUS), and electricity storage will allow Canada to be a world leader in non-emitting electricity and smart grids.
• To support the development and deployment of these technologies, the Government will make additional investments, including $250 million to support predevelopment work of large clean electricity projects – in collaboration with provinces and territories – through the Electricity Predevelopment Program.
• The Government also established the Canada Electricity Advisory Council to provide external advice on how best to direct clean electricity infrastructure investments.

Agriculture and natural areas

Q13. What is being done to help farmers and the agriculture sector?

• Farmers not only keep food on our tables, they are also landowners and partners in the fight against climate change.
• The Government of Canada will provide additional funding to top up the current successful applicants of the Agricultural Climate Solutions: On-Farm Climate Action Fund, broaden support to additional key climate mitigation practices, extend the program past its current sunset of 2023/24, and support adoption of practices that contribute to the fertilizer emissions target and Global Methane Pledge.
• The Government will also:
  • Invest $150 million for a resilient agricultural landscapes program to support carbon sequestration, adaptation and address other environmental co-benefits
  • Provide $330 million to triple funding for the Agricultural Clean Technology program by broadening and expanding the scope of the program
  • Invest $100 million in transformative science for a sustainable sector in an uncertain climate and net-zero economy for 2050. This funding will support fundamental and applied research supporting a path to net zero emissions, knowledge transfer, and developing metrics.
• The Government will also continue to explore policies and programs that will support further emissions reductions in the agriculture sector and put Canada on the path to meeting our climate change goals. For example,
  • As part of the Sustainable Canadian Agricultural Partnership (S-CAP) the Government is ensuring that environmental considerations are at the core of the new federal-provincial/territorial agricultural policy framework, and will update business risk management programs, including to integrate climate risk management, environmental practices and climate readiness.
  • The Government is developing a Sustainable Agricultural Strategy (SAS), which will take an integrated approach for addressing agri-environmental issues in Canada’s agriculture sector to support the sector’s actions on climate change and other environmental priorities towards 2030-2050, including improving environmental performance, enhancing resilience to climate change, supporting farmers’ livelihoods and strengthening the business vitality of the Canadian agricultural industry.

Q14. The agriculture sector accounts for ~10% of Canada’s GHG emissions, why is the sector only expected to reduce 1% of emissions below the 2005 levels based on the backcasting approach?

• The backcasting projections present a credible pathway to meeting Canada’s 2030 target by identifying concrete climate actions and emissions reduction potential on a sector-by-sector basis, including agriculture.
• In particular, the ERP was clear that existing and proposed new measures are expected to lead to up to 13 million tonnes in agricultural-related reductions by 2030, taking into account both reductions in emissions and increased carbon sequestration in agricultural soils. The total number is based on previously announced measures (e.g., the Fertilizer emissions target and activities supported by Budget 2021 funding such as Agriculture Climate Solutions Living Labs, On-Farm Climate Action Fund, etc.), as well as new proposed measures including the additional $1B announced in the ERP.
• The new support announced in the ERP reflects the nature and readiness of the sector with its close to 200,000 private farms, the availability of practices and technologies, and the sector’s capacity to adopt climate solutions in the short-term.
• The 1% projected sectoral contributions shown for the Agriculture sector does not reflect all the contributions that the sector will make to Canada’s climate objectives as the potential reductions presented for each sector represent one possible pathway to achieving the 2030 target.
• Based on UNFCCC reporting requirements, some of these measures will reduce emissions as measured in the agriculture sector while others will contribute to reductions in the land use sector.
• We believe that a reduction of 13 million tonnes is realistic, meaningful, and necessary, and will not impact Canada’s food security or our agriculture industry.

Consultation and collaboration

Q15. How did provinces and territories contribute to the 2030 Emissions Reduction Plan?

• Provinces and territories – as well as Indigenous peoples, the Net-Zero Advisory Body, the public, and key stakeholders – were all engaged when establishing this 2030 Emissions Reduction Plan. Throughout the plan, the important insights provided by these groups have been reflected.
• Supporting a clean electricity sector was identified as a priority for a number of provinces and territories, building on efforts to phase-out coal-fired electricity and increase the production of renewable energy.
• Provinces, territories and municipalities also prioritized emissions reduction efforts in the buildings sector, with support for greater alignment of programs and incentives between governments.
• The electrification of the transportation sector is an important climate measure for many provinces and territories. Provincial and municipal governments have an important influence on transportation choices and can make significant contributions in this area.

Q16. Did the provinces and territories, municipalities, and Indigenous peoples contribute to the 2023 Progress Report or have the opportunity to review and provide feedback?

• Under the Canadian Net-Zero Emissions Accountability Act, provinces and territories, Indigenous peoples, the Net-Zero Advisory Body, and interested persons, must be provided with the opportunity to make submissions when setting or amending a national greenhouse gas emissions target or establishing or amending an emissions reduction plan.
• With respect to progress reports related to emissions reduction plans, there is no legislative requirements to engage, except with federal ministers having duties and functions relating to the measures that may be taken to achieve the greenhouse gas emissions target.
• The Progress Report provides an update on the Government of Canada’s progress on the implementation of the federal climate plan.
• Even in the absence of legislative requirements to consult in the development of the Progress Report, the Government of Canada recognizes the importance of a continued collaboration with other order of government and Indigenous peoples. This is why the federal government worked with the provinces and territories and with National Indigenous Organizations (NIOs) to include an overview in this report of the important work being done by provinces and territories and to provide an update on Canada’s partnerships with First Nations, Inuit and Métis to advance work on the Indigenous Climate Leadership Agenda.

Q17. Is the Government expecting/requiring provinces and territories to increase their climate action and ambition?

• The science is clear. Canada must do more and faster to combat climate change. Driving deeper reductions will require accelerated climate action beyond the federal jurisdiction.
• Enhanced climate ambition from provinces and territories, municipalities, industry, the financial sector, as well as the acceleration of clean technology innovation and deployment – will drive further reductions. These collective efforts will give Canada the accelerated momentum that is needed to achieve the upper bound of Canada’s emissions reduction target and put us on track to net-zero emissions by 2050.

Q18. How does Canada’s trajectory to 2030 account for provincial and territorial actions and ambition?

• Provincial and territorial efforts to reduce emissions are fundamental to meeting Canada’s 2030 climate objectives.
• The environment is an area of shared responsibilities between federal, provincial and territorial governments, and provinces control the policy levers for many key emissions sources.
• For example, provinces have responsibilities related to most types of industries, including mining and manufacturing, meaning that they also have an important role in regulating emissions from these industries.
• The Government of Canada works closely with provinces and territories to achieve shared climate objectives. A number of funding programs, covering a wide range of sectors, have launched in recent years, including the Low Carbon Economy Fund, and the Natural Climate Solutions Fund.
• As announced in Budget 2022, the Government of Canada will advance and enhance the Low Carbon Economy Fund through additional funding. The funding aims to leverage further climate actions from provinces and territories, municipalities, universities, colleges, schools, hospitals, businesses, not-for-profit organizations, and Indigenous communities and organizations.
• Further investments including $780 million to the Nature Smart Climate Solutions Fund to deliver additional emissions reductions from nature-based climate solutions to support projects that conserve, restore and enhance wetlands, peatlands, and grasslands to store and capture carbon.
• Budget 2022 also proposed $55.1 million to establish an Old Growth Nature Fund in collaboration with British Columbia, non-governmental organizations, and Indigenous and local communities.
• ECCC consults with provinces and territories to make sure that their policies and measures are properly reflected in the projections.

Q19. Some provincial governments have raised concerns about measures such as the Clean Fuel Regulations and the oil and gas sector emissions cap. How is the government working with provinces and territories to ensure these measures are effective and produce the desired results?

• The Government of Canada works closely with provinces and territories to achieve shared climate objectives. It recognizes that the transition to a clean economy must take into account regional differences and challenges, and provide opportunities to create good, sustainable jobs in all the Canadian regions.
• Regulatory measures such as the Clean Fuel Regulations and the oil and gas sector emissions cap are subject to consultation with the provinces and territories, and their finalization takes into consideration the feedback received.
• The Government of Canada is committed to addressing affordability while taking action to reduce emissions.
  • For example, to support families feeling the pressure on monthly bills, the government announced a three-year pause to the federal price on pollution (fuel charge) on deliveries of heating oil in all jurisdictions where the federal fuel charge is in effect.
  • It is also announcing additional aid to help people save money by making it easier to switch to an electric heat pump along with a doubling of the pollution price rebate rural top-up rate.

Q20. How did Indigenous partners contribute to the Emissions Reduction Plan?

• The full, effective and meaningful participation of Indigenous partners in the transition to net zero is key. When engaged on the development of this plan, Indigenous governments and representative organizations collectively stressed the importance of working on a nation-to-nation, Inuit-Crown, and government-to-government basis. In their submissions, Indigenous partners:
  • Noted the urgency of protecting their territories, homelands, resources, languages, traditions and foods for future generations and that lived realities are inseparable from the effects of climate change.
  • Encouraged expanded efforts to support remote, northern and Indigenous communities transition off diesel power, and to advance community-owned and led renewable energy projects.
  • Emphasized that energy efficiency and retrofits are a priority for many Indigenous governments, but so is the housing crisis they are facing. Nearly 20% of Indigenous people live in housing that needs major repairs, and 20% live in housing that’s overcrowded.
• In addition, Indigenous peoples are well placed to support natural climate solutions due to their role as stewards of their traditional territories. Indigenous Knowledge has a vital role to play in supporting natural climate solutions in Canada.

