Canada’s First Biennial Transparency Report under the Paris Agreement (2024) – Executive summary

Minister's Message

As 2024 draws to a close, I present Canada's First Biennial Transparency Report under the Paris Agreement. This report underscores the important climate action journey Canada is travelling. While many of Canada's efforts over the last nine years to reduce emissions have generated strong results, we are reminded it won't be easy to reach our goals.  This report showcases our commitment to transparency, accountability, and collaboration as we continue our journey to address the urgent challenge of climate change.

Since the Paris Agreement was adopted by countries around the world in 2015, Canada has taken bold steps to reduce emissions, adapt to climate impacts, and lay the groundwork for a low carbon economy. Our targets to cut emissions by 40 to 45 per cent below 2005 levels by 2030 and to achieving net-zero by 2050 are backed by one of the world's most comprehensive climate plans, the 2030 Emissions Reduction Plan. After the 2022 release of the 2030 Emissions Reduction Plan, we released a National Adaptation Strategy in 2023. Earlier this month, we announced our target for 2035, to cut emissions 45 to 50 per cent below 2005 levels by 2035.

Like our international partners, Canada has been working diligently to reduce its emissions and limit global warming. The Government of Canada has more than 140 climate measures to support our pathway to lower emissions. Canada's provinces, territories, communities, and industries are also taking action to reduce emissions and support Canada's transition to a low carbon future. While there is still work to do, our plan is working.

This report highlights our progress to date, including the implementation of measures like pollution pricing, the proposed cap on oil and gas greenhouse gas pollution, the Electric Vehicle Availability Standard, and over $60 billion in investments to enable affordable and reliable clean electricity, underpinned by the recently published Clean Electricity Regulations. It also demonstrates Canada's leadership in supporting global efforts, including following through on our $5.3 billion climate finance commitment to help other countries tackle climate change.

Thanks to our collective efforts, we are now seeing the results, with emissions dropping in many sectors. While we continue to be on track to surpass our previous target of 30% below 2005 levels by 2030, we have more work to do to achieve our enhanced 2030 target of 40-45% below 2005 emissions. Our new 2035 target aims to put Canada in a good position to reach net-zero emissions by 2050. Challenges remain— the lack of urgent climate action by some industrial sectors has cancelled out emissions reductions elsewhere, negating so much of the hard work done to reduce emissions across the country.

Recent natural disasters and extreme weather events are a harsh reminder of the importance of taking action, with the impacts of climate change continuing to be felt across Canada. Climate events can lead to higher emissions, as demonstrated by the drought on the Canadian Prairies in 2021, which contributed to higher emissions in 2022. Canada also set a new record for insured losses in 2024, with climate events including flooding, hail, and fires resulting in over $8 billion of losses, during what was a second year of record high temperatures.

Adaptation and resiliency have never been more important. Despite efforts to reduce emissions, climate change is upon us, and we must be prepared for what we are experiencing now and what is still to come. This report includes our second Adaptation Communication, demonstrating Canada's commitment to transparency and ambition on adaptation. This follows our first Adaptation Communication in 2021, which was submitted to the UNFCCC prior to the release of Canada's final National Adaptation Strategy. 

While the journey is far from over, this report illustrates the need for Canada's continued determination in meeting its international obligations and ongoing collaboration with partners domestically and around the globe. Despite year-to-year fluctuations from events such as a drought reducing the ability to absorb carbon, to the risks presented by speculative oil and gas energy production forecasts, the overall trajectory of deep cuts against Canada's projected emissions is clear. Our actions today are building the foundation for a sustainable, resilient, and inclusive future for all Canadians—and the world.

As we look to the future, the imperative is upon us to take the action needed today to safeguard our future. This requires a collective effort by all Canadians, including all levels of government and every industry.

Only together can we achieve the emissions reductions needed to create a healthier, more sustainable future.

Chapter 1: Introduction and Executive Summary

Canada was a signatory to the United Nations Framework Convention on Climate Change (UNFCCC) in 1992 and set its first national emissions target in 2000. Despite these and other commitments, emissions in Canada continued to rise. While emissions hit a peak in 2007, projections in 2015 indicated that that peak would be temporary. Canada's emissions were projected to hit a new peak in 2020 and continue to rise. In 2016, Canada ratified the Paris Agreement and in 2021 submitted an enhanced national 2030 emissions reduction target. Also in 2021, Canada adopted the Canadian Net-Zero Emissions Accountability Act, enshrining Canada's international commitments to address climate change in domestic law. In 2024, as per the Act, Canada set its 2035 target. Canada's Nationally Determined Contribution (NDC) for 2035 will be submitted in early 2025.

