Appearance before the Standing Committee of Finance (FINA) – October 20, 2025

Bill C-4 (Part 3) - Amendments to the Greenhouse Gas Pollution Pricing Act - Removing the consumer carbon price from Canadian law

Overview

This measure would permanently repeal the fuel charge framework in Part 1 of the Greenhouse Gas Pollution Pricing Act (GGPPA). The measure would legislate the repeal of the consumer carbon price after regulations were made to remove the fuel charge effective April 1, 2025.

The proposed amendments would come into force in four phases to ensure an orderly process for charge payers and the Canada Revenue Agency:

• In the first phase, charging provisions would be retroactively repealed as of April 1, 2025
• In the second phase, provisions allowing for certain rebates would be repealed as of October 1, 2025
• For example, this would allow charge payers to claim a rebate for fuel charge paid before April 1, 2025, on fuel that is exported on or after April 1, 2025
• All registration provisions would be repealed as of November 1, 2025, giving registrants until October 31 to file returns to claim rebates arising before October 1
• All remaining provisions of Part 1 of the GGPPA would be repealed, including definitions, interpretation rules, administrative and procedural rules, effective April 1, 2035
• This would provide continuity and certainty for final wind-down activities, including Canada Revenue Agency’s processes that continue to rely on existing rules
• This continuity also ensures that fuel charge payers have the ability to interact with the government in a predictable and straightforward manner in respect of any residual fuel charge obligations

The measure does not extend to Part 2 of the GGPPA, which implements an output-based pricing system on large emitters in listed jurisdictions.

Key messages

• The proposed amendments to the Greenhouse Gas Pollution Pricing Act (GGPPA) in Bill C-4 only impact the part of the GGPPA that established the framework for the consumer carbon price, also known as the federal fuel charge
  • The federal fuel charge framework was developed by the Minister of Finance and administered by the Minister of National Revenue
  • These proposed amendments to GGPPA follow the regulations made in March that already ceased the application of the federal fuel charge, effective April 1, 2025
• If Bill C-4 receives royal assent, GGPPA will continue to establish minimum national standards of GHG price stringency, ensuring carbon pollution pricing applies to a broad range of GHG emissions from industrial sources throughout Canada
• Part 2 of the GGPPA establishes the federal Output-Based Pricing System (OBPS), a regulatory trading system for industry administered by Environment and Climate Change Canada, and Canada’s Greenhouse Gas Offset Credit System, which provides an incentive to reduce greenhouse gases emissions or increase removals from the atmosphere
• Under Part 2 of the GGPPA, the federal OBPS is only applied in provinces and territories that do not have a carbon pricing system in place that meets the minimum national standards, or in those that have requested that the federal OBPS be applied
• The federal OBPS currently applies in Manitoba, Nunavut, Prince Edward Island, and Yukon

Questions and answers

Question 1. Can you describe the impacts of the Bill C-4 amendments to the GGPPA?

• The proposed amendments to the GGPPA in Bill C-4 only impact the part of the GGPPA that established the framework for the consumer carbon price, also known as the federal fuel charge
  • Finance Canada is better placed to answer questions on the specifics of the proposed amendments

Carbon pollution pricing

Overview

From 2019, a price on carbon pollution has applied across Canada through a mix of federal, provincial and territorial pricing systems.

The goal of carbon pricing is to incentivize investments in emissions reductions and decarbonization across the economy wherever they are more cost-effective than the carbon price. This incentive is delivered by the cost of pollution, as well as the opportunity to earn tradable credits in industrial carbon markets. Businesses and other economic actors have the opportunity to save or earn money by investing in technologies or changing behaviour to avoid the cost of carbon.

At that time, most pricing systems were composed of a consumer carbon price (e.g., a fuel charge) and an industrial pricing system (e.g., Alberta’s Technology Innovation and Emissions Reduction Regulation (TIER) or the federal Output-Based Pricing System).

Canada’s approach gives provinces and territories the flexibility to implement their own pricing systems subject to minimum national stringency standards (the “benchmark”). The federal pricing system applies in jurisdictions that either opted for it or did not have pricing systems that met the benchmark.

In March 2025, the government announced it was refocusing carbon pricing on a broad range of greenhouse gas emissions from industry and removed the federal fuel charge as of April 1, 2025.

The Government committed to engage provinces, territories and stakeholders on changes to the minimum national stringency standards for carbon pollution pricing, known as the federal ‘benchmark’ criteria. Changes would focus on ensuring industrial pricing systems continue to maximize emissions reductions and encourage the transition to low carbon technologies, while protecting industry against competitiveness and carbon leakage impacts.

The Government also intends to improve the stringency and effectiveness of industrial carbon pricing systems to ensure that they create incentives for reductions from a broad range of industrial sources of greenhouse gas emissions.

The Government of Canada is proposing legislative amendments that would repeal the fuel charge framework under Part 1 of the Greenhouse Gas Pollution Pricing Act (GGPPA). These proposed amendments follow the regulation made in March that already ceased the application of the federal fuel charge, effective April 1, 2025.

Key messages

• The Government intends to make Canada an energy superpower. A price on pollution for large industrial emitters is a pillar of Canada’s plan to build a strong economy and greener future
• Robust and well-functioning industrial carbon markets are a key tool to unlock investment in major decarbonization projects, protect competitiveness of Canadian industry, and support renewable energy and clean tech
• The Government is committed to ensuring industrial pricing systems across Canada are effective in driving emissions reductions and investment while enabling our companies to remain competitive in the global marketplace
• Providing certainty and predictability is crucial to maintaining investor confidence in decarbonization projects
• Meaningfully addressing climate change requires action by large emitters
• Industrial carbon pricing is the climate policy with the single largest contribution to achieving our climate targets
• Industrial pricing systems in Canada aim to reduce carbon pollution from industry and protect the competitiveness of Canadian industry
• It is an approach that is fair and effective. Carbon pricing systems for industry are designed to keep costs low to protect against competitiveness risks
• 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 goal of the benchmark is to ensure that carbon pollution pricing applies to a broad set of emissions across Canada at a similar level of stringency
• The benchmark provides certainty by setting clear standards and assessment periods so that businesses can plan for the future
• This includes that carbon markets function well and send a clear price signal across all covered emissions in Canada
• The Government committed to engage with provinces, territories, industry, and investors on how improved benchmark standards can help deliver on Canada’s broader climate and energy objectives

Questions and answers

Question 1. 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
• Carbon pollution pricing is central to Canada’s climate plan and is critical to delivering on Canada’s aim to reach net-zero emissions by 2050
• In March 2025, the Government of Canada removed the requirement for provinces and territories to have a consumer-facing carbon price effective April 1, 2025 and announced that federal carbon pollution pricing standards will refocus on ensuring carbon pricing systems are in place across Canada on a broad range of greenhouse gas emissions from industry

Question 2. What are the government’s plans for the future of industrial carbon pricing?

• Meaningfully addressing climate change requires action by large emitters
• A price on pollution for large emitters is a pillar of Canada’s plan to build a strong economy and greener future
• It is a system that is fair and effective
• Carbon pricing systems for industry are designed to keep costs low to protect against competitiveness risks
• While the Government of Canada has removed the requirement for provinces and territories to have a consumer-facing carbon price in place, the requirement to maintain industrial carbon pricing systems that meet the federal minimum national stringency standards – the federal 'benchmark' – remains
• The Government of Canada will engage provinces, territories, Indigenous Peoples and stakeholders on the goal of strengthening industrial carbon pricing
• The Government of Canada is committed to ensuring industrial pricing systems are stringent to drive emissions reductions and investment while enabling our companies to remain competitive in the global marketplace
• Providing certainty and predictability is crucial to maintaining investor confidence in decarbonization projects
• As Canada looks to expand its trading relationships around the world, including with Europe and the UK, it is more important than ever to maintain strong carbon markets as those partners move forward with their own carbon pricing mechanisms and border measures

Question 3. 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 ensures 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

Question 4. 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 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
• The system is designed to send a price signal on only a portion of a facility’s emissions such that they have an incentive to reduce emissions while mitigating the competitiveness risks to Canadian industry
• Provincial and territorial carbon pollution pricing systems have similar designs to protect against carbon leakage and adverse competitiveness impacts

Question 5. 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

Question 6. 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 Output-Based Pricing System (OBPS) can choose to have these proceeds returned directly
• Jurisdictions that accepted or requested the federal backstop include the Yukon, Nunavut and Prince Edward Island
• Past backstop jurisdictions where the federal OBPS system was applied but not accepted or requested included Saskatchewan, Ontario, and New Brunswick
• Manitoba is currently the only backstop jurisdiction where the federal OBPS system is currently applied without having been accepted or requested
• For these jurisdictions proceeds are being returned through the OBPS Proceeds Fund to further support industrial decarbonization and clean electricity initiatives

Question 7. What is the OBPS Proceeds Fund?

