Canada’s 2030 Emissions Reduction Plan - Chapter 2
Canada's climate actions to date have resulted in the decoupling of economic growth from emissions growth. This is a massive step forward, but in order to further reduce emissions in every part of the economy, Canada needs to do more. This means implementing strategies that apply to the entire economy, and others that are targeted to specific sectors. This chapter begins by looking at strategies for emissions reductions and economic growth across the entire economy, then at strategies for key sectors.
Every economic sector has a role to play and a responsibility to act. At the same time, each sector and the workforces and communities they support are distinct. This diversity means that every sector will have a unique transition pathway. The policy tools employed to reduce emissions will need to take into account the realities of the regions and people they impact. Economic sectors are linked and interdependent; decarbonizing one sector will often have positive spillover effects to enable reductions from another sector. For example, reducing emissions from Canada's electricity sector by transitioning to a net zero-emissions grid will allow other zero-emissions technologies that rely on electrification, like zero-emission cars, trucks, and buses, to yield greater emissions reductions.
Canada's climate actions carefully consider the need to increase climate ambition, while also maintaining or enhancing equity, creating jobs, and growing a strong economy where everyone has a fair chance at success. As Canada works to achieve its 2030 and 2050 goals, maintaining this balance will be paramount. As emphasized by the Net-Zero Advisory Body in their Foundational Values and Design Principles for Pathways to Net-Zero report, the guiding force behind Canada's efforts to 2030 and 2050 will be to seize the upsides of the transition, and pursue measures with the broadest benefits for individuals, families, workers, businesses, society as a whole, and future generations.
Working to build a prosperous, net-zero economy in every region of Canada
The global shift to net-zero presents a significant opportunity for Canada to grow its economy significantly and sustainably, creating jobs and economic prosperity now and into the future. Each region of the country is uniquely positioned to take advantage of new markets emerging from the transition while creating jobs and reducing GHG emissions. This is why, over the coming years, the Government of Canada is proposing to work in partnership with provinces and territories, Indigenous Peoples, industry and others towards building Canada's net zero economy. The Government proposes to accelerate regional growth opportunities and energy systems transformation through a $25 million investment in Regional Strategic Initiatives that will drive economic prosperity and the creation of sustainable jobs in a net-zero economy.
The Government of Canada acknowledges the requirement under the Canadian Net-Zero Emissions Accountability Act to take into account Indigenous Knowledge when setting emission reduction targets, as well as the requirement to consider the United Nations Declaration on the Rights of Indigenous Peoples in the establishment of emission reduction plans. Recognizing these requirements and the time constraints in the development of this 2030 Emission Reduction Plan, the Government of Canada will work in partnership with Indigenous Peoples to enable future emissions reduction plans to meaningfully incorporate Indigenous Knowledge, which could include efforts to emphasize the importance of building a net-zero emissions future that is just and resilient for generations to come, and reflect the lived realities of Indigenous Peoples. In order to better apply the principles within the UN Declaration, the Government will continue to work with Indigenous partners to co-develop an approach to enable a stronger presence of the Indigenous perspective in other elements of emission reduction plans, as well as work to better incorporate the multi-dimensional solutions offered by Indigenous Peoples, which could include returning to the land, food security, local and green power solutions, and language revitalization.
Reaching Canada's enhanced NDC of 40-45% below 2005 levels will require a significant increase in ambition across all economic sectors, and the measures and strategies outlined in this plan reflect this reality. Factors like the pace and scale of clean technology adoption, additional actions from other governments, and emerging market opportunities will all influence Canada's emissions trajectory to 2030—but, it is unclear at this point how these factors will evolve over time. To try to reflect these influences, the Government uses economic modelling to estimate how mitigation measures and strategies could impact Canada's emission levels in 2030. The updated projections to 2030 presented in Chapter 3 provide insight into how the measures in this 2030 ERP could influence Canada's pathway to 2030, and shed light on additional areas of ambition for the Government to pursue going forward.
Canada's emissions reduction plan for 2030 and pathway to 2050
2030 Emissions Reduction Plan (ERP): Canada's decarbonization framework
The 2030 ERP will reflect Canada's proposed decarbonization framework, setting clear policy signals on how the government intends to achieve its 2030 target, including focus on reductions from key sectors (such as oil & gas, transport, agriculture), and create pathways to meet net-zero emissions by 2050.
Reaching Canada's 2030 and 2050 targets will require transformation across the economy. Enhancing mitigation measures with horizontal enabling measures to support and facilitate the transition is needed.
Mitigation opportunities for 2030 and 2050
- Continue carbon pricing trajectory, with increase of $15 per tonne from 2023-30, and increased stringency of the benchmark
- Champion adoption of global minimum standard on carbon pricing
- Cap oil and gas emissions at current levels with five-year targets to achieve net-zero by 2050
- Implement the Global Methane Pledge
- CCUS tax credit
- Implement the Net-Zero Accelerator
- Launch Critical Minerals Strategy
- Introduce Buy Clean Strategy
- And other measures
- Clean Electricity Standard
- Pan-Canadian Grid Council
- Reduce reliance on diesel by 2030
- Support transition lines and the integration of renewables and clean fuels
- Continue to invest in renewables
- And other measures
- Regulated sales mandate of 50% zero-emission LDVs in 2030; 100% in 2035
- Regulated sales mandate of 100% zero-emission MDV/HDVs by 2040
- Decarbonize on-road freight
- Add 50,000 EV chargers and hydrogen stations
- Accelerate public/active transit
- And other measures
- National Net-Zero Emissions Building Strategy
- Net-zero emissions building and model retrofit code by 2024
- National Infrastructure Assessment
- Low-carbon building materials innovation hub
- And other measures
Agriculture and waste:
- Integrate climate risk management into business risk management programs
- Triple funding for clean tech on farms
- Work to reduce methane and fertilizer emissions
- Develop agricultural policy framework, with climate at the core
- Create No-Waste Food Fund
- And other measures
Natural climate solutions:
- Advance Natural Climate Solutions Fund
- And other measures
Cross-cutting opportunities for 2030 and 2050
Clean technology and climate innovation:
- Advance Canada's clean technology ecosystem to align with 2030 and 2050 goals, and explore Canada's climate innovation trajectory, through efforts such as regulatory ambition, investments in clean tech deployment, low-carbon procurement, and more
- Advance mandatory climate-related financial disclosures in partnership with PTs, and require federally-regulated institutions to issue climate-related financial disclosures
- Launch Canada's first federal green bond and develop a net-zero capital allocation strategy with the Sustainable Finance Action Council
Skills and people-centered transition:
- Advance Just Transition legislation and create a New Futures Fund to support affected workers
- Launch Clean Jobs Training Centre and redesign Canada Training Benefit to help workers gain skills to thrive in a net-zero economy
- Increase inclusion in the clean energy workforce by creating more opportunities for under-represented people
Economy-wide strategies to reduce emissions allow for maximum flexibility at the lowest overall cost. Policies with long-term targets and price trajectories provide policy certainty, allowing Canadians and businesses to make informed investment decisions.
2.1.1. Putting a price on carbon pollution
Supreme Court decision on the price on carbon pollution
On March 25, 2021, the Supreme Court of Canada released its judgment on the Greenhouse Gas Pollution Pricing Act, where a strong majority ruled to uphold the validity of the Act. In doing so, the Court confirmed that Parliament has the authority under its peace, order, and good government power to legislate to establish minimum national standards of GHG price stringency to reduce emissions.
In the Court's own words:
"Climate change is real. It is caused by greenhouse gas emissions resulting from human activities, and it poses a grave threat to humanity's future. The only way to address the threat of climate change is to reduce greenhouse gas emissions."
"The evidence reflects a consensus, both in Canada and internationally, that carbon pricing is integral to reducing GHG emissions."
"Any province's failure to act threatens Canada's ability to meet its international obligations, which in turn hinders Canada's ability to push for international action to reduce GHG emissions. Therefore, a provincial failure to act directly threatens Canada as a whole."
It is much harder to cut pollution if it is free to pollute. The principle is straightforward: a price on carbon pollution establishes how much businesses and households need to pay for their carbon pollution. The higher the price, the greater the incentive to pollute less, conserve energy, and invest in low-carbon solutions.
Canadians and businesses understand that putting a price on carbon pollution spurs the development of new technologies and services that can help reduce their emissions cost-effectively, from how they heat their homes to what kind of energy they use to do so. It also provides Canadians and businesses with an incentive to adopt these changes or solutions into their lives. That's why experts consistently recommend carbon pollution pricing as an efficient, effective approach to reducing emissions.
Canada is leading the charge on sending the necessary price signals needed to transform the economy. At COP 26 in Glasgow, Canada called for global leaders to work together to triple the global emissions covered by carbon pollution pricing to 60% by 2030.
What have we done so far?
Since 2019, every jurisdiction in Canada has had a comparable price on carbon pollution. Not only does this help fight climate change, it puts more money back into people's pockets. Canada's approach is flexible: any province or territory can design its own pricing system tailored to local needs, or it can choose the federal pricing system. The Government of Canada sets minimum national stringency standards (the "benchmark") that all systems must meet to ensure they are comparable and effective in reducing GHG emissions. If a province decides not to price carbon pollution, or proposes a system that does not meet these standards, the federal system is applied. In August 2021, the Government of Canada published strengthened benchmark criteria that all systems will need to meet from 2023-2030.
A key element of the federal benchmark is the price on carbon pollution.Footnote 1 The price on carbon pollution started at $20 per tonne of emissions in 2019 – and has been rising at a predictable rate of $10 per year to reach $50 in 2022. Starting in 2023, the price will start rising by $15 per year until it reaches $170 per tonne in 2030. The price schedule is laid out to 2030 to create certainty, which is important for attracting private sector investment.
The federal carbon pollution pricing system has two parts: a regulatory charge on fossil fuels like gasoline and natural gas (the "fuel charge"), and a performance-based emissions trading system for industries, known as the Output-Based Pricing System (OBPS).
Grey: Provincial/Territorial system applies
Blue: Federal backstop applies in part
Teal: Federal backstop applies in full
- Output-Based Pricing System (OBPS), a regulatory trading system for industry
- Fuel charge
Provinces/territories and the system that applies in each:
- Newfoundland and Labrador (grey): Provincial carbon tax and OBPS
- Nova Scotia (grey): cap-and-trade
- Prince Edward Island (teal): provincial fuel charge, federal OBPS
- New Brunswick (grey): provincial fuel charge, provincial OBPS as of January 1, 2021
- Quebec (grey): cap-and-trade
- Ontario (teal): federal fuel charge, provincial OBPS as of January 1, 2022.
- Manitoba (blue): federal backstop
- Saskatchewan (teal): federal fuel charge, provincial OBPS on some sectors, federal OBPS on others
- Alberta (teal): federal fuel charge, provincial OBPS.
- British Columbia (grey): provincial carbon tax
- Yukon (blue): federal backstop
- Northwest Territories (grey): territorial carbon tax
- Nunavut (blue): federal backstop
Ensuring that provincial and territorial pricing systems continue to meet federal benchmark criteria is key to realizing the significant emissions reductions from the price on carbon pollution by 2030. The Canadian Climate Institute reviewed the state of the price on carbon pollution across Canada and recommended that "to support effectiveness and address competitiveness and fairness issues, federal, provincial, and territorial governments should work towards developing a common standard of emissions coverage for carbon pricing."
The federal fuel charge applies in Ontario, Manitoba, Saskatchewan, Alberta, Yukon, and Nunavut. Applying the fuel charge at higher rates over time will help to reduce GHG emissions and support clean growth. It also sends a signal to markets and provides an increasing incentive to choose cleaner sources of energy and reduce energy use through conservation and efficiency measures.
Output-Based Pricing System
The OBPS applies to industrial emitters that are emissions intensive and trade exposed. It ensures there is a price incentive for industrial emitters to reduce their emissions, spurring innovation and encouraging the adoption of cleaner technologies and fuels while minimizing competitiveness and "carbon leakage" risks (i.e. the risk of industrial facilities moving from one region to another to avoid paying a price on carbon pollution). The federal OBPS applies in Prince Edward Island, Manitoba, Yukon, Nunavut, and partially in Saskatchewan. All other provinces and territories are implementing their own pricing systems for industrial emitters, aligned with the federal benchmark.
Carbon pollution pricing proceeds
Ensuring that the proceeds of the federal price on carbon pollution remain in the province or territory where they were collected is an important component of the federal pricing system.
Return of Federal carbon pollution proceeds
The federal carbon pollution pricing system returns all direct proceeds back to the jurisdiction where they were collected. Some provinces and territories receive the funds directly and can use them as they see fit. In other provinces, the federal government uses the proceeds to support to individuals, Indigenous Peoples, families, and businesses through direct payments and federal programming.
The majority of households in jurisdictions that receive Climate Action Incentive payments under the federal backstop system receive more money than they pay in fuel charges. Direct payments to households work because they help make the price on carbon pollution affordable, and enable households to make investments to increase energy efficiency and further reduce emissions.
|Average cost impact per household1 of the federal system||$ 578||$ 559||$ 734||$ 700|
|Average Climate Action Incentive payment per household2||$ 712||$ 788||$ 1053||$ 1038|
Source: Department of Finance Canada calculations using inputs from Environment and Climate Change Canada, Canada Revenue Agency and Statistics Canada.
1 The estimated average impact per household reflects the impact on household spending costs, accounting for direct impacts (reflecting consumption of fuels to which the federal carbon pollution pricing system applies) and indirect impacts (reflecting consumption of goods and services with federal carbon pollution pricing embedded in them). These impacts are inclusive of carbon pollution pricing embedded in imports that households purchase from other provinces/territories on which a federal carbon pollution price is applied. They do not include the costs associated with other carbon pricing systems; accordingly, they do not include the costs associated with the provincial systems for large industrial facilities such as those in Saskatchewan and Alberta. Estimates also assume full pass-through from businesses to consumers.
2 The 2022-23 Climate Action Incentive payment amounts include an adjustment for over-distributions made with respect to proceeds generated in previous years in each of the above provinces respectively. As a result, the average payment amount per household also reflects this adjustment.
What was heard from the 2030 ERP engagement process?
- Canadians and stakeholders recognized that putting a price on carbon pollution is one of the best tools to fight climate change, and that support for vulnerable households will be critical as the price increases. Sound investment decisions will demand long-term certainty and a clear trajectory.
- A number of jurisdictions are working on new or updated climate change plans or related strategies, emissions targets, and carbon pollution pricing approaches for 2023-2030 that will comply with federal requirements.
- Indigenous submissions emphasized that market-based solutions have limitations, and the path toward net-zero should be a holistic process leading to a just, equitable, and resilient future for generations to come, founded on Indigenous Peoples' right to self-determination.
Carbon pricing is the cornerstone of Canada's approach to climate action. The Government of Canada has established a globally-recognized pricing system focused on the return of revenue, putting money back in the pockets of Canadians, and incentivizing decarbonization throughout the economy. Ensuring that the federal benchmark price will rise by $15 per year, increasing to $170 per tonne by 2030, is key to achieving Canada's climate objectives. This requires that provinces and territories update their carbon pollution pricing systems where necessary to align with the strengthened benchmark.
Ensuring carbon pricing certainty
To enhance long-term certainty, the Government of Canada will explore measures that help guarantee the future price of carbon pollution. This includes, for example, investment approaches like carbon contracts for differences, which enshrine future price levels in contracts between the Government and low-carbon project investors, thereby de-risking private sector low-carbon investments. This also includes exploring legislative approaches to support a durable price on carbon pollution. The Government of Canada will provide an update on these exploratory efforts in Canada's 2023 Progress Report under the Canadian Net-Zero Emissions Accountability Act.