Canada has successfully bent its emissions trajectory, is now consistently below 2005 emissions levels and is tracking towards significant emissions reductions by 2030. Canada's economy is also 31% less carbon-intensive than it was in 2005 due to energy efficiency improvements, decarbonization of the electricity grid, and structural shifts in the economy. Canada is taking actions that are reducing emissions and paving the way to net-zero by 2050, including the Oil and Gas Emissions Cap, Clean Fuel Regulations, Clean Electricity Regulations, supports for clean technology development and adoption and carbon pricing measures such as the Fuel Charge and Output-Based Pricing System. Canada continues to pursue opportunities to reduce emissions and secure a prosperous low-carbon future for Canadians and to support climate action around the world.

Canada is pleased to present its First Biennial Transparency Report under the Paris Agreement. Canada has prepared this report in accordance with the adopted Modalities, Procedures, and Guidelines of the Enhanced Transparency Framework.

The following Introduction and Executive Summary provides an overview of Canada's progress in reducing emissions and establishing the conditions for a low-carbon future.

1.1 National circumstances and institutional arrangements

Canada is a geographically large federation composed of a central federal government, ten provincial governments, and three territorial governments. The Canadian Constitution and convention assign different powers to each order of government. Protection of the environment is not specifically addressed under the Constitution and is an area of shared responsibility.

The Constitution also recognizes and affirms the Aboriginal and treaty rights of First Nations, Inuit, and Métis. The Government of Canada recognizes that Indigenous Peoples' leadership is key to Canada achieving its climate objectives and is committed to working collaboratively to advance distinctions-based and self-determined climate action.

Canada's unique geographic, demographic, and economic circumstances influence its greenhouse gas (GHG) emissions profile. While Canada has a relatively small population, it also has one of the largest landmasses in the world, with most of it located in the northern half of the northern hemisphere, leading to higher emissions from the transportation of people and goods. Although Canada is often associated with a cold climate, Canada experiences a wide range of climate conditions. Most of the heavily inhabited regions experience distinct seasons, including very warm summers, which can exceed 40°C, and very cold winters, often below ‑30°C and sometimes much lower. The requirements for heating and cooling buildings have a significant impact on energy use, and these factors contribute to a higher intensity energy use and associated GHG emissions.

Canada's emissions profile is also influenced by its economy. As of 2023, Canada was the world's 10th largest economy with a GDP of $2.1 trillion. On a GDP-per-capita basis, Canada ranks 26th in the world. While all countries face unique decarbonization challenges, Canada must navigate a unique socio-economic structure relative to other advanced economies, creating less favourable conditions for rapid emissions reductions. Due to its carbon-intensive industries, Canada is one of only two countries from the Organisation for Economic Cooperation and Development (OECD) that exports more GHGs than it imports, with up to 40% of domestic GHGs being driven by foreign demand (thrice as much as in the US). Canada's economy is more reliant on natural resources (19.2% of nominal GDP in 2022, including but not limited to fossil resources), with revenues more than 20 times the G7 average and four times the US. Canada is both a major energy producer and exporter, with overall Canadian energy exports in 2022 totalling $240.5 billion, representing 33% of total Canadian goods exports. The goods-producing sector, comprising 26% of Canada's GDP in 2023, is led by manufacturing, construction and mining, quarrying, and oil and gas extraction industries. These emissions-intensive industries contribute significantly to Canada's emissions. In contrast with most OECD countries, Canada has an electricity grid that is overwhelmingly clean and cannot rely on the decarbonization of electricity generation—the cheapest and least disruptive mitigation action—to contribute a large share of emissions reductions.