• Launched in February 2022 and funded from proceeds collected through the federal OBPS in provinces where the federal system has been applied and not requested (SK, MB, ON, NB), the OBPS Proceeds Fund is designed to reduce industrial greenhouse gas emissions and support clean electricity projects through its two program 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 in OBPS regulated facilities
  • The Future Electricity Fund stream is designed to support provincially managed clean energy projects and/or programs

Question 8. How much funding is available under the OBPS Proceeds Fund and how much has been returned?

• Available funding depends on the amount of proceeds collected from OBPS regulated facilities during a given compliance period
• Since its implementation in 2019, the federal OBPS has collected approximately $917 million
• That amount represents collections from 2019 to 2023. The amount collected in 2024 will be confirmed in early 2026
• Through the OBPS Proceeds Fund, as of March 31, 2025, the Government of Canada has committed approximately $816 million to provincial and industry-led clean technology and clean energy projects
• As of 2023, Manitoba is the sole jurisdiction that remains regulated by the federal OBPS that did not request its application
• The OBPS Proceeds Fund will continue to support projects in all applicable jurisdictions until all proceeds are returned
• The following table shows the total funds collected and committed through the OBPS Proceeds Fund as of March 31, 2025:

	Saskatchewan	Manitoba	Ontario	New Brunswick	Total
Proceedscollected from 2019, 2020, 2021, 2022, 2023 (in millions)	$540.0	$38.4	$313.3	$25.9	$917.5
Number of funding agreements	14	10	38	1	63
Funding agreement value (in millions)	$540.1	$32.1	$223.4	$20.1	$815.7
OBPS Proceeds Returned (in millions)	$137.9	$3.3	$69.3	$10.0	$220.5

Question 9. 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 projects in those jurisdictions until all proceeds have been returned
• New Brunswick implemented its own system as of 2021
• Ontario implemented its system as of 2022, and Saskatchewan, as of 2023 for electricity generation and natural gas transmission
• Manitoba is the sole jurisdiction that remains regulated by the federal OBPS that did not request its application

Question 10. Can you provide examples of OBPS Proceeds Fund supported projects?

• Under the Decarbonization Incentive Program the Government of Canada helps regulated Canadian companies and organizations deploy clean technologies which cut pollution and enhance energy efficiency
• For example, Canada is providing over $5.8 million to the University of Toronto to replace natural gas equipment with high efficiency electric alternatives
• Through the Future Electricity Fund, the Government of Canada will support advancing provincial clean energy priorities and grid greening initiatives
• For example, Canada is working with the Saskatchewan Government to invest over $22 million in the province’s Northern Indigenous Retrofit and New Construction Housing Program which supports energy efficiency improvements, saving energy costs and reducing GHG emissions
• Additional examples include:

• Stream: Decarbonization Incentive Program (DIP)
• Province/Territory: Ontario
• Recipient name: Redpath Sugar Ltd.
• Contribution amount: $25.0 million
• Project details: Redpath Sugar’s E‑Side Carbon Reduction project will install new equipment and technology to improve the efficiency of the sugar refining process. The project will reduce thermal energy consumption by recovering and reusing waste heat, which will help drive down carbon pollution.

• Stream: Decarbonization Incentive Program (DIP)
• Province/Territory: Ontario
• Recipient name: IGPC Ethanol Inc.
• Contribution amount: $2.2 million
• Project details: The Membrane Dehydration of Sieve Regen Steam project will install membrane separation technology to reduce the amount of steam required in the manufacturing process. This will lower natural gas consumption and reduce associated carbon pollution on a per‑unit‑of‑ethanol basis.

• Stream: Future Electricity Fund
• Province/Territory: New Brunswick
• Recipient name: New Brunswick Power Corporation
• Contribution amount: $20.1 million
• Project details: The Enhanced Energy Savings Program will support low‑income homeowners in reducing their energy consumption and lowering their energy costs through home energy‑efficiency retrofits.

• Stream: Future Electricity Fund
• Province/Territory: Saskatchewan
• Recipient name: Crown Investments Corporation of Saskatchewan
• Contribution amount: $9.5 million
• Project details: The Demand Side Management and Demand Response Program will help manage provincial electricity demand during peak periods and reduce overall energy use. The initiative includes a suite of residential and commercial programs such as rebates for energy‑efficient technologies, direct installation programs for northern First Nations communities, and home retrofit rebates.

Question 11. How is the Government of Canada returning fuel charge proceeds to Indigenous governments?

• The Minister of Finance specified the Minister of Environment and Climate Change as responsible for returning over $531M of net fuel charge proceeds for the period of 2020-21 to 2024-25 to Indigenous governments in each province where the federal fuel charge was in effect during this period
• December 2023: specification of $282.19M, representing 1% of net fuel charge proceeds collected from 2020-21 to 2023-24
• February 2024: specification of $249.3M, representing 2% of net fuel charge proceeds collected in 2024-25
• In January 2025, Environment and Climate Change Canada launched the Fuel Charge Proceeds Fund for Indigenous Governments (FCPFIG) which provides grants to eligible Indigenous governments
• Developed in partnership with Indigenous communities, the FCPFIG grant program offers maximum flexibility for Indigenous governments to manage and use their share of fuel charge proceeds for self-determined priorities, including climate action
• ECCC continues to work directly with eligible Indigenous governments to facilitate the return of fuel charge proceeds and anticipates disbursing all remaining proceeds by the end of 2025-26.

Question 12 What is the impact on repealing the fuel charge on emissions levels and on other regulations?

• Removing the fuel charge as of April 1, 2025 is estimated to lead to a loss of 12.57 Mt cumulative GHG emissions reductions from 2025 to 2030
• This estimation of the environmental effect of the fuel charge differs from previous estimates such as the one published by the PBO in October of 2024
• While the previous analysis finds that the fuel charge is responsible for a 15 Mt reduction by 2030, the current analysis finds that the fuel charge is responsible for only 3.3 Mt in 2030
• This analysis is not however comparable
• The analysis done for the PBO assessed a carbon pricing scenario with an alternate scenario where there had never been carbon pricing, and carbon pricing in Quebec was also removed
• In contrast, the current analysis compares the pricing scenario with a counterfactual case where the fuel charge is in place until 2024 and is removed in 2025, but the Quebec cap-and-trade system stays intact
• Furthermore, additional policies such as the CFR, ZEV mandates, and Green Buildings Strategy are included in the current analysis; these additional policies, which interact with the fuel charge, end up reducing the impact of removing the fuel charge

Question 13 What is the government’s response to recent actions by Alberta and Saskatchewan to freeze or remove their carbon price?

• Carbon pricing is the foundational approach for decarbonizing the economy and creating incentives for clean innovation
• We have a shared interest in ensuring industrial carbon markets, whether federal or provincial, are working well
• Robust and well-functioning industrial carbon markets are a key tool to unlock investment in major decarbonization projects, maintain competitiveness of conventional energy, and support renewable energy and clean tech
• The requirement to maintain industrial carbon pricing systems that meet the federal minimum national stringency standards – the federal 'benchmark' – remains
• As announced in March, all existing industrial carbon pricing systems that aligned with the benchmark standards at that time were anticipated to continue to be sufficiently stringent if no significant design changes were made
• As provinces or territories introduce design changes, the government will consider the impacts of those changes on alignment with the benchmark standards, and will engage with the relevant provincial and territorial governments to resolve any concerns
• We will welcome Alberta and Saskatchewan’s engagement in that process

Clean Fuel Regulations

Overview

The Clean Fuel Regulations (CFR) reduce air pollution and greenhouse gas emissions and have been the driver for billions of dollars of new investments in clean fuel production in Canada.

The CFR require gasoline and diesel primary suppliers (i.e. producers and importers) to reduce the carbon intensity (CI) of the gasoline and diesel they produce and import into Canada by 15% from 2016 levels by 2030.

Regulated parties meet their obligations through credits which they create themselves or buy on the CFR credit market. Credits can be created from a wide range of actions across all stages of fuel production and use--from extraction through processing, distribution and end use, including:

• Compliance Category 1: Clean tech projects (e.g., upstream emissions reduction projects like carbon capture and storage in the oil sector)
• Compliance Category 2: Supplying low carbon fuels and clean fuels (like ethanol, renewable diesel, hydrogen)
• Compliance Category 3: Advanced vehicle charging/fuelling (like electric vehicles)

Credits can be created by regulated and voluntary parties and can be traded on the credit market. Voluntary parties, such as ethanol and agriculture feedstock producers, face no regulatory obligation and only benefit from the regulations.

The Regulations also incorporate the minimum volumetric requirements that were set out in the federal Renewable Fuel Regulations, requiring a minimum 5% low-carbon-intensity fuel content in gasoline and 2% low-carbon-intensity fuel content in diesel fuel.

The CFR is expected to cut greenhouse gas pollution across the country by up to 26 million tonnes in 2030.