Border carbon adjustments
Countries around the world are considering how to take strong climate action while mitigating carbon leakage and competitiveness risks for domestic industries. Currently in Canada, these risks are addressed through the design of domestic carbon pollution pricing systems by reducing average costs. Another complementary approach is to apply border carbon adjustments – import charges and potentially export rebates – to account for differences between countries in carbon costs incurred in producing emissions-intensive goods that are traded internationally. Such a policy can support ambitious carbon pollution pricing by leveling the playing field between domestic producers and their international competitors. The Government of Canada is exploring border carbon adjustments as a potential policy tool that could complement domestic carbon pollution pricing to allow for greater ambition and stringency.
Developing Canada's domestic offset system
The Government is developing a Federal Greenhouse Gas (GHG) Offset System under the Greenhouse Gas Pollution Pricing Act (GGPPA). The Federal GHG Offset System will encourage voluntary project activities across Canada that reduce GHG emissions or remove them from the atmosphere by allowing the generation of offset credits. Finalizing the Federal GHG Offset System will encourage cost-effective, voluntary emissions reductions and removals from activities that go beyond legal requirements and common practice, as well as those not covered by the price on carbon pollution expanding the financial incentives to reduce carbon pollution across the economy.
Facilities covered by the Federal OBPS can use federal offset credits as a compliance option, while other groups, including governments and businesses, can use federal offset credits to meet other climate objectives. The initial set of protocols under development will create a financial incentive to reduce emissions from activities such as landfill methane recovery and destruction, replacing high global warming potential (GWP) gases in refrigeration systems, sustainable agriculture land management practices which enhance storage of organic carbon in soil, and improving forest and livestock feed management. Moving forward the Government will continue to develop protocols under the Federal GHG Offset Program for activities in the agriculture, forestry and waste sectors, as well as for the commercial and industrial activities not covered by pricing and activities that result in long-term storage of CO2.
Continuing to return carbon pollution proceeds
Beginning in 2022, the Government of Canada will return proceeds collected through the federal fuel charge to families on a quarterly basis. The Government of Canada will also provide targeted support that recognizes the unique circumstances of Indigenous Peoples, farmers, and small and medium-sized businesses.
Using funds collected under the federal OBPS, the Government of Canada has introduced the Decarbonization Incentive Program and the Future Electricity Fund. The Decarbonization Incentive Program will support the deployment of clean technology projects to further reduce GHG emissions by incentivizing long-term decarbonization of Canada's industrial sectors. The Future Electricity Fund will support the production and delivery of clean electricity as well as its efficient use.
2.1.2. Production and use of clean fuels
Low carbon intensity fuels – or clean fuels – have significantly lower emissions over their lifecycle than conventional fuels. Examples include ethanol, biodiesel, advanced biofuels such as renewable diesel, liquid synthetic fuels, renewable natural gas, and low carbon intensity hydrogen.
Clean fuels can be produced from a variety of feedstocks, such as sustainably harvested agricultural and forest biomass, wastes (including agricultural, forestry, and municipal solid wastes), renewable electricity, and/or from fossil fuel sources with CCUS.
The IEA's World Energy Outlook underlines the importance of low carbon intensity fuels to reduce emissions in several hard to abate sectors (shipping, aviation, heavy-duty trucking, and industrial processes). Currently, low carbon intensity fuels make up less than 6% of Canada's total energy supply. Barriers preventing clean fuels production in Canada from reaching its full potential include investment uncertainty, up-front capital costs and commercial readiness.
What have we done so far?
Recognizing the essential role of clean fuels on the road to net-zero, Canada has published proposed Clean Fuel Regulations, worked with key stakeholders on the Hydrogen Strategy for Canada, and made investments to grow the clean fuels market through investments such as the Energy Innovation Program and the Clean Fuels Fund.
The Clean Fuel Regulations will require liquid fossil fuel (gasoline and diesel) suppliers to reduce the carbon intensity of the fuels they produce and import for use in Canada over time. By adopting regulations that focus on emissions throughout the lifecycle of fuels, the Government of Canada is following similar approaches that already exist in British Columbia, California, Oregon and other jurisdictions.
The $1.5 billion Clean Fuels Fund is designed to de-risk the capital investment for building new or retrofitting or expanding existing clean fuel production facilities. The Energy Innovation Program funds research, development, and demonstration projects, and other related scientific activities that advance clean energy technologies.
The emerging hydrogen economy will reduce GHG emissions across Canada, while supporting energy transition, regional economic development, and new employment opportunities for energy workers. The Hydrogen Strategy for Canada is a call to action, developed jointly by the Government of Canada, other levels of government, Indigenous partners, industry, and other stakeholders. The Strategy lays out an ambitious framework for actions that will reinforce hydrogen as a tool to achieve our goal of net-zero emissions by 2050 and position Canada as a global, industrial leader in clean fuels.
Initiatives to support the production and use of clean fuels are particularly important for hard to decarbonize sectors of the economy, such as heavy industry and some transportation modes. To meet Canada's 2030 target and lay the groundwork for net-zero emissions by 2050, the Government will also explore the feasibility of a bioenergy strategy to optimize how Canada uses its agricultural, forestry and municipal waste resources to generate net-zero energy in the medium and long term.
Additionally, the Government will continue consulting on the Clean Fuel Regulation to ensure it continues to play a meaningful role in the decarbonization of the transportation sector, driving investments in clean fuels and zero-emissions vehicle technology. In light of other related measures, such as the increased price on carbon pollution and the commitment to establish a cap on oil and gas emissions, the Government is consulting on increasing the stringency of the Clean Fuel Regulations. This change would lead to a decrease of approximately 15% (below 2016 levels) in carbon intensity of liquid fossil fuels by 2030. This change would also help enable the Clean Fuel Regulations in delivering significant emissions reductions from liquid fossil fuels used in Canada.
2.1.3. Supporting the transition to a clean growth economy
Deployment of innovative and efficient technologies and processes remains critical to unlocking transformational change and achieving decarbonization. Programs that target specific barriers can help industry, governments and the public adopt technologies and approaches that reduce carbon emissions. Programs targeting Indigenous participation in a clean growth economy can enhance socio-economic outcomes for communities while increasing buy-in and the eventual success of key projects.
What have we done so far?
Low Carbon Economy Challenge Fund
To date, approximately $300 million in approved active projects will reduce GHG emissions by 1Mt in 2030. Supported projects include:
- City of Saint John received up to $5.9 million for the District Energy System Project to install a renewable heating and cooling system in a commercial complex, as well as to perform energy retrofits in up to 50 municipal buildings throughout the city.
- City of Peterborough received up to $6.1 million for the Peterborough Organics Project to develop a centralized composting centre to divert food, leaf, and yard waste from landfills
- Cowessess First Nation received over $630,000 for the Community Buildings Solar Project to install solar arrays on five community-owned buildings.
- Centre de Traitement de Biomasse de la Montérégie received up to $3 million to install new equipment to convert organic and food waste into renewable energy and hygienic dried bio-fertilizer.
The Government of Canada has committed over $100 billion in 2016-2021 to target specific barriers and encourage early adoption of new technologies, help Canada meet its GHG targets, transition to a clean growth economy and protect the environment.
The Low-Carbon Economy Fund supports provincial and territorial programs through the Leadership Fund, while the Challenge Fund provides over $500 million to a wide range of recipients, including provinces and territories, businesses, municipalities, not-for-profits, and Indigenous communities and organizations.
The Climate Action and Awareness Fund is investing over $200 million over five years to support projects that help build capacity and raise awareness in an effort to reduce Canada's GHG emissions.
The Canada Infrastructure Bank (CIB) was established to ensure that Canadians benefit from modern and sustainable infrastructure through partnerships between governments and the private sector. The Government has allocated $35 billion for the CIB to fulfill its purpose, which Parliament approved, and set out priority investment areas for the CIB, which include green infrastructure ($5 billion), public transit ($5 billion) and clean power ($5 billion). With this government direction, the CIB is helping to fight climate change and achieve Canada's emissions reduction targets by investing in a range of projects, including for zero-emission buses, public and commercial building retrofits, electricity transmission and storage, and renewable energy sources.
Canada's Greening Government Strategy
As the owner and manager of the largest fixed asset portfolio in Canada—with 32,000 buildings, 20,000 engineered assets such as bridges and dams, as well as 40,000 vehicles—federal action is making a critical contribution to meeting Canada's climate objectives. The Government of Canada is also the largest public procurer in Canada, and is well-positioned to leverage its procurement power to stimulate market demand for low-carbon products (e.g., low-carbon cement) and Canada's emerging clean technology sector.
The Greening Government Strategy, created in 2017 and updated in 2020, commits the Government of Canada to transition to net-zero carbon and climate-resilient operations, and reduce environmental impacts on waste, water and biodiversity. The Government of Canada has committed to ensuring its operations will be net-zero emissions by 2050 including government-owned and leased real property, fleets, and procurement of goods and services. Emissions from federal operations are declining, with total federal GHG emissions from real property and conventional fleet operations 40.6% lower in 2020-21 when compared to 2005-06.
Broad funding programs will continue to play an important role in meeting Canada's decarbonization objectives. These programs support tangible GHG reductions and provide a direct contribution to meeting Canada's 2030 and 2050 goals. They can also help increase knowledge and build capacity in Canadian society around opportunities for taking positive climate action. As such, the Government of Canada will expand the Low Carbon Economy Fund through a $2.2 billion recapitalization. The funding aims to leverage further climate actions from provinces and territories, municipalities, universities, colleges, schools, hospitals, businesses, not-for-profit organizations, and Indigenous communities and organizations.
2.1.4. Taking a holistic approach to reduce methane
Methane is a potent greenhouse gas. Once released into the atmosphere, it has 86 times the warming power of carbon dioxide over a 20-year period. According to Canada's current national inventory, published in April 2021, methane accounted for 13% (98 Mt CO2e) of total 2019 GHG emissions in Canada. Over 90% of these emissions were from three key sectors: oil and gas, agriculture and waste.
What have we done so far?
In November 2021, Canada was a global leader in joining the Global Methane Pledge. This pledge has now been signed by over 100 countries, who will work together to reduce global anthropogenic methane emissions across all sectors by at least 30% below 2020 levels by 2030. In support of this Pledge, the Government of Canada is developing a plan to reduce methane emissions across the broader Canadian economy.
In 2018, Canada demonstrated global leadership by publishing the first national-level oil and gas regulations that specifically target methane emission reductions. In March 2022, the Government of Canada launched consultations to inform the design of more stringent regulations to achieve at least a 75 percent reduction in methane emissions from the oil and gas sector by 2030. In addition, regulations and other measures are being developed and consulted upon to address methane emissions from landfills and support the diversion of organics from landfills across the country. Additionally, a number of measures have been put in place to support Canadian businesses in this transition, such as the:
- $750 million Emissions Reduction Fund to support methane reductions in oil and gas;
- Energy Innovation Program's Canadian Emissions Reduction Innovation Network to develop and deploy methane reduction technologies;
- $20 million Food Waste Reduction Challenge and,
- Clean Fuels Fund support for clean fuels projects including those using waste biomass for low-carbon energy.
Enhancing scientific knowledge and continuous improvement in emissions measurement and quantification is essential to inform policy decisions. That is why the Government of Canada is working with academics, scientific experts, industry, and clean technology companies to better understand methane emission sources and improve quantification to mitigate emissions.
The IEA Global Methane tracker recently pointed to underreporting of actual methane emissions in the UNFCCC National Inventory Reports. Canada had identified that issue, and in 2021, committed to revising its methodology to estimate oil and gas sector fugitive emissions. This significantly improves methane emission estimates. A new fugitive emission model is now in place to estimate carbon dioxide and methane emissions in the upstream oil and gas industry. It resulted in methodological improvements that will be published in Canada's 2022 National Inventory Report (NIR). Furthermore, Canada adjusted its methodology to estimate landfill methane emissions to address underestimation of emissions in its 2021 NIR.
The Government of Canada intends to release its plan to reduce methane emissions across the economy this year, aligned with Canada's methane reduction commitments.
This plan will highlight science and clean technology innovation for measurement and quantification to inform reporting, policy development, and mitigation measures across the Canadian economy. The strategy will strengthen the clean technology sector, provide tools to industry and governments to achieve methane emission reductions effectively, and protect our climate, reaffirming Canada's global leadership and providing tools and best practices for other countries to achieve emission reductions. Further, the Government of Canada has committed to establishing a global centre of excellence on methane detection and elimination.
Decarbonizing the buildings sector is critical to Canada's pathway to 2030 and 2050. Emissions in the buildings sector have been trending upwards since 2005 as Canada's building stock continues to grow. In particular, more than 80% of Canada's building stock will be made up of existing buildings that are still in operation in 2030. It is also imperative that new buildings are net-zero ready and energy efficient, to avoid the need for future retrofits.
Current sector emissions
Canada's Buildings Emissions, 2019
Canada's buildings emissions, 2019. Buildings: 91 megatonnes of carbon dioxide equivalent (Mt CO2e), 12%.
Buildings accounted for 12% of Canada's direct GHG emissions in 2019, or 91 Mt (2021 NIR). Off-site generation of electricity for use in buildings brings the total to around 17%. This percentage could increase further if accounting for embodied carbon from the manufacturing of building materials such as concrete and steel.
Over 85% of buildings sector emissions come from space and water heating, due to the use of fossil fuel equipment, such as natural gas furnaces, and extra energy demand to heat and cool buildings with insufficient envelope performance. Remaining emissions come from electricity used to power appliances, lighting, and auxiliary equipment.
Breakdown of Canada's Building Stock
Percentage of total residential buildings
Source: NEUD 2017.
- Mobile homes: 1.7%
- Single attached: 12.3%
- Apartments: 32.7%
- Single detached: 53.2%
Percentage of total commercial buildings
Source: NEUD 2017.
- Hospital: 0.2%
- Care facility: 2.4%
- Hotel, motel: 2.6%
- Office (medical): 3.3%
- Schools: 3.6%
- Retail store (food): 4.0%
- Retail store (non-food): 12.8%
- Warehouse: 12.9%
- Office (non-medical): 20.1%
- All other commercial/industrial buildings: 38.1%
The buildings sector in context: key drivers
Challenges to decarbonization in the buildings sector remain, but can be overcome
Canada has a vast building stock
Significant efforts will be required to retrofit existing buildings to achieve Canada's decarbonization goals. The Pembina Institute projects that reaching net-zero in 2050 will require carrying out retrofits at an annual pace of nearly 600,000 homes (11.4 million in total) and the equivalent of 32 million m2 of commercial property until 2040, at a cost of roughly $21 billion per year. While a foundation for progress has been laid through federal investments, such as the Canada Greener Homes Grant, the Energy Efficient Buildings program, the Green Municipal Fund, and the Green and Inclusive Community Buildings program, additional investments from the public and private sector are required.
