Final report from the Advisory Council on Climate Action: section 1

Context

Introduction

Accelerating the transition to sustainable, resilient transportation systems and buildings will be essential to meeting Canada’s commitments under the Paris Agreement. The economic opportunities for businesses and workers in a clean economy provide a clear motivation to address remaining barriers in these sectors and effect meaningful change. The Government of Canada alone cannot realize these opportunities. The federal government does, however, have important tools that can be used to clarify and amplify promising market trends emerging in Canada and globally.

Since the beginning of the Advisory Council’s mandate, as announced in the 2018 Fall Economic Statement, we have engaged in thoughtful conversations with select experts and considered analysis of effective policy tools in the transportation and built environment sectors. In March 2019, we provided interim recommendations on key measures to encourage the uptake of zero emissions vehicles across Canada, including a purchase incentive of up to $5,000. We were pleased to see many essential points of this advice reflected in Budget 2019.

In our final report, we have identified what we believe to be the most promising opportunities to enhance the current suite of federal policies to reduce greenhouse gas (GHG) emissions from transportation and buildings. Our advice, in particular on how to strengthen market demand for building retrofits, complements the work of the Expert Panel on Sustainable Finance. While the Expert Panel’s mandate included broader range of topics related to sustainable finance and climate-related risk disclosure, we benefitted from the insights on building retrofits and sustainable infrastructure gained through the Expert Panel’s discussions and engagement over the previous year.

Given the short duration of our mandate, this report is not intended to be a comprehensive roadmap of desirable policies across these sectors. Our recommendations focus on areas that are within the Government of Canada’s jurisdiction, and in particular areas where government action can catalyze the development of a broader market. In the built environment sector, the Government of Canada can prime the retrofit market for growth by disseminating information and best practices, including through scaled-up demonstration projects within its diverse portfolio of owned and leased assets. In the transportation sector, we recommend that the Government of Canada build on its current efforts to promote Zero Emission Vehicles by mandating supply commitments from manufacturers in order to ensure long-term market certainty and stability. We also briefly explore potential avenues to reduce emissions from other modes of transportation, noting the need for an integrated strategy to guide these efforts.

Rapid changes in technology and falling costs have opened a window of opportunity to modernize buildings and transportation systems in ways that will create more livable towns and cities. Choosing a zero emission vehicle or constructing a highly efficient building no longer involves trade-offs between environmental, financial, and health benefits; all of these advantages are aligned. The task that remains is for government to set the right conditions for private sector ingenuity to move the broader economy towards these desirable outcomes.

Scale of the challenge: built environment and transportation sector trends

Together, transportation and the built environment sectors account for over a third of Canada’s GHG emissions. While emissions are projected to decline in both of these sectors by 2030, the pace and scale of these reductions are not aligned with the targets that Canada has committed to under the Paris Agreement.

In 2016, 25% of Canada’s GHG emissions came from the transportation sector and 12% were from the built environment sector.Footnote 1  Based on the most recent available emissions projections that Environment and Climate Change Canada published in late 2018, emissions from transportation are expected to decline from 173 megatonnes (Mt) in 2016 to 155 Mt in 2030, and built environment emissions are projected to remain fairly steady at 81 Mt in 2016 and 80 Mt in 2030. With additional measures that have been proposed but not yet fully implemented - including stronger building codes, more stringent energy efficiency standards for appliances and equipment, additional vehicle fuel efficiency standards, and the clean fuel standard - emissions would further decline by 14 Mt for transportation and 15 Mt from the built environment.Footnote 2  The additional measures scenario represents a 25% reduction below 2005 levels of emissions in 2030 for the built environment sector and a 13% reduction in the transportation sector. Greater ambition will be needed to bend the emissions curve towards deeper decarbonisation.

In the built environment sector, emissions are almost evenly divided between the residential and commercial sectors. Energy efficiency improvements have helped to offset the effects of population growth, which has driven demand for increased housing and commercial and institutional building stock. Similarly, fuel efficiency gains have dampened the emissions impacts as more vehicles have been added to Canada’s roads and kilometers driven have increased. While overall passenger vehicle emissions have declined, and are projected to continue to decline as uptake of zero emissions vehicles increases, emissions from ground freight, off-road and other vehicles are projected to grow.

These trends point to opportunities for emissions reductions that the recommendations in this report seek to unlock. Emissions from buildings are slowly decreasing from efficiency gains, but additional reductions could be realized through deeper retrofits of more of the building stock while ensuring that new construction is built to high standards. Similarly, greater longer-term reductions from transportation could be achieved through scaled-up electrification, beginning with passenger vehicles in the near term and expanding to other modes as new technologies mature. Low-carbon biofuels and modal shifts will also need to be part of the solution to achieve deep reductions in transportation emissions.

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