Pan-Canadian Framework on Clean Growth and Climate Change second annual report: section 4

Canadians currently rely on fossil fuels to power and heat their homes, businesses, and industries, and to travel distances and extract natural resources. The PCF was designed to help reduce this reliance and guide Canada’s transition towards a low-carbon economy.

To complement carbon pollution pricing, other targeted actions are being developed and implemented that, in addition to reducing emissions, also directly:

• improve health outcomes (e.g., by reducing air pollution such as that from coal-fired power plants)
• cut costs for Canadians (e.g., by improving energy and fuel efficiency, and therefore reducing utility bills and the cost of refuelling vehicles)
• reduce traffic congestion (e.g., by improving public transit networks); and
• help businesses use cleaner and more efficient technologies (e.g., by supporting the adoption of energy management systems)

These targeted complementary actions – which include regulations, programs and funding in the areas of electricity, the built environment, transportation, industry, forestry, agriculture and waste, government leadership and international leadership – were carefully designed to support a transition towards a better and low carbon future.

Highlights of federal regulatory action taken in 2018 include the publication of final coal and natural gas-fired electricity regulations; consultations on a Clean Fuel Standard; publication of final methane regulations for the oil and gas sector; and the entry into force of the hydrofluorocarbons (HFCs) regulations. In addition, in 2017, the Government of Canada launched the Generation Energy initiative, a national dialogue which engaged over 380,000 people on the future of energy in Canada. The Council’s report, released in June 2018, rests on four pathways: energy efficiency, electrification, renewable fuels, and cleaner oil and gas production.

Federal, provincial and territorial governments also launched funding programs in 2018 to support complementary actions, including: financing for renewable energy projects, particularly in northern, Indigenous, and remote communities; programs and incentives to make new buildings more energy efficient and retrofit the existing building stock, including government buildings; investments in public transportation networks; programs to increase the uptake of Zero Emission Vehicles (ZEVs) by installing networks of charging stations, providing incentives for vehicle purchase, and increasing the number of ZEVs in government fleets; the launch of the Canadian Agricultural Partnership, which will help reduce emissions from agricultural practices and support climate resilience; and providing international climate financing to support global efforts to combat climate change.

To support green infrastructure and public transit projects, all provinces and territories have finalized their Integrated Bilateral Agreements (IBAs) for the Investing in Canada Infrastructure Program, which allocates $9.2 billion for green infrastructure projects, as well as $20.1 billion in funding for public transportation. The Low Carbon Economy Fund has approved funding worth $1.1 billion for provincial and territorial projects that leverage investments in projects that will generate clean growth and reduce GHG emissions to support the PCF.^{Footnote 5}  In 2018, Canada also launched calls for proposals for five green infrastructure programs investing a total of $822 million to support smart grids, electric vehicle (EV) infrastructure, renewable power, clean energy for rural and remote communities and energy efficiency in buildings.

3.1 Electricity

Canadians rely on electricity to power homes, businesses, industrial and agricultural operations, and transportation networks. Although GHG emissions from electricity have decreased over time, with 82% of Canada’s generated electricity now coming from non-emitting sources, in 2016 the electricity sector remained the fourth largest source of GHG emissions in Canada.^{Footnote 6} 

Federal, provincial, and territorial governments committed to work together to increase generation from renewable and non-emitting sources, distribute clean electricity, modernize systems, and reduce diesel use in northern and remote communities.