Q21. How is UNDRIP and Indigenous knowledge taken into account in the plan?

• The Government of Canada acknowledges that Indigenous peoples experience disproportionate effects of climate change.
• Consistent with the Paris Agreement’s call to respect, promote and consider Indigenous rights when taking action on climate change, the Government is committed to renewed nation-to-nation, Inuit-Crown and government-to-government relationships with First Nations, Inuit, and Métis, based on the recognition of rights, respect, cooperation and partnership.
• The Government of Canada also supports the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) and acknowledges that Indigenous Knowledge systems and ways of doing must be a cornerstone of Canadian climate policy.
• While more work needs to be done to ensure that Indigenous climate leadership is fully integrated into Canada’s climate action, Canada has an ongoing commitment to improve the reflection of UNDRIP in all of its policy and programming and to work with Indigenous partners to better support their climate priorities.

The economy and affordability

Q22. Canadians are facing affordability challenges in many parts of Canada. Why continue to implement the 2030 ERP instead of prioritizing these pressing affordability issues for most of Canadians?

• Climate change is costing us all. The idea that affordability and fighting climate change work at cross purposes is increasingly false, if it was ever true.
• Unlimited pollution – making it free to pollute – simply shifts the cost of that pollution from one favoured group onto those who can least afford it.
• Research and experience have proven that fighting climate change and improving the purchasing power of Canadians in a strong economy do not oppose each other. The Government’s focus continues to be on taking climate action that also makes life more affordable for Canadians. A number of measures implemented or under development serve this objective, such as:
  • Strengthening the federal price on pollution that puts more money back in people’s pockets;
  • Helping people retrofit their homes to save on monthly energy bills; and,
  • Making electric vehicles more affordable.
• Furthermore, the impacts of climate change have costly consequences for the Canadian economy, and indeed for all Canadians. The cost of climate disaster was particularly high in 2022 and 2023 in terms of cost for fighting wildfires, but also in terms of costs related to evacuations, insured losses, economic interruptions, and health services. The longer we wait to reduce emissions, the greater the costs associated with the impacts of climate change will be felt by Canadians.
• The measures being implemented are expected to benefit all Canadians by helping to alleviate the negative impacts of climate change, which are worse for lower-income Canadians, women, Indigenous peoples and others living in rural and remote areas.
• Taking climate action now is a critical economic opportunity that will maintain and create Canadian jobs, and make our economy more resilient and more competitive. The Bank of Canada and the Office of the Superintendent of Financial Institutions (OSFI) showed that delaying climate policy action increases the overall economic impacts and risks to financial stability.

Q23. Why is the government providing exemptions to the fuel charge on home heating oil?

• Regarding the Prime Minister’s recent announcement on home heating, this is a temporary measure that is geared to the unique needs of Canadians that are still using oil to heat their homes, particularly those in Atlantic Canada and in rural communities.
• The goal is to give Canadians the opportunity to make the switch to high-efficiency heat pumps. We know this will take a bit of time, and three years provides ample opportunity for these federal investments to really make a difference.
• We also know that a price on carbon pollution is widely recognized as the most efficient means to reduce the greenhouse gas emissions that cause climate change, while also driving investment in low-carbon alternatives giving Canadians greener, cleaner, and more affordable options and providing rebates to families leaving most families better off, with low- and middle-income families benefiting the most.
• Canada’s carbon pollution pricing works by encouraging businesses and consumers to choose less carbon-intensive options for energy production, home heating, and transportation. For example, estimates show that pollution pricing will reduce greenhouse gas emissions by 20-30% by 2030, relative to 2005 levels.
• As Canadians continue to take actions to reduce emissions – by improving their home insulation, purchasing an electric vehicle, or installing a heat pump – they will cut costs and also save money.
• In provinces where the federal system is in place and fuel charge proceeds are returned through rebate payments, the amount of these payments increases as the pollution price goes up, and most households will receive more back than they pay as a result of the federal system.
• Where families receive pollution pricing rebates – called Climate Action Incentive payments – eight out of ten households get more money back than they spend on the fuel charge. Low- and middle-income households in these provinces will benefit the most as they tend to spend less on energy-intensive goods, while still collecting the full amount of the pollution price rebate.

Q24. Will ECCC give a carbon price exemption to all home heating fuels in every jurisdiction in Canada?

• Regarding the Prime Minister’s recent announcement on home heating, this is a temporary measure that is geared to the unique needs of Canadians that are still using oil to heat their homes, particularly those in Atlantic Canada and in rural communities.
• Pollution pricing remains the backbone of our climate plan and is the most cost-efficient and effective way of combating the climate change that is costing Canadians billions of dollars in extreme weather impacts. We are simply responding to a unique set of affordability concerns on a time-limited basis.
• The federal pollution pricing system sets a benchmark for carbon pricing coverage that all provinces and territories must meet. Some provinces opt to implement their own systems aligned with federal benchmark requirements. So, while the temporary pause on heating oil will come into effect on November 9, 2023 in provinces where the federal system applies, those provinces and territories with their own systems can also choose to make the adjustment, as long as they continue to meet the federal benchmark.

Q25. Are you conceding that the carbon tax punishes low-income Canadians?

• No. Pollution pricing works. It is a fundamental part of Canada’s climate plan. The real challenge to affordability for Canadian families is high energy costs that have allowed oil and gas companies to make record profits.
• We recognize that oil heating is particularly expensive compared with other forms of home heating, and that too many low- and median-income families rely on it as their fuel source. Canadians who heat their homes with oil can expect to spend $2,100 to $3,000 per year on heating fuel.
• That is why we are accelerating the transition to lower-cost heat pumps to help households reduce their dependency on expensive fossil fuels – while reducing the emissions that cause climate change at the same time.
• As part of this plan we are temporarily suspending the fuel charge on heating oil and providing up-front payments of $250 to low- and median-income Canadians.

Q26. There have been notable issues with recent investments in clean technology. Does the LCEF have any issues with its clean technology investments?

• The Low Carbon Economy Fund will continue to be open to a wide range of applicants from coast-to-coast-to-coast to support projects that will help Canada meet its climate objectives.
• We remain committed to supporting projects that reduce Canada’s greenhouse gas (GHG) emissions, generate clean growth, build resilient communities, and create good jobs for Canadians

Q27. How is the Government’s refocused expenditures exercise going to affect the ability of Canada to meet its 2030 target?

• Affordability and cost-of-living is top of mind for many Canadians right now. However, we know we must also continue to prioritize climate action.
• In fact, failing to address climate change will only make things more expensive for Canadians. The Canadian Climate Institute estimates that climate damages could slow Canada’s economic growth in 2025 by $25 billion annually, effectively cutting projected GDP growth in half.
• Many of the actions to reduce emissions, such as regulations, are complemented by incentives and other supports to help offset the costs on Canadians and support them in taking climate action.
• The government will continue to advance climate measures and programs in support of reaching our climate targets, while carefully considering the impacts on the daily lives of Canadians.

On LCEF

• The LCEF remains an important part of Canada’s climate change initiatives and will continue to support projects to help Canada meet its climate change objectives.
• Environment and Climate Change Canada (ECCC) is working with other federal departments to implement the Delivering support for Canadians on energy bills measures announced by the Prime Minister on October 26, 2023, including as it relates to the Low Carbon Economy Fund, and will share more information in due course.
• We remain committed to supporting projects that reduce Canada’s greenhouse gas (GHG) emissions, generate clean growth, build resilient communities, and create good jobs for Canadians.

Q28. In 2023, wildfires burned across the country emitting GHGs exceeding the total emitted by all sectors of the economy. Are there mitigation measures in place or under development to protect against continued wildfires in Canada?

• One of the most important ways to lessen the risk of a wildfire season like last year’s or worse is by doing our part to keep warming below 1.5°C, as per the Paris Agreement. A study by the World Weather Attribution showed that the weather conditions that fueled wildfires in eastern Canada in summer 2023 were twice as likely to happen and more intense because of human-caused climate change.
• In addition, the Government of Canada is collaborating with the provinces and territories, Indigenous peoples, and other stakeholders on forest and fire management approaches based on innovative research, scientific evidence, and traditional knowledge.

Q29. The 2030 ERP contained measures which aim to make it easier for Canadians to switch to zero-emission vehicles (ZEVs) and make them more affordable. Have we seen progress in the number of light-duty ZEVs sales and the cost Canadians have to pay for these vehicles?