The Government is making targeted changes to the CFR to support domestic supplies of biofuel, while maintaining the Regulations’ primary focus of emission reductions and the transition to a lower carbon economy.

Key messages

• On September 5, 2025, the Government announced a new set of measures to support industries impacted by recent global trade pressures, including the biofuel sector
• As part of the suite of actions taken, the Government of Canada intends to introduce targeted amendments to the CFR to ensure the Canadian market is able to continue supplying sufficient quantities of biofuels
• The goal of these targeted amendments is to strengthen and support the development of Canada’s low carbon fuel sector, while maintaining the primary goal of the Regulations to lower carbon emissions
• ECCC will be publishing a consultation document in the coming weeks, followed by an information session
• In parallel, the Government also announced the Biofuels Production Incentive - a time-limited program led by Natural Resources Canada that will provide over $370 million over two years to support the stability and resiliency of domestic producers of biodiesel and renewable diesel, and their Canadian value chains, including Canada’s agricultural sector like canola producers
• This incentive will provide a per litre subsidy to Canadian producers of biodiesel and renewable diesel

Questions and answers

Question 1. What do the Clean Fuel Regulations cover?

• The Regulations aim to reduce greenhouse gas emissions from liquid fossil fuels used in Canada for transportation, such as 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

Question 2. Do the Clean Fuel Regulations duplicate what would be achieved by carbon pollution pricing?

• The Clean Fuel Regulations complement carbon pricing
• Carbon pricing sends a broad signal across industry 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
• Together they make an important contribution to reducing emissions towards our climate targets and incenting investments in clean technologies

Question 3. 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 are driving 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
• The CFR is currently on track to meet these objectives
• 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

Question 4. What is the status of the credit market? Are there enough credits available for compliance?

• The Clean Fuel Regulations credit transfer market is operating well and as expected
• There is publicly available information on the CFR credit market on ECCC’s website

Question 5. What are some examples of projects funded under the Clean Fuel Regulations?

• The CFR is driving transformational changes in how liquid fuels are produced in Canada
• Industry has either made or indicated plans to undertake significant investments in projects related to the CFR since the announcement of the Regulations
• Some of these projects are directly related to the CFR whereas others are primarily driven by other measures (e.g. Clean Hydrogen Investment Tax Credit) and supported by the CFR
• These include, for example:
  • Hydrogen – projects account for $33 billion in investments across 21 projects, including Air Product Canada’s hydrogen energy complex (AB) and TES Canada H2 Inc’s $4 billion green hydrogen plant (QC)
  • Clean fuel and feedstocks – investments in 19 facilities such as renewable diesel, sustainable aviation fuel, renewable natural gas, and ethanol total $5 billion
  • Major projects include Imperial Oils’ renewable diesel facility (AB) which came online in Summer 2025, and $1.5 billion in canola processing
  • Investments in carbon capture and storage, co-processing and other projects—including seven co-processing projects in BC, AB, SK, QC

Question 6. What does the CFR credit price mean for price at the pump?

• An independent study from ESMIA (Energy Super Modelers and International Analysts, commissioned by ECCC) determined fuel price impacts from the CFR would be negligible for gasoline in 2024, increasing to an average of around 4 cents per litre in 2030

Question 7. What are the recently proposed amendments to the CFR?

• The Clean Fuel Regulations are an important part of Canada’s plan to protect the environment and human health from the threat of climate change by significantly reducing greenhouse gas emissions
• They also will accelerate the use of clean technologies and fuels, and support sustainable jobs in a diversified economy
• The Government of Canada intends to introduce targeted amendments to the CFR to ensure the Canadian market is able to continue supplying sufficient quantities of biofuels
• The goal of these targeted amendments is to strengthen and support the development of Canada’s low carbon fuel sector, while maintaining the primary goal of the Regulations to lower carbon emissions

Question 8. Will the CFR amendments address the competitiveness issues of Canada’s biofuel sector?

• The Government of Canada intends to introduce targeted amendments to the CFR to ensure the Canadian market is able to continue supplying sufficient quantities of biofuels
• The goal of these targeted amendments is to strengthen and support the development of Canada’s low carbon fuel sector, while maintaining the primary goal of the Regulations to lower carbon emissions

Question 9. Will the CFR amendments erode emissions reductions expected?

• The emissions reductions from the CFR are based primarily on the stringency, i.e. the requirement to reduce the carbon intensity of fuels below certain levels by 14 grams of carbon dioxide equivalent per megajoule (gCO2e/MJ) by 2030, which represents a decrease of approximately 15% in CI below 2016 levels
• The Regulations work in conjunction with other federal, provincial and territorial policies to help meet Canada’s current 2030 GHG emission reduction target under the Paris Agreement and put Canada on a path towards the goal of net-zero emissions by 2050
• The impact of an amendment, including on emissions reductions, will be analyzed and assessed, and will be included in the Regulatory Impact Analysis Statement published with final Regulations

Question 10. What is the impact on the Clean Fuel Regulations from the repeal of the Fuel Charge?

• The CFR focuses on liquid fuels used in the transportation sector (i.e. gasoline and diesel)
• Although the CFR complement other environmental regulations, the incentive to decarbonize the transportation sector remains strong even with the repeal of the fuel charge

Proposed Oil and Gas Sector Greenhouse Gas Emissions Cap Regulations

Overview

• The government published draft Oil and Gas Sector Greenhouse Gas Emissions Cap Regulations on November 9, 2024, in Canada Gazette Part I for a 60-day public consultation period
• The proposed regulations would establish a cap-and-trade system that would apply to all upstream oil and gas production – including offshore development – as well as liquified natural gas (LNG) production
• The government received significant feedback from provinces and territories, industry, and other stakeholders
• The government is considering the path forward in the context of broader efforts to support sector decarbonization

Key messages

• We are committed to positioning Canada as an energy superpower
• We are going to get there by powering every Canadian industry with the cleanest energy, so that the products that Canada sells to the world are climate competitive
• The Government will work with the sector, provinces and territories, and Indigenous communities to build clean, and promote the innovation and the adoption of technologies to reduce emissions, including carbon capture, utilization, and storage

Questions and answers

Question 1. Will the government cancel the oil and gas emissions cap?

• The government is considering the path forward in the context of broader efforts to support sector decarbonization

Question 2. Isn’t the GHG emissions cap really a cap on oil and gas production?

• Oil and gas companies have proven repeatedly that they can innovate and develop new technologies and more competitive business models
• The GHG emissions cap was designed to stimulate re-investment into the economy from oil and gas companies
• Estimates show that production in the oil and gas sector under a GHG emissions cap would continue to grow

Question 3. No other sector faces an emissions cap. Why would you single out oil and gas?

• The oil and gas sector is Canada’s largest source of greenhouse gas emissions.
• In 2022, it accounted for 31% of national emissions
• Decreasing emissions from the oil and gas sector ensures that the sector remains competitive well into the future
• We are committed to positioning Canada as an energy superpower
• We are going to get there by powering every Canadian industry with the cleanest energy, so that the products that Canada sells to the world are climate competitive

Question 4. Why do you need a cap-and-trade system when you have carbon pricing? Isn’t this just double regulation?

• Economy-wide carbon pricing is a powerful policy to drive emissions reductions, but it does not guarantee a level of emissions for any specific sector
• The proposed regulations would ensure emissions from the sector do not exceed a regulated limit
• The government is considering the path forward in the context of broader efforts to support sector decarbonization

Question 5. How much would the oil and gas GHG emissions cap increase the costs to consumers?

• Because oil prices are set internationally and gas prices are set continentally, there would not be an impact on consumers at the pump

Question 6. What are the main elements of the proposed regulations to cap emissions?

• The draft regulations would establish a cap-and-trade system that would apply to all upstream oil and gas production – including offshore development – as well as liquified natural gas (LNG) production
• The system would establish a cap on GHG emissions, and create corresponding emissions allowance credits that would be distributed to operators of oil and gas facilities
• It would also give facilities access to some compliance flexibilities, including offset credits
• Together – the emissions cap and total compliance flexibility would establish an upper limit on emissions for the sector, or “legal upper bound”
• The approach was designed to ensure predictable emissions reductions while taking into account continued growth in production in line with expected changes in global demand
• The approach would establish a framework to ensure the sector’s GHG emissions decrease over time on a pathway consistent with the goal of carbon neutrality by 2050

Question 7. What are the impacts?

• The Regulatory Impact Analysis Statement provided detailed estimates of impacts:
  • Net benefits estimated to be $428 million over 2025-2032 period
  • Canadian GHG emissions would be 13.4 Mt lower from 2030 to 2032
  • Oil and gas production projected to grow 16% from 2019 to 2030-2032, only slightly lower than the projected growth of 17% without the emissions cap
  • Canada’s GDP projected to grow 22.0% from 2019 to 2030-2032, only slightly lower than the projected growth of 22.1% without the emissions cap

Question 8. What is a cap-and-trade system? How would it work?