In 2016, coal-fired electricity generating units were responsible for 10% of the total electricity generated in Canada, but accounted for 71% of GHG emissions from the sector.^{Footnote 7}  Building on prior action in provinces and territories, the Government of Canada announced plans to phase out traditional coal-fired electricity generation by 2030, and published draft regulatory amendments in February 2018 with final amendments published in December 2018. The total expected benefit of the coal phase out is $4.9 billion, including $3.6 billion in avoided climate change damage benefits and $1.3 billion in health and environmental benefits from air quality improvements.^{Footnote 8}  A Pembina Institute report also estimated that the phase out of coal-fired electricity by 2030 will mean that between 2015 and 2035, Canada will avoid an estimated 1,008 premature deaths and 871 emergency room visits.^{Footnote 9}  It will also lead to an estimated 16 Mt of GHG emissions reductions by 2030.^{Footnote 10} 

The four provinces that still rely on coal-fired electricity generation are also taking action to reduce emissions from coal. For example, in January 2018 Saskatchewan implemented new regulations to limit GHG emissions on coal and gas-fired electricity generators, while New Brunswick announced its commitment to eliminate coal-fired electricity generation by 2030.

The Government of Canada released draft regulations for natural gas-fired electricity generation in February 2018 and final regulations in December 2018. The natural gas regulations will work in tandem with the coal regulations, to ensure that where coal-fired electricity is replaced with natural gas-fired electricity generation, new systems use efficient technology. For coal units that convert to run on natural gas, the proposed regulations would encourage companies to convert their coal units to natural gas ahead of their end-of-life under the amended coal regulations.

To complement coal and natural gas-fired electricity regulations, federal, provincial and territorial governments are working to increase the expansion of clean electricity through additional investments in research and development activities, the adoption of new energy strategies and policies, and the expansion of infrastructure to support clean energy use and production. Increasing the use of clean electricity in Canada will lower GHG emissions and lead to improvements in air quality and thereby to human and environmental health.

In the PCF, federal, provincial, and territorial governments committed to work together to identify and evaluate electricity interconnection opportunities, build new and enhanced transmission lines between and within provinces and territories, and establish new interprovincial power sale agreements. Canada’s Regional Electricity Cooperation and Strategic Infrastructure Initiative brought together the four western provinces, the Northwest Territories, and the four Atlantic provinces and their utilities to identify and assess the best regional electricity infrastructure projects that can significantly reduce GHG emissions. Final reports were published in summer 2018 and governments and utilities continue to advance projects identified to significantly reduce GHG emissions and have economic merit.

Governments are also providing support for the demonstration and deployment of smart grid technologies that allow electricity systems to make better use of renewable energy by facilitating the integration of energy storage for renewables, and helping to expand renewable power capacity. In January 2018, the Government of Canada launched a $100 million Smart Grid Program to fund next- generation smart grid, storage, and clean electricity technology demonstration and deployment projects. Project funding announcements began with a smart grid demonstration project led by ENMAX in Alberta.

Governments also continued efforts to explore and develop practical options to reduce the reliance on diesel in northern, remote, and Indigenous communities.

Also in 2018, Canada launched the $220 million Clean Energy for Rural and Remote Communities Program to reduce the reliance of rural and remote communities on diesel fuel for heat and power and support the sustainable use of energy. Projects have been selected for funding and announcements will be made over the next few months.

Provinces and territories are also working to develop a roadmap for the potential development and deployment of small modular reactors in Canada. Alberta is working with its partners to develop options to enable the reduction of diesel in remote and northern, predominantly Indigenous, communities by implementing cleaner sources of electricity.

3.2 Built environment

Buildings require energy to power heating and cooling systems, lighting, appliances and other needs. Energy efficiency improvements reduce energy demand, thereby cutting GHG emissions while also lowering utility bills and increasing the comfort of buildings by improving ambient conditions such as better temperature regulation. According to analysis by Clean Energy Canada, the energy efficiency measures in the PCF to make new buildings more energy efficient, retrofit existing buildings, improve energy efficiency for appliances and equipment, support energy efficiency in Indigenous communities, and improve industrial energy efficiency are projected to save the average household $114 per year or $3,300 over the lifetime of the measures.^{Footnote 11} 

In the PCF, federal, provincial, and territorial governments committed, in consultation with industry, to develop and adopt increasingly stringent model building codes that are climate-informed; establish programs to incentivize the construction of buildings which are more energy efficient; invest in the research, development, and demonstration of highly energy-efficient building construction technologies and practices; and require labelling of building energy use. One example is Prince Edward Island’s launch of the New Home Construction program in early 2018 to incentivize homeowners to build new homes to higher requirements.