• Accelerating the transition to zero-emission vehicles (ZEV) is essential to achieving net-zero emissions by 2050.
• In 2022, demand for ZEVs outstripped supply, in part due to supply chain constraints, but also reflecting increased interest from consumers.
• Canadians are choosing ZEVs faster than expected with 10% of new vehicles being ZEVs in the first half of 2023. ZEVs are a dependable form of transportation with lower operating costs and a reduced environmental footprint.
• The uptake of ZEVs is supported by an expanding network of chargers and federal, provincial and territorial government incentives.
• Going forward, the Government of Canada will continue to support the development and installation of reliable ZEV charging and refueling infrastructure, and address ZEV affordability issues for Canadians.
• The Government of Canada is committed to achieving 100% new light-duty ZEV sales by 2035 in alignment with many other countries.

Q30. Does the speed of renewable energy deployment match expectations, and is it compatible with the goal of achieving a net-zero electricity grid by 2035?

• The Government of Canada is investing billions into the research, development, and deployment of renewable and low-carbon electricity.
• In August 2023, the Government of Canada published the draft Clean Electricity Regulations in the Canada Gazette, Part I. The draft Clean Electricity Regulations aim to set an early signal to accelerate Canada on a path towards a net-zero electricity grid by 2035.
• The cost of renewables such as solar and wind has declined dramatically since 2010. These technologies have become competitive with fossil fuels, i.e., in Alberta and Ontario wind can produce electricity at a lower cost than natural-gas-fired power. Canada’s solar and wind electricity generation capacity grew by over 10% in 2022.
• Canada now has more than 19 GW of utility-scale wind and solar energy generation. More than 1.8 GW of that new generation capacity was added in 2022.
• Alberta has been a leader in renewable energy development in Canada accounting for 75% of the country’s increase in solar and wind generation in 2022, with 14% of the province’s electricity from wind and solar in 2022.
• The clean energy sector will offer significant benefits to Canadians from reduced electricity costs to cleaner air in our communities, and will generate 2.7 million jobs by 2050 according to a study from Clean Energy Canada and Navius Research.

Q31. The 2030 ERP mentioned the need to move towards a circular economy, and that the Government of Canada would explore with others what opportunities greater circularity could offer in Canada. What has been done in this regard since March 2022?

• The Government of Canada is working to implement circular economy initiatives in order to reduce emissions and waste while simultaneously saving Canadians and businesses money. This includes supporting circular strategies such as remanufacturing, redesigning, and reducing.
• Since the release of the 2030 ERP, a number of crucial steps have been taken to move Canada towards a more circular economy, including: tackling food waste through assessing Food Waste Reduction Challenge applications; lowering plastic waste by holding public consultations on minimum recycled content regulations, and publishing the Single-Use Plastic Prohibition Regulations; engaging with other levels of government and stakeholders on improved CE policy collaboration; and, providing industry with the tools to better manage waste, water, and identify opportunities to reduce embodied carbon.
• Moving towards a circular economy involves all levels of government as such, the Government of Canada is working with provinces, territories, and municipalities in order to further implement circular economy strategies.

Q32. With the recent Supreme Court decision related to the Impact Assessment Act, will the Government of Canada have to change how it is implementing its climate plan?

• The Government of Canada does not intend to change how its climate plan is being implemented. The Supreme Court decision related to the Impact Assessment Act does not rule out measures contained in the 2030 ERP.
• One of the flagship measures of the 2030 ERP, the carbon pricing, has already been found constitutional by the Supreme Court.
• The federal government will continue to implement its climate plan because, as stated by the Supreme Court, global warming causes harm beyond provincial boundaries and that it is a matter of national concern.
• Environment is a shared responsibility between federal, provincial and territorial governments. The Government of Canada recognizes and is sensitive to provincial and territorial jurisdiction while continuing to play a key role in safeguarding the environment and economy for all Canadians.

Q33. The first audit on CNZEAA was released by the CESD in November and was critical of the government’s climate plan. What is the federal government doing to address these criticisms?

• The Government of Canada welcomes the tabling of five reports from the Commissioner of the Environment and Sustainable Development and thanks him for his important work in reviewing federal programs and policies to help deliver the best possible results for Canadians.
• The Commissioner is correct—there is still work to be done to meet our ambitious, but achievable, 2030 goal of at least 40 per cent emissions reductions compared to 2005 levels.
• Our Government is already substantially bending the curve on emissions in Canada. Since we launched the 2030 Emissions Reduction Plan last year, we have been working extremely hard with partners on over 140 concrete measures in the plan.
• We still have major initiatives under development and will continue to look for more opportunities to reduce emissions. Every sector of the economy has a role to play, and by taking these actions, our economy will be stronger and more sustainable well into the future.
• It is important to take the necessary time to work with partners to implement measures successfully. This can include engaging in the lengthy consultation periods needed to develop regulations that reflect affordability and other socioeconomic issues.
• The Government of Canada continues to take extensive action on climate change putting in place key measures and collaborating with partners to collectively reduce emissions across the economy. This is done with careful consideration of how these actions will impact the lives of Canadians, including their homes, their jobs, and their daily costs, and how best they can be supported.

Q34. Did the Government of Canada provide all the requested information to the CESD?

• In the Report, the CESD raises concerns around access to information, particularly with respect to the Integrated Climate Lens analysis and evidence to support the projected sectoral contribution for the Oil and Gas sector.
• The Government of Canada provided all requested information to the CESD, with appropriate redactions to respect Cabinet confidence, as required to be in compliance with applicable laws and statutory instruments.
• Cabinet confidence enables Ministers, within a confidential setting, to debate issues vigorously, reconcile different perspectives, participate in and influence deliberations, and collectively reach decisions. Section 39 of the Canada Evidence Act (CEA) constitutes the statutory means for safeguarding that Cabinet confidentiality sets out a regime which prevents the disclosure of information or documents that consist of confidences of the Queen’s Privy Council for Canada.

Q35. How is the Government of Canada ensuring that Canada’s climate action is inclusive?

• The Government of Canada is committed to ensuring that all climate actions are inclusive. This is why efforts were made to ensure that the 2030 Emissions Reduction Plan is inclusive. However, the Government of Canada acknowledges the need for improvement and will continue to explore new ways to make its policies more inclusive.
• The Government of Canada will continue to leverage government-wide decision-based tools, such as the Gender-Based Analysis Plus tool, to analyze the impacts of measures on specific demographics, and to inform the development of future measures. The Government of Canada will also apply such tools to future emissions reduction plans, and related milestones, required by the Canadian Net-Zero Emissions Accountability Act. Government departments will work collaboratively to explore options for developing indicators and for collecting data to better understand the impact of climate measures on certain groups such as marginalized populations.

Inefficient fossil fuel subsidies

Q1. What is being done to stop providing fossil fuel subsidies?

• In 2009, Canada, as a part of the Group of 20 (G20) Leaders, committed to rationalize or phase out inefficient fossil fuel subsidies. The Government then accelerated its commitment to do so from 2025 to 2023.
• Nine tax preferences that supported the fossil fuel sector have been, or are in the process of being, phased out or rationalized.
• On July 24, 2023, the Government released the Inefficient Fossil Fuel Subsidies Government of Canada Self-Review Assessment Framework and Guidelines which fulfilled our commitment to phase out and rationalize inefficient fossil fuel subsidies.
• Canada is the first G20 country to phase out inefficient fossil fuel subsidies ahead of the 2025 deadline and is the first country to release a rigorous analytical guide to increase transparency.
• The Government of Canada is also committed to phasing out public financing of the fossil fuel sector, and will announce an implementation plan by fall 2024.
• In addition to domestic efforts, in December 2022, the Government of Canada published policy guidelines to implement its commitment from COP26 in Glasgow to end new, direct public financing for international unabated fossil fuel investments and projects. These guidelines have been in effect since January 1, 2023, and will ensure that Canada meets – and in some cases exceeds – the ambition outlined at COP26.
• Taken together, these actions will ensure public investments align with the Government of Canada’s domestic and international climate goals.

Q2. What progress has the government made on the G20 commitment?

• The Government has made important progress on the G20 commitment to rationalize and phase out inefficient fossil fuel subsidies. Nine tax preferences supporting the fossil fuel sector have been, or are in the process of being, phased out or rationalized, including:
  • Phase-out of the accelerated capital cost allowance for oil sands (announced in Budget 2007; completed in 2015)
  • Reduction in the deduction rates for intangible capital expenses in oil sands projects to align with rates in conventional oil and gas sector (announced in Budget 2011; completed in 2016)
  • Phase-out of the Atlantic Investment Tax Credit for investments in the oil and gas and mining sectors (announced in Budget 2012; completed in 2017)
  • Reduction in the deduction rate for pre-production intangible mine development expenses to align with rate for the oil and gas sector (announced in Budget 2013; completed in 2018)
  • Phase-out of the accelerated capital cost allowance for mining (announced in Budget 2013; completed in 2021)
  • Allowing the accelerated capital cost allowance for liquefied natural gas facilities to expire as scheduled in 2025 (announced in Budget 2016)
  • Rationalize the tax treatment of expenses for successful oil and gas exploratory drilling (announced in Budget 2017; completed by 2021)
  • Phase out tax preference that allows small oil and gas companies to reclassify certain development expenses as more favorably treated exploration expenses (announced in Budget 2017; completed in 2019)
  • Phase-out of flow-through shares for oil, gas, and coal activities (announced in Budget 2022; to be completed in 2023)
• In July 2023, the Government of Canada released the Inefficient Fossil Fuel Subsidies Government of Canada Self-Review Assessment Framework and Guidelines. The Guidelines apply to all federal departments and agencies, and will be used to prevent the creation of inefficient fossil fuel subsidies in the future. Moving forward, fossil fuel subsidies should only be considered if they meet one or more of the following six criteria:
  1. Enable significant net greenhouse gas emissions reductions in Canada or internationally in alignment with Article 6 of the Paris Agreement.
  2. Support clean energy, clean technology, or renewable energy.
  3. Provide essential energy service to a remote community.
  4. Provide short-term support for emergency response.
  5. Support Indigenous economic participation in fossil fuel activities.
  6. Support abated production processes such as carbon capture, utilization, and storage, or projects that have a credible plan to achieve net-zero emissions by 2030.