Much of the technology needed to decarbonize the buildings sector exists today. For example, electrification of heating by switching from fossil-fuels (e.g. oil, natural gas) to electric heat pumps is an economic and viable option in most parts of Canada, particularly as electrical grids expand capacity and decarbonize in parallel. Energy efficiency measures such as upgrading the building envelope with improved insulation, replacing windows and doors, or air sealing are also essential for decarbonization. Combined with fuel switching, energy efficiency can lower heating and cooling loads, minimize demand on the electricity grid, help control energy costs, and reduce the cost of heating with low-carbon technologies. The market up-take for some of these technologies has been slow; however, further innovation will improve affordability and support broader adoption. Reducing embodied carbon in construction materials such as steel and concrete is a key opportunity to further lower emissions in the buildings sector. New research and development will continue to deliver lower cost, higher performing technologies and approaches, creating even more opportunities to economically decarbonize the sector.
Building codes are key enablers of a net-zero buildings sector
Strong building codes set the baseline for building performance and lock in best practices in construction. The Government of Canada actively works with industry as well as provincial and territorial governments on the development of increasingly stringent, performance-based model building codes, including to introduce net-zero energy-ready model codes for new construction and the code for retrofits to existing buildings. Wide-scale adoption of these codes will go a long way to improving the performance of Canada's building stock.
Decarbonization of the buildings sector will provide economic opportunities and create jobs
Decarbonizing Canada's building sector will create new well-paying local jobs in every part of the country and could stimulate new markets for Canadian industry. Canada's building sector workforce will need to grow dramatically to meet increasing demand, including professional and trades people in construction, renovation, equipment manufacturing, installation and repair, building maintenance, energy assessment and management. Decarbonization of the buildings sector is also expected to create new entry points for workers with diverse professions and identities.
Greening government buildings
As the owner of a significant number of public facilities, the Government of Canada has a role and responsibility to reduce emissions from federal buildings. The Government of Canada has already taken action to this end, including by committing to: ensure all new federal buildings are net-zero emissions and that major building retrofits are low-carbon; ensure that, starting in 2030, 75% of domestic office new lease and lease renewal floor space will be in net-zero carbon, climate resilient buildings; and support emerging clean technologies through procurement to reduce emissions from federal buildings.
What have we done so far?
Canada Greener Homes Grant
The Canada Greener Homes Grant helps homeowners make their homes more energy-efficient grow domestic green supply chains, and fight climate change. It provides up to 700,000 grants of up to $5,000 to help homeowners make energy efficient retrofits to their homes, supported by an EnerGuide evaluation. To date, there have been over 130,000 applicants to the program.
Green and inclusive community buildings
To help tackle emissions from community buildings across Canada – including community centres, sport facilities, and cultural spaces – the Government launched the Green and Inclusive Community Buildings program. This program commits $1.5 billion to projects that improve energy efficiency through retrofits, repairs or upgrades, and new builds, 10% of which is reserved for projects benefiting Indigenous communities.
Canada Infrastructure Bank's Growth Plan
As part of its Growth Plan, the Canada Infrastructure Bank (CIB) has targeted $2 billion in financing for large-scale public and commercial building retrofits. The CIB aims to create a model for investment and procurement for energy performance projects that can be self-perpetuating as the market normalizes and accelerates towards net zero targets in 2050.
Energy efficiency in Indigenous housing
First Nation Infrastructure Fund (FNIF) supports energy efficiency on reserve and the Northern REACHE program supports Inuit and Indigenous communities in the north with renewable energy and energy efficiency projects.
What was heard from the 2030 ERP engagement process?
- Canadians and stakeholders expressed support for incentives and grants for home retrofits, including support for transitioning homes to cleaner energy sources. There is also support for low-carbon materials in construction.
- Energy efficiency and retrofits are a priority for many Indigenous governments. At the same time, Indigenous Peoples emphasized the need to address the housing crisis they are facing. Nearly 20% of Indigenous people live in housing that needs major repairs, and 20% live in housing that's overcrowded.
- Provinces, territories, and municipalities are also prioritizing emissions reduction efforts in the buildings sector, with support for greater alignment of programs and incentives between governments.
- The Net-Zero Advisory Body noted the importance of laying out a clear path forward for the sector, and using regulations and complementary actions to further the transition. They also encouraged: leveraging building codes and equipment regulations; ensuring that enabling and financing systems are put in place to support and scale up deeper retrofits; accounting for embodied carbon associated with building materials; and, leading by example.
A whole-of-government and whole-of-economy effort focusing on regulatory, policy, investment, and innovation levers is needed to drive decarbonization of the buildings sector. The Government of Canada will continue to put in place actions to provide the certainty and market signals needed by the private sector to make investment decisions. Complementary actions from all orders of government will be needed to accelerate building code adoption, transform space and water heating, and build the workforce needed to achieve net-zero. Successful decarbonization of the buildings sector will also depend on a number of enabling conditions, such as electrification and clean grids, a zero/low-carbon supply chain, innovation in construction practices, and private financing. To meet Canada's 2030 target and prepare for net-zero emissions by 2050, the Government of Canada will:
Chart a path to net-zero emissions
To lay the foundation for a net-zero buildings sector, the Government will invest $150 million to develop a national net zero by 2050 buildings strategy, the Canada Green Buildings Strategy. Working with partners, the strategy will build off existing initiatives and set out new policy, programs, incentives and standards needed to drive a massive retrofit of the existing building stock, and construction to the highest zero carbon standards. The Buildings Strategy will:
- develop a Low Carbon Building Materials Innovation Hub to drive further research, building code reform, and demonstration activities, all promoting the use of lower carbon construction materials (e.g., wood, steel, cement, etc.) in the built environment
- develop regulatory standards, and an incentive framework to support the transition off fossil-fuels for heating systems
- develop an approach to require EnerGuide labeling of homes at the time of sale, and design a complementary Climate Adaptation Home Rating Program
- launch a new Net Zero Building Code Acceleration Fund to accelerate adoption and implementation of the highest performance tiers of the national model energy codes, incentivizing stakeholder participation while addressing persistent challenges in Canada's codes system and paving the way to a code for alterations for existing buildings
- improve federal capacity and technical support to provinces, territories and key stakeholders for the development and adoption of net zero emission codes, and alteration to existing buildings codes
- develop an approach to increase the climate resilience of the built environment
The Net-Zero Advisory Body recommended accelerating the adoption of national model building codes, and supporting research and development for innovative net-zero technologies, such as developing readily available and affordable net-zero building materials. The Buildings Strategy proposed in this plan aligns with this advice.
Accelerating retrofits and net-zero new builds in communities across Canada
Supporting communities to upgrade homes and buildings, including affordable housing, is key to reaching Canada's climate goals. To help meet those goals, the following additional investments are being made:
- $458.5 million in contribution and loan funding to support the low-income stream of the Greener Homes Loan Program, which will support increased energy savings.
- $33 million to establish a Greener Neighbourhoods Pilot Program, which will retrofit homes or units in up to six communities across the country using an aggregated building retrofits approach based on the Dutch "Energiesprong" model. This support for community-level home retrofits aligns with the Net-Zero Advisory Body's recommendation to seek out opportunities to decarbonize multiple buildings at once.
- $200 million to support deep retrofits of large buildings through a retrofit accelerator initiative, which will provide help to address barriers to deep retrofits (such as audits or project management).
- $183 million to support a decarbonized and climate resilient construction sector through the development of standards and building codes, the establishment of a Centre of Excellence, research and development activities – including a concrete and cement R&D initiative, timber construction R&D initiative, and multi-sector collaboration challenges – and a procurement challenge.
Going further – the Government of Canada commits to explore additional opportunities, including:
- Mobilize private sector financing to support deep retrofits in existing residential, commercial, and institutional buildings.
- Mobilize Indigenous sector financing to support deep retrofits and clean energy initiatives.
- Link infrastructure funding (e.g., public transit) to housing outcomes.
- Review of Canadian Mortgage and Housing Corporation's market tools to promote climate compatibility in new construction and within the existing housing stock.
- Increase energy efficiency standards of National Housing Strategy (NHS) programs.
- Lead by example by decarbonizing the federal government's highest emitting buildings.
A clean, affordable, and reliable electricity system is essential for Canada to build a prosperous low-carbon future, as it will help reduce emissions from other sectors of the economy including industry, transportation and buildings as those sectors electrify.
Current sector emissions
Canada's Electricity Emissions, 2019
Canada's electricity emissions, 2019. Electricity: 61 megatonnes of carbon dioxide equivalent (Mt CO2 eq), 8.4%.
Canada is a world leader in clean electricity with an electricity sector that is currently 82% non-emitting. Canada's electricity sector emissions have also declined more than any other sector in Canada since 2005.
Canada's Electricity Sector Emissions by Year (Mt CO2e)
|Kilotonnes of CO2e||2005||2013||2014||2015||2016||2017||2018||2019|
Source: NRCan Energy Fact Book
Canada's electricity generation by type
|Type of electricity generation||Percentage (%) of total in terawatt-hours (TWh)|
|Gas, oil and others||11.3%|
Canada's electricity sector is 82% non-emitting
The electricity sector in context: key drivers
There are significant regional differences in electricity systems
Electricity market types and generation sources, which fall under provincial jurisdiction, vary greatly by region. Some provinces such as Quebec, Manitoba, and British Colombia have vast hydroelectricity resources providing them with abundant low-cost, non-emitting electricity. Prince Edward Island also uses large amounts of power from renewable sources, with almost all of its electricity coming from wind. Other regions, including Alberta, New Brunswick, Nova Scotia, and Saskatchewan, are currently reliant on fossil fuels for electricity generation. Ontario and New Brunswick use nuclear energy to provide large proportions of their non-emitting power, but both provinces still rely on fossil fuels for some of their electricity generation. There are also over 200 remote and Indigenous communities in Canada that currently rely on diesel for electricity.
Breakdown of Provincial and Territorial Electricity Generation by Source, 2019 (%)
|Emissions source||Megatonnes of carbon dioxide equivalent (Mt CO2 eq)||Percentage (%) of total|
|Pulp and paper||8||11%|
|Iron and steel||15||20%|
|Lime and gypsum||2||3%|
|Chemicals and fertilizers||21||28%|
Source: 2021 National Inventory Report.
A diverse mix of energy sources is key to affordability and reliability
Canadians expect the electricity that powers their homes, businesses, and industries to be clean, reliable and affordable. As unabated fossil fuel-fired power plants are replaced with non-emitting sources of electricity, such as solar, wind, hydro, and nuclear, or are reconfigured to accept low carbon or renewable fuels, additional investments in energy storage and grid stability will be required to ensure affordability and reliability. Investments may also occur in emerging technologies such as geothermal, long duration energy storage and small modular nuclear reactors. Finally, carbon capture, utilization and storage (CCUS) technologies, or switching from natural gas to hydrogen, may also have potential to help natural gas plants provide non-emitting flexible generation.Footnote 2
Electricity demand is expected to increase as Canada's economy decarbonizes
The phase-out of unabated fossil fuel-fired electricity generation and increased demand for electricity in other parts of the economy, such as space heating and on-road transportation, will lead to a significant increase in demand for non-emitting electricity. Multiple reports have estimated that, by 2050, Canada will require two to three times the current generating capacity.Footnote 3 The overall increase in demand will require large investments in grid modernization and new non-emitting generating capacity, as well as regional interties to allow clean power to flow from jurisdictions with surplus capacity to jurisdictions that need more clean power. Also important is the need to reduce electricity demand through smarter energy use and energy efficiency actions in order to achieve optimized electricity systems and keep costs down.
What have we done so far?
Accelerated the coal phase-out, natural gas regulations and put a price on carbon pollution
Coal-fired power is currently the biggest source of emissions in the electricity sector. The Government of Canada has passed regulations to accelerate the phase out of unabated coal-fired electricity by 2030, which is expected to cut carbon pollution by approximately 13 Mt in 2030.
The federal natural gas regulations complement the coal regulations and impose attainable performance standards on new natural gas generators. Carbon pollution pricing also applies to all electricity generators in provinces under the Federal OBPS to provide an economic signal to decarbonize generation.
Funded cleaner grids
To meet the rising demand for non-emitting electricity, the Government of Canada has invested in several programs to deliver more clean and reliable power. These include the $964 million Smart Renewable Electrification Pathways Program, which funds smart renewable energy and electrical grid modernization projects; the $100 million Smart Grids program that invests in demonstration and deployment of smart grid technologies and systems; and the $200 million Emerging Renewable Power program that supports new renewable power projects to expand Canada's portfolio of commercially viable resources. The Canada Infrastructure Bank also has a priority investment area in clean power which has funded projects such as the Oneida Battery Storage—a 1,000 megawatt-hour energy storage development project made in partnership with the Six Nations community in Ontario.
Made connections through grid interties
Building regional interties allows regions to distribute abundant non-emitting power to regions with more emissions-intensive grids. The Government of Canada has been working with provinces and territories, as well as the Canada Infrastructure Bank, to make progress on regional interties, such as the Atlantic Loop. This work has been supported through the $25 million Strategic Interties Predevelopment Program.
Case study: The Kivalliq Hydro-Fibre Link
The Kivalliq Hydro-Fibre Link is an electric transmission system extending from Manitoba into the Kivalliq region of Nunavut. This Inuit-led project will bring renewable, sustainable and reliable hydroelectricity to modernize electricity systems and potentially reduce reliance on diesel power while supporting economic development in remote communities. Additionally, the link would supply broadband connectivity, enhancing telecommunication services to the region.
The Canadian Northern Economic Development Agency invested nearly $3 million to build on a prior feasibility study examining the development of the Kivalliq Hydro-Fibre Link. The Canada Infrastructure Bank signed a memorandum of understanding with the Kivalliq Inuit Association to provide advisory services on the Kivalliq Hydro-Fibre Link. Budget 2021 proposed an investment of $40.4 million over three years, starting in 2021-22, to support feasibility and planning of hydroelectricity and grid interconnection projects in the North.
Reduced reliance on diesel in remote and Indigenous communities
Over 200 remote communities in Canada are reliant on diesel for electricity and heat. These communities consume on average 680 million litres of diesel fuel every year. The Government of Canada is currently supporting more than 160 renewable energy and capacity building projects across Canada. The Government is investing an additional $300 million over five years to ensure that rural, remote and Indigenous communities that currently rely on diesel have the opportunity to be powered by clean, reliable energy. This transition will help advance reconciliation, Indigenous-led climate action and support local economic development and jobs while reducing pollution.
Supporting the development of small modular reactors
In December 2020, the Government of Canada launched the Small Modular Reactor (SMR) Action Plan to lay out the next steps to develop and deploy this technology as a potential tool to reduce emissions within Canada and abroad. The Government will continue to work with utilities, as well as provinces and territories, Indigenous Peoples and communities, industry, innovators, laboratories, academia, and civil society to advance SMRs through Canada's SMR Action Plan.
What was heard from the 2030 ERP engagement process?
- Canadians and stakeholders highlighted support for increased renewable energy sources, grid modernization, storage and a national clean electricity standard. Enabling low-carbon technologies, infrastructure investments and expanding the workforce were also noted to support the increased demand for clean electricity as Canada transitions to net-zero emissions.
- The full, effective and meaningful participation of Indigenous partners in the transition to a net-zero electricity sector is key. Indigenous partners encouraged expanded efforts to support remote, northern, and Indigenous communities transition off-diesel, as well as community-owned and led renewable energy projects.
- Supporting a clean electricity sector is also a priority for a number of provinces and territories, building on efforts to phase-out coal-fired electricity and increase the production of renewable energy.