• Cap-and-trade is a proven approach that has been used successfully around the world, such as in the European Union and in the United States, to cut emissions
• Cap-and-trade systems work by establishing an emissions cap for facilities covered by the system and issuing allowances equal to the cap
• Over time, the Government gives out fewer allowances, reducing the overall level of emissions
• Cap-and-trade has many benefits
• It guarantees the emissions outcome, while giving facilities flexibility by allowing them to trade allowances
• This reduces overall cost because facilities that reduce their emissions cheaply can sell allowances to facilities that may need more time
• The value of allowances creates an incentive to invest in cleaner production, without prescribing which and when technologies should be used

Impact due to removal of fuel charge and changes to climate measures – Status on Climate Targets

Key message

• Reducing GHG emissions is a moral obligation and an economic imperative
• Canada has set ambitious goals to cut emissions, and we’ve already made real progress
• Since 2005, our emissions have gone down by 8.5%, while the economy has grown by 38%
• Canada’s emissions are projected to continue to decline as policies and measures are implemented across the country
• Canada is committed to reaching net-zero emissions by 2050
• This ambitious goal demands continued action and is essential to position Canada to compete in the emerging low-carbon economy
• Canada’s approach to climate change mitigation relies on a coordinated mix of measures that support emissions reduction while strengthening our economy with sustainable jobs and clean industrial growth
• The Government of Canada will continue to support households, firms and the economy on the path to net-zero, ensuring flexibility where required to deal with competitiveness pressures, such as tariffs from the U.S
• We will continue to work with industry, provinces and territories, and Indigenous peoples to promote clean innovation, secure new economic opportunities in low-carbon industries, and encourage the adoption of technologies to reduce emissions

Responsive

• Canada is committed to fighting climate change and is working to launch a climate competitiveness strategy soon to advance that commitment and to position Canada to lead in a global economy that increasingly wants decarbonized goods, services, technology and know-how
• Details on the strategy will be announced in the coming weeks

Questions and answers

Question 1. What progress has Canada made on reducing GHG emissions?

• According to the latest National Inventory Report, in 2023, Canada’s greenhouse gas (GHG) emissions were 694 megatonnes of carbon dioxide equivalent (Mt CO2 eq), a decrease of 65 Mt (8.5 per cent) from 2005
• These figures exclude the Land Use, Land-Use Change and Forestry (LULUCF) sector emissions or removals
• The emissions data for 2023 confirms Canada’s economy continues to decouple from its GHG emissions
• The emissions intensity for the entire economy has declined by 34 per cent since 2005
• This suggests many parts of the economy are continuing to become more efficient through the adoption of clean technologies and are being powered by more non-emitting electricity (hydro, wind, solar, nuclear) in the pursuit toward net-zero emissions by 2050

Question 2. The CCI recently indicated emissions reductions seem to be stalled; is Canada continuing to reduce emissions?

• Canada’s emissions are now the lowest they have been in 27 years, excluding the pandemic years, and significantly lower than pre-pandemic levels
• Policies and technologies are working to tackle emissions, and they will continue to achieve greater reductions over the coming years
• The 2023 data show that the emissions intensity for the entire economy has declined by 45 per cent since 1990, and 34 per cent since 2005
• This suggests many parts of the economy are continuing to become more efficient, thanks to the adoption of clean technologies powered by more non-emitting electricity
• Official GHG numbers for 2024 will be published in April 2026

Question 3. Are we reducing emissions fast enough to meet our climate goals? What more is needed?

• Progress on lowering emissions will accelerate as key greenhouse gas regulations, investments and policies come fully into force in the later part of this decade
• This approach allows industry and other businesses sufficient time to make investments and take advantage of support programs from the Government of Canada
• This helps to maintain their competitiveness and continue to provide well-paying jobs for their workers as they transition to cleaner operations
• The last official projections published by ECCC, in late 2024, showed that Canada could reduce emissions by up to 40% below 2005 levels by 2035 under implemented and announced measures
• The Government of Canada will publish its next Progress Report on the 2030 Emissions Reduction Plan in December 2025, which will include updated emissions projections

Question 4. How do Canada’s emissions compare to emissions from other G7 countries?

• Direct comparison of emissions reductions should be treated with caution as Canada has a very different economy from other G7 countries and is a major producer and exporter of oil and gas
• Canada’s level of ambition and policy effort are similar to its international peers

Zero-emission vehicle sales target and amending Passenger Automobile and Light Truck GHG Emission Regulations

Overview

The Government announced its intent on September 5 to make targeted regulatory adjustments to help the automotive sector stay competitive during a period of transition. The automotive sector is essential to Canada’s economy, supporting jobs, trade, innovation and the green transition. To support the sector as it navigates the immediate challenges from U.S. trade actions while preparing for a zero-emissions future, the Government of Canada will remove the 2026 target from the Electric Vehicle Availability Standard (EVAS) and is launching a 60-day review of the overall regulation.

The EVAS currently requires that 20% of new light-duty vehicle sales in Canada be zero emissions by 2026, rising annually to 60% by 2030 and reaching 100% by 2035. The EVAS will be amended to remove the target for the 2026 model year vehicles to help reduce the economic pressure due to tariffs.

At the same time, the Government is launching an immediate review of the EVAS to ensure it continues to reflect market realities, remains effective for Canadians, and does not place undue burden on automakers. The review will consider potential amendments to the annual sales targets, including the 2035 goal, and will explore possible additional flexibilities.

In addition to regulatory adjustments, the Government will also explore options to bring more affordable electric vehicles to Canadians.

These changes are part of the Government of Canada’s broader strategy to support key sectors impacted by global trade dynamics, while ensuring a clean and competitive economy for the future.

The Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations establishes progressively more stringent GHG emission standards for new light-duty vehicles in alignment with the U.S. EPA national standards. Light-duty EV sales continue to rise. Since the introduction of the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations, the volume of EVs reached 13.4% for the 2023 model year and approximately 15.3% in 2024. Despite strong continued global sales growth, some softening in Canadian sales has taken place in 2025, in part due to the pause of Transport Canada’s consumer rebate program. The Government announced the Electric Vehicle Availability Standard in December 2023, requiring all new light-duty cars and passenger truck sales to be zero-emission by 2035. The regulation includes interim targets of 20% by 2026 and 60% by 2030 with flexibility provisions.

On August 1, 2025, the U.S. published a proposal to rescind the 2009 Endangerment Finding, which underpins a broad spectrum of GHG emissions regulations. If the EPA goes ahead with this, all on-road vehicle GHG emissions rules will be repealed, which represents a set back at least 15 years. Legal challenges are expected, with no clear timeline on when this issue will be resolved.

Key messages

• The Government is waiving the regulatory requirements for 2026 model year vehicles under the Electric Vehicle Availability Standard (EVAS)
• We have also launched a review of the EVAS to ensure it continues to reflect current market realities, remains effective, and does not place undue burden on automakers
• The review will consider potential amendments to the annual sales targets, including the 2035 goal, and will explore possible additional flexibilities to reduce costs

If pressed

• In addition to regulatory adjustments, the Government will also explore options to bring more affordable EV models to Canada
• Up to 1 in 4 vehicles sold in the world today is an electric vehicle
• Shifting toward EVs will offer long-term savings for drivers, reduced carbon emissions and improved health from cleaner air
• The global shift to electrification is also creating significant opportunities for the Canadian economy, including new manufacturing jobs and expansions in critical minerals mining and processing, which will benefit rural communities

Questions and answers

Question 1. Why is the Government of Canada considering changes to the EVAS?

• Canada’s EV targets are being impacted by several economic factors – many of which are unrelated to the EVAS specifically – that have created potentially challenging market conditions to be realized in the near-term
• For example, EV sales in Canada dropped to 9.4% in May 2025 from a previous high of 15.4% in 2024, making compliance with EVAS uncertain and costly and leading to increased calls for Canada to revisit its EV targets and EVAS
• Some factors impacting low sales in 2025 include:
  • Pause of the federal purchase Incentives for Zero Emission Vehicles (iZEV) program as well as the termination of some provincial incentive programs
  • Tariffs impacting the sector
• The U.S. intent to withdraw support for the EV transition and roll back vehicle emission standards has also created uncertainty in the Canadian market
• EVAS is part of a suite of federal measures to support EV adoption

Question 2: What is the roll-out plan for the review?

• The Department has initiated a 60-day review period of the Electric Vehicle Availability Standard (EVAS)
• The purpose of the review will be to obtain feedback from stakeholders including automakers, industry associations, provinces/territories, non-government organizations, and Indigenous groups on the appropriate changes to EVAS to ensure they remain feasible and cost is reduced while continuing on the maximum possible decarbonizing of transport
• Interested parties will be encouraged to share their views and any related information and data
• Based on this pre-consultation work, proposed amendments would be published in the Canada Gazette, Part I, for formal consultation, followed by the final amendments

Question 3: What are some potential changes that are being considered?