Q3. Can you provide the definition of efficient and inefficient fossil fuel subsidies?

• There is no internationally recognized definition of “inefficient fossil fuel subsidies,” so countries can define this term in the context of their national circumstances.
• Under the Inefficient Fossil Fuel Subsidies Government of Canada Self-Review Assessment Framework and Guidelines, the Government has adopted the WTO’s definition of a subsidy where a subsidy is a financial contribution or form of income or price support that confers a benefit to the recipient. Subsidies can be program spending, tax measures, or lending on less than commercial terms. All subsidies that “solely support fossil fuel activities”, or “provide a disproportionate benefit to the fossil fuel sector” are considered fossil fuel subsidies. All measures identified as fossil fuel subsidies are considered “inefficient” unless they meet one or more of the efficiency criteria:
  1. Enable significant net GHG emission reductions in Canada or internationally in alignment with Article 6 of the Paris Agreement;
  2. Support clean energy, clean technology, or renewable energy;
  3. Provide an essential energy service to a remote community;
  4. Provide short-term support for emergency response;
  5. Support Indigenous economic participation in fossil fuel activities;
  6. Support abated production processes, or projects that have a credible plan to achieve net-zero emissions by 2030.

Q4. In terms of reviewing inefficient fossil fuel subsidies, Canada has committed to undergo a peer review process under the G20. When will the government complete the peer review?

• In June 2018, it was announced that Canada and Argentina would partner to perform peer reviews to ensure both countries are on track to phase out inefficient fossil fuel subsidies. The peer review requires Canada to produce a self-review report, which will be reviewed by an international review panel. Canada’s self-review report, as well as a report from the international review panel, will be made public once the peer review process is complete.
• ECCC is working closely with Finance Canada who is leading the peer review process under the G20 commitment. Both departments are working to develop an approach that reflects the feedback received from the Commissioner of Environment and Sustainable Development, targeted and public consultations, and the lessons learned from the six countries that have completed the G20 peer review so far. The process is in its early phase following the implementation of the Inefficient Fossil Fuel Subsidies Government of Canada Self-Review Assessment Framework and Guidelines earlier this year.

Q5. Why would government continue to provide any funding to the fossil fuel sector?

• The fossil fuel sector is a significant part of the Canadian economy. The Government of Canada recognizes that environmental commitments, such as net-zero, do not mean shutting down the oil and gas sector but rather transforming it to become cleaner and more sustainable. As such, it will be an important player in helping Canada achieve net-zero by 2050.

International climate finance

Q1. What are the main objectives of Canada’s climate finance?

• Climate finance is a critical part of Canada’s efforts to support climate mitigation and adaptation action in developing countries in line with the objectives of the Paris Agreement.
• In 2021, Canada doubled its climate finance commitment to $5.3 billion (B) over 5 years to support developing countries to transition to sustainable, low-carbon, climate-resilient, nature-positive and inclusive development.
• To support developing countries in combating the dual crises of climate change and biodiversity loss, a minimum of 20% of $5.3B is being allocated to projects that leverage nature-based climate solutions and projects that contribute to biodiversity co-benefits.
• Canada’s climate finance envelope is comprised of 40% grants and 60% loans, having increased its provision of grants up from 30% under the previous five-year commitment to support improved access by affected communities.
• As part of its $5.3B climate finance commitment, Canada increased its provision of funding towards adaptation to 40% and will double its funding for adaptation from 2019 levels by 2025, in line with the Glasgow Climate Pact. This increase represents more than double the provision of adaptation finance relative to Canada’s previous $2.65B commitment.
• Canada’s climate finance is aligned with our Feminist International Assistance Policy and will continue to support women’s leadership and decision-making in climate action. Canada will ensure that 80% of its climate finance projects integrate gender equality.
• During the five years of the commitment, Canada is focusing its international climate finance on four main thematic areas: clean energy transition and coal phase-out, climate-smart agriculture and food systems, nature-based solutions and biodiversity, and climate governance.
• Canada’s climate finance plays an important role in demonstrating Canada’s commitment to deliver on its part of the collective $100 billion annual climate finance goal through to 2025.

Q2. What results has Canada achieved from its international climate finance?

• To date, Canada’s previous $2.65B climate finance commitment is expected to reduce or avoid over 223.7 megatonnes of greenhouse gas (GHG) emissions and help over 8.04 million (M) people increase their resilience to climate change. The impacts of Canada’s climate finance will continue to fluctuate over time as results of the investments materialize in the long-term.
• Canada’s climate finance has other impacts that are harder to quantify. For example, Canada’s contribution to the National Adaptation Plan (NAP) Global Network has enabled developing countries to build capacity and adopt best practices in developing and implementing NAPs, as well as strengthening gender considerations in NAPs.
• To achieve results, Canada works with partners that have clear accountability frameworks and closely monitors the progress of our support through rigorous performance measurement at the programmatic level.
• Results from Canada’s climate finance investments are published on a regular basis, notably through our Departmental Results Reports, Canada’s National Communications and Biennial Reports to the UNFCCC, the Annual Synthesis Report on the Status of Implementation of the Pan-Canadian Framework, and on our climate finance website.

Q3. Is Canada contributing its fair share of climate finance?

• Yes, Canada recognizes that developing countries are the hardest hit by climate change and that transformational financial investments are needed to help vulnerable communities better address climate change. Canada’s $5.3B climate finance commitment builds on the previous $2.65B commitment (2015-16 to 2020-21) and the $1.2B Fast Start Finance (2010-11 to 2012-13). As such, Canada’s $5.3B commitment is a significant increase compared with previous levels and continued progression towards meeting the collective goal of U.S. $100 billion per year through 2025.
• Canada’s total climate finance contribution goes much further than its core commitment. It includes climate finance mobilized from a variety of sources beyond Canada’s climate finance pledge such as private finance mobilized through blended finance, additional international assistance with a climate component, core contributions to multilateral development banks, and climate relevant financing by Export Development Canada and FinDev Canada. Canada has provided and mobilized over $6.8 billion in climate finance from all sources from 2015-2021, which far exceeds the baseline amount pledged through its public climate finance commitment.

Q4. Are we on track to meet the collective $100 billion goal?

• Canada has been steadfast in its efforts to meet the $100 billion collective goal and has been working with Germany to build trust and increase ambition among contributor countries.
• Based on data from the Organization for Economic Cooperation and Development (OECD), climate finance provided and mobilized towards the $100 billion goal surpassed earlier projections in 2021 and 2022. The OECD Secretary General indicated that the goal was likely met in 2022 and contributors are confident that it will be met in 2023 at the latest.
• While we are confident the goal has been met, data on climate finance delivered in 2023 will not be available until 2025 due to data requirements and reporting processes in place. Providing sufficient time for data on climate finance to be collected, compiled, and reported by contributors and subsequently assessed and analyzed by the Organization for Economic Cooperation and Development (OECD) is an integral part of efforts to ensure transparency and accountability.

Q5. What is Canada doing to support Small Island Developing States (SIDS)?

• One of the key objectives of Canada’s climate finance is to support the climate resilience of the poorest and most vulnerable countries, including SIDS.
• In addition to scaling up support for adaptation finance in its current $5.3B commitment, Canada is working to bolster efforts to address the barriers to accessing climate finance faced by SIDS, which compound the issue of vulnerability.
  • For example, Canada supported the creation of the Climate Finance Access Network (CFAN) initiative that supports developing countries build their capacity to structure and secure finance for priority climate mitigation and adaptation investments. Canada is providing a renewed contribution of $5.25M in funding to support CFAN expand its work with climate-vulnerable countries. Canada is also providing $7.5M in bilateral support to Caribbean and Pacific Island SIDS to assist in the implementation and achievement of nationally determined contributions (NDCs) through methane reductions.

Q6. How is Canada addressing the issue of loss and damage?

• Canada is taking concrete measures to address loss and damage in developing countries and to build resilience to safeguard future generations. Loss and damage can result from adverse climate events and can, for example, include damage to infrastructure due to hurricanes or the loss of territory due to sea-level rise to which SIDS are particularly vulnerable.
• Previous measures to address loss and damage include Canada’s $10 million contributions to Climate Risk Early Warning Systems (CREWS), and $1 million contribution to the Systematic Observation Funding Facility (SOFF), to help build early warning systems in developing countries to strengthen the resilience of the most vulnerable.
• At COP28, Canada announced a $16 million contribution to the start-up cost of a global fund to address loss and damage. This contribution will support the fund as it starts to provide vulnerable countries and communities with the resources they need to respond to the worst impacts of climate change.