These factors exacerbate near-term transition costs and carbon leakage risks, all while exposing Canada's economy to greater vulnerabilities, such as declining demand and value for carbon-intensive commodities (carbon leakage refers to a process by which emissions reductions in Canada could be offset by an increase of emissions in other countries with lower environmental standards). Carbon leakage goes hand-in-hand with reduced competitiveness and capital flight, and compromises benefits for the climate. While economy-wide carbon leakage is low, emission-intensive and trade-exposed (EITE) sectors that are particularly vulnerable to carbon leakage account for a significant share of Canada's annual emissions, including cement, lime, chemical, iron, steel, aluminum, and industrial gas manufacturing, as well as oil and gas and pulp and paper. They also account for over 35% of Canada's exports, most of which goes to the US. However, Canada's abundant natural resources, skilled workforce, and competitive business environment also provide opportunities to grow its expanding cleantech industry and low-carbon economy, including through clean fuels, nature-based solutions, and critical minerals development and battery production, to help support not only Canada's but the world's net-zero future. Canada's climate has been increasingly warming over the last several years, with Northern regions being the most affected. Canada has also experienced many extreme climate events such as drought, heat waves, forest fires, floods, and severe thunderstorms, which are happening more frequently and at higher intensities. The cost of associated disasters is rising as a result, with 2024 being the most expensive year in Canadian history for insured losses, with four weather events over a two-month span resulting in over $8 billion in insured losses.

The Government of Canada recognizes the necessity to take ambitious climate action. In 2021, the Government of Canada enacted the Canadian Net-Zero Emissions Accountability Act. The Act sets legal requirements for current and future governments to plan, report, and course correct on the path to net-zero emissions by or before 2050. It commits Canada in legislation to achieving its 2030 Nationally Determined Contribution under the Paris Agreement of 40% to 45% below 2005 emissions levels, as well as committing Canada to setting national targets for the reduction of GHG emissions every five years starting in 2030, with the objective of attaining net-zero emissions by 2050.

Canada published the 2030 Emissions Reduction Plan in 2022. The Plan is an ambitious and achievable roadmap that outlines a sector-by-sector path for Canada to reach its 2030 emissions reduction target and net-zero emissions by 2050. In 2023, the first Progress Report on the Plan was released. It provides an update on progress towards Canada's emissions reduction targets, as well as updates on the implementation of federal measures and strategies and key cooperative measures and agreements with provinces and territories. Under the legislation, the next progress report on the 2030 Emissions Reduction Plan is required to be completed by the end of 2025. Under the Act, Canada was also required to set a 2035 target. In December 2024, Canada announced its 2035 target of 45% to 50% below 2005 levels. Canada will submit its Nationally Determined Contribution for 2035 in early 2025.

1.2 Implementing and achieving Canada's Nationally Determined Contribution

With its 2021 submission of an enhanced Nationally Determined Contribution (NDC), Canada committed to reducing economy-wide GHG emissions by at least 40% to 45% below 2005 levels by the 2030. For reporting on Canada's progress towards achieving its NDC, Canada's 2030 emissions, and emissions in the years leading up to 2030, will be its national total emissions (excluding LULUCF) plus the LULUCF accounting contribution. Canada will officially assess its NDC achievement using the NIR published by 2032.

In May 2024, Canada published the 2024 National Inventory Report, detailing Canada's emissions up to and including 2022. With this report, Canada is publishing updated LULUCF accounting contribution estimates, also up to and including 2022.

In 2022, Canada's national total GHG emissions (excluding LULUCF) were 708 Mt CO₂ eq, a decrease of 54 Mt (‑7.1%) from 2005, and an increase of 9.3 Mt (1.3%) from 2021, while remaining 44 Mt below (‑5.9%) pre‑pandemic (2019) emission levels. With the addition of the LULUCF accounting contribution, Canada's GHG emissions in 2022 were 720 Mt CO₂ eq, a decrease of 41 Mt (‑5.5%) from 2005, and an increase of 50 Mt from 2021, while remaining 6.7 Mt below pre‑pandemic (2019) emission levels.

While the LULUCF accounting contribution is typically a net credit (sink) for Canada, the accounting contribution was a net debit (source) in 2022. This was mainly due to a significant one-year change in LULUCF, owing to a significant drop in carbon input from crop production in 2021 due to the drought in the Canadian prairies, which in turn led to a large increase in cropland emissions. This is not expected to be a trend that continues and the LULUCF accounting contribution is expected to return to being a net credit in 2023.