To meet Canada's 2030 target and lay the groundwork to net-zero emissions by 2050, Canada commits to:
Require net-zero electricity by 2035 through a Clean Electricity Standard
Developing a Clean Electricity Standard (CES) to support a net-zero electricity grid by 2035 will provide a clear path forward and certainty for industry. To achieve this goal, the Government has released a discussion paper and launched a collaborative process with provinces, territories, and Indigenous partners to inform the design and scope of the standard. This process will help ensure that the design of the CES provides a clear and workable basis for provinces and territories to be able to plan and operate their grids in a way that will continue to deliver clean, reliable and affordable electricity to Canadians. Establishing a net-zero-emitting electricity sector will require substantial effort from provinces and territories, and a CES will provide the regulatory signal to support decision-making at all levels of government to achieve this goal.
Expand non-emitting energy deployment and development
Continued and enhanced support for the deployment of commercially ready renewable energy technologies will support grid decarbonization in the near term. Looking out to 2050, investments in emerging technologies such as geothermal, tidal, SMRs, carbon capture and storage, and electricity storage will allow Canada to be a world leader in these new technologies. To support the development and deployment of these technologies, the Government will make additional investments:
- $600 million to the Smart Renewables and Electrification Pathways Program to support additional renewable electricity and grid modernization projects.
- $250 million to support predevelopment work for large clean electricity projects, in collaboration with provinces, through the Electricity Predevelopment Program.
- $2.4 million for the creation of the Pan-Canadian Grid Council to provide external advice to the Government of Canada to promote clean electricity infrastructure investments.
Connect regions to clean power
The challenges of reducing emissions from Canada's existing electricity sector will fall disproportionally on some regions due to the current energy composition of their grids. One of the key tools to ensure that these regions are able to meet future needs while also participating in the transition to net-zero, will be investments in regional interties. To help connect regions with clean power, the Government will:
- Supported by a $25 million investment, establish Regional Strategic Initiatives to work with provinces, territories and relevant stakeholders to develop regional net-zero energy plans (see Chapter 2 introduction).
- Lead engagement across Atlantic Canada to shape a clear path forward for the Atlantic Loop initiative.
- Support de-risking and accelerating the development of transformational, nation-building inter-provincial transmission lines that connect supplies of clean power to locations that currently rely heavily on fossil fuels for power generation.
Going further – the Government of Canada will also explore additional opportunities to increase the availability of clean electricity, such as approaches to support municipal-level climate planning, which could include community energy generation.
2.4. Heavy industry
Canada's heavy industry sector – which includes mining and manufacturing of various industrial and commercial products, such as metals, chemicals and fertilizers, cement, and pulp and paper—plays an essential role in Canada's economy. It supports regional jobs and builds prosperous communities across Canada. Decarbonizing this sector is essential for meeting Canada's 2030 climate target, and especially net-zero emissions by 2050, while creating jobs and building a sustainable, globally-competitive economy.
The Government of Canada is committed to assisting Canadians and businesses as they transition to a net-zero emissions future, meet the demands of domestic and global consumers for low-carbon goods and services, and create middle-class jobs.
Current sector emissions
Canada's current heavy industry sector emissions rank as the fourth highest emitting sector.
Canada's Heavy Industry Emissions, 2019
Canada's heavy industry emissions, 2019. Heavy industry: 77 megatonnes of carbon dioxide equivalent (Mt CO2 eq), 11%.
|Emissions source||Megatonnes of carbon dioxide equivalent (Mt CO2 eq)||Percentage (%) of total|
|Oil, natural gas and CO2 transmission||11||6%|
|Oil sands (mining, in-situ, upgrading)||83||43%|
|Natural gas distribution||1||1%|
|Natural gas production and processing||53||28%|
|Conventional oil production||25||13%|
Since 2005, emissions from heavy industry have decreased by roughly 10%, driven in part by cleaner, more efficient manufacturing processes.
Heavy industry in context: key drivers
Increasing emphasis on clean growth will help promote Canadian industrial competitiveness
A growing number of Canadian companies, including those in all industrial sectors, are producing or adopting clean and low emissions technologies to drive growth and remain competitive. This emphasis on clean growth, coupled with emerging opportunities in areas such as critical minerals, electrification, low-carbon construction materials and an array of clean technologies, will help lay the groundwork for further reducing Canada's industrial emissions and meeting demand for clean products.
As part of its plans to allocate approximately $1 billion of capital expenditures annually to decarbonize its global assets, Dow has announced the construction of the petrochemical industry's first net-zero ethylene and derivatives complex at its Fort Saskatchewan, Alberta site. This investment would more than triple the Fort Saskatchewan site's ethylene and polyethylene capacity, while retrofitting the entire complex to reach net-zero emissions by 2030 – a reduction of 1 Mt of GHG emissions. The company credits its investment decision to Canada's strong, stable, and rising price on carbon pollution, as well as access to competitive energy, feedstock, and CO2 infrastructure.
A combination of regulation and investment is key to further decarbonizing the industry sector
Canadian industry has already started to work on overcoming challenges to decarbonization, such as energy intensive processes, emissions inherent in producing industrial goods, the high cost and long lifespan of equipment, hard-to-abate process emissions associated with chemical processes, and trade exposure. Competitiveness in a low carbon economy will require the heavy industry sector to use energy more efficiently, effectively engage and partner with Indigenous communities, rely more on clean electricity and low-carbon intensity fuels (clean fuels), and seize opportunities unlocked by innovative new technologies (e.g., carbon capture, utilization, and storage). Although carbon pollution pricing sends signals to decarbonize, and regulations in some sectors will advance emission reductions, additional public and private investments are required. These investments will help to accelerate the development and adoption of the new technologies, clean fuels and innovative processes needed to transition to a net-zero economy.
Enabling measures and consultations with stakeholders will support decarbonization
Technologies and changes to industrial processes are only part of the effort required to drive clean growth in the sector. The Government of Canada is also focused on having the backs of workers and putting people first by making significant investments in skills training to ensure that workers succeed in the low-carbon economy of the future, and continuing consultations on the development of legislation to ensure a just transition through creation of sustainable jobs.
What have we done so far?
Strategic Innovation Fund – Net Zero Accelerator (SIF-NZA)
The Government of Canada has launched the $8 billion Net Zero Accelerator to support the decarbonization and sustainable growth of Canada's largest industrial emitters through investments in the adoption of clean technology and processes that will dramatically reduce the GHG footprint of these industries by 2030, and create pathways to net zero by 2050.
Low Carbon Economy Fund
The Low-Carbon Economy Fund supports a wide range of provincial and territorial programs through the Leadership Fund, while the Challenge Fund provided over $500 million to a wide range of recipients, including provinces and territories, businesses, municipalities, not-for-profits, and Indigenous communities and organizations.
Cutting corporate taxes for makers of zero emissions technology
The Government of Canada proposed in Budget 2021 to reduce by half the general corporate and small business income tax rates for businesses that manufacture zero-emission technologies. The Government has also put in place Accelerated Capital Cost write-offs that are available for the purchase of new manufacturing equipment and investments in clean energy.
Clean Growth Program
In 2017, the Government of Canada launched a $155 million program to invest in clean technology research, development, and demonstration in the Canadian energy, mining, and forestry sectors.
Accelerating industrial decarbonization through SIF-NZA
- Government of Canada is investing $400 million in a $1.8-billion project to decarbonize the steel production process at ArcelorMittal Dofasco's Hamilton, Ontario facility. This investment will help transition the facility to a hydrogen-ready direct reduced iron fed electric arc furnace, which will allow it to meet growing demand for low-carbon steel among North America's automotive, medical, and consumer packaging industries. The project will make a significant contribution toward Canada's climate objectives by reducing GHG emissions by up to 3 Mt per year by 2030.
- Through an investment of $25 million in Svante to support its $97-million project, the Government is supporting the development and commercialization of a low-cost carbon capture technology for industrial applications like cement and blue hydrogen. This investment will help the Burnaby, BC company manufacture and commercialize carbon capture systems with the ability to capture up to 2,000 tonnes of CO2 per day using a novel solid filter. This technology is one of the tools that will help Canada transform difficult-to-abate industries and reach its goal of net zero by 2050.
- The Government is investing $60 million in a $558-million large-scale demonstration project led jointly by Alcoa Corporation and Rio Tinto Aluminum. Located in Saguenay–Lac-Saint-Jean, Quebec, the project will pilot a transformative production process that has the potential to virtually eliminate the Canadian aluminum industry's carbon footprint, while strengthening the already well-integrated Canada-US aluminum and manufacturing supply chain. Once fully implemented across the industry, the technology could reduce annual GHG emissions by approximately 6.5 Mt, the equivalent of taking more than 1.8 million passenger vehicles off the road or nearly the number of passenger vehicles in Toronto, Montréal, and Vancouver combined.
In May 2021, the Government of Canada and Canada's cement sector announced a joint partnership to support the development and implementation of a 'Roadmap to Net-Zero-Carbon Concrete' to provide Canadian cement and concrete industry with the technologies, tools and policy needed to achieve net-zero carbon concrete by 2050.
What was heard from the 2030 ERP engagement process?
- Canadians and stakeholders supported incentives, regulations, and support for clean technologies as key tools to effectively reduce emissions for industries, such as cement and steel.
- Provinces and territories are taking action to reduce emissions from the heavy industry sector, including efforts related to decarbonizing the industrial sector through clean fuels and renewable energy, as well as sustainable mining of critical minerals to support the manufacturing of batteries.
The World Bank estimates that global climate commitments will create new investment opportunities in emerging economies – an estimated $23 trillion between 2016 and 2030. Canada is well equipped to take advantage of these opportunities and attract global investment in Canadian clean technology. For example, based on analysis by the World Bank, the Canadian Climate Institute in their Charting our Course report found that Canada's mining sector is well positioned to take advantage of increased global demand for clean technology, as Canada is home to significant deposits of almost all critical minerals and metals for clean technologies.
To meet Canada's 2030 target and lay the groundwork for net-zero emissions by 2050, the Government of Canada commits to:
Enhance efforts to decarbonize large emitters
The Government of Canada will make further investments to support new technologies and projects that will reduce emissions now while developing low-emissions technologies for a net-zero future. In addition, the Government has committed to introducing new Buy Clean Strategy for federal investments to support and prioritize the use of made-in-Canada low-carbon products in Canadian infrastructure projects. The Government will also invest:
- Invest $194 million to expand the Industrial Energy Management Program to support ISO50001 certification, energy managers, cohort-based training, audits, and energy efficiency-focused retrofits for key small-to-moderate projects, thus filling a gap in the federal suite of industrial programming; and,
- Develop a comprehensive CCUS Strategy to guide the development and deployment of CCUS technologies to mitigate GHG emissions from a range of industrial sectors in Canada, such as steel, cement, chemicals, and the oil and gas sector.
Strengthen Canada's mining sector while reducing emissions
Building on actions such as the Canadian Minerals and Metals Plan, the Government of Canada has committed to improving the critical mineral supply chain resiliency to support the green and digitized economy, as well as the Mines to Mobility Strategy.
First announced in Canada's strengthened climate plan, A Healthy Environment and a Healthy Economy, the Net-Zero Challenge is a voluntary initiative that aims to encourage businesses to develop and implement credible and effective plans to transition their facilities and operations to net-zero emissions by 2050. The goals of the Net-Zero Challenge are to normalize net-zero planning so that it becomes the default business practice, build momentum through guidance and leadership, and reduce greenhouse gas emissions from industrial and other sectors. The Net-Zero Challenge will be launched soon.
2.5. Oil and gas
As a major economic contributor to the country and Canada's largest source of greenhouse gas emissions, the oil and gas sector has a critical role to play in meeting Canada's climate objectives.
Individual oil and gas players are setting ambitious climate goals. For example, Shell Global has set a target to reduce absolute emissions by 50% by 2030, relative to their 2016 baseline.
The Oil Sands Pathways Alliance, which represents 95% of Canada's oil sands production, was formed in order to keep the sector competitive in a decarbonizing economy by drastically reducing its carbon footprint to achieve net zero emissions by 2050.
The sector faces a major transformation as the world moves away from fossil fuels to address climate change and to enhance energy security. The International Energy Agency forecasts that to limit warming to less than 1.5 °C, global oil demand will have to decline from 100 million barrels per day in 2020 to 24 million barrels by 2050. To remain competitive in a tighter future market, Canadian production will have to reduce its carbon intensity while the sector also explores opportunities to transition to non-emitting products and services.
Modelling of the most economically efficient pathway to meeting Canada's 2030 target projects that the oil and gas sector would make a significant contribution (see Chapter 3). Drawing on that analysis, Canada's oil and gas sector emissions would decline by about 31% from 2005 levels to reach 110 Mt in 2030. This projected sectoral contribution represents about a 42% reduction from current levels, because overall emissions from the sector have been rising rather than falling. The projected sectoral contribution will guide the Government of Canada's work with industry, stakeholders, provinces and territories, Indigenous Peoples and others to define and develop the cap on oil and gas emissions.
Clean B.C. Roadmap to 2030: Reducing emissions from the oil and gas sector
British Columbia's oil and gas sector is currently responsible for 20% of provincial emissions. As part of its Clean B.C. Roadmap, the Government of British Columbia set a target to reduce emissions from its oil and gas sector by 33-38% below 2007 levels by 2030. This is being implemented through a number of policies and programs, including strengthening British Columbia's methane regulations, modernizing its royalty system, and introducing a new industrial climate program, to be released in 2023.
Current sector emissions
In 2019, the oil and gas sector produced 26% of national emissions. While performance has improved, with a 20% reduction in emissions intensity since 2005, overall emissions have climbed due to significant production growth. The oil sands are the biggest driver of new production and emissions growth, with emissions rising 137% since 2005.
Oil and gas sector greenhouse gas emissions by region (Mt CO2e)
|Year||Prince Edward Island||Nova Scotia||Northwest Territories, Yukon, and Nunavut||Manitoba||Quebec||New Brunswick|
|Year||Newfoundland and Labrador||Ontario||British Columbia||Saskatchewan||Alberta|
Oil and gas sector greenhouse gas emissions by sub-sector (Mt CO2e)
|Year||Other||Oil sands, upgrading||Oil sands, in situ||Oil sands, mining and extraction||Conventional oil||Natural gas|
The oil and gas sector in context: key drivers
The oil and gas sector contributes significantly to the Canadian economy
The oil and gas sector is critical to the economy, currently contributing nearly 6% to Canada's GDP. Employing thousands of Canadians throughout the country, the sector is particularly important in Alberta, Saskatchewan, British Columbia, and Newfoundland and Labrador. The sector is diverse, comprising a wide range of activities from exploration, drilling and extraction to processing, transportation, and refining of multiple resources, including light oil, heavy oil, oil sands and natural gas. Most of Canada's oil production is exported to the United States, making the U.S. a key partner.
Current economic conditions are creating new opportunities to reduce emissions
With energy demand and prices rebounding to pre-pandemic levels and a tightening global energy market, Canada's oil and gas industry is currently generating record cash flow. If deployed strategically, these funds could enhance carbon competiveness and enable the sector to do its fair share in contributing to the country's climate goals. The extent to which investors and shareholders will direct funds toward decarbonization will depend on many factors, including decisions to pay down debt, reward shareholders and buy back shares, as well as the regulatory environment.
As the world acts on climate change and the global supply of fossil fuels becomes cleaner, Canada's oil sector will need to continue to drive down emissions and costs to remain competitive. The following graph illustrates how the federal measures outlined in this plan will ensure that Canadian oil and gas production becomes less emissions intensive (i.e. fewer emissions per barrel) over the next decade. While the actual trajectory to 2030 will unlikely be a straight line as portrayed, and the global average is also unlikely to remain static, reducing the carbon intensity of Canadian production below the global average is both possible and likely to be increasingly important in order for the Canadian industry to compete in an increasingly constrained global market.
