Canada's 2016 greenhouse gas emissions reference case

Canada's greenhouse gas emissions projections 2016

This report provides a reference case of Canada’s greenhouse gas (GHG) emissions through 2030. This Reference Case presents the future impacts of policies and measures taken by federal, provincial and territorial governments as of November 1st, 2016. It is aligned with Canada’s historical emissions from 1990 to 2014 as presented in National Inventory Report 1990-2014: Greenhouse Gas Sources and Sinks in Canada (NIR). The Reference Case does not take into account the impact of broader strategies or future measures within existing plans where significant details are still under development. Policies still under development will be included in subsequent reference cases as their details become finalized. Table 30 gives a full description of measures included into 2016 Reference Case.

Given the uncertainty regarding the key drivers of GHG emissions, alternate scenarios (high and low emissions projections) are also included.

The projections in this report use the same modelling framework as those presented by Environment and Climate Change Canada’s Biennial Reports to the United Nations Framework Convention on Climate Change (UNFCCC) in 2014 and 2016.

As shown in Table 1, absent additional actions, total Canadian GHG emissions projections in the Reference Case would be 731 megatonnes of carbon dioxide equivalent (Mt CO2 eq) in 2020 and 742 Mt in 2030.

Table 1 Reference Case Emissions Projections by Economic Sector (Mt CO 2 eq)
Sector Historical Projected Change
2005 to 2030
2005 2014 2020 2030
Oil and Gas 159 192 201 233 74
Electricity 118 78 64 34 -84
Transportation 171 171 168 157 -14
Heavy Industry 88 76 85 97 9
Buildings 85 87 89 94 9
Agriculture 70 73 72 74 4
Waste & Others 56 54 51 53 -3
Total 747 732 731 742 -5

Note: Numbers may not sum to the total due to rounding.

Comparison of 2016 and 2015 Reference Case Emissions ProjectionsFootnote 1

In 2030, the Reference Case GHG emissions in Canada are projected to reach 742 Mt, 73 Mt below last year’s forecast of 815 Mt presented in Canada’s Second Biennial Report (see Figure 1 and Table 2)Footnote 2. This reflects the expected impacts of a number of federal and provincial policies that were put in place over the last year, namely:

  • Alberta’s Carbon levy, 2030 phase-out of coal-fired electricity, and 100 Mt cap on oil sand emissions;
  • Domestic reductions from Ontario joining Quebec and California in the Western Climate Initiative (WCI) cap-and-trade regime in 2017;
  • Quebec’s regulation for new commercial, institutional and residential high-rise buildings; and,
  • Government of Canada measures (announced in Federal Budget 2016) to increase efficiency of residential and commercial equipment and appliances.

In addition to the new policies, the lower Reference Case emissions projections are also driven by a lower GDP growth forecast and lower light oil, oil sands, and natural gas production estimates (see Annex 1 for details). These changes in macroeconomic and energy assumptions, along with modelling improvements and revisions in historical data, result in emissions reductions of approximately 30 Mt in 2030 from last year’s projection.

Figure 1 Canada’s 2016 and 2015 Reference Case Emissions Projections Footnote 3

Figure 1. See description below
Text Description

Figure 1 presents two lines on a graph spanning the years 2005-2030. The vertical axis is Megatonnes of CO2e and spans the values 500 to 850 in 50 megatonne increments. The two lines start out as one in the period between 2005 and 2012, at which point they start to diverge. The top line shows the projections from 2015 Reference Case, which by 2030 reach 815 Mt. The line on the bottom represents the Reference case from December 2016, which by 2030 reaches 742 Mt. Below the lines is a dot at 523 Mt, which represents Canadian target level of emissions in 2030 (30% below 2005 levels).

Table 2 Comparison of 2016 and 2015 Reference Case Emissions Projections by Economic Sector (Mt CO 2 eq)
Sector Historical 2015 Projection 2016 Projection Change
2005 2020 2030 2020 2030 2030
Oil and Gas 159 210 242 201 233 -9
Electricity 118 74 58 64 34 -24
Transportation 171 169 164 168 157 -7
Heavy Industry 88 90 107 85 97 -10
Buildings 85 96 109 89 94 -15
Agriculture 70 74 76 72 74 -2
Waste & Others 56 54 59 51 53 -6
Total 747 768 815 731 742 -73

Note: Numbers may not sum to the total due to rounding.

Sensitivity Analysis

GHG emissions projections depend on a number of economic and energy assumptions and are subject to significant uncertainty, especially in the longer term (see Table 3).  In general, GDP growth has a direct and significant impact on GHG emissions. In Canada, oil and natural gas production is also strongly correlated with oil and gas prices which are highly volatile and largely determined by external commodity markets.

Table 3 GDP Growth, Oil and Gas Price Assumptions
Assumptions Low Reference High
Average Annual GDP Growth (2014-2030) 1.0% 1.7% 2.3%
2030 West Texas Intermediate Oil Price (2014 US$/bbl) 42 81 111
2030 Henry Hub Natural Gas Price (2014 US$/GJ) 2.89 3.72 4.62
2030 GHG Emissions (Mt CO2 eq.) 697 742 790

To address these uncertainties, alternate scenarios that reflect different assumptions about oil and natural gas prices and production as well as different rates of economic growth have been developed.   As shown in Figure 2 below, these scenarios suggest that the expected emission range of the Reference Case in 2030 could be from 697 Mt in the lowest emissions scenario to 790 Mt in the highest emissions scenario. This 93 Mt range will continue to change over time with further government actions, technological change, economic conditions and developments in energy markets.  Furthermore, these estimates do not include contributions for Land Use, Land-Use Change and Forestry (LULUCF).

Figure 2 Canada’s Domestic Emissions Projections in 2020 and 2030 (Mt CO2 eq)

Figure 2. See description below
Text Description

Figure 2 presents three lines on a graph spanning the years 2005-2030. The vertical axis is in Megatonnes of CO2e and spans the values 500 to 850 in fifty megatonne increments. The three lines start out as one in the period between 2005 and 2014 and represent historical emissions, but in 2015 they start to diverge. From 2015 the top line, representing the highest emissions scenario, reaches 747 Mt in 2020, peaks in 2029 and then declines slightly to reach 790 Mt in 2030. The middle line, representing the reference scenario, reaches 731 Mt in 2020, is slowly increasing to reach the peak in 2025, and then declines to 742 in 2030. The lowest line represents the lowest emissions scenario and reaches 720 Mt in 2020, stays relatively stable till 2029, and then declines to 697 Mt in 2030. Below the lines is a dot at 523 Mt, which represents Canadian target level of emissions in 2030 (30% below 2005 levels).

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