• The review will explore and consider a variety of approaches based on feedback gathered during the engagement
• These could include amendments to the annual sales targets as well as possible additional flexibilities
• The Government of Canada will provide an update later this year on the outcomes of the review

Question 4: How would a review of EVAS impact the B.C. and Quebec provincial requirements?

• The Government of Canada continues to have regular engagement with the provinces and territories, and particularly B.C. and Québec which both have EV regulations
• Both provinces are also reviewing their EV regulations
• These discussions are helping to inform our review

Question 5: What is the role of GHG performance standards and how do they work in tandem with the EVAS requirements?

• The Electric Vehicle Availability Standard is part of the federal Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations, which also include GHG performance standards
• While both sets of requirements are in the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations, they operate separately
• All vehicles count towards compliance with EVAS and the fleet-average GHG performance standards
• EVAS is designed to result in increasing ZEV sales, resulting in significant emissions reductions, while GHG regs are designed to drive emission reductions from the whole LDV fleet and including ZEVs as one of the compliance pathways to reduce GHGs
• Cost-benefit analysis conducted by ECCC in 2023 estimated that EVAS would reduce GHGs by 362 million tonnes cumulatively by 2050, in addition to the GHG regulations

Question 6: What are the auto sector’s views for the EVAS review and upcoming amendments?

• There are a range of views in the auto sector and we are committed to working with them to hear their perspectives and explore possible solutions
• It will also be important to hear from other experts and key players in the ZEV ecosystem

Question 7. With the consumer carbon price already removed and the vehicle emissions regulations now under review, is Canada backtracking on climate action?

• The Government of Canada is committed to reaching net-zero emissions by 2050. It is not backtracking
• Ensuring regulations are best suited is important to the continued competitiveness of the auto sector as we remain focused on the economic and environmental benefits of a net zero economy by 2050
• Building climate resilience and meeting our targets is economically smart, fiscally responsible, and essential to protecting Canadians and the places they call home

Question 8. The regulations force the auto industry to change and force consumers to change too. Are the costs higher than the benefits?

• Canada is warming at twice the global average and up to three times faster in the North
• Building climate resilience and meeting our targets is not optional
• It’s economically smart, fiscally responsible, and essential to protecting Canadians and the places they call home
• The Regulations are designed to protect the environment and human health from the threat of climate change by significantly reducing greenhouse gas emissions from new vehicles sold in Canada
• Not only that, but the electric vehicle supply chain is driving record investment into our economy
• Canada is uniquely positioned to lead this transformation
• We have abundant critical minerals, a highly skilled workforce, and a strong national commitment to clean energy
• If Canada plays its cards right, it could build a domestic EV battery supply chain that could support up to 250,000 jobs by 2030 alone
• EVs will save money for vehicle owners over the life of their vehicles due to lower costs for energy and lower maintenance costs

Question 9. What are the Government’s EV sales targets? What are current sales?

EV sales targets by model year

Model Year	EV sales targets (%)
2026 Footnote *	20
2027	23
2028	34
2029	43
2030	60
2031	74
2032	83
2033	94
2034	97
2035 and beyond	100

• EV sales in Canada are growing fast. In 2024, about 15% of new vehicles sold in Canada were an EV
• However, sales numbers have dropped to about 9% through the first half of 2025

Question 10. What is the impact of exempting 2026 model year sales target on overall climate targets?

• Emission reductions in 2026 are predominantly driven by Light-Duty Vehicle GHG regulations and therefore little to no emissions impact is expected
• However, we will assess the impact on GHG emissions by the 2026 pause, in addition to other changes to EVAS that may be made because of the ongoing EVAS review

Question 11. How does Canada’s approach compare to Europe’s?

• The European Parliament has voted to adopt very tough performance-based emission standards that will require new light-duty vehicles in 2035 have near-zero tailpipe emissions
• The United Kingdom has adopted a dual approach same as Canada with GHG and EV regulations
• Both the E.U. and the U.K. are aiming to achieve 100% EV sales by 2035

Question 12. EVs are still very expensive. Will low-income Canadians be able to afford one?

• In addition to EVAS regulatory adjustments announced on September 5, 2025, by the Prime Minister, the Government of Canada will also explore options to bring more affordable electric vehicles to Canadians
• EV purchase prices are projected to fall relative to gas vehicles, making ZEVs more accessible for Canadians
• In addition, it can cost 5 to 10 times less to charge a battery-electric vehicle compared to filling up on gas or diesel to drive the same distance, and driving an EV can save 40% to 50% on annual vehicle maintenance costs
• More affordable used EVs are coming on to the market
• As a result – with all these options - EVs can lower the transportation costs for drivers

Details:

• The EVAS sales targets help ensure that car makers are building and expanding EV choices at a rate which increases availability, reduces wait times and costs, and increases options for drivers
• Canadians can expect a reduced total cost of ownership once they make the switch to an EV
• Many of the most popular EVs in Canada have a range of over 400 km and cost around $10 or less to charge at home, depending upon where you live
• Expensive and unpredictable world oil prices and the growing desire by Canadians to lower their environmental footprint has more households and businesses wanting to get off the gasoline and diesel roller-coaster by making the switch to EVs
• It’s a fact that EVs have lower operating costs compared to an equivalent internal combustion engine vehicle based on lower fuel and maintenance costs
• Over time, regulated new vehicle sales targets will result in more EVs becoming available on the used-vehicle market
• As lower-cost EVs and more used EVs hit the market, more households will be able to benefit from their lower fueling and maintenance costs
• Some provinces are providing consumer incentives for used EV purchases

Question 13. To what extent is the Trump Administrations proposed repeal of vehicle GHG regulations and the IRA Tax Credits for EVs in the U.S. Impacting Canada? Will this be taken into account during the review?

• ECCC’s GHG regulations for vehicles and engines have been aligned with the U.S. Environmental Protection Agency (EPA) since 2011
• These emissions performance standards, as well as the compliance testing and certification procedures, are harmonized until the end of 2026
• ECCC is closely monitoring U.S. developments, assessing the potential impact of coming changes on Canada and its auto sector
• ECCC will consider any feedback received on these regulations during the EVAS review

Question 14. Why is the EVAS so Important for Canada’s Climate Targets?

• Transportation is the second highest emitting sector in Canada (23% of emissions in 2023) with almost half of those emissions coming from light-duty vehicles (passenger cars, SUVs, and light trucks)
• EV adoption is essential for Canada to meet net-zero by 2050, and the development of the full EV supply chain is an opportunity to leverage Canada’s resources, tech, and talent to support our growing low carbon economy
• Phasing in 100 percent new electric vehicle sales by 2035 is projected to reduce over 360 million tonnes of greenhouse gas emissions by 2050, avoiding almost $100 billion in global damages
• Canada’s approach to climate change mitigation relies on a coordinated mix of measures that support emissions reduction while strengthening our economy with sustainable jobs and clean industrial growth
• We're creating the conditions for world-leading clean technology to thrive — by investing in innovation, scaling homegrown solutions, and positioning Canadian companies to lead in the global race to net-zero
• EVAS is an important tool in that mix
• The strongest economies of the future will be clean, low-carbon, and resilient
• In this, Canada can — and must — lead
• Not just because the world is watching, but because our future depends on it
• Cost-benefit analysis conducted by ECCC in 2023 estimated that EVAS would reduce GHGs by 362 million tonnes cumulatively by 2050

Oil and gas methane regulations

Overview

In December 2023, Environment and Climate Change Canada (ECCC) published draft enhanced methane regulations (EMR) that increase the scope and stringency of Canada’s existing methane regulations for oil and gas. The EMR would deliver significant near-term emission reductions at a relatively low cost and does not overlap with industrial carbon pricing systems.

The enhanced methane regulations would expand the coverage and stringency of the 2018 methane regulations and include an innovative performance-based pathway that provides industry with greater flexibility in how they choose to meet the regulation’s requirements. It also positions Canadian oil and gas to compete in Asian and European markets, which are increasingly seeking low methane intensity. The Government has not announced these publicly yet.

Canada’s 2025 methane target for oil and gas is to reduce emissions to 40-45% below the 2012 level. Analysis published in 2021 found that Canada is on track to achieve that level of emission reductions with equivalency agreements in effect.

Key messages

• Canada was one of the first counties in the world to regulate methane from new and existing oil and gas facilities
• Experience shows that methane regulations are a low-cost and effective way to achieve substantial GHG reductions in the oil and gas sector
• Canada continues to advance the enhanced methane regulations that cut these emissions even further
• We are committed to working with the provinces to position Canada as an energy superpower
• There is a history of successful federal-provincial collaboration to reduce methane emissions from oil and gas
• British Columbia, Alberta, and Saskatchewan have demonstrated leadership through their own methane regulations in place of the federal regime, giving industry clear rules to drive their investment in solutions
• This approach has put Canada on track to meet the Government of Canada's 2025 methane reduction target for oil and gas
• Jurisdictions and energy companies around the world are taking methane emissions seriously because of the threat of climate change. Investing in methane reduction technologies will ensure Canadian oil and gas is competitive in global markets and is produced responsibly
• The regulations would also help create demand for Canadian clean technology

Landfill methane regulations

Overview

Biodegradable waste such as food, wood, and paper makes up over 60% of the waste disposed in Canada. When this waste is sent to landfill it breaks down to produce landfill gas which is composed of about 50% methane and 50% carbon dioxide.