Canada oil carbon intensity vs global average
|Year||Other||Oil sands, upgrading||Oil sands, in situ||Oil sands, mining and extraction||Conventional oil||Natural gas|
What have we done so far?
Pricing carbon pollution
Since 2019, a price on carbon pollution has been in place across Canada through a mix of federal, provincial and territorial pricing systems. The Government of Canada sets minimum national standards that all systems must meet to ensure they are fair and consistent ("the benchmark"). Putting a price on carbon pollution creates a financial incentive throughout the economy to reduce emissions and invest in clean innovation. Oil and gas activities across Canada are subject to carbon pollution pricing under the federal Output Based Pricing System or equivalent provincial systems.
Federal regulations require the oil and gas sector to reduce methane emissions by 40-45% below 2012 levels by 2025. In 2021, Canada joined the Global Methane Pledge, which aims to reduce global methane emissions by 30% below 2020 levels by 2030. As part of this Pledge, Canada was the first country to commit to reducing methane emissions in the oil and gas sector by at least 75% below 2012 levels by 2030.
Clean Fuel Regulations
The Clean Fuel Regulations will reduce the carbon intensity of liquid fossil fuels in Canada, including by reducing emissions from oil and gas production.
Emissions Reduction Fund
The $675M Emissions Reduction Fund (ERF) – Onshore Program is helping Canadian onshore oil and gas companies invest in green solutions to continue their progress toward reducing methane emissions in the context of the COVID-19 pandemic. The $42M Offshore Deployment Program will further position the offshore oil and gas sector as a leader in Canada's transition to a low carbon future. The $33 million Offshore RD&D Program is supporting research, development, and demonstration projects that advance solutions to decarbonize the offshore oil and gas industry.
Clean Growth Program
The Clean Growth Program (CGP) was a $155 million investment in clean technology research, development, and demonstration projects in three Canadian sectors: energy (including oil and gas), mining, and forestry.
Energy Innovation Program
Canadian Emissions Reduction Innovation Network (CERIN): aims to accelerate the development, validation and deployment of technologies that reduce oil and gas sector emissions. CERIN is jointly funded by NRCan, contributing $9 million and Alberta Innovates, contributing $6 million. As part of Budget 2021, the government is investing $319 million into research, development, and demonstrations to advance the commercial viability of CCUS technologies through the carbon capture, utilization, and storage stream.
CCUS Investment Tax Credit
The Government is developing an investment tax credit for capital invested in CCUS projects to encourage the development and deployment of CCUS technologies.
What was heard from the 2030 ERP engagement process?
- Canadians expressed support for eliminating fossil fuel subsidies, ending expansion of oil and gas projects, supporting a just transition for affected workers, and advancing clean technologies, such as carbon capture, utilization and storage.
- Stakeholders also highlighted the importance of leveraging public and private capital, supports for enabling infrastructure, regulatory cooperation and clarity, as well as Indigenous equity and reconciliation, particularly with respect to upholding First Nations' rights to self-determination, including the minimum standard of free, prior and informed consent.
- Provinces and territories are also prioritizing emissions reductions in the oil and gas sector, including through investments in carbon capture, utilization and storage.
- In response to the Ministers of Environment and Climate Change and Natural Resources request for advice on guiding principles for the development of five-year emissions reductions targets for the oil and gas sector, the Net-Zero Advisory Body noted that targets should: be set using a whole-of-economy lens; include clear parameters for the use of offsets; apply to all parts of the sector and to all firms; be announced early to provide clarity and certainty; align with technical feasibility recognizing that the pathway to net-zero emissions is not linear; and should lead to a scale of emissions reductions that would not otherwise have occurred. The Advisory Body also noted principles for success, including data and monitoring of progress and support for workers, families and communities.
The challenge of meeting Canada's climate objectives and transforming an industry as complex as oil and gas to net-zero emissions is huge. For its part, the Government of Canada will pair increased stringency in measures to accelerate and deepen emissions reductions from the sector with a range of supporting policies.
Oil and gas companies have proven repeatedly that they can innovate and develop new technologies and more competitive business models. The technical hurdles they have cleared to develop technologies like in situ oil sands extraction demonstrate that the sector can meet the challenge with the appropriate regulations, incentives and supports. Close partnership among all levels of government and industry will be needed. With a clear and collaborative plan, the sector can transform itself into the cleanest global oil and gas producers, while also moving to provide low-carbon and non-emitting energy products and services, such as low-carbon hydrogen, geothermal heat and power, carbon fiber, and asphaltenes.
Investments today in decarbonization and diversification, during a period of record profitability, will also better position the sector over the medium-term, minimizing future climate-related financial risks for companies, workers and Canadians. These investments can also create new jobs and support local and regional economies.
To meet Canada's 2030 target and the lay the groundwork for net-zero emissions by 2050, the Government of Canada commits to:
The Government of Canada is committed to cap and cut emissions from the oil and gas sector at the pace and scale needed to get to net zero by 2050. The details of how best to design and implement this cap will require close collaboration with industry, provinces, Indigenous partners, and civil society. The government is considering a range of options to achieve these emissions reductions.
The Government will work closely with provinces and the sector to manage competitiveness challenges, remain attuned to evolving energy security and climate risk considerations, maximize opportunities for ongoing investment in the sector, and minimize the risk of carbon leakage. The intent of the cap is not to bring reductions in production that are not driven by declines in global demand. Mechanisms like the CCUS investment tax credit will help support decarbonization. The sector may also need time-limited flexibilities, for example using domestic or international offsets, to achieve a small portion of reductions.
These and other considerations will be explored in a discussion paper that will initiate formal consultations on the cap this spring.
Advancing carbon capture, storage and utilization
Increased use of CCUS features in the mix of every credible path to achieving net zero by 2050, including all 1.5°C pathways developed by the United Nations Intergovernmental Panel on Climate Change and the IEA. The Government of Canada is supporting development of CCUS technology and working to provide policy certainty to facilitate the development and deployment of this technology. This includes a new CCUS investment tax credit, the details of which will be provided soon. The Government will also continue efforts to increase coordination between public and private sectors to eliminate regulatory barriers and facilitate CCUS deployment.
Further reducing methane emissions
Reducing methane emissions from oil and gas operations is not only essential, but also one of the most cost effective climate solutions. The methane review, published in December 2021, concluded that Canada is on track to meet our 2025 target. However, scientific studies indicate that methane emissions have been historically underestimated, so while progress has been made, more work is required to improve methane measurements and drive further reductions in this sector. The Government has committed to go beyond the current regulatory requirements (aimed at a 40-45% reduction by 2025) and to develop new measures to reduce oil and gas methane emissions by at least 75% below 2012 levels by 2030. Strengthened regulations to meet this target will be introduced in early 2023. See Chapter 2.1.4 for further information on Canada's holistic approach to addressing methane.
Eliminating subsidies for fossil fuel
The Government has committed to eliminating inefficient fossil fuel subsidies, and developing a plan to phase-out public financing for the fossil fuel sector, including by federal Crown corporations.
Good jobs now and in the future
The Government will always have the backs of Canadian workers. The energy needs of Canada and the world will grow in the decades to come, while global demand for oil and gas will decline. Responding to these changes requires thoughtful, coordinated, and deliberate investment and policy choices to meet Canada's and the world's clean energy needs. Increased green investments will create jobs. Even though the oil and gas sector is seeing record cash flow, the sector employs 6% fewer people than in 2013, the last time the price of oil was over $90 per barrel. The sector has gone from representing 30% of private sector capital spending in Canada to 11%.
Canada has the contractors, roughnecks, construction crews, and labour to build and maintain energy systems of all types. Alberta is home to more professional engineers per capita than any other Canadian province or territory. A hydrogen production facility utilizing carbon capture technology will not look much different from an existing refinery – and the same holds true for a biofuels plant. Building and operating carbon capture and storage is forecast to create tens of thousands of jobs globally by 2030. The International CCS Knowledge Centre, based in Regina, estimates that just three major Canadian projects would create more than 2,300 direct jobs and more than 6,000 jobs in total, including indirect and induced jobs. The Government is working with provinces and businesses to get the transition right – so that we achieve our emission reduction goals and ensure economic competitiveness, prosperity and good jobs for Canadians. See Chapter 2.12 for further action to support sustainable jobs, skills and communities.
An efficient and clean transportation sector is essential to supporting a strong and competitive economy, while minimizing pollution as people and goods get around. To meet Canada's climate objectives, it will be necessary to decarbonize the transportation sector in Canada through actions such as enabling active and public transportation, increasing the share of zero-emission vehicles (ZEVs)Footnote 4 on the road, and investing in clean fuels for all transportation modes and vehicle sizes.
Current sector emissions
Canada Transportation Emissions, 2019
Canada's transportation emissions, 2019. Transport: 186 megatonnes of carbon dioxide equivalent (Mt CO2 eq), 25%.
Canada's transportation sector is the second-largest contributor to overall GHG emissions. According to data from the most recent National Inventory Report (2021), emissions from transportation were 186 Mt in 2019, accounting for 25% of total emissions in Canada.
Currently, the majority of emissions come from light-duty passenger vehicles (e.g., cars, SUVs, and pickup trucks) and freight (e.g., heavy-duty vehicles) transport. This reflects a robust economy, high demand for goods and services, and the large and growing number of passenger vehicles on Canadian roads, which have been shifting over the past decade from cars to larger vehicles such as SUVs and light trucks. Regionally, transportation is the highest source of emissions in the majority of provinces and territories.
Emissions by vehicle type, 2019 (Mt CO2e)
|Vehicle type||Megatonnes of carbon dioxide equivalent (Mt CO2 eq)||Percentage (%) of total|
|Passenger, cars, light trucks, motorcycles||89||48%|
|Passenger, bus, rail and aviation||10||5%|
|Freight, heavy-duty trucks and rail||72||39%|
|Freight, aviation and marine||6||3%|
Historic emissions by transportation mode (Mt CO2e)
|Year||Aviation||Rail||Marine||On-road passenger||On-road freight||Off road||Total|
The transport sector in context: key drivers
Expanding clean and accessible transportation will be critical
Building a zero-emission public transit system across Canada is a key step to cutting emissions, while helping people get around faster, safer and cheaper. Public transit systems contribute to the decarbonization of the transportation sector by encouraging modal shift, combatting congestion, and reducing reliance on personal vehicles. However, maximizing transit benefits in terms of emissions reductions also depends on encouraging intensification and effective land-use planning in communities, especially along higher-frequency transit corridors. Active transportation also provides a zero-emissions and healthy transportation alternative.
International momentum on low-carbon transportation is creating new economic opportunities
Countries around the world are racing to drive down their transport emissions. As they do, demand for low-carbon transport has been increasing. With rising consumer demand for ZEVs, and exciting new products being offered by both traditional and new manufacturers, the world is nearing a tipping point. The global electric car stock reached 10 million in 2020 and the trend line is curving upward for 2021. Electric cars continue to break records around the world — global sales more than doubled in 2021 despite supply chain challenges. As many electric cars are now sold in the space of a week as in the whole year of 2012. The Canadian Climate Institute has identified Canada's low-carbon transport sector as a transition-opportunity sector with massive market growth potential, and the policies put in place today are essential to realizing future economic benefits.Footnote 5 Similarly, modelling by Clean Energy Canada and Navius Research has found that jobs in electric vehicle technology are on track to grow 39 per cent per year, and could employ 184,000 people in the industry in 2030—a 26-fold increase over 2020.Footnote 6
Transportation is a significant component of Canada's economy
According to Statistics Canada data, in 2021, the transportation and warehouse industry accounted for 5.2% of Canada's labour force, and 3.7% of Canada's GDP. The sector underpins Canada's social and economic networks: it moves over $2 trillion worth of goods and 16 million commuters, and is the second largest household expense.
Vehicle manufacturers, including those in Canada, have been responding with a wholesale shift in their product development, R&D and capital investments to the production of ZEVs. New models are being announced on a regular basis. Many studies predict that the price of electric vehicles will fall rapidly in the coming years. For example, BloombergNEF projects that electric vehicles will reach price parity with internal combustion vehicles by the mid-2020s in most segments.Footnote 7 As fueling and maintenance costs are generally lower for ZEVs than for conventional vehicles, the cost of personal transportation will likely decrease once the initial price of new ZEVs falls and more used ZEVs are on the market.
Significant economic opportunities exist, both in vehicle production and also battery production (and associated upstream mines and manufacturing and downstream recycling), to create jobs and serve the growing export market. Canada has an opportunity to utilize its strong manufacturing expertise, mineral deposits, infrastructure and skilled labour force to capitalize on the global shift toward the production of ZEVs.
More needs to be done to advance clean transportation adoption rates
Canada's ZEV market-share is increasing. According to IHS Markit,Footnote 8 the ZEV share of light-duty vehicles (LDV) sales was 5.6% in 2021 (up from 3.8% in 2020 and 3.1% in 2019). However, ZEV uptake varies greatly by jurisdiction, with 95.4% of new ZEVs sold in BC, ON, and QC in 2021. Limited inventory for ZEVs exists across Canada (generally supply and model availability is greater in BC and QC) —about 55% of dealerships in Canada do not have ZEVs available to purchase or test-drive (2021).Footnote 9 Moreover, according to Statistics Canada, just 13% of small businesses and 19% of large businesses in Canada have adopted clean transportation technologies.
Provincial and Territorial ZEV Incentives as of March 2022
Provincial and territorial zero-emission vehicle incentives as of March 2022
Blue: Provincial/territorial zero-emission vehicle incentive programs
Grey: no provincial/territorial zero-emission vehicle incentive programs
- Yukon (blue): up to $5,000
- Northwest Territories (blue): up to $5,000
- British Columbia (blue): up to $3,000
- Quebec (blue): up to $8,000
- New Brunswick (blue): up to $5,000
- Nova Scotia (blue): up to $3,000
- Newfoundland and Labrador (blue): up to $2,500
- Prince Edward Island (blue): up to $5,000
More also needs to be done to encourage domestic businesses to adopt clean transport, particularly in medium and heavy-duty vehicles (MHDVs).Footnote 10 Unlike light-duty ZEVs, significant innovation is required to enable the broad-scale adoption of zero-emission MHDVs, which include trucks of various sizes, school and transit busses, and municipal vehicles (e.g., trash collectors and snowplows). RD&D in batteries, electric drive trains, lightweight materials, and hydrogen powered vehicles will be key in enabling a successful transition to zero-emissions freight transportation.
Greening government operations – fleet
The Government of Canada operates a diverse air, marine and land fleet that includes both conventional and national safety and security vehicles. The Government has already reduced conventional fleet emissions by 44% since 2005-06, and has committed to net-zero emissions from all of its operations by 2050. To accelerate action in this area, the Government will electrify the entire federal fleet of light duty vehicles by 2030 and will launch a Low-Carbon Fuel Procurement Program to support the purchase of low-carbon fuels for use in the federal air and marine fleets.
There are also a number of important innovations and clean technologies that will play a critical role in reducing emissions from air travel, rail and marine transport, such as hydrogen fuel cells, low carbon intensity fuels (e.g. sustainable aviation fuel and renewable diesel), batteries, hydrogen, electrification, digitization, many of which are being developed in Canada. As the global economy accelerates its shift toward low-carbon technologies, there is an opportunity for Canadian businesses to reap the benefits. This is why in Budget 2021, the Government targeted $1.75 billion from the Strategic Innovation Fund to the aerospace sector.