Q7. How much of the $5.3B climate finance envelope is ECCC implementing?

• Over 5 years, ECCC will implement $160M in grants and contributions in 3 thematic areas: Clean Energy and Coal Phase-Out ($50M), Nature-based Solutions ($15M) and Climate Governance ($90M). An Emerging Priority Fund sets aside $5M to retain flexibility to support Canada’s international climate change priorities and allow for responsive and opportunity-driven participation in key initiatives, in particular international events such as the G7/G20 and UNFCCC conferences.
• ECCC’s funding will support developing countries’ transition to clean energy primarily by phasing out coal-fired electricity and promoting equitable access to reliable and cost-effective clean energy solutions and energy efficient technologies, complementing Canada’s leadership through the Powering Past Coal Alliance.
• The funding will also support initiatives that catalyze the private sector’s role in the blue economy, coastal resilience and coral reef conservation to help advance ocean health, reduce vulnerability and build resilience in the most vulnerable coastal regions and communities.
• ECCC will also support projects that strengthen the enabling environments for effective climate governance in developing countries at the global, national and subnational levels.
• For 2023-24, ECCC is allocating a total of $45M in grants and contributions, building on $28M in 2022-23. This includes over $18M in support for clean energy and coal phase-out, $2.5M in funding for nature-based solutions and biodiversity, over $23M for climate governance, and $1.25M allocated for the emerging priorities fund.

Investment tax credits

Q1. What are the Clean Investment Tax Credits?

• The Government has announced a number of tax incentives to support the development and deployment of clean technologies, attract new investment, create good middle class jobs and build Canada’s clean economy.
• This regime of clear and predictable investment tax credits will be broadly accessible to eligible organizations and is accompanied by provisions to ensure that workers see the benefits of a clean economy.
• There are five Clean Investment Tax Credits (ITC):
  1. a 15% Clean Electricity ITC for eligible investments in technologies that are required for the generation and storage of clean electricity and its transmission between provinces and territories, which is available to taxable and tax-exempt entities.
  2. a Clean Technology Manufacturing ITC to cover 30% of costs in new machinery and equipment used to manufacture or process clean technologies and extract, process or recycle critical minerals.
  3. a Clean Hydrogen ITC to support between 15 and 40% of eligible projects’ costs to produce clean hydrogen.
  4. a Carbon Capture, Utilization, and Storage (CCUS) ITC between 37.5 to 60% for capital invested in CCUS projects including capture, transportation and storage equipment, with the highest rate for direct air capture.
  5. a Clean Technology ITC of 30% for business investments in certain electricity generation equipment, stationary electricity storage, low-carbon heating, and non-road zero-emission vehicles and related charging and refueling infrastructure.

Q2. What is the value of the ITCs?

• The Clean Investment Tax Credits are expected to reach an overall value of over $60 billion over the coming ten years, in terms of foregone tax revenue.

Q3. What will the ITCs accomplish?

• The ITCs will set a framework for boosting overall investment, while leaving the private sector to determine how to invest based on market signals.
• They will support green innovation in the private sector, grow our economy, and create or secure thousands of good middle-class jobs.
• They will help stimulate Canada’s transition to net-zero by mobilizing additional investment in clean growth projects such as clean electricity, hydrogen, clean technology manufacturing, electric vehicles, and batteries.

Q4. Detailed: Clean Electricity Investment Tax Credit

• Budget 2023 announced the Government’s intention to introduce a Clean Electricity Investment Tax Credit.
• To support and accelerate clean electricity investment, the Clean Electricity ITC will be a 15% refundable tax credit for eligible investments in non-emitting electricity generation systems, certain abated natural gas electricity-fired electricity generation, stationary electricity storage systems that do not use fossil fuels in operation, and equipment for the transmission of electricity between provinces and territories.
• Both new projects and the refurbishment of existing facilities will be eligible for the Clean Electricity ITC.
• Taxable and non-taxable entities such as Crown corporations and publicly owned utilities, corporations owned by Indigenous communities, and pension funds, would be eligible for the Clean Electricity Investment Tax Credit.
• Finance Canada is developing the design and implementation details of the tax credit. They will be engaging with provinces, territories, and other relevant parties in doing so.
• Timelines:
  • The government is targeting to introduce legislation in Parliament in fall 2024.
  • Enacting legislation and regulations will need to receive royal assent before the tax credit could be claimed.

Q5. Detailed: Clean Technology Manufacturing Investment Tax Credit

• The Clean Technology Manufacturing ITC will be a refundable tax credit equal to 30 per cent of the cost of investments in machinery and equipment used to manufacture or process key clean technologies, and extract, process, or recycle certain critical minerals essential to clean technology supply chains.
• Finance Canada is currently developing specific design details for the tax credit.
• Timelines:
  • The 2023 Fall Economic Statement announced that draft legislation will be released for public comment and consultations before the end of fall 2023.
  • The legislation and regulations will need to receive royal assent before businesses can claim the tax credit.

Q6. Clean Hydrogen Investment Tax Credit (CHITC)

• The CHITC was announced in Budget 2023. The credit will apply to both electrolysis projects (i.e., ‘Green Hydrogen’) and natural gas reforming projects, if emissions are abated with carbon capture utilization and storage or CCUS (i.e., ‘Blue Hydrogen’).
• CHITC levels of support will vary from 15% to 40% of eligible project costs, depending on the life cycle emissions of the hydrogen produced. The cleanest projects, where carbon intensity is less than 0.75kgCO2 /kgH2, will be eligible for the highest tax credit rate.
• Certain labour requirements would have to be met for proponents to access their credit in full.
• ECCC’s Fuel Life Cycle Assessment (LCA) Model will be used to calculate the life cycle carbon intensity of hydrogen under the CHITC.
• The CHITC can also be applied to equipment for converting clean hydrogen to ammonia, at a reduced rate of 15%.
• The credit will apply to both electrolysis projects and natural gas reforming projects, if emissions are abated with carbon capture utilization and storage. Going forward, Canada will continue to review eligibility for other production pathways.
• The CHITC is expected to provide $17.7 billion in tax incentive support to the sector by 2035 (based on expected use of the credit and does not represent a funding envelope or target).
• Timelines:
  • The legislation will need to receive royal assent before taxpayers can claim the tax credit.
  • Once legislated, the investment tax credit will be retroactively available to eligible property acquired and available for use on or after March 28, 2023.
  • The government is targeting to introduce legislation in Parliament in early 2024.

Q7. Detailed: Carbon Capture, Utilization, and Storage Investment Tax Credit (CCUS-ITC)

• The CCUS-ITC was originally proposed in Budget 2021. Budget 2022 announced specific design details of the CCUS-ITC, and further enhancements were announced in Budget 2023.
• The CCUS-ITC would be available to CCUS projects that permanently store captured CO2 in dedicated geological storage or in concrete, but not for enhanced oil recovery.
• The CCUS-ITC will accelerate private investment, drive down costs and encouraging widespread market adoption of CCUS technologies.
• From 2022 through 2030, the CCUS-ITC rates would be set at:
  • 60% for investment in equipment to capture CO2 in direct air capture (DAC) projects;
  • 50% for investment in equipment to capture CO2 in other CCUS projects; and
  • 37.5% for investment in equipment for transportation, storage and use.
• After 2030, the CCUS-ITC rates will be reduced by half, and will not be available after 2040.
• Alberta and Saskatchewan were pre-approved for access to the CCUS-ITC, and British Columbia has also now been added as an eligible jurisdiction. Other provinces and territories will be added when they have established internal regulatory regimes to ensure the safe and permanent storage of captured CO2.
• Timelines:
  • In August 2022, an initial consultation on draft legislation was launched, which included details on design features.
  • In August 2023, a full package of legislative proposals was released for consultation. This consultation closed on September 8, 2023.
  • Enacting legislation was tabled in Parliament on November 30, 2023, in Bill C-59.
  • The legislation and regulations will need to receive royal assent before taxpayers can claim the tax credit. Once legislated, the tax credit will be retroactively available to businesses that have incurred eligible CCUS expenses, starting in 2022.

Q8. Detailed: Clean Technology Investment Tax Credit

• The Clean Technology Investment Tax Credit was originally announced in the 2022 Fall Economic Statement, with additional information shared in Budget 2023.
• Through this credit, investments in clean electricity generation and storage, low carbon heating and industrial zero-emission vehicles, including related charging or refueling equipment, and certain geothermal energy systems will be eligible for a 30% tax credit.
• Timelines:
  • In August 2023, a package of legislative proposals was released for consultation. This consultation closed on September 8.
  • Enacting legislation was tabled in Parliament on November 30, 2023, in Bill C-59.
  • Once legislated, the tax credit will be retroactively available to businesses that have incurred eligible expenses, as of March 28, 2023.

Low Carbon Economy Fund

Q1. What is the Low Carbon Economy Fund (LCEF)?