As well as making new buildings more energy efficient, retrofits to existing buildings are particularly important because 75% of the buildings that will still be in use by 2030 have already been built. In 2018, many federal, provincial, and territorial governments supported retrofitting existing buildings to improve energy efficiency, increase fuel switching, and promote adoption of high-efficiency equipment. Also in 2018, Canada’s Energy Efficient Buildings Program launched and is providing up to $182 million to increase energy efficiency and address climate change by improving how buildings are designed, renovated, and constructed. The Government of Canada is working with provinces and territories to develop an online platform to disclose buildings’ energy use. A Model National Labelling and Disclosure Framework with guidelines for commercial and institutional buildings is also underway for 2019.

In 2018, federal, provincial, and territorial governments provided financial incentives, programs, and energy audits and training for building retrofits. In June 2018, Alberta passed An Act to Enable Clean Energy Improvements to enable municipalities to establish programs to help private property owners make energy efficiency upgrades. Prince Edward Island and the Government of Canada completed a joint project to support the construction of a district heating system that will use a hot water boiler fueled by wood chips to deliver heat. Newfoundland and Labrador continued to provide support for building retrofits through its Energy Efficiency Loan Program and Home Energy Savings Program, which provide low-interest financing and grants, respectively, for energy efficiency retrofits.

In 2018, provinces and territories focused their efforts related to appliances and equipment on supporting rebate programs and energy efficiency standards. For example, British Columbia launched its EfficiencyBC retrofit program and updated efficiency standards for air source heat pumps and gas fireplaces.

Governments have collaborated with Indigenous Peoples as they move toward more efficient new building standards and incorporate energy efficiency into their building retrofits. In spring 2018, the National Research Council began consultations with stakeholders, including the First Nations National Building Officials Association, on the development of a guide (for new buildings as well as retrofits to existing buildings) that will leverage Traditional Knowledge and support sustainable housing on reserves. British Columbia is working on a pilot with the Heiltsuk First Nations in Bella Bella to install air-source heat pumps in homes that are currently using oil for heating.

3.3 Transportation

Canada’s transportation sector was responsible for almost a quarter of total GHG emissions in 2016. However, Canadians are increasingly choosing alternatives such as low or non-emitting forms of transportation, which supports GHG emissions reduction and helps to reduce congestion, lower household expenses, and improve health and well-being. Between 1996 and 2016, the number of commuters taking public transit grew by 59.5% and the number of commuters cycling rose by 61.6%.^{Footnote 12} From 2016 to 2017, zero emissions vehicles (ZEV) uptake in Canada increased by 68%.^{Footnote 13} 

Actions by federal, provincial, and territorial governments to create clean and efficient transportation networks across Canada include: setting and implementing standards for new light duty vehicles (LDVs) (e.g., passenger vehicles) and heavy-duty vehicles (HDVs) (e.g., buses and trucks); investments to support an increased uptake of ZEVs and alternative fuel vehicles; improving efficiency and fuel switching in the rail, aviation, marine and freight sectors; public transit improvements; and, investing in efficient trade and transportation corridors.

In 2018, the Government of Canada: published final amended regulations for new HDVs designed to reduce GHG emissions in Canada from new on-road HDVs; continued to implement emissions standards for new LDVs; and, created an FPT Working Group HDV retrofits to support the PCF commitment to develop new requirements for heavy-duty trucks to install fuel-saving devices.

Provinces and territories have engaged in discussions with the Government of Canada to examine a potential shift towards cleaner fuels, with a number of provinces continuing implementation or introducing renewable fuel content regulations.

Action by provinces and territories will complement the federal Clean Fuel Standard, developed through stakeholder and industry consultations, which will aim to reduce emissions by 30 Mt CO2e per year by 2030, equivalent to taking seven million cars off the road. For example, in April 2018, Ontario increased its renewable content requirement in gasoline from 5% to 10%, coming into force in 2020. The publication of the first phase of regulations for the Clean Fuel Standard is proposed for 2019.