What have we done so far?
Public and active transportation
Since 2015, the Government of Canada has made the most significant public transit investments in Canada's history with over 10 times the federal investments made in the decade prior. Over $30 billion has been allocated to public transit through Infrastructure Canada's programs. Additionally, in 2021 the Government of Canada committed to permanent public transit funding of $3 billion per year beginning in 2026-2027, to allow for careful and long-term project planning and delivery.
Light-duty vehicles targets
Canada set a mandatory target for 100% of new light-duty cars and passenger truck sales to be zero-emission by 2035.
Zero-Emissions Vehicles Incentives
Already over 136,000 Canadians have used the Incentives for Zero-Emission Vehicles (iZEV) Program, receiving a rebate of up to $5000 to offset the purchase price of ZEVs. Additionally, the Government has implemented a 100% tax-write off for businesses that purchase light, medium, and heavy-duty ZEVs.
In addition to developing and deploying low carbon fuels, Canada continues to develop regulations for Heavy-Duty Vehicles and engines that are aligned with the most stringent standards in North America (whether at the federal or state level in the United States).
EV charging and alternative refueling infrastructure
Infrastructure programs supporting deployment, demonstrations, and codes and standards, have provided over $450 million since 2016 for EV charging and alternative fuel infrastructure. Investments have supported the deployment of public charging and refueling stations across Canada, the demonstrations of next-generation and innovative charging and hydrogen refueling technologies, and the development of codes and standards.
What was heard from the 2030 ERP engagement process?
- Canadians expressed support for reducing emissions in the transportation sector through more and cleaner public transit and walkable communities, and the transition to ZEVs. Stakeholders also recognized the importance of ongoing alignment with the U.S. on GHG reduction standards, and supported a holistic strategy to boost consumer adoption of ZEVs, including increased charging infrastructure.
- Indigenous partners have expressed concerns with increased ZEV adoption, due to little or no access to ZEV charging stations in a large number of Indigenous communities, which are located in northern, rural, and remote regions, and the cost of ZEVs.
- The electrification of the transportation sector is an important climate measure for many provinces and territories.
- The Net-Zero Advisory Body highlighted the importance of reducing emissions from on-road transportation given its emissions profile. Opportunities raised include: increased uptake of electric light-duty vehicles facilitated by regulated targets and incentives; additional charging infrastructure; and modal shifts including greater use of public transportation. The Net-Zero Advisory Body also recognized that addressing emissions from the heavy duty vehicle and freight sectors – including rail, aviation and marine – would require different approaches such as hydrogen, clean fuels and other zero-emission technologies.
Canada's transport sector will already be much cleaner and stronger by 2030, and fully sustainable and net-zero by 2050. To meet Canada's 2030 target and lay the groundwork for net-zero emissions by 2050, the Government of Canada commits to:
Accelerate the switch to zero-emission on-road vehicles
Continued efforts to make ZEVs more affordable and accessible for all Canadians will be essential. To that end, the Government of Canada will:
- Develop a light duty vehicles ZEV sales mandate, which will set annually increasing requirements towards achieving 100% LDV ZEV sales by 2035, including mandatory interim targets of at least 20% of all new LDVs offered for sale by 2026 and at least 60% by 2030.
- Launch an integrated strategy to reduce emissions from medium-and heavy-duty vehicles (MHDVs) with the aim of reaching 35% of total MHDV sales being ZEVs by 2030. In addition, the Government will develop a MHDV ZEV regulation to require 100% MHDV sales to be ZEVs by 2040 for a subset of vehicle types based on feasibility, with interim 2030 regulated sales requirements that would vary for different vehicle categories based on feasibility, and explore interim targets for the mid-2020s.
In support of these objectives, the following additional investments will be made:
- $1.7 billion to extend the iZEV purchase incentive program for light-duty vehicles for three years. Budget 2022 will provide additional detail on the program's design.
- $400 million in additional funding for ZEV charging stations, in support of the Government's objective of adding 50,000 ZEV chargers to Canada's network.
- In addition, the Canada Infrastructure Bank will invest $500 million in large-scale ZEV charging and refueling infrastructure that is revenue generating and in the public interest.
- $547.5 million for a purchase incentive program for MHDVs. Purchase eligibility date will be announced in Budget 2022.
- $199.6 million to retrofit large trucks currently on the road.
- $33.8 million for hydrogen trucking demonstration projects that address barriers to long-haul zero-emission trucking commercialization – including technical, regulatory and standards challenges.
- $2.2 million to support Greening Government fleet electrification commitments.
The Government of Canada has also committed to support transit agencies and school boards in transitioning their bus fleets to zero-emission technology through planning, the purchase of at least 5,000 zero emission buses, and the necessary supporting infrastructure that enable successful deployments.
Going further – Meeting Canada's climate objectives will require efforts in all modes of transportation, including air, rail and marine where there are significant opportunities for cleaner fuel alternatives and electrification. The Government of Canada commits to explore additional opportunities, including:
- Building on successive voluntary agreements with industry, develop an action plan to decarbonize rail in line with Canada's net-zero by 2050 goal, which could include efforts to advance zero-emission locomotives and locomotive electrification.
- Developing a whole-of-government approach on the long-term decarbonization of aviation, informed through ongoing engagement with industry and other stakeholders on a renewed action plan to reduce emissions from aviation, which could include initiatives to expand the production and use of low-carbon sustainable aviation fuel, and efforts to decarbonize and electrify airport operations in Canada.
- Working with international partners to increase ambition in International Civil Aviation Organization (ICAO) emission reduction goals and measures.
- Developing a national action plan to enable the marine sector to reduce its emissions, which could include engagement with stakeholders on energy efficiency/carbon intensity requirements for domestic vessels in-line with requirements for international vessels.
- Working with international partners to develop measures to reduce black carbon in the Arctic from international shipping.
- Pursuing zero-emission standards for new off-road small spark-ignition engines (such as lawn and garden equipment). The Government of Canada could also investigate the potential to advance zero-emission technologies and clean fuels for other types and applications of off-road equipment (e.g., small marine engines and recreational vehicles), and larger equipment found in the agriculture, construction, mining and port sectors.
- Working with other levels of government, and in collaboration with key federal partners on additional emission reductions from transportation (e.g., urban mobility and local goods movement).
- Explore opportunities to link investments in infrastructure, particularly public transit, to urban form (e.g. urban mobility of people and goods, optimizing modal shift) and housing outcomes.
Canadian farmers have long been responsible stewards of their land. Across the country, farmers are already demonstrating innovation and ambition in the adoption of sustainable practices and technologies – and they will remain key partners in developing and implementing solutions to tackle climate change and build resilience. Moving forward, more ambitious action is needed to further reduce emissions in the agriculture sector, move towards net-zero emissions by 2050, and maximize the potential of agriculture soils to sequester carbon.
Canada's agriculture emissions, 2019
Agriculture: 73 megatonnes of carbon dioxide equivalent (Mt CO2 eq), 10%.
Current sector emissions
Emissions from Canada's agriculture sector were 73 Mt in 2019, accounting for 10% of Canada's total emissions.Footnote 11 The sector is also one of the main sources of methane emissions, contributing 29% to Canada's total methane emissions in 2019. Currently, the majority of emissions come from biological sources, such as livestock production (enteric fermentation), the application of synthetic nitrogen fertilizers, manure management, and on-farm fuel use.
Canada's agriculture emissions by province and territory (2019)
|Province and territory||Megatonnes of carbon dioxide equivalent (Mt CO2 eq)|
|Newfoundland and Labrador||0.1|
|Prince Edward Island||0.4|
Given the large role that the Prairies play in Canada's food production, almost two-thirds of emissions come from this region, with more than half of the sector's emissions coming from Alberta and Saskatchewan.
Agricultural soils are also a significant carbon sink. In 2019, agricultural soils stored slightly more than 4 Mt, offsetting approximately 6% of total annual agricultural emissions.
The agriculture sector in context: key drivers
Consumers across the globe are demanding more sustainable production practices
Demand for more environmentally-responsible and sustainable foods is increasing, as consumers around the globe are keen to know more about the food they purchase. Actions taken on climate mitigation will help the Canadian brand stand out in a highly competitive global marketplace.
Agricultural production is particularly vulnerable to the impacts of climate change
Canadian farmers are already seeing and experiencing the effects of climate change, with droughts, floods, and severe storms across the country. For example, at the end of September 2021, nearly 80% of national agricultural landscape was under drought conditions, causing crop yield losses of 30 to 40% in the Prairies, poor pasture and rangeland conditions, significant shortages of livestock feed, and limited water supplies. Adopting climate-smart practices is essential for limiting and averting the worst impacts of climate change, while improving on-farm climate resilience.
Canadian farms are highly diverse, with large variations across regions and farm types
Made up of almost 200,000 farms, there is significant diversity in the agriculture sector. Agriculture is also a shared jurisdiction between provincial and federal governments. This large variety of factors requires tailor-made approaches within flexible policies in order to be as broad and effective as possible.
Nature-based solutions and alternative farming practices offer a large potential to reduce emissions in the agriculture sector, while providing additional co-benefits
Farmers have already demonstrated leadership in adopting climate-smart farming practices and beneficial management practices such as techniques like no-till, low-till, cover cropping, rotational grazing and agroforestry. As a result, Canadian agricultural soils have transformed over the last 20 years from a carbon source to a carbon sink. The agriculture sector has the potential to sequester even more carbon at the 2050 horizon through increased use of natural climate solutions such as cover cropping, shelterbelts, agroforestry, rotational grazing, and improved manure management. Some of these practices can bring co-benefits for production or other environmental benefits, while others come with potential trade-offs related to costs or production yields.
What have we done so far?
Canadian Agricultural Partnership
The Canadian Agricultural Partnership, launched in 2018, is a five year $3 billion cost-shared investment by the federal, provincial, and territorial governments to support region-specific agriculture programs and services that are tailored to meet regional needs. Under the Partnership, cost-shared on-farm environmental stewardship programs are delivered by provinces and territories to support Environmental Farm Plans and adoption of beneficial management practices which have multiple environmental benefits, including soil and water conservation, reductions in emissions and emission intensity, and climate resilience.
The Agricultural Clean Technology program is a $165.7 million fund that aims to create an enabling environment for the development and adoption of clean technologies that reduce emissions and enhance competitiveness. The program prioritizes energy and energy efficiency, precision agriculture and bioeconomy technologies.
Nature-based climate solutions
The Agricultural Climate Solutions Living Labs program, is a $185 million fund that will help to develop and implement farming practices to tackle climate change, such as shelterbelts, cover crops, intercropping and rotational practices. The Agricultural Climate Solutions On-Farm Climate Action Fund is a $200 million program to support immediate on-farm action in the areas of improved nitrogen management, increased cover cropping and rotational grazing.
Fertilizer emission reductions
Under Canada's strengthened climate plan, the Government of Canada committed to setting a national fertilizer emission reduction target of 30% below 2020 levels by 2030 and to work with fertilizer manufacturers, farmers, provinces and territories, to develop an approach to meet it.
What was heard from the 2030 ERP engagement process?
- Canadians expressed support for more sustainable agriculture practices, including electrification of equipment, urban and vertical farming, polyculture, and other regenerative methods. Some stakeholders also supported incentives for increased carbon sequestration through agricultural practices.
- Provinces and territories highlighted their efforts to reduce emissions from agriculture, such as cover cropping, nitrogen management, rotational grazing, and increased local food supply.
With only eight growing seasons remaining until 2030, and the work required to get to net-zero emissions in 2050, the Government of Canada commits to taking more action to support farmers and producers to reduce emissions through investments in, and support for, the adoption of climate-smart farming practices.
Provide incentives for producers to adopt on-farm practices
Increasing adoption of beneficial management practices and natural-climate solutions – such as rotational grazing, cover cropping, regenerative agriculture, nutrient management, manure management, and agroforestry – will play a key role in reducing emissions and increasing soil carbon sequestration in the agriculture sector. In addition, these practices can offer other co-benefits such as improved biodiversity, soil health, and climate resilience and adaptation. Barriers to adoption of on-farm practices by producers can include high upfront or maintenance costs, time, or uncertainty about benefits and production risks of adopting the practice. Providing financial assistance addresses some of the monetary barriers producers face in adopting climate change mitigating practices. To that end, additional investments are being made:
- $470 million to the Agricultural Climate Solutions: On-Farm Climate Action Fund. This funding will allow the program to top-up funding for some current successful applicants, broaden support to additional key climate mitigation practices, extend the program past its current end date of 2023/24, and support adoption of practices that contribute to the fertilizer emissions target and Global Methane Pledge.
- $150 million for a resilient agricultural landscapes program to support carbon sequestration, adaptation and address other environmental co-benefits.
Support the development and adoption of clean technologies
Consistent with other sectors, the path to net-zero emissions requires the development and adoption of clean technology solutions that will reduce emissions while maintaining productivity and competitiveness. Canada is already making significant investments to meet this demand by supporting tools for implementing precision agriculture and more energy efficient farm equipment (e.g. grain dryers), but there is a need for increased support. The Government of Canada will continue to support on-farm adoption of existing technologies – such as anaerobic digesters, smart irrigation infrastructure and tools for precision agriculture – while also investing in the development of transformative technologies, practices and novel production systems. The Government will provide $330 million to triple funding for the Agricultural Clean Technology program by broadening and expanding the scope of the program.
Invest in transformative science, measurement and knowledge transfer
New practices, such as clean technologies, climate-smart practices, or data collection tools, will require changes in how farmers and farms operate. While a number of beneficial management practices are already available to yield benefits for the environment and agricultural soils, additional research and innovations are needed now to identify opportunities for 2050. Collecting on-farm environmental data, such as weather conditions, soil carbon levels and nutrient levels, can help farmers select practices with better environmental outcomes. Farmers will need improved extension and knowledge transfer services from industry, academia, and agrologists to support their adoption of new technologies and practices. Data management and measurement will be essential to gauge the improvement in environmental performance of the sector. To help support further transformation, the Government will invest $100 million in transformative science for a sustainable sector in an uncertain climate and net-zero economy for 2050. This funding will support fundamental and applied research supporting a path to net zero emissions, knowledge transfer, and developing metrics.
Going further – the Government of Canada commits to explore additional opportunities, including:
- As part of the next Agricultural Policy Framework, ensure environmental considerations are at the core of the framework, and update business risk management programs, including to integrate climate risk management, environmental practices and climate readiness.
- Advance a Green Agricultural Plan for Canada, in consultation with the agriculture and agri-food sector, Indigenous Peoples, and other stakeholders, to establish a long-term vision and approach to agri-environmental issues in order to advance the sustainability, competitiveness, and vitality of the sector.
- Explore variety of tools to reduce emissions and expedite the application of existing technologies or practices.
Governments at all levels, Indigenous governments, and the private sector have been working to cut GHG emissions from the waste sector, particularly by addressing landfill methane emissions and increasing waste diversion. However, the approach across Canada is uneven and emissions have not decreased for over a decade. To further decarbonize this sector, landfills across Canada need to capture more of the methane they generate, and seize the opportunity to convert methane into clean energy. Actions to reduce generation and increase diversion of biodegradable waste (the source of landfill methane) are also needed to achieve longer-term emission reductions. In a circular economy, biodegradable wastes and waste emissions are processed to increase their value as they are transformed to raw material for products such as fertilizers, soil supplements, and renewable energy.