• The Low Carbon Economy Fund is an important part of Canada’s clean growth and climate action plans. It supports projects that help to reduce Canada’s greenhouse gas (GHG) emissions, generate clean growth, build resilient communities, and create good jobs for Canadians.
• The Low Carbon Economy Fund was first funded in Budget 2017 in support of the Pan Canadian Framework on Clean Growth and Climate Change. The up to $2 billion of federal funding announced in 2017 has and continues to leverage investments in projects that generate clean growth, reduce greenhouse gas emissions, and contribute towards Canada’s climate targets.
• The original Low Carbon Economy Fund had two parts: the Low Carbon Economy Leadership Fund, providing up to $1.4 billion to provinces and territories to deliver on their commitments to reduce carbon pollution and contribute to meeting Canada’s 2030 climate targets; and the Low Carbon Economy Challenge including both Champions and Partnerships streams, leveraging investments in projects that reduce carbon pollution.
• Through Canada’s 2030 Emissions Reduction Plan and Budget 2022, the Government of Canada announced it committed additional funding to the Low Carbon Economy Fund. This would extend the Low Carbon Economy Fund through to 2028-2029.
• There are four parts to the recapitalized Low Carbon Economy Fund:
  1. The recapitalized Leadership Fund will continue to provide support to stimulate provincial and territorial climate action, with a focus on deploying proven low-carbon technologies that will result in GHG emissions reductions in 2030 and align with Canada’s net-zero by 2050 goals.
  2. The recapitalized Challenge Fund will continue to support the low-carbon economy transition of provinces and territories, municipalities, universities/colleges, schools, hospitals (MUSH), businesses of all sizes, not-for-profit organizations, and Indigenous governments, communities and organizations. Through open and regular calls for proposals, the recapitalized Challenge Fund will support the deployment of proven, low-carbon technologies that will result in GHG emissions reductions in 2030, align with Canada’s net-zero by 2050 goals, and generate economic benefits such as job creation.
  3. Dedicated funding for climate action by Indigenous peoples, with a new Indigenous Leadership Fund. This stream will target clean energy and energy efficiency projects led by First Nations, Inuit, and Métis communities and organizations connected to the North American grid, as well as support the transition to cleaner heating options in remote Indigenous communities. As announced in Budget 2022, $32.2 million will be directed to the Atlin Hydro Expansion project in northern British Columbia, which will provide clean electricity to the Yukon and help reduce GHG emissions.
  4. A new Implementation Readiness Fund, which will provide funding for activities and investments that increase eligible recipients’ readiness to deploy GHG emissions reduction projects. Eligible recipients will be lower capacity entities and organizations that would benefit from support to get projects “off the ground” through funding for feasibility studies, planning, workforce development and capacity building, among other eligible activities.

Q2. How much funding will be available for future intakes under LCEF?

• As a part of the 2030 Emissions Reduction Plan, Canada’s Next Steps for Clean Air and a Strong Economy, the Government of Canada is investing in further climate action.
• As announced in the 2030 Emissions Reduction Plan and Budget 2022, the Government of Canada will be empowering communities to take climate action by expanding the Low Carbon Economy Fund.
• As a result of recent government decisions, some budget reductions will affect funding available under LCEF. This includes a $500 million redirected from the LCEF to Natural Resources Canada to support the expansion of programs to support the deployment of heat pumps. Further details on the impact of decisions on LCEF will be available in due course.
• The renewed Low Carbon Economy Fund will support climate action by Indigenous peoples with a new $180 million Indigenous Leadership Fund. This will support clean energy and energy efficiency projects led by First Nations, Inuit, and Métis communities and organizations.

Q3. How will Indigenous communities and organizations benefit from the new Indigenous Leadership Fund?

• With the creation of the new Indigenous Leadership Fund, there will be opportunities to better support Indigenous-led projects that will reduce GHG emissions, while reducing the administrative burden for applicants.
• The new stream will foster Indigenous climate change mitigation leadership including through the deployment of renewable energy projects and energy efficiency improvements across Canada. Additionally, the new Indigenous Leadership Fund has the potential to deliver numerous co-benefits ranging from environmental protection and economic prosperity to the advancement of Indigenous climate priorities and self-determination.
• Environment and Climate Change Canada continues to work with Indigenous partners to support Indigenous-led emissions reduction projects in Indigenous communities. This includes applying a distinctions-based, collaborative approach to designing the framework and implementation of the new Indigenous Leadership Fund.

Canada’s National Adaptation Strategy

Q1. What is the National Adaptation Strategy and why do we need one?

• Climate change is affecting the safety of people across Canada, our food supply, and quality of life. Canadians understand this reality and the need to take action. Many Canadians have experienced extreme events such as Canada’s extreme 2023 fire season; Hurricane Fiona, which battered Atlantic Provinces and Eastern Quebec in September 2022; droughts and crop losses in the Prairies in 2021; and catastrophic flooding in Ontario and Quebec in 2019.
• Canada understands that the climate has changed and will continue to change affecting all aspects of society. Preparing properly and adapting accordingly will make Canadians and their communities safer and healthier, shield our economy from shocks, and help avoid some of the steep and rising costs associated with extreme weather.
• We must keep fighting climate change, but we must also be better prepared for the changes we are already seeing and adapt to those changes that are here to stay.
• There is a strong foundation of adaptation actions in Canada, but all segments of society need to accelerate action to match the magnitude of the climate threat. Everyone in Canada can work better together and take coordinated and more ambitious action.
• To help all aspects of society to work together, the Government of Canada developed a National Adaptation Strategy working with provincial, territorial and municipal governments, Indigenous peoples and other key partners.
• The Strategy establishes a shared vision for climate resilience in Canada, identifies key priorities for increased collaboration and establishes a framework for measuring progress at the national level. It unites governments in Canada through shared priorities, cohesive action, and a whole-of-Canada approach to reducing climate risks and building climate-resilient communities.

Q2. How was the Strategy developed?

• Canada’s first National Adaptation Strategy was released in June 2023. It reflects two years of extensive engagement with provincial, territorial, and municipal governments; First Nations, Inuit, and Métis Nation representatives; key experts and stakeholders; and people from across Canada.
• This engagement included: input from nearly 120 experts and more than 800 written submissions from diverse stakeholders; more than 20 workshops and roundtables; a national symposium with 1,400 participants; and 16,000 contributions from the public received through the public engagement platform.
• The Strategy represents the first time that Canada has assembled adaptation objectives and targets into a single framework joining many other national and subnational jurisdictions. It will help guide the efforts of all areas of society on adaptation.
• The Strategy builds upon the Pan-Canadian Framework on Clean Growth and Climate Change and complements adaptation strategies led by provinces, territories, local governments, Indigenous peoples, and others.

Q3. What will the Strategy accomplish?

• The National Adaptation Strategy is a whole-of-society plan for climate change adaptation action. It outlines how the Canadian economy and society can be more resilient and prepared for the impacts of climate change. The Strategy will help us address the urgent impacts that people in Canada are already experiencing, and set in motion the transformations we need in years to come.
• The National Adaptation Strategy sets ambitious goals and near-term objectives in five systems that are key to building climate resilience across society:
  1. Reducing the impacts of climate-related disasters;
  2. Improving health and overall well-being;
  3. Protecting and restoring nature and biodiversity;
  4. Building and maintaining resilient infrastructure; and,
  5. Supporting the economy and workers.
• The Strategy unites governments in Canada through shared priorities, cohesive action, and a whole-of-society approach. It also introduces 25 targets to mobilize and align whole-of-society action in the short-term (e.g. 2024-2030).
• The federal government has a role to play in building resilient communities across Canada. The Government of Canada Adaptation Action Plan was released alongside the Strategy as the federal government’s contribution to implementation of the Strategy. It lays out how the Government of Canada is taking strategic and targeted action to help meet the Strategy’s goals and objectives.
• Through the Action Plan, the Government of Canada is delivering a suite of programming to address the climate risks that matter most to Canadians. Recognizing that climate change impacts are highly regional in nature, many of the actions under the plan are designed to be flexible and support regions, communities and businesses in addressing their individual needs and priorities.
• The Action Plan includes over 70 federal actions across 22 federal departments and agencies illustrating the depth and breadth of action being taken. Since 2015, the Government of Canada has invested more than $6.5 billion in adaptation. This investment supports actions targeting the five key systems identified in the National Adaptation Strategy: Disaster Resilience; Health and Well-being; Nature and Biodiversity; Infrastructure; and Economy and Workers.
• The government will continue to invest in adaptation actions in the coming years, guided by the unifying vision of the National Adaptation Strategy.
• Taken together, the National Adaptation Strategy and Government of Canada Adaptation Action Plan represent a comprehensive approach to prepare for climate change, build safer and climate resilient communities, create jobs, and support a stronger economy.

National Inventory Report

Q1. What are the key highlights from the 2023 National Inventory Report?