Federal, provincial, and territorial governments continue to work collaboratively and with industry and other stakeholders to develop a Canada-wide Zero-Emission Vehicle Strategy, and have made strides towards accelerating the adoption of ZEVs and alternative fuel vehicles. For example, the Government of Canada has invested over $180 million in charging stations and other alternative refueling infrastructure. British Columbia has also invested over $82 million in vehicle incentives, charging and hydrogen fueling infrastructure, fleet programs, and public outreach. Installing charging and refueling infrastructure will remove a key barrier to Canadians’ uptake of ZEVs and alternative fuel vehicles. Governments are also continuing efforts to increase Canadians’ ability to afford ZEVs through purchase incentive programs and ZEV performance and feasibility assessments.

In 2018 the Government of Canada continued to work through international and domestic fora to improve the efficiency of, and reduce emissions from, the aviation and marine sectors, as well as the domestic rail sector. For example, as part of the Impact Canada Initiative, the Government of Canada has also launched the $14 million Sky’s the Limit Challenge to support the development of sustainable biojet fuels in Canada.^{Footnote 14} 

In the PCF, federal, provincial, and territorial governments committed to work together to enhance investments in public transit upgrades and expansions which will reduce traffic congestion, air pollution and GHG emissions. The Investing in Canada Infrastructure Program has finalized Integrated Bilateral Agreements with all provinces and territories. Both Alberta and the Government of Canada have announced support for the Calgary Green Line Light Rail Transit project and in 2018, the Canada Infrastructure Bank announced it was providing a $1.28 billion, 15 year loan to Québec in support of Montreal’s light rail transit project REM (Réseau express métropolitain).

Efficient trade and transportation corridors support the flow of goods and people across Canada and to international destinations. The Government of Canada’s National Trade Corridors Fund (NTCF) program aims to facilitate this by supporting investments in transportation infrastructure, including ports, airports, railways, border crossings, and roads that contribute to reductions in GHG emissions by addressing bottlenecks and congestion.

3.4 Industry

Industrial sectors, including mining and resource extraction, manufacturing, and oil and gas, are key contributors to the Canadian economy. However, they are also significant sources of Canada’s GHG emissions.

By improving energy efficiency, fuel-switching, and reducing GHG emission leaks from industrial operations, emissions from industry can be reduced. Energy efficiency improvements also reduce operating costs for industry, increasing their competitiveness while demonstrating their climate leadership. Federal, provincial, and territorial governments are working with industry to reduce emissions through regulatory measures, providing support for the adoption of energy management systems and investing in research and development opportunities for technology that will reduce emissions.

In March 2016, the Prime Minister committed to reduce emissions of methane from the oil and gas sector by 40%-45% below 2012 levels by 2025. In April 2018, the Government of Canada published final methane regulations for the oil and gas sector designed to achieve significant reductions in GHG emissions. Oil and gas facilities account for 26% of Canada’s total GHG emissions and are also Canada’s largest emitters of methane. Methane is a potent GHG with a global warming potential 25 times that of carbon dioxide. Interested provinces and territories will work with the Government of Canada to pursue equivalency agreements.

Also in April 2018, final regulations to phase down the consumption of hydrofluorocarbons (HFCs) entered into force. Found in refrigerators, air conditioners and insulation foam, HFCs are thousands of times more powerful drivers of climate change than carbon dioxide. These regulations aim to reduce the supply of HFCs that enter Canada and the demand for HFCs in manufactured products, thereby averting future HFC releases to the environment. A number of provinces and territories are engaged in their own work to regulate methane and HFC emissions from industry.