Figure 1‑2: Historical and projected LULUCF accounting contribution (including reflecting the projected impact of Nature-based climate solutions (NBCS) and Agriculture measures for the period 2030 to 2040), (Mt CO₂ eq)

Emissions by sector are presented in Figure 1‑3.

Figure 1‑3: Breakdown of Canada's emissions by Intergovernmental Panel on Climate Change Sector (2022)

In addition to the inventory reporting requirement of allocating emissions by IPCC GHG categories, it is useful to allocate emissions by economic sector for the purpose of analyzing economic trends and policies (see Figure 1-4). Overall, GHG emissions trends in Canada's economic sectors are consistent with those described for IPCC sectors. The Oil and Gas, Agriculture, and Buildings economic sectors showed emission increases of 21 Mt (11%), 4.6 Mt (7.0%) and 3.9 Mt (4.5%), respectively, since 2005. These increases have been more than offset by emission decreases in Electricity (‑69 Mt or ‑59%), Heavy Industry (‑10 Mt or ‑11%), and Waste and others (‑4.3 Mt or ‑7.8%). Since 2005, Transportation emissions have generally increased, with an important drop in 2020. Emissions in 2022 from the Transportation sector are now similar to 2005 levels.

Figure 1‑4: Breakdown of Canada's emissions by economic sector (2022)

Canada's emissions are projected to continue to decline as policies and measures are implemented across the country. With this report, Canada is providing updated emissions projections, extending out to 2040 for the first time.

Canada has made substantial and enduring progress toward emissions reductions since the establishment of the Pan-Canadian Framework on Clean Growth and Climate Change with provinces and territories in 2016. Emissions projections are updated each year to account for new measures, to address changing conditions in the domestic and global economy, and to incorporate the historical emissions from the most recent NIR. The underlying data and methodology for estimating emissions are also revised over time in line with the principle of continuous improvement.

Based on data from Canada's most recent NIR and the projections presented in this report, Canada's GHG emissions peaked in 2007. This represents a significant accomplishment, given that in 2015, as reported in Canada's Second Biennial Report to the UNFCCC, Canada's emissions were projected to be 2.2% above 2005 levels in 2020, and to continue to grow, reaching 9% above 2005 levels by 2030. The historical emissions results for 2022, which included a notable emissions increase due to a climate related event (drought), further highlights the imperative to take climate action and the risks that a changing climate can in turn lead to higher emissions. Despite this, Canada continues to reduce emissions and is on track to exceed the previous climate target of 30% below 2005 levels by 2030, while recognizing that additional efforts will be required to achieve Canada's 2030 target.

Figure 1‑5: Canada's projected emissions trajectory

Figure 1-6: Progression of Canada's projected emissions in 2030 (Mt CO₂ eq)

Canada accounts for approximately 1.4% of global GHG emissions, making it the 12th largest emitter^{Footnote 1}. While Canada is one of the highest per capita emitters, per capita emissions have declined since 2005 from 24 t CO₂ eq/capita to 18 t CO₂ eq/capita in 2022^{Footnote 2}. Since 2005, Canada's economy has grown more rapidly than its GHG emissions. As a result, the emissions intensity for the entire economy (GHGs per GDP) has declined by 30%. While the COVID‑19 pandemic undoubtedly impacted recent emissions, the sustained decline in emissions intensity over time can be attributed to factors such as fuel switching, increases in efficiency, and the modernization of industrial processes.

Figure 1‑7: Canadian GHG emissions and indexed trend emissions intensity excluding Land Use, Land-Use Change and Forestry, NBCS, and agriculture measures, WAM scenario, 1990 to 2040

The entire Canadian economy has a role to play in reducing emissions and responsibilities for climate action are shared between federal and provincial and territorial governments. This report provides an update on 148 federal measures and 300 provincial and territorial measures, demonstrating the depth and breadth of action being taken by governments across Canada in the fight against climate change. These measures are contributing to emissions reductions, directly and indirectly, and the establishment of the necessary conditions for a prosperous low-carbon future for Canada.

1.3 Climate change impacts and adaptation

While reducing emissions may help to mitigate future climate change impacts or severity, Canada's climate is already undergoing irreversible changes, with consequences for current and future generations of people across the country. Climate change is increasing the frequency and intensity of many kinds of severe weather and climate events nationwide; additional climate warming will exacerbate the risks of such events. Additionally, slow-onset changes such as permafrost thaw and sea-level rise are transforming landscapes and coastlines, affecting communities, livelihoods, and identities.