Some reductions in methane emissions from landfills can be achieved by diverting biodegradable waste from landfills to be used for composting, anaerobic digestion and recycling. However, by 2030, approximately 40% of the methane that will be generated from landfills will come from biodegradable waste disposed of before 2020.

On-site equipment can be installed to recover landfill gas and reduce methane emissions.

Canada’s 2022 Methane Strategy included federal actions to reduce waste sector emissions including new regulations to increase recovery and destruction of methane from large landfills.

The Regulations would gradually come into effect, depending on the landfill’s methane generation rate, to allow adequate time for the design and installation of the required infrastructure.

Key messages

• Landfill methane is a significant portion of all methane emissions
• By reducing emissions of methane from Canadian landfills, Canada can help slow down near-term climate impacts, like the natural disasters we are increasingly experiencing, and make progress towards our goal to achieve net-zero emissions by 2050
• Reducing landfill methane emissions is cost-effective, with a very low cost per tonne of carbon dioxide reduced

Questions and answers

Question 1. What actions has ECCC advanced to address landfill methane emissions in Canada?

• In 2023, emissions from Canadian landfills accounted for almost 17% of national methane emissions and about 3% of national GHG emissions
• These emissions can be reduced in two ways
  • by diverting the biodegradable waste (food, paper, yard waste) from landfill to prevent the creation of methane and
  • by installing systems at landfills to capture and destroy the methane that is being emitted from decades of biodegradable waste already disposed
• Despite voluntary and regulatory actions implemented in Canada over the past decades – including efforts to divert biodegradable waste, significant additional methane emission reductions from landfills are possible
• Canada’s 2022 Methane Strategy and the Emissions Reduction Plan included federal actions to reduce waste sector emissions including new regulations to increase recovery and destruction of methane from large landfills
• The government published proposed regulations in Canada Gazette, Part I in June 2024
• The proposed Regulations would reduce emissions at regulated landfills by setting performance standards in line with the most stringent in North America; by requiring regular monitoring to identify methane leaks and locations where methane emissions from the landfill surface exceed specified limits and by setting timelines for repair of methane exceedances and leaks
• The proposed Regulations were estimated to reduce methane emissions by as much as 8 Mt CO2e per year by 2030 (over 1% of Canada's total GHG emissions) at an average cost of $8 per tonne of CO2e reduced
• ECCC continues to advance efforts towards finalizing these regulations

Question 2. What costs are imposed on municipalities due to these regulations, and what have you done to help reduce these costs?

• ECCC received feedback from stakeholders on the proposed regulations citing concerns with the costs that would be imposed on smaller municipalities
• Comments indicated a potential need for federal funding to support these types of landfill owners
• Elements of the proposed regulations were crafted with a view to minimize financial impacts on smaller municipalities, primarily through a delayed implementation timeline for monitoring and methane control requirements for the smallest of the regulated landfills until 2033 (rather than the proposed implementation timelines for larger landfills of 2027 or 2029)
• This additional time would enable landfill owners that elect to take early action to control methane emissions through a landfill gas recovery system to generate and sell offset credits
• Offset credits are tradeable credits that can be sold to companies who use them for compliance with regulations or to support voluntary GHG reduction targets
• The equipment most likely to be installed to comply with the regulations – an active landfill gas recovery system – is eligible for funding under several federal programs for municipalities including the Canada Community Building Fund and the Canada Housing Infrastructure Fund
• About 80% of entities proposed to be regulated are municipalities

Clean Electricity Regulations

Overview

In December 2024, the Government of Canada published Powering Canada’s Future: A Clean Electricity Strategy, which brings together significant measures that the federal government is taking to help support the build-out of a clean, reliable, and affordable electricity sector.

The Clean Electricity Regulations (CER), which were finalized in December 2024, are an important element of the Strategy. The objective of the CER is to help protect the health and environment of Canadians from the threat of climate change by prohibiting excessive emissions of carbon dioxide from fossil-fuel fired electricity generation. Achieving net-zero emissions in the electricity sector will also help to decarbonize other sectors of the economy, such as transportation and buildings, and aid in Canada’s commitment to achieve net-zero GHG emissions economy-wide by 2050. Starting in 2035, the CER require fossil-fuel-fired electricity generating units connected to the electricity grid to achieve net-zero emissions by 2050. This timeline of a net-zero grid by 2050 aligns with the goals set by many provinces, including Alberta and Saskatchewan.

The Regulations were developed pursuant to well-established authorities for regulating pollution, including greenhouse gas emissions, in accordance with the Canadian Environmental Protection Act, 1999.

Reducing greenhouse gas (GHG) emissions in all sectors, including electricity, is necessary to address the threat to the environment and human health caused by climate change.

Demand for electricity is expected to double over the coming 25 years due to increasing demand from a growing population and new drivers like artificial intelligence and data centres. Ensuring that the coming grid expansion is clean is crucial to addressing climate change.

The CER is complemented by over $60 billion in funding over the next 10 years to support the electricity sector in their transition to net-zero by 2050. This includes a series of investment tax credits and concessional loans and funding programs.

Global clean energy investment reached $2.1 Trillion in 2024—nearly double that of fossil fuels—with Canada ranking 8th at $35 Billion. Canadian jobs in clean energy are set to grow 7% a year from 509,000 in 2025 to 2.7 million in a net-zero 2050.

The federal government recognizes that some provinces face unique challenges in transitioning to a net-zero electricity grid. Based on extensive feedback, the final regulations were revised significantly from the draft regulations to include significant flexibility to enable provinces and territories to continue providing reliable and affordable electricity to Canadians, while maintaining the primary objective of achieving significant emissions reductions.

In addition, Environment and Climate Change Canada is open to negotiating equivalency agreements that would stand down the federal regulations in provinces that have in force provincial laws that achieve equivalent environmental outcomes (emissions reductions).

On May 1, 2025, the Province of Alberta commenced a challenge to the constitutionality of the Clean Electricity Regulations in the Alberta Court of Appeal. 

Key messages

• The objective of the Clean Electricity Regulations is to help protect the health and environment of Canadians from the threat of climate change by prohibiting excessive emissions of carbon dioxide from fossil-fuel fired electricity generation
• Starting in 2035, the CER require fossil-fuel-fired electricity generating units connected to the electricity grid to achieve net-zero emissions by 2050
• A clean, reliable, and affordable electricity grid is key to building a strong net-zero economy
• This gives Canada a competitive advantage and makes it an attractive place for businesses around the world to invest since clean electricity will help them succeed
• The Government will continue working with provinces and territories and electricity providers to expand Canada’s current supply of electricity to meet future demand while ensuring that it is net-zero by 2050
• The federal government has committed more than $60 billion towards this goal

Questions and answers

Question 1. Are the Clean Electricity Regulations still needed?

• The CER remains a key element of our climate actions and an integral part of Canada’s Clean Electricity Strategy to set the country on a path to net-zero by 2050
• Reducing greenhouse gas emissions in all sectors, including electricity, is necessary to address the threat to the environment and human health caused by climate change
• This is the primary objective of the CER
• Given the expected increase in electricity demand as a result of electrification and population growth over the coming decades, it is important to reduce excessive greenhouse gas emissions from the electricity sector to position Canada to meet its goal of net-zero emissions economy-wide by 2050
• This will ensure that, as other key economic sectors such as transportation and buildings electrify, the electricity used to power this transition will be generated from low or non-emitting sources
• A clean, reliable, and affordable electricity grid is also key to building a strong net-zero economy
• It gives Canada a competitive advantage and makes us an attractive place for businesses around the world to invest and helps keep electricity rates affordable for households and industries

Supplemental lines:

• The CER is expected to reduce the electricity sector’s greenhouse gas emissions by an estimated 181 million tonnes (Mt) from 2024 to 2050
• Under a high load growth scenario, the CER is expected to enable significantly more GHG emissions reductions, estimated at 303 Mt from 2024 to 2050
• By accelerating the uptake of renewable electricity, the Regulations also cut air pollution, reducing Canadians’ exposure to pollutants like nitrogen oxides, sulfur oxides, particulate matter, and mercury. This results in benefits to local air quality and to Canadians’ health

Question 2. How have we responded to the concerns about the CER expressed by provinces and other interested parties?