Supporting improved energy efficiency of industrial operations remains a priority for many jurisdictions. For example, Canada’s industrial energy management program supports the uptake of energy management systems, such as ISO 50001 and the ENERGY STAR for Industry program, in industrial facilities. British Columbia’s Clean Growth Program for Industry will address the competitive impacts of increasing the province’s carbon tax with new incentives for industrial operations based on emissions benchmarks of similar products made at the cleanest facilities around the world, and with a new fund to offset the cost of making operations cleaner. The Program will direct a portion of B.C.’s carbon tax paid by industry into incentives that encourage them to transition to cleaner operations and reduce emissions.

Related to research and development opportunities, Yukon is working with industry to promote the use of clean energy technology and the connection of remote mining operations to Yukon’s renewable electrical grid in order to reduce GHG emissions and promote economic growth in the territory.

3.5 Forestry, agriculture and waste

Forests and agricultural lands sequester atmospheric CO₂ as carbon and store it in trees, plants, dead organic matter, and soils, which are also known as carbon sinks. Forest and agricultural lands can be sustainably managed to maximize the amount of carbon they store, representing an opportunity to reduce atmospheric GHG levels. There has been a renewed focus on how land management can be adjusted to enhance carbon sinks and reduce GHG emissions by, for example, advancing regeneration of forests after natural disturbances like insect infestations and fire.

As of December 2018, three approved Low Carbon Economy Leadership Fund proposals target the agriculture sector and provide incentives that improve the efficiency of equipment or promote best practices to reduce emissions, and to enhance soil carbon sequestration within the agriculture sector. There are also five approved proposals that target enhancing forest sinks, including by promoting forest regeneration in disturbed areas that have not recovered from harvest or wildfires, and afforestation of idle land.

The use of renewable solid wood products in construction can also help store carbon long-term and reduce the use of other, more GHG intensive materials. The PCF recognizes this through commitments by federal, provincial and territorial governments to increase the use of wood for construction. In 2018, the Government of Canada’s Green Construction through Wood program worked on negotiating agreements for a tall wood demonstration project, and launched calls for Expressions of Interest for low-rise commercial building and bridge demonstration projects.

British Columbia continued implementation of its major Forest Carbon Initiative to restore up to 300,000 hectares of forests impacted by the mountain pine beetle infestation and wildfires. New Brunswick has assisted with several agricultural research projects, including some to target increasing soil carbon levels.

The province of Alberta continues to provide opportunities for reduction of GHG emissions in the forestry, agriculture, and waste sectors through its emission offset system, and has recently launched the Forest Carbon Technical Experts Group, to provide guidance on acceptable approaches to the quantification, accounting, and monitoring, reporting and verification.

In the agricultural sector, a number of key funding initiatives were launched this year aimed at enhancing the long-term environmental sustainability and resilience of the sector.

In the PCF, FPT governments also committed to work together to identify opportunities to produce renewable fuels and bioproducts, for example, the generation of renewable fuel from waste. New Brunswick is focused on reducing methane emissions from waste. All of New Brunswick’s landfill facilities have methane gas capture, with captured gas being used to produce electricity in most facilities.

3.6 Government leadership

Governments that set ambitious targets to reduce the carbon footprint of their own operations, while devising and implementing concrete plans to achieve these targets, are sending a strong signal regarding their leadership and commitment to combat climate change. In their efforts to meet targets, governments can also help to move markets and create demand for clean technologies.

In the PCF, federal, provincial, and territorial governments committed to scaling up efforts to ensure that government operations transition to highly efficient public buildings and zero-emission government vehicle fleets. Efforts include investing in energy efficient building retrofits, requiring new buildings to exceed minimum energy efficiency standards, and implementing new strategies to accelerate the adoption of low emission technologies and practices.

In December 2017, the Government of Canada released its Greening Government Strategy, which set a target to reduce GHG emissions from federal operations by 40% from 2005 levels by 2030 (or earlier) and 80% by 2050. The Government of Canada will also be an early adopter of the new and existing building standards proposed under the PCF, and all new executive vehicle purchases must now be zero-emission vehicles or hybrid vehicles.