Current sector emissions
Canada's waste emissions, 2019
Canada's waste and other emissions, 2019. Waste and others: 51 megatonnes of carbon dioxide equivalent (Mt CO2 eq), 7.0%.
Canada's waste sector is responsible for 4% of Canada's total emissions, and released 28 Mt of emissions in 2019, according to data from the most recent National Inventory Report (2021). Methane is the primary GHG emitted from the sector, representing about 27% of Canada's methane emissions.
Solid waste landfills are the largest source of emissions from the sector (23 Mt in 2019, 83% of total waste emissions, and 23% of total methane emissions). The landfill methane generated today is a result of decades of landfilling of biodegradable waste - food, yard and garden waste, paper, wood, natural fiber textiles and others - which makes up more than 60% of the waste currently landfilled in Canada. Other emissions sources in the sector include industrial wood waste landfills (10.9%), wastewater treatment and discharge (3.6%), composting and biological treatment of solid waste (1.5%), and incineration and open burning of waste (0.7%)
The waste sector in context: key drivers
There are multiple ways to decrease landfill emissions
Food waste is a significant contributor to landfill methane generation, and represents about a quarter of the waste that is landfilled.Footnote 12 More than half of Canada's food supply is lost or wasted annually,Footnote 13 occurring at all stages of the supply chain from farm to fork. While some food loss and waste is unavoidable, much of it can be prevented or recovered for productive uses such as animal feed and biofuels. Where it cannot be used productively, diverting biodegradable waste and using techniques such as beneficial management approaches including composting and anaerobic digestion can help avoid methane emissions from landfills.
Methane emissions can be also managed through the installation of infrastructure to recover landfill gas, which can be flared or used to generate energy. These approaches are well established and are technically feasible, commercially available and provide quantifiable emissions reductions.
Other aspects like waste prevention, reuse and recycling also need to be addressed
A growing body of evidence is pointing to waste prevention, reuse, and recycling as key sources of untapped potential for GHG reductions.Footnote 14,Footnote 15 For example, recycled plastics generate less than half the emissions compared to virgin plastic production on a life cycle basis (i.e. accounting for activities between end of life of an old product to the creation of a new recycled product, including transportation, cleaning, sorting, and reprocessing).
The Government of Canada has adopted a comprehensive approach to advance towards its target of zero plastic waste. Important aspects of the agenda include investing in research through Canada's Plastics Science Agenda, innovation through the Canadian Plastics Innovation Challenges, and in community action through the Zero Plastic Waste Initiative. Canada will continue to implement the proposed ban on harmful single-use plastics and recycled content requirements.
What have we done so far?
Landfill methane regulations
Under Canada's strengthened climate plan, the Government of Canada committed to develop new federal regulations to increase the number of landfills that collect and treat methane. Consultations on the development of the regulations began in early 2022.
Food waste reduction
In 2020, the Government of Canada launched the Food Waste Reduction Challenge, a $20 million initiative over five years to incentivize developing and deploying innovative new solutions to reduce food waste across the supply chain.
Investments in waste and recycling infrastructure
The Government of Canada has made significant investments to enhance waste and recycling infrastructure, and reduce greenhouse gas emissions, through, for example, the Investing in Canada Infrastructure Program and the Canada Community Building Fund (formerly the Gas Tax Fund).
What was heard from the 2030 ERP engagement process?
- Canadians expressed support to reduce waste and promote a circular economy, as well as to improve recycling and composting programs across the country. Also raised were opportunities to improve landfill gas capture and for collaboration between all levels of government to increase organics diversion.
- In light of the ongoing water crises that many Indigenous communities experience across Canada, concerns on how to deal with plastic waste from the consumption of bottled water remains. Many Indigenous communities across Canada do not have access to waste pickup or recycling. Further, current methane capture technologies are not viable or are inaccessible in northern communities.
- Provinces and territories are taking action to reduce waste, for example, through efforts to address organic waste.
Continued efforts to reduce the generation of waste and divert biodegradable waste from landfills will avoid the generation of landfill methane for decades to come and preserve landfill capacity. Increasing recovery of methane at landfills is a cost-effective approach to reducing GHG emissions. Supporting provincial, territorial, Indigenous, and municipal governments to develop infrastructure, such as landfill gas recovery systems, anaerobic digesters, composting facilities, thermochemical processing, and waste diversion strategies, will facilitate further contributions to a low-carbon future. In addition, improvements to waste and water systems have the potential to reduce emissions while also creating jobs, and contributing to local economic diversification.
To meet Canada's 2030 target and lay the groundwork for net-zero emissions by 2030, the Government of Canada commits to:
Put in place landfill methane regulations
The strengthened climate plan – A Healthy Environment and a Healthy Economy—committed to cutting emissions from the waste sector by developing new federal regulations to increase the number of landfills that collect and treat their methane, and ensure that landfills already operating these systems make improvements to collect all they can. The Government of Canada is proposing new regulations under the Canadian Environmental Protection Act (CEPA) to significantly reduce methane emissions from municipal solid waste landfills by 2030, and will continue to engage and work with provincial and territorial governments, Indigenous Peoples, municipalities, industry, non-governmental organizations, and Canadians to develop this regulatory framework.
Advance circular economy
A growing number of countries have put circular economy strategies in place, and circularity is increasingly referenced in climate plans as a means to achieve increased GHG reductions; almost 80 countries refer to circularity in their Nationally Determined Contributions. The circular economy has potential to offer new opportunities for sustainable economic growth while supporting net zero strategies in Canada. Moving forward, the Government will work with others to explore what opportunities greater circularity could offer in a Canadian context.
Going further – the Government of Canada commits to explore additional opportunities, including:
- Finalize the Food Waste Reduction Challenge and explore opportunities to continue supporting innovators working to prevent and divert food waste.
- Examine opportunities to help all players along the food supply chain to commercialize and adopt ways to eliminate, reduce or repurpose food waste.
- Explore approaches to support waste and water capital projects, plans, studies, and to accelerate deployment and scaling-up of waste and water solutions.
2.9. Nature-based solutions
Investing in nature and natural climate solutions holds significant potential to contribute to Canada's decarbonization goals, as Canada's forests, grasslands, wetlands, agricultural lands, and oceans have the capacity to both store carbon and reduce carbon emissions. Natural climate solutions (also known as nature-based solutions) are actions that protect, sustainably manage, and restore ecosystems to contribute to climate change mitigation and deliver important co-benefits for society. Healthy ecosystems do everything from sequestering carbon to filtering toxic substances from the air, water, and soil, to contributing to Canadians' mental health, to helping to reduce the costs of extreme weather events.
Indigenous Peoples are well placed to support natural climate solutions due to their role as stewards of their traditional territories, and Indigenous Knowledge has a vital role to play in supporting natural climate solutions in Canada.
Canada's forestry sector can also help contribute to Canada's climate targets. Canada has over a third of the world's third-party certified forest, more than any other country. Sustainably managed forests can provide a variety of products that can displace more fossil fuel-intensive materials.
Natural climate solutions include actions such as:
- Planting trees/protecting and restoring grasslands and wetlands
- Improving forest management/reducing deforestation
- Enhancing the use of wood products to maximize carbon storage
- Improving agricultural land management to capture/store carbon
- Reducing wildfire impacts through changes in land management
Current sector emissions
What are managed lands?
Managed lands include agricultural lands (cropland and agricultural grassland), wetlands (peat extraction and flooded lands), settlements, and managed forests (managed for timber and non-timber resources or subject to fire protection).
Canada's managed lands act as both a source and a sink of GHG emissions. Land use activities (such as timber harvesting and land conversion), as well as natural disturbances (such as forest fires and insect infestations), result in releases of GHG emissions. On the other hand, land use activities can also result in GHG removals. For example, as forests recover and trees grow, carbon is removed from the atmosphere and converted into wood by trees, a process known as biologic carbon sequestration. Land management decisions can help mitigate climate change by increasing carbon dioxide removals from the atmosphere or decreasing GHG emissions from the land.
In 2019, lands under the influence of human activity emitted 9.9 Mt into the atmosphere. Forestry, wetlands and settlements emitted 9.3, 2.6 and 2.2 Mt CO2e, respectively, while agricultural lands removed 4.2 Mt CO2e.
Climate change and Canada's forests
The Government of Canada is committed to ensuring thorough estimates and understanding of how Canada's forests can help address climate change. Canada develops its forest-related GHG inventory estimates and emission and accounting projections using scientific and internationally recognized methodology, in accordance with the United Nations Framework Convention on Climate Change (UNFCCC) and guidelines of the Intergovernmental Panel on Climate Change (IPCC). Every year, international experts convened by the UNFCCC secretariat review Canada's GHG inventory estimates to ensure compliance with these requirements. The Government of Canada strives to ensure that the methodologies used to monitor and report on Canada's managed forest carbon balance reflect state-of-the-art science and the best available data and is committed to continually improving their estimates and adopting new methods, using the best available data and scientific understanding.
Land-based greenhouse gas emissions and removals from human activities by activity sector, Canada, 1990 to 2019
|Year||Forestry sector||Agricultural land||Wetlands||Settlements||Net exchange|
The land sector in context: key drivers
Global finance for nature and natural climate solutions remains insufficient
Natural climate solutions have the potential to provide up to 37% of cost-effective solutions to meet global targets under the Paris Climate Agreement.Footnote 16 However, in order to realize the full potential of natural climate solutions, global finance for nature will need to at least triple in real terms by 2030 and increase four-fold by 2050 if the world is to meet its climate change, biodiversity and land degradation targets.Footnote 17
The climate change and biodiversity crises are intertwined
Climate change and biodiversity loss are deeply interconnected. Climate change is now a leading threat to biodiversity; conversely, destruction of ecosystems undermines nature's ability to provide a critical contribution to climate change mitigation and adaptation.Footnote 18 Taking a synergistic approach to tackling climate change and biodiversity loss is essential as Canada's forests, soils, plants and wetlands contain almost one third of all land-based carbon storage.
Climate action has positive benefits for nature
Natural climate solutions have the potential to tackle both climate mitigation and adaptation challenges at a relatively low-cost while providing co-benefits for people and nature. This demands that special care be taken to ensure unintended consequences of climate action do not negatively impact ecosystems or the flora and fauna that depend on them. For example, considerations must be taken to avoid conversion of non-forested landscapes with high biodiversity value and high levels of ecosystem services into a forest of low biodiversity value or, the unintended impacts on migratory birds and bats from improper siting of wind turbines or solar farms.
Carbon sequestration in nature is reversible
Sequestration of carbon in nature is reversible—captured carbon could be released back into the atmosphere by wildfires, changes in land-use or land management, or climate change itself. Direct wildfire emissions in recent years have exceeded 200 Mt per year, and additional emissions have also been released from the decay of fire-killed trees. Continued climate warming is projected to further increase emissions from wildfires, insects and droughts in Canada's forests, including protected forests. More research is needed on land management practices, along with implementation and testing of forest management strategies aimed at reducing future wildfire area burned, associated emissions, and risks to properties, communities and human health. Lessons can also be learned from Indigenous communities on forest management. For instance, many communities use controlled burning to reduce the number of and severity of forest fires. First Nations-led firefighting efforts include those by Yukon First Nations Wildfire (YFNW), and Tahltan First Nation.
What have we done so far?
Natural Climate Solutions Fund
The Government of Canada's 10-year, $4 billion program includes Natural Resources Canada's 2 Billion Trees Program, Environment and Climate Change Canada's Nature Smart Climate Solutions Fund, and Agriculture and Agri-Food Canada's Agricultural Climate Solutions Program including the On-farm Climate Action Fund. These programs aim to provide substantial emissions reductions (13-17 Mt of CO2 annually in 2050) while also providing important co-benefits for human well-being and biodiversity.
25 by 25 and 30 by 30
The Government of Canada is continuing to move forward with delivering on its commitment to conserve and protect 25% of Canada's land and 25% of Canada's waters by 2025, working towards 30% of each by 2030. Canada has already conserved over 13% of its lands and ocean for future generations. This work remains grounded in science, Indigenous knowledge and local perspectives.
Natural Infrastructure Fund
The $200 million Natural Infrastructure Fund, announced in June 2021, supports projects that use natural or hybrid approaches to protect the natural environment, support healthy and resilient communities, contribute to economic growth, and improve access to nature for Canadians. This Fund is the first of its kind at the federal level in Canada.
Indigenous Protected and Conserved Areas
The establishment of new Indigenous Protected and Conserved Areas (IPCAs) and Indigenous Guardians programs will continue to be a key priority for Canada, in partnership with Indigenous communities and advancing Indigenous leadership in conservation. For example, in February 2022, the Minister of Environment and Climate Change and the President of Nunatsiavut signed a Memorandum of Understanding to determine the feasibility of establishing an Indigenous protected area in northern Labrador under the Canada National Marine Conservation Areas Act.
To address the interconnected crises of climate change and biodiversity loss, Canada will allocate at least 20% of its $5.3 billion climate finance commitment to nature-based climate solutions with biodiversity co‑benefits in developing countries over the next five years.
What was heard from the 2030 ERP engagement process?
- Canadians expressed support for reforestation and afforestation, as well as improved forest management practices. Increasing conservation efforts, investing in ecosystem restoration and reclamation, protection of old growth forests, and the importance of Indigenous-led climate solutions were also raised.
- Indigenous-led conservation and stewardship of the lands and waters continues to be a priority for Indigenous Peoples across Canada. Indigenous women in their traditional roles as stewards of the lands and waters are often at the forefront of this work. Indigenous submissions also proposed a new narrative toward net-zero that centres on reciprocal relationships between people and the land, including an emphasis on natural climate solutions.
- Provinces and territories also emphasized the importance of nature-based solutions in their jurisdictions, and are advancing key measures such as restoration efforts and carbon sequestration in wetlands.
Emissions reductions from nature based solutions will take time. For example, planting trees or restoring wetlands can take up to 10 years to reap the benefits. The greatest mitigation benefits will occur over the long term, contributing to Canada's goal of net-zero emissions by 2050, as well as helping communities and ecosystems adapt to the impacts of climate change. Nonetheless, immediate actions to advance natural climate solutions can provide short-term GHG mitigation benefits and help Canada achieve its 2030 target.
To meet Canada's 2030 target and lay the groundwork to net-zero emissions by 2050, the Government will invest an additional $780 million in the Nature Smart Climate Solutions fund to deliver additional emission reductions from nature-based climate solutions. The Fund supports projects that conserve, restore and enhance wetlands, peatlands, and grasslands to store and capture carbon. The Government also commits to:
Continue to protect critical habitat such as old growth forests
Habitat conservation and protection not only plays an essential role in preserving the functioning and health of biodiversity, but also has significant carbon sequestration potential. The Government of Canada has committed to help protect old growth forests, notably in British Columbia. BC's old growth forests are highly diverse ecosystems, are also culturally and spiritually significant, and sequester large amounts of carbon, one of the highest rates on earth.
Cultivate the mitigation potential of blue carbon
The carbon stored in ocean and coastal ecosystems such as tidal wetlands, riparian habitats and seagrass meadows is known as "blue carbon." Scientists estimate that these ecosystems can hold up to three to five times the amount of carbon absorbed by forests, the traditional carbon "sinks".Footnote 19 In recognition of this, the Government has committed to ensuring that Canada is positioned to succeed in the fast-growing global ocean sectors of the blue economy and advancing reconciliation, conservation and climate objectives.