• Beginning in March 2022, ECCC undertook extensive engagement to understand the viewpoints of over three hundred (300) different interested parties including electricity operators and provincial/territorial regulators in every jurisdiction
• In total, the CER underwent over two and half years of engagement and consultation which informed its development and ensured that it considered the different circumstances across Canada
• The draft CER were revised significantly to include additional flexibility to enable provinces and territories to continue providing reliable and affordable electricity to Canadians
• External electricity experts have modelled the CER and confirmed that nothing in the Regulations impedes grid operators from generating adequate reliable and affordable power to customer
• The single biggest change was shifting the federal net zero grid goal from 2035 to 2050, aligning with provincial/territorial goals
• Compliance burden was reduced by reducing the stringency of the underlying performance standard (From 30t/GWh to 65t/GWh, with the ability to emit up 100t/GWh with offsets until 2050. After 2050, the performance standard drops to 0t /GWh with 42t/GWh of offsets.)
• Extended the end-of-prescribed-life provisions from 20 years to 25 years and introduced provisions that allow new units under development to operate unabated until the end of 2049. These changes support a more gradual transition for gas and minimize stranded assets
• ECCC also introduced several new flexibilities at the request of provinces including:
  • the change to an annual emissions limit rather than the originally proposed binary emission intensity standard – an idea originally developed with Alberta officials;
  • the ability to use offsets for exceedances;
  • pooling of emissions room from a number of units so that more efficient units can run longer than less efficient ones and have more flexibility to address peak power needs – developed with input from Nova Scotia, New Brunswick and Ontario;
  • banking of unused compliance credits from past pooling for future years, which addresses concerns Manitoba raised regarding periodic droughts;
  • creation of new credits for the use of and purchase of renewable natural gas in and outside of the electricity sector to address requests from Quebec and Manitoba; and
  • full exemptions for existing cogeneration units not exporting the grid as well as more emissions room for co-gen units exporting to the grid than is provided to grid operators until 2050 to respond to concerns from Alberta, Saskatchewan
  • Creating emergency provisions that delegate the ability to call an emergency to the system operator and not have those emissions created during the emergency counted towards compliance with the regulations

Supplemental lines:

• While the Territories and most Indigenous communities are for the most part not directly impacted by the Regulations, we did engage with them and heard their concerns to not be left behind in the clean energy transition
• Colleagues in other departments such as Natural Resources Canada are working to advance Indigenous led clean energy projects

Question 3. How have provinces and territories reacted to the CER?

• The CER will stimulate a gradual transition to net-zero electricity starting in 2035, which will be fully realized by 2050
• Most provinces and territories share this net-zero by 2050 goal and are supportive of the CER
• For the remaining few provinces, the Government of Canada is open to Equivalency Agreements to stand down the federal regulations as long as they have provincial rules in place realizing equivalent environmental outcomes, subject to periodic reviews towards such progress

Supplemental lines:

• We recognize that some provinces have been developing their own pathways to a net-zero electricity grid
• ECCC is open to negotiating equivalency agreements with any interested province, that would stand down the federal regulations in provinces that have in force provincial laws that achieve equivalent outcomes
• This allows provinces to achieve the same goals using their own rules to suit their unique circumstances
• Under the Clean Electricity Strategy, significant investments are being made across the country tailored to each province’s particular needs
• More than $60 billion in federal funding, including through Investment Tax Credits, the Canada Infrastructure Bank, and funding programs, is available to help provinces and territories advance clean electricity build-out

Question 4. How will the CER impact affordability for Canadians? Are certain provinces going to experience greater impacts?

• Between 2025 and 2050, even without the CER, in a business-as-usual scenario, provincial operators will need to make large investments to maintain, upgrade and expand their electricity grids to respond to growing electricity demand
• This will be caused by increased deployment of heat pumps, electric vehicles and the electrification of other sectors, as well as population and economic growth
• The CER simply ensures that this necessary expansion is clean and therefore adds only a marginal extra cost because renewable electricity is very cost-effective
• As a result, the CER will have at most only a minimal impact on rate payers (less than 1% by 2050), while significantly increasing overall household affordability
  • In a scenario where electricity demand increases by 1.5 times from current levels by 2050, the incremental impacts of the CER over the 2024-2050 period are projected to be:
    • $54.9 billion in benefits (including monetized climate/health benefits and fuel savings)
    • The net benefit is $14.6 billion
    • $40.3 billion in costs (primarily from new generation capacity)
  • Analysis published by the Simon Fraser University think tank, Clean Energy Canada in October 2024, shows that clean electricity will not only to support competitiveness of Canadian businesses, but will also lead to lower overall household energy bills for Canadians
  • Affordability analysis shows that more than 80% of Canadian households will spend less on energy overall in 2050 by switching to electricity, even if electricity is slightly more expensive, because they will stop paying for increasingly costly gasoline for their cars or natural gas to heat their homes
  • Households on average will save 20% on their total energy costs, though there are some regional divergences
• Federal cost modelling has been validated by multiple external parties with well-known expertise in electricity modelling including Navius, Esmia, University of Victoria and Professor Brett Dolter
• Their estimates were in line with Departmental modelling

Supplemental lines:

• The minor additional costs of integrating renewable power reliably into the electricity system (for example, storage, transmission) are outweighed by the broader benefits, including reduced greenhouse gas (GHG) emissions reductions, health benefits from air pollutant reductions, cost savings on fuel for industry and enhanced competitiveness

Question 5. Will the CER impact reliability or possibly lead to blackouts or brownouts?

• No, it will not
• Provinces and territories are responsible for managing and planning their electricity systems in a reliable manner
• For the final CER we increased the regulatory flexibility needed to enable provinces to continue supplying reliable power, including through the continued use of natural gas where necessary during the transition to net zero
• The Regulations contain provisions to enhance the ability of provinces to address peak power needs and take immediate action to respond to emergency circumstances
• Federal models, corroborated by third party modelling and additional analyses, show that grid reliability is not an issue
• International experience with the successful adoption of higher wind and solar levels without compromising grid reliability underscores what can be done
• At 8% wind and solar today, Canada has a lot of room to expand
• Many northern U.S. states and European countries rely much more heavily on renewables than we do without compromising their grid stability
• The U.K., Germany and Denmark for example have successfully and rapidly transitioned to 33%, 40% and 67% wind and solar deployment respectively and have outperformed Canada on grid reliability
• They did this by making investments in grid technologies that exist today, such as synchronous condensers, batteries, transmissions lines and interties

Question 6. When will the CER actually achieve a net-zero electricity system? How much more natural gas will these flexibilities allow?

• The CER will begin the transition to net-zero electricity starting in 2035 and as part of its regulatory requirement, ensuring that Canadian grids achieve true net-zero emissions by 2050
• This timeline also takes into account supply chain and permitting constraints and is aligned with the net-zero objectives of provinces
• Electricity systems will need to expand very significantly in the coming years to meet the growing demand for electricity
• The CER sets an early signal for this electricity to be clean, without which emissions can substantially increase to meet this demand growth
• A continued, but limited and declining role for some fossil fuels, mainly natural gas, is necessary to support grid reliability, as electricity operators make the transition to net-zero

Question 7. How does carbon pricing interact with the CER?

• The CER works in conjunction with carbon pricing, while reducing regulatory overlap
• Where a facility’s emissions are covered by both the CER and a federal or provincial industrial pricing system, emissions reductions would reduce a facility’s compliance obligation under both
• Given the CER still allows natural gas use prior to 2050, carbon pricing provides an incentive to reduce electricity emissions beyond what the CER requires
• The CER will permit eligible offset credits to meet coinciding obligations under carbon pricing regimes and the CER
• A tonne offset under the CER can be a tonne offset under a provincial regime
• The Department will establish a list of carbon pricing systems where cross-recognition of offset use with the CER is authorized

Supplemental lines:

• Carbon pricing is an efficient incentive to reduce emissions across the economy, but the federal backstop currently does not require a sector-by-sector alignment
• Carbon pricing in its current form would not bring the electricity sector to net-zero while the CER requires all electricity generating units to achieve a net-zero by 2050
• ECCC modelling of the CER assumed a carbon price of $170 per tonne until 2050
• ECCC is confident that there will be a sufficient supply of offset credits available for the demand created by the CER
• ECCC modelling suggests that relatively few offset credits would be used to comply with the CER before 2050, given the substantial flexibility provided by other provisions and the relatively low cost of renewable energy
• More use of offsets would likely occur starting in 2050 to meet net-zero, but this provides 25 years for Canadian offset credit markets to mature
• The number of offset projects registered in the federal system is already growing and regulations like the CER can create more certainty about the future demand for offsets, which incents the growth of offset creation

Question 8. Does the CER add to the cumulative regulatory burden placed on industry?