• Canada’s greenhouse gas emissions were 670 Mt of CO2 equivalent in 2021. This is an increase of 12 Mt from 2020, the first year of the pandemic, but 53 Mt below 2019 pre-pandemic emission levels.
• Noteworthy changes in emissions between 2020 and 2021 came from:
  • Emissions from Transportation increased by 9 Mt largely due to more travelling.
  • Emissions from Oil and Gas extraction increased by 4 Mt.
  • Emissions from residential fuel combustion decreased by 1.5 Mt, driven by a warmer winter.
  • Emissions from agricultural soils decreased 1.4 Mt mainly due to a sharp decrease in crop production following drought conditions on the prairies.
  • Emissions from public electricity and heat production also decreased by 1.1 Mt due to further reductions in coal consumption.
• The emissions data for 2021 confirms Canada’s economy continues to decouple from its GHG emissions. The emissions intensity for the entire economy has declined by 42% since 1990.

Q2. Are GHG emissions data available by industrial facility in Canada?

• The Greenhouse Gas Reporting Program collects information on GHG emissions annually from over 1700 facilities across Canada under section 46 of the Canadian Environmental Protection Act. This data is complementary to NIR data, and is available online (Canada.ca/GHG-reporting).

Q3. ls Canada improving methane emissions estimates in future editions of the NIR?

• Continuous improvements to quantify and report Canada’s emissions are essential to ensure Canada’s inventory estimates are based on the best available science and data. This includes regularly engaging with experts and stakeholders to identify knowledge gaps and prioritize input to the scientific process that underlies GHG estimation and reporting.
• In the 2023 edition of the NIR, significant improvements and revisions were made to methodologies for landfills as well as fugitive methane from oil and gas. Additional improvements are expected in a future edition of the NIR to incorporate atmospheric measurements of methane from upstream oil and gas facilities.

Q4. How is Canada consulting with Province and Territories on emissions?

• The National Inventory Report is one way federal, provincial and territorial governments take annual stock of emissions reduction progress of the various federal, provincial, territories climate plans.
• Improvements to Canada’s National GHG Inventory Report (NIR) often results in revisions to historical GHG estimates and changes to provincial and territorial GHG estimates. The commitment to quality and evidence-based information includes collaborating with stakeholders to reconcile national, provincial and territorial data towards nationally-consistent data sets.
• As part of its regular consultation process, Environment and Climate Change Canada (ECCC) shares preliminary GHG emissions data with provinces and territories. ECCC reviews and addresses any comments received to the extent possible prior to the NIR’s publishing.

Net Zero Accelerator Initiative

Q1. What is the Net Zero Accelerator Initiative?

• The Net Zero Accelerator Initiative (NZA) will provide up to $8 billion in funding for projects that will support innovation, enable Canada to reduce its domestic greenhouse gas (GHG) emissions by 40-45% by 2030 and achieve net zero by 2050, as well as unlock pathways to a healthy and productive decarbonized economy.
• The initiative will support projects that promote the decarbonization of large emitters, accelerate industrial transformation, and advance clean technology development and Canada’s battery ecosystem.
• The initiative will help Canadian businesses seize new opportunities as the world builds a greener global economy.

Q2. What role does Environment and Climate Change Canada have in the initiative?

• I, as the Minister of Environment and Climate Change, support the Minister of Innovation, Science and Industry in the implementation of the initiative including by providing advice and perspective in the context of strategic investments to support Canada’s climate plans.
• As part of enhanced governance efforts, Environment and Climate Change Canada works collaboratively to help ensure that investments drive industrial transition and significant reductions in greenhouse gas emissions. The scale of the investments needs to be consistent with achieving Canada’s climate goals and ability to meaningfully transform Canadian industry to lead and compete in a net-zero emissions future.

Q3. Can you give an example of the types of investments that are being made?

• In July 2021, the Prime Minister announced an important investment. Algoma Steel Inc. will receive up to $200 million from the Net-Zero Accelerator Initiative to retrofit their operations and phase out coal-fired steelmaking processes at their facility in Sault Ste. Marie, Ontario.
• This funding will enable the company to purchase state-of-the-art equipment to support its transition to Electric-Arc Furnace production. This electricity-based process is expected to cut GHG emissions by more than 3 million tonnes per year by 2030 making a meaningful contribution to achieving Canada’s climate goals.
• In July 2021, the Minister of Innovation, Science and Industry announced a $25 million investment in Svante Inc., to support its project to develop and commercialize its novel low-cost carbon capture technology that will prevent significant release of CO₂ into the atmosphere from industrial sites like cement and blue hydrogen plants. This innovative industrial point-source carbon capture technology will collect CO2, concentrate it and release it for safe storage or industrial use. Svante is planning to manufacture systems with the ability to capture up to 2,000 tonnes of CO₂ per day, depending on the application. This technology is one of the tools that will help achieve Canada’s goal of net-zero by 2050, especially for heavy emitting industries that continue to produce goods Canadians use every day.
• In November 2022, the Government of Canada announced that ten projects under the Call to Action for high-emitting sectors were selected to move forward to the due diligence review process. These companies were assessed as promising early movers that would significantly reduce emissions at existing facilities and contribute to the decarbonization of their industry sectors, including electricity generation, hydrogen production and iron for the steel industry. Based on the companies’ own estimates, these projects could create a reduction in GHG emissions of up to 10 million tonnes per year by the year 2030.
• The companies include:
  • Capital Power Corporation
  • ENMAX (Shepard Energy Centre)
  • Federated Co-operatives Limited (FCL)
  • Strathcona Resources Ltd.
  • Lafarge Canada Inc.
  • ArcelorMittal Mining Canada G.P.
  • Suncor ATCO Heartland Hydrogen Hub
  • Alberta Power (2000) Ltd. (Heartland Generation)
  • Stelco Inc.
  • Dow Chemical Canada ULC

Methane emissions reductions

Q1. Why is methane important? Why is it necessary to have a strategy focused specifically on methane rather than all greenhouse gases?

• Methane is a potent greenhouse gas and a short-lived climate pollutant with a global warming potential of more than 25 times greater than carbon dioxide over 100 years, and 86 times greater than carbon dioxide over a 20-year period.
• Methane is responsible for about 30% of the global rise in temperature and half a million premature deaths globally each year. The IPCC has made it clear that there is no pathway to limiting warming to 1.5 degrees without strong, rapid, and sustained reductions in methane emissions.
• Unlike other GHGs, methane is also an energy source so there is economic value from capturing methane emissions or preventing methane leaks.
• Natural gas is composed almost entirely of methane, and is a valuable resource used by Canadians to heat their homes and power factories. However, a significant amount of the natural gas extracted by the oil and gas industry is wasted due to leaks and intentional venting. In addition to oil and gas, landfills and agriculture are Canada’s other major sources of methane emissions.

Q2. What is the government doing or planning to do about methane emissions?

• At the November 2021 UN Climate Summit (COP26), Canada joined the Global Methane Pledge, along with the United States, the European Union and over 100 other countries. The Pledge aims to reduce global anthropogenic methane emissions economy-wide by at least 30% below 2020 levels by 2030.
• In September 2022, Canada released its methane strategy which outlines measures to reduce methane emissions across the economy, consistent with the Global Methane Pledge.
• The strategy outlines plans for addressing methane from the three sectors that account for over 95% of Canada’s anthropogenic methane emissions: oil and gas (40%), agriculture (29%), and landfills (27%).
• With the measures outlined in Canada’s Methane Strategy, Canada will reduce domestic methane emissions by more than 35 per cent by 2030, compared to 2020 levels. This will exceed the Global Methane Pledge target of 30 per cent that Canada signed on to in 2021.
• In 2016, Canada set a target of reducing methane emissions from the oil and gas sector by 40-45 per cent below 2012 levels by 2025 and has had regulations in place since 2018 to help achieve it.
• As part of the 2020 COVID-19 Economic Response Plan, the Government launched the $750 million Emissions Reduction Fund to support emission reduction efforts.
• Responding to the global imperative for further cuts, Canada has committed to reduce oil and gas methane emissions by 75% below 2012 levels by 2030.
• On December 4, at COP 28, the publication of draft strengthened oil and gas methane regulations was announced to meet this commitment. The draft regulations will achieve significant methane emission reductions from new and existing upstream oil and gas facilities by expanding the scope of the existing regulations, introducing a focus on maximizing emission reductions, removing some exclusions, and ensuring all practical actions to lower emissions that are considered both achievable and cost effective are in place by 2030.
• As part of our ambitious methane abatement plan, a $30 million investment was announced to establish a Methane Centre of Excellence in the near term, which will improve our understanding and reporting of methane emissions, with a focus on collaborative initiatives to support data and measurement.
• Regulations are also being developed to increase the number of landfills that collect and treat methane. Consultations on these regulations have begun with a discussion paper in January 2022.
• Canadian farmers and industry partners who are taking action to reduce emissions, sequester carbon and make their operations more sustainable, productive, and competitive will also be supported.

Q3. What is the status of the government’s commitment to develop an economy-wide methane plan as per the Environment Minister’s mandate letter?

• In September 2022, Canada released its strategy to reduce methane emissions across the broader Canadian economy, consistent with the Global Methane Pledge.
• With the measures outlined in the Strategy, Canada will reduce domestic methane emissions by more than 35 per cent by 2030 compared to 2020 levels. This will exceed the Global Methane Pledge target of 30 per cent that Canada signed on to in 2021.
• It focuses on the three sectors that account for over 95% of Canada’s anthropogenic methane emissions: oil and gas (40%), agriculture (29%), and landfills/waste (27%).