Canada's National Adaptation Strategy was developed with provincial, territorial, and municipal governments, Indigenous partners, the private sector, non-governmental organizations, adaptation experts, and youth. It outlines a shared vision for a climate-resilient Canada and offers the opportunity to scaleup ongoing actions and advance new initiatives and leadership through shared priorities and collaboration.

The Strategy was informed by key climate impacts and risks identified through the Canada in a Changing Climate National Assessment Process, the 2019 Canada's Top Climate Risks report by the Canadian Council of Academies, and Indigenous Knowledge Systems. It aims to direct whole-of-society action to achieve adaptation outcomes across five interconnected systems:

• reducing the impacts of climate-related disasters
• improving health and well-being
• protecting and restoring nature and biodiversity
• building and maintaining resilient infrastructure
• supporting the economy and workers

Building climate resilience is a long-term challenge that requires ambitious and sustained action. The National Adaptation Strategy is designed to be iterative as climate risks and adaptation needs and priorities evolve.

The Strategy is underpinned by a set of guiding principles intended to direct and inform decisions on how adaptation actions are designed and advanced. They acknowledge the importance of how Canada reaches its goals and objectives. These principles are:

1. respect jurisdictions and uphold the rights of Indigenous Peoples
2. advance equity, climate, and environmental justice
3. take proactive, risk-based measures to reduce climate impacts before they occur
4. maximize benefits and avoid maladaptation

All the actions taken by government, private and nonprofit organizations, and individuals across the country collectively support the improvement of resiliency to climate change impacts across Canada. First Nations, Inuit, and Métis are already leading Canada's efforts to adapt to the impacts of climate change and are developing climate-change strategies and actions to set out a long-term vision for adaptation in their communities and regions.

Chapters 3 and 4 of this report also serve as Canada's second Adaptation Communication under the Paris Agreement.

1.4 Provision of financial, technological, and capacity-building support

Climate change is a global challenge that requires global solutions. Developing countries, particularly the poorest and most vulnerable, are the hardest hit by climate change. Many face capacity constraints to mitigate and cope with the consequences of climate change, like severe weather, drought, and flooding. Transformational financial investments are needed to help communities around the world better address climate change and adapt to its harmful consequences. International climate finance plays a key role in achieving this.

Canada is committed to supporting low and middle-income countries affected by climate change to transition to sustainable, low-carbon, climate-resilient, nature-positive, and inclusive development. This includes providing climate finance, technology, and capacity-building support to help developing countries mitigate and adapt to climate change and to support those most vulnerable to its effects. Efforts focus on obtaining clean and reliable sources of energy and enhancing resilience in their fight to adapt to the impacts of climate change.

Between 2021 and 2022, Canada provided and mobilized over $3.39 billion in climate finance to support developing countries in their transition to low-carbon, climate-resilient economies. This support, drawn from various sources, includes Canada's international climate finance commitments, as well as other climate-relevant support to developing countries.

Figure 1‑8: Canada's total climate finance delivered over 2021 and 2022, by source ($ millions)

Building on its previous $2.65 billion climate finance commitment (2015 to 2021), Canada announced its five-year (2021 to 2026) $5.3 billion climate finance commitment in 2021. This commitment features four main thematic areas to guide programming: clean energy transition and coal phase-out; climate-smart agriculture and food systems; nature-based solutions and biodiversity; and climate governance.

In addition to thematic areas, Canada's $5.3 billion climate finance commitment includes the following policy targets: 40% of funding towards adaptation to help developing countries build resilience to climate change impacts; a minimum of 20% of funding to projects that leverage nature-based climate solutions and projects that contribute biodiversity co-benefits; and, 80% of projects that integrate gender equality considerations, in line with Canada's Feminist International Assistance Policy.

In 2021 and 2022, Canada provided a total of $1.61 billion in bilateral climate finance support. This funding was allocated to 87 developing countries across a wide variety of geographies. Canada also delivered climate finance through various multilateral channels. These channels include the Green Climate Fund, the world's largest international climate fund dedicated to supporting developing countries pursue climate action, and the Global Environment Facility, through which Canada is able to support developing countries implement multilateral environmental agreements and priorities such as biodiversity, land degradation, and sustainable forest management.