• When developing the CER, the Department took into consideration regulatory interactions and sought to eliminate overlap and counter-productive interactions, for example with the Clean Fuels Regulations
• These different regulations cover different activities and have different objectives
• Behind the fence industrial emissions are largely exempt from the CER
• Only generating units that have net electricity exports in a given year, that is they send more electricity to the grid that they take from it, are subject to the CER emissions limit in that year
• This means that an industrial generator that is only producing electricity for its own use or that is not a net contributor to the electricity system will not have to comply with an emission limit under the CER
• Further, until 2050, the CER’s emission limit only applies to emissions from the portion of electricity sent to the grid and not the portion used on-site
• Other flexibilities include the ability of a Province to request an equivalency agreement that would effectively stand down the CER in that province on the condition that provincial rules achieving the same outcome are put in place
• The CER also repeals the Federal Coal Regulations in 2035 and the Natural Gas Regulations in 2050
• During the transition to net-zero electricity by 2050 units only have to comply with one federal emission standard at any given time

Question 9. Will ECCC be defending the CER against Alberta’s court challenge?

• The Department is confident that the Clean Electricity Regulations are valid and will continue to defend the validity of the regulations
• The objective of the Clean Electricity Regulations is to protect the environment and human health from the threat of climate change by prohibiting excessive emissions of carbon dioxide from fossil-fuel fired electricity generation
• The CER was developed under the long-established federal authority to prohibit releases of harmful pollution, including greenhouse gas emissions
• The Supreme Court of Canada has recognized that the federal government has constitutional jurisdiction to enact prohibitions for the purpose of preventing the releases of toxic substances – including greenhouse gas emissions - into the environment

Supplemental lines:

• Climate change is a growing threat to Canada and the world. We are already seeing the risks and costs of climate change through extreme weather events like the wildfires burning throughout Canada this summer, as well as drought, floods, and more severe storms
• The Clean Electricity Regulations put in place a pollution limit which is a well-established federal authority
• Access to abundant affordable and reliable electricity, especially clean electricity, is an increasingly important competitive advantage for Canada
• In addition to addressing the threat to the environment and human health caused by climate change, the Clean Electricity Regulations will also help make Canada an attractive place to invest

Major Projects and Building Canada Act

Overview

The Government has committed to taking action to build Canada as an energy superpower and has prioritized building one Canadian economy by removing barriers to interprovincial trade and identifying and expediting nation-building projects that will connect and transform the country.

This includes establishing a “one window” approval process through the new Major Projects Office; shifting the focus of project reviews from “why” to “how” while upholding rigour when it comes to environmental protection and Indigenous consultation and participation; rendering final project decisions within a two-year timeframe; and signing, within six months, co-operation agreements with interested provinces to provide for “one project, one review”.

Work is underway to implement efficiency improvements throughout all phases of the impact assessment process. This includes:

Leveraging federal and provincial data and information to require less from proponents and leveraging provincial assessments and oversight to manage federal effects.

Gathering permit requirements during assessments where proponents are willing to submit earlier project details. This requires coordination between federal departments and more risk tolerance all around.

Standardizing mitigation measures on routine issues and focusing scope of federal reviews on unique issues in our jurisdiction that will influence decisions.

Incorporating the use of AI throughout (e.g., to develop these standard measures, synthesize public comments, and shorten reports).

Undertaking more strategic and regional assessments to further reduce what needs to be studied at the project level. This has been used successfully in the past to exempt offshore oil and gas exploration from assessments and could be expanded to offshore wind.

Proactively supporting proponents and Indigenous groups in addressing key issues rather than waiting for proposed solutions.

This builds on previous work related to enhancing regulatory efficiency for major projects, including by the previous Ministerial Working Group on Regulatory Efficiency for Clean Growth Projects and actions from previous Budgets, such as providing permitting coordination services during the impact assessment to provide clarity on permitting requirements earlier in the process.

On September 10, 2025, 11 members were officially appointed to the Major Project Office's Indigenous Advisory Council, including from First Nations, Inuit, Métis, and Modern Treaty and Self-Governing Communities. The Indigenous Advisory Council will, through their expertise, advise the Major Projects Office and help ensure that processes and projects integrate Indigenous perspectives and priorities.

The first projects of national interest and significance being referred to the Major Projects Office were announced on September 11, 2025, including: Phase two of LNG Canada in Kitimat, B.C.; the Contrecœur Terminal Container Project to expand the Port of Montreal; the Darlington New Nuclear Project in Clarington, Ont.; the McIlvenna Bay Foran Copper Mine Project in Sask.; and the expansion of the Red Chris Mine in northwestern B.C. The first two have already completed the relevant federal assessment processes; the latter three will not require a federal assessment under the Impact Assessment Act.

Key messages

• The Impact Assessment Agency of Canada (IAAC) is committed to help advance projects of national interest and will work with the Major Projects Office (MPO) when projects are subject to both the Building Canada Act and the Impact Assessment Act
• Two of the projects identified in the first series being referred to the Major Projects Office have already completed the federal impact assessment process (LNG Canada and Contrecoeur), and the other three are not subject to the Impact Assessment Act
• The announcement also included a list of several strategies for projects that could be truly transformative for this country, which are at an earlier stage and require further development
• As these are developed, IAAC will be able to confirm whether or not the projects may be subject to the Impact Assessment Act
• In the meantime, IAAC is already re-engineering its processes to ensure all assessments are concluded within a two-year timeline without sacrificing essential environmental protections
• Ongoing work with provinces to implement a “one project, one review” approach under co-operation agreements will be key to overall efficiency and meeting two-year timelines for projects of national interest, and all major projects

Questions and answers

Question 1. Is meeting two-year timeline feasible?

• The two-year timeline includes actions to streamline information requirements and simplify templates to make the process more predictable and manageable, as well as actions to minimize duplication with provincial processes, sharpen the focus on areas of federal jurisdiction, and provide new guidance for proponents to support meaningful early engagement with Indigenous Peoples and early identification of issues
• These efforts build on meaningful progress already achieved toward improving efficiency of project reviews, such as 2024 legislative amendments that helped focus decision-making
• Since amending the IAA in 2024, more than 10 projects have completed the federal impact assessment process with about 90% within less than three months and one in less than 50 days

Question 2. Would you provide details on the Ring of Fire?

• The new Major Projects Office does not change the work of regional assessments
• A Working Group has been established to carry out the Regional Assessment composed of delegates from the 15 First Nation Partners and representatives from IAAC
• First Nation Partners and IAAC will continue working together according to the Terms of Reference for the regional assessment

If pressed on Regional Assessments and ongoing project-level assessments in the Ring of Fire:

• The new Major Projects Office does not change the work of regional assessments
• The ongoing impact assessments on road projects in the Ring of Fire will proceed in accordance with their legislative timelines, which are independent of the regional assessment process
• The results from regional assessments will be used to inform future impact assessments for projects, if and when proposed

Climate competitiveness strategy

Key messages

• The Government of Canada is working to launch a climate competitiveness strategy as part of Canada’s commitment to fight climate change and position Canada to lead in a global economy that increasingly wants decarbonized goods, services, technology and know-how
• The Government will continue to work with provinces and territories, Indigenous partners, industry, and stakeholders to promote clean innovation, secure new economic opportunities in low-carbon industries, and encourage the adoption of technologies to reduce emissions
• Details on the strategy will be announced in the coming weeks

Questions and answers

Question 1. What is this Climate Competitiveness Strategy? When can we expect to see something?

• The Climate Competitiveness Strategy will help advance decarbonization and economic diversification by taking advantage of the opportunities in the growing low-carbon economy
• The strategy will help grow the economy with a focus on areas where economic and industrial opportunities and advantages align with climate change and net-zero objectives
• Supporting business and industry in their efforts to make investment decisions will be achieved with an enhanced focus on the implementation of clear, streamlined, and predictable regulations
• No release date has been set

Question 2. What does the Climate Competitiveness Strategy mean for previous climate plans? Is there an intent to amend the CNZEAA to align with this new strategy?

• The strategy complements existing action the government is taking under the Canadian Net Zero Emissions Accountability Act, including the 2030 Emissions Reduction Plan, as well as the National Adaptation Strategy
• The strategy is not meant to address all of Canada’s decarbonization challenges and will not replace Canada’s 2030 Emissions Reduction Plan

Question 3. What does this strategy mean for Canada’s emissions reduction targets?

• The strategy is part of the Government’s economic agenda to grow Canada’s economy into the strongest in the G7
• It positions Canada to continue advancing decarbonization towards net-zero by 2050 while protecting Canada’s competitiveness from near-term economic threats

Question 4. Has the government engaged with provinces, territories, Indigenous partners, industry, and stakeholders on the CCS?

• This strategy is being elaborated to respond to economic pressures faced by Canadians and drive industry investments in decarbonization, with a focus on reinforcing the competitiveness of Canadian businesses in the short-term while putting in place foundational measures to build the strongest economy in the G7
• The strategy sets out actions the Government of Canada intends to take
• The Government of Canada will collaborate with provinces and territories, Indigenous partners, industry, and stakeholders to discuss and strengthen partnerships for effective delivery