Q4. Is the Global Methane Pledge target of reducing methane economy-wide by 30% by 2030 achievable? How are you going to achieve that target?

• In September 2022, Canada released its strategy to reduce methane emissions across the broader Canadian economy, consistent with the Global Methane Pledge.
• With the measures outlined in Canada’s Methane Strategy, Canada will reduce domestic methane emissions by more than 35 per cent by 2030, compared to 2020 levels. This will exceed the Global Methane Pledge target of 30 per cent that Canada signed on to in 2021.
• Our government’s progress on addressing oil and gas methane shows that significant methane reductions are achievable in Canada.
• In 2016, Canada set a target of reducing methane emissions from the oil and gas sector by 40–45 per cent below 2012 levels by 2025, and in 2018, we put regulations in place to help achieve it.
• Canada has now committed to reduce oil and gas methane emissions by 75% below 2012 levels by 2030.
• On December 4, at COP 28, the publication of the draft strengthened oil and gas methane regulations was announced to meet this commitment.
• As part of the announcement, the ambitious commitments of numerous large oil and gas companies were highlighted to reducing methane emissions by 2030, some to near-zero and others to 80 to 90 per cent. The commitments by British Columbia and Alberta were also noted to explore ways to achieve a similar target. These commitments emphasize that Canada’s oil and gas methane reduction target is ambitious but achievable.
• Planned to develop regulations to increase the number of landfills that collect and treat methane. Consultations began on landfill methane regulations by publishing a discussion paper in January 2022.
• By going further on oil and gas methane reductions, introducing new methane regulations for landfill methane, and exploring opportunities to address methane from agriculture, we are confident that we can achieve economy-wide methane reductions consistent with the Global Methane Pledge.

Q5. Are the government’s methane plans going to impact farmers?

• Our government is exploring ways to reduce methane emissions from all of the top-emitting sectors including agriculture.
• We will be consulting with farmers and the agricultural industry about the best opportunities and approaches for reducing methane from agriculture.
• Our government is committed to supporting Canadian farmers and industry partners who are taking action to reduce emissions, sequester carbon and make their operations more sustainable, productive, and competitive.

Thermal coal export ban

Q1. Why is the government ending exports of thermal coal?

• The Government of Canada has long recognized that unabated coal power-generation is the most carbon-intensive source of electricity and that addressing this source of emissions is critical in the fight against climate change. To address this important carbon source, Canada has shown leadership over the past few years both domestically and internationally.
• In November 2021, at the UN Climate Change Conference (COP26), the Government of Canada announced its intention to ban thermal coal exports by 2030. This makes Canada the first country in the world to make this commitment to address climate change.
• The impacts of climate change are already being seen, with the most severe impacts happening in the developing world. Ending emissions from coal power generation is one of the single most important steps the world must take in the fight against climate change. It will also lead to cleaner air and healthier communities for hundreds of millions of people around the world.
• Moving away from exporting thermal coal also makes good economic sense as the falling costs of renewables and low-carbon energy are providing more clean energy options in many countries.

Q2. What is the government doing to end exports of thermal coal?

• The Government of Canada is exploring options for implementing an export ban on thermal coal. This includes an assessment of socio-economic and environmental impacts, alignment with other policies and potential impacts on trade. An update on the next steps will be provided following assessment of the options.

Zero-emission vehicles

Q1. What is the role of zero-emission vehicles in GHG emissions reduction?

• Canada is taking action across all sectors to meet its commitment under the Paris Agreement to reduce GHG emissions by 40% to 45% below 2005 levels by 2030 and to reach net-zero emissions by 2050.
• Recognizing that the transportation sector accounts for about 28% of Canada’s GHG emissions, the Government is taking multiple actions to reduce these emissions including expanding the number of zero-emission vehicles (ZEVs) on Canadian roads.
• We have published proposed Regulations to require that at least 20% of light-duty vehicle sales are zero emission by 2026, at least 60% by 2030 and 100% by 2035. We plan to publish the final regulations shortly.
• We are going to introduce similar requirements for selected classes of medium- and heavy-duty vehicles next year.
• We will also update our emission standards for light- and heavy-duty vehicles to align with the forthcoming U.S. EPA standards.
• The Government is also investing in key areas such as consumer rebates for ZEV purchases, consumer education and awareness, expanding charging infrastructure, etc.

Q2. Is Canada’s ZEV target too ambitious?

• Canada is not alone in setting ambitious ZEV targets. Quebec, B.C., California and at least 15 U.S. States have similar ZEV mandates.
• We are complementing the sales requirements with measures to make ZEVs more affordable, significantly expand charging infrastructure, and lead by example via federal procurement rules.

Q3. Your Department recently completed consultations. What are the views of industry, stakeholders to the Government’s ZEV targets?

• The 75-day consultation period for the new regulations closed on March 16, 2023. The Department received 215 unique comments.
• ENGOs think our ZEV targets could be even more ambitious. Traditional automakers are opposed to ZEV requirements and want the Government to rely on continued alignment of emission standards with the U.S.
• There is widespread support for Government to continue to provide purchase incentives and charging infrastructure.
• The proposed federal regulations do not have any interaction with provincial programs.

Q4. How does Canada compare to other countries in terms of ambition?

• The Netherlands, Sweden and Denmark have a target of 100% of light-duty vehicle sales to be ZEVs by 2030. Norway has committed to get there by 2025. Quebec and British Columbia in Canada, the UK, Japan, and Thailand, as well as California and other states that comprise up to 40% of the U.S. market have committed to 100% light-duty ZEVs by 2035. China is pursuing a 25% by 2025 ZEV sales target, and the European Union is regulating GHG performance standards to achieve 100% ZEV sales by 2035.
• Since Glasgow in 2021, there have been numerous announcements and commitments to transitioning the on-road fleet to zero-emission vehicles. These were supported by Canada – and many other countries, governments, and businesses.
  • The Breakthrough Agenda on Road Transport aims for ZEVs to be the new normal, and to be accessible, affordable, and sustainable in all regions by 2030.
  • During the Transport Day Declaration in 2021, governments, businesses, and others committed to work towards all sales of new cars and vans being zero emission globally by 2040, and no later than 2035 in leading markets, and Canada joined the Accelerating to Zero Coalition (A2Z) Coalition at COP27.
  • For heavy-duty vehicles, under the Global Drive to Zero MoU, leading countries committed to working together to enable 100% zero-emission new truck and bus sales by 2040 with an interim goal of 30% zero-emission vehicle sales by 2030.

Q5. How is Canada going to support the existing on-road medium and heavy-duty vehicle fleet?

• Minister Wilkinson’s mandate letter includes a requirement to develop a plan for making investments to retrofit large trucks currently on the road, and supporting the production, distribution, and use of clean fuels, including low or zero carbon hydrogen.
• Canada is not alone in setting ambitious transportation decarbonization targets. Under the Drive to Zero MoU, leading countries committed to working together to enable 100% zero-emission new truck and bus sales by 2040 with an interim goal of 30% zero-emission vehicle sales by 2030.
• Since announcing the federal ZEV sales targets, our departments have held a series of engagement and consultation sessions with the vehicle manufacturing industry, the broader private sector, provinces, and territories, as well as the freight sector, to better understand their concerns and needs.

Q6. How are GHGs from passenger automobiles and light trucks currently regulated?

• GHGs from new passenger automobiles and light trucks are regulated federally, with progressively more stringent GHG emission standards over the 2011 to 2026 model years that are aligned with the standards in the U.S.
• The U.S. has indicated its intent to publish more stringent GHG emission standards for post-2026 vehicles with an initial proposal released in spring 2023. Canada will align our regulations with these new U.S. standards.
• Heavy-duty vehicles are regulated under separate regulations. These also set progressively more stringent GHG emission standards for the various types of HDVs.

Q7. What ZEV-related investments were included in Budget 2022 and the 2022 Fall Economic Update?

• In support of Canada’s LDV and MHDV ZEV targets, Budget 2022 is making several significant investments:
  • $1.7 billion (3 years) to extend the iZEV program until March 2025 (TC).
  • $500 million (from existing) in large-scale urban and commercial ZEV charging and refuelling infrastructure (CIB).
  • $400 million (5 years) for the Zero-Emission Vehicle Infrastructure Program (ZEVIP) to fund the deployment of ZEV charging infrastructure in sub-urban and remote communities (NRCan).
  • $2.2 million (5 years) to renew the Greening Government Operations Fleet Program (NRCan).
  • $547.5 million (4 years) to launch a new purchase incentive program for MHDV ZEVs (TC).
  • $33.8 million (4 years, with $42.1 million in remaining amortization) to work with provinces and territories to develop and harmonize regulations and to conduct safety testing for long-haul zero-emission trucks (TC).
  • $199.6 million (5 years, $0.4 million ongoing) to expand the renamed Green Freight Program to support increased assessments and retrofits (NRCan).
• The 2022 Fall Economic Statement proposes a refundable tax credit equal to 30 per cent of the capital cost of investments in industrial zero-emission vehicles and related charging or refueling equipment such as hydrogen or electric heavy-duty equipment used in mining or construction.