British Columbia continued its requirement for a carbon neutral government and achieved carbon neutrality across the provincial public sector for the eighth consecutive year in 2017. New Brunswick allocated $20.3 million in 2018-2019 for investments in efficiency retrofits and renewable energy initiatives in schools and hospitals. The Northwest Territories has also allocated over $5 million this year to undertake energy conservation retrofits on existing government buildings through its Capital Asset Retrofit Fund.

As part of its ongoing collaborative work, the Canadian Council of Ministers of the Environment released the report Lights on the Path in July 2018 on best practices for reducing GHG emissions and building climate resilience in government operations. At the 2018 Energy and Mines Ministers’ Conference, Canada’s energy ministers released the Greening Government Fleets best practice guide that outlines a comprehensive step-by-step process for adopting lower emitting vehicle technologies and practices.

3.7 International leadership

In the PCF, governments identified key areas for Canada’s international leadership on climate change. The Government of Canada is delivering on its historic commitment of $2.65 billion in international climate finance commitments, which are helping developing countries transition to low carbon, climate resilient economies. In addition, while governments are focused first on achieving emission reductions here in Canada, the PCF recognizes that part of Canada’s approach could involve acquiring ‘internationally transferred mitigation outcomes’ (ITMOs) from other parts of the world. International cooperation involving ITMOs has the potential to help advance global climate action, support capacity building and clean growth in developing countries, provide new business opportunities for Canadian companies, and help Canada reach its 2030 target in a cost-effective manner. In the PCF, governments also committed to advance trade and development objectives by ensuring trade rules support climate policy, and will help align global efforts to reduce GHG emissions.

In 2018, the Government of Canada continued to explore opportunities and mechanisms to facilitate collaboration with international partners. To date, the Government of Canada has announced over $1.2 billion in climate financing contributions that will support developing countries take action on climate change. So far, $430 million has been disbursed to projects over fiscal year 2015-2016 and fiscal year 2016-2017. Canada is continuing to work with its international partners to deliver on this commitment by fiscal year 2020-2021. Québec also assists Francophone countries that are the most vulnerable to the impacts of climate change with their efforts to reduce GHG emissions and adapt to climate change.

FPT governments held several meetings and workshops, as part of the work on international mitigation under Canadian Council of Ministers of the Environment, to discuss the technical aspects, rules, and infrastructure that would be needed to enable the use of, and accounting for ITMOs in the Canadian context. This includes exploring potential pilot projects related to the generation of ITMOs that Canada could consider acquiring and/or accounting toward its 2030 emissions reduction target. Also in 2018, Ontario hosted a workshop to explore synergies between the emerging rules under the Paris Agreement and prospects for carbon pollution pricing policies in North America. Québec and California are working toward the development of accounting methodology for emissions allowances transferred through the Western Climate Initiative’s (WCI) linked emissions trading system.

Internationally, the Government of Canada, along with other Parties to the United Nations Framework Convention on Climate Change (UNFCCC), continued discussions on ITMOs and non-market approaches to advance development of the guidance to implement the Paris Agreement. Parties discussed key elements of this guidance at the 24th meeting of the Conference of the Parties (COP24) of the UNFCCC in December 2018. These negotiations will affect how Parties use ITMOs and non-market approaches to cooperate with other Parties on mitigation under the Paris Agreement.

The Government of Canada also worked in close collaboration with Canada’s Indigenous Peoples to maintain Canada’s leadership in advancing the implementation of the UNFCCC’s Local Communities and Indigenous Peoples Platform. Canada provided financial support for the first activity of the Platform in May 2018 in Bonn, Germany, and was recognized for its ongoing leadership in bringing Parties and Indigenous Peoples together to discuss how a decision at COP24 can ensure that the Platform continues to operate successfully.

The Government of Canada also continued to engage in relevant fora to promote enhanced understanding of the relationship between trade and climate change through participating in international-level meetings on the subject of trade and climate change. Multilateral and bilateral opportunities are being pursued.