Explore the potential of nature-based negative emissions technologies
Negative emissions technologies, while not exclusively nature-based, permanently remove and store CO2 from the atmosphere and may be instrumental in meeting Canada's emissions targets, particularly when combined with other mitigation measures. To this end, the Government of Canada commits to continuing to explore the potential for negative emission technologies in the forest sector, particularly in facilities where biomass is used as an energy source.
2.10. Clean technology and climate innovation
Reaching net-zero will require significant effort to accelerate both the development of clean technologies and their deployment. There is increasing global recognition that such technological transitions must be accelerated through ambitious action if the world is to avoid dangerous climate impacts. At COP26, over 40 countries – representing more than 70% of global GDP – committed to accelerate clean technology innovation and deployment in line with transforming major sectors of the economy, from transport to steel production.Footnote 20 This represents both an opportunity to drive down emissions but also a chance to generate clean economic growth, with global clean technology activity projected to reach $3.6 trillion by 2030.Footnote 21
Accelerating clean technology transitions in Canada
GHG emissions reductions deepen with deployment. Cost and efficiency of clean technology improve with time.
- Emergence: strong support
- Deployment: moderate/strong support
- Market saturation: no support
Readying innovations for 2050:
- Negative emissions technologies
- Clean hydrogen
- Carbon capture
Advancing deployment for 2030:
- Heat pumps
- Zero emission vehicles
- Efficient building materials
- Methane reduction solutions
The position and selection of clean technologies is for illustrative purposes.
- Clear regulatory signals
- Innovation support
- Deployment investment
- Tax incentives
With a highly skilled and educated workforce, abundant access to the natural resources and energy sources critical for a net-zero future, and a thriving clean technology industry, Canada already has the building blocks in place to seize this opportunity. However, deployment of commercially available clean technologies must move faster, and innovation must also be accelerated as 50% of global GHG emissions reductions by 2050 will need to come from technologies that are still in early stages of development.Footnote 22 The future of Canada's clean technology industry and climate commitments rests on scaling up the adoption of commercially available clean solutions and readying emerging climate innovations.
The clean technology sector in context: key drivers
Examples of Canada's Leading Clean Tech Companies
CarbonCure manufactures technology that introduces waste carbon dioxide into the concrete mix during production to reduce CO2 emissions and improve strength. The CO2 conversion technology offers an effective method of reducing carbon emissions. Based in Halifax, CarbonCure recycles CO2 from industrial emitters and works with concrete producers to retrofit concrete production to serve construction projects across North America.
GHGSat is a global leader in high-resolution methane and greenhouse gas monitoring from space through satellites and sensor-equipped aircraft. With GHGSat's technology, industrial facilities are able to monitor their emissions in near real-time. An emerging player in Montreal's aerospace industry, the company provides unique services to businesses, governments, regulators, and investors worldwide.
Ionomr Innovations is advancing the development and manufacturing of ion-exchange membranes and polymers for fuel cell systems, green hydrogen production and carbon capture and utilization. Ionomr's ultra-thin membranes offer better efficiency, durability, and reduced environmental impacts. Based in Vancouver, the company relies on the chemical industry to develop its technologies for hydrogen producers and other manufacturers.
This year, 13 Canadian companies were named to the Global Cleantech 100 list, more than any other country after the United States. Clean technology companies contributed $31 billion to Canada's GDP in 2020 and created at least 211,000 jobs in the same year.Footnote 23 Canada's clean technology industry is one of the fastest growing segments of the economy, with economic activity and employment forecast to rise by roughly 50% over the next eight years.Footnote 24 This opportunity for clean growth extends across every part of the country and all sectors of the economy, from emerging high tech industries to longstanding sectors like energy and renewables, resource development, and manufacturing. The choices that Canada makes today will determine both its GHG emissions trajectory as well as its place in the global clean tech market for decades to come.
What have we done so far?
Strategic Innovation Fund - Net-Zero Accelerator
As part of the Strategic Innovation Fund, Canada's Net-Zero Accelerator is providing $8 billion in support of projects that enable the decarbonization of large emitters, clean technology and industrial transformation, and development of a Canadian batteries ecosystem through activities such as battery cell manufacturing and electric vehicles. For example, the fund has invested $400 million to support ArcelorMittal Dofasco's transition to low-carbon steel production and $25 million in Svante Inc to advance carbon capture technology for cement and hydrogen production.
Clean Growth Hub
The Clean Growth Hub serves as a whole-of-government focal point for clean technology. The Hub helps clean technology innovators and adopters navigate the federal system of funding and services while enhancing coordination on federal clean technology programs.
Economic Strategy Table for Clean Technology
Canada's Economic Strategy Table for Clean Technology is a collaboration between government and clean tech industry leaders. In 2018, the table released an ambitious plan to transform clean technology into one of Canada's top five exporting industries.
Sustainable Development Technology Canada (SDTC)
In 2020, the Government continued to support SDTC through an additional investment of $750 million over five years to support startups and to scale-up companies to enable pre-commercial clean technologies to successfully demonstrate feasibility and enable early commercialization efforts.
Impact Canada Initiative – Clean Tech Stream
In 2017, the Government invested $75 million in challenge-based initiatives, including the Women in Cleantech challenge to create six new women-led clean tech companies. For example, this initiative has supported Evercloak in commercializing its novel GHG emissions reduction technology for indoor air treatment.
Industrial Research Assistance Program
Through a network of 130 offices across Canada, the Industrial Research Assistance Program provides advice, connections, and funding to help Canadian small and medium-sized businesses increase their innovation capacity and take ideas to market.
What was heard from the 2030 ERP Engagement Process?
- Canadians recognized that Canada is well placed to take advantage of emerging opportunities such as hydrogen and carbon capture, utilization and storage. However, concerns were raised on the risk of relying too much on CCUS for emissions reductions, and that the technology should be used only when other efforts to eliminate emissions are exhausted.
- Stakeholders expressed support for investment tax credits and investments to support research and development in emerging clean technology solutions, such as battery storage, hydrogen and renewable energy, as well as the CCUS incentives and tax credits.
- Provinces and territories also emphasized the importance of clean technology.
Going forward, the Government will advance key measures to simultaneously position the clean technology industry for success, drive emissions reduction, and spur net-zero focused innovation. The Government commits to strengthen federal coordination on clean technology and climate innovation through a whole-of-government strategy. The strategy will build on existing progress and identify additional actions in five priority areas: innovation support, investment in deployment, clear regulatory signals, tax incentives, and procurement.
The Government of Canada will continue to drive climate innovation by providing additional funding to trial pre-commercial clean technologies and de-risk large-scale pilot projects critical to net-zero transitions. Actions will be taken to enhance the Canadian climate innovation ecosystem to promote the scale-up of clean tech companies and to coordinate efforts in strategic areas where it can yield major emissions reduction.
Investment in deployment
The Government of Canada will make transformative investments in the infrastructure needed to enable clean electrification solutions and the shift to clean fuels, including battery storage and renewable energy. Actions will also be taken to enhance coordination across federal funding programs and strengthen investments to accelerate the adoption of fuel switching technologies among Canadian businesses and households in alignment with Canada's climate goals. Beyond sector-specific actions to accelerate clean technology deployment, the Government of Canada will:
- Finalize the extension of the accelerated capital cost allowance to critical clean energy and energy efficient technologies, such as hydrogen production by electrolysis of water and renewable fuel production.
Clear regulatory signals
The Government of Canada will also strengthen coordination on regulatory signals to provide certainty on the direction of the net-zero transition and secure its outcome. Canada remains committed to a carbon pollution pricing trajectory that will reach $170 per tonne of CO2e by 2030. The Government also recognizes that targeted sectoral regulations will continue to be needed to complement carbon pollution pricing and drive clean technology adoption in line with 2030 and 2050 climate commitments, such as through forthcoming sectoral efforts to introduce a clean electricity standard and a regulated zero emission vehicle sales mandate.
Mobilizing private capital to accelerate investment in the clean technologies of the future is essential to the net-zero transition. That is why the Government will develop additional tax incentives to help de-risk capital investment in clean technology projects to speed up their deployment in step with climate commitments. Specifically, the Government of Canada will:
- Develop an investment tax credit for carbon capture, utilization, and storage, with details to be provided soon.
As the largest asset owner and public procurer of goods and services in Canada, the Government of Canada has the opportunity to develop early markets for emerging clean innovations. In support of this, the Government of Canada will:
- Build on the Greening Government Strategy to reduce GHG emissions and support the market for emerging climate innovations by developing procurement requirements to green federal buildings and construction materials, fleet, fuels, electricity and other high-carbon goods that the government buys.
Strategic investments in emerging clean technologies
The Government of Canada is making strategic investments in a number of emerging clean technologies that are mission critical for reaching net-zero and where Canada has comparative advantage (e.g., in terms of resource endowments, regional industries conditions, and know-how). Examples include:
Carbon capture, utilization and storage (CCUS)
- CCUS is a suite of technologies that capture CO2 from industrial or power applications and either use it to create products such as concrete and low-carbon synthetic fuels or transport it to be permanently stored in geological formations underground. It is also a critical enabling technology for carbon dioxide removal solutions such as direct air capture.
- Canada has demonstrated leadership in CCUS in terms of large-scale projects, cutting-edge innovation, geological storage capacity, and enabling regulatory environment.
- The Government will publish a CCUS Strategy in 2022 to outline a strategic vision for the technology.
Clean electrification solutions
- Canada benefits from one of the cleanest and most affordable electricity systems in the world as well as access to the resources needed to meet rising global demand for clean technologies.
- The Government has committed to transitioning Canada's electricity system to net-zero by 2035 and expanding inter-provincial interconnections, which will provide a strong foundation for clean electrification solutions such as electric vehicles and heat pumps to decarbonize multiple economic sectors.
- The Government will continue to position Canada's natural resources and clean tech industry as leaders within the growing global market in support of clean electrification solutions, including through the launch of a Critical Minerals Strategy and efforts to strengthen North American collaboration on clean technology supply chains.
- Cleans fuels like hydrogen and biofuels are versatile energy carriers that can decarbonize difficult-to-abate applications, including where electrification is not yet feasible such as heavy duty and long-distance transport.
- Canada is a leader in hydrogen as one of the top 10 global hydrogen producers and is home to ample feedstock for both clean hydrogen and biofuels.
- The Government will continue to support the advancement of the Hydrogen Strategy through investments in RD&D and deployment, including the $1.5 billion Clean Fuels Fund launched in 2021 and regulatory initiatives such as the Clean Fuel Standard.
2.11. Sustainable finance
Canada's financial sector will play a key role in raising and guiding the necessary funds to meet Canada's climate objectives. To do so, the financial sector will need to incorporate environmental, social, and governance (ESG) factors throughout financial decision-making. This is generally referred to as sustainable finance.
The financial sector is increasingly aware of their role in the global transition to net-zero. At COP26 in November 2021, private institutions with over US$130 trillion in assets united through the Glasgow Financial Alliance for Net Zero to accelerate progress toward a net-zero emission future. This includes representation from Canada's six largest banks, pension plans, and other market participants.
Sustainable finance incorporates ESG factors into financial decisions such as lending, investing, insurance, and oversight. Examples of these decisions in practise could include:
A high tech company using a power purchase agreement with a wind energy company to offset its electricity emissions
A rental car company issuing a green bond to finance a fleet of zero-emission vehicles
A financial institution committing to enhanced climate-related financial disclosures
An insurance company offering preferred rates for flood resiliency measures
Sustainable finance is also a key cross-cutting policy tool needed to meet Canada's 2030 and 2050 climate objectives. Sustainable finance initiatives can help crowd-in needed private investment and amplify existing climate policy signals in a business-friendly manner. Sustainable finance also enables the mobilization and alignment of private sector investments towards climate and environmental objectives and promotes financial stability related to climate risk.
Climate-related financial disclosure, a key element of sustainable finance, is essential to reflect the risk of climate change in financial markets. Increasing and improving climate-related financial disclosures provides a more robust view of climate resiliency and risks and opportunities, which promotes more informed investment, credit, and insurance underwriting decisions. Markets, lenders, insurers, investors, policy makers, and the public require standardized information about the climate-related risks and opportunities organizations face to ensure assets are correctly priced to reflect those risks.
In recent years, the importance of standardizing disclosure of climate-related financial risks has gained recognition. In 2017, the Task Force on Climate-related Financial Disclosures (TCFD) developed a framework to help companies more effectively disclose climate-related financial risks to investors, lenders, insurers, and other stakeholders. Since then, support for the TCFD has grown. As of early 2022, more than 120 Canadian companies support the recommendations of the TCFD.Footnote 25
What have we done so far?
Federal green bonds
Canada recognizes the important role that capital markets must play in financing public and private investments in support of our shared goals. On March 3 2022, the Government released its Green Bond Framework, and on March 23, 2022 issued its inaugural green bond—the first of many. The green bond offering saw robust demand from environmentally and socially responsible investors who represented a majority of buyers (72 per cent), as well as from international investors, who made up over 45 per cent of the investor base. The final order book of over $11 billion set a record high for a Canadian dollar green bond offering. This $5 billion issuance, the largest in Canadian history, will allow investors to support federal investments in climate action and environmental protection, while fostering further development of the Canadian sustainable finance market. Canada's green bond program will add liquidity and AAA-rated ESG assets to create a more mature, liquid, and diverse market for investors, and support the growth of Canada's sustainable finance market.
In 2018, Canada launched the Expert Panel on Sustainable Finance to provide recommendations to the Government on scaling and aligning sustainable finance with climate and economic goals. The Expert Panel released their final report in June 2019 and provided 15 recommendations outlining opportunities for sustainable growth for consideration by the Government of Canada (Box 2).
Building on one of the key recommendations of the Expert Panel, Canada launched the Sustainable Finance Action Council in May 2021 to support the growth of a strong, well-functioning, sustainable finance market. The Sustainable Finance Action Council comprises 25 of Canada's deposit-taking institutions, insurance companies and pension funds, which, combined, have more than $10 trillion in assets.
During its three year mandate, the Sustainable Finance Action Council will make recommendations on the critical market infrastructure needed to attract and scale sustainable finance in Canada, including: enhanced assessment and disclosure of climate risks and opportunities; better access to climate data and analytics; and common standards for sustainable and low-carbon investments.
Climate-related financial disclosures
Since the Government of Canada first announced its support for the voluntary international disclosure standards proposed by the TCFD in Budget 2019, it has taken action to improve climate-related disclosures in Canada.
Budget 2021 announced that Crown corporations with assets over $1 billion will be required to make climate-related financial disclosures starting in 2022, with smaller Crown corporations following by 2024.
In October 2021, Canadian securities regulators issued proposed climate-related disclosure requirements, based on the TCFD framework, for public consultation. When implemented, these disclosure requirements will assist investors in making more informed decisions.
In January 2022, the Bank of Canada and Office of the Superintendent of Financial Institutions (OSFI) released the results of a pilot project on climate scenario analysis. This pilot was an important step in helping Canada's financial sector identify, measure and disclose climate-related risks. The OSFI also outlined seven initiatives it will focus on to build federally regulated financial institution awareness and capability to manage climate-related financial risks, including assessing broad adoption of mandatory climate-related financial disclosures.
In November 2021, at COP26, the International Financial Reporting Standards Foundation selected the city of Montreal to host one of the central offices of the new International Sustainability Standards Board (ISSB). The ISSB will be responsible for setting global sustainability reporting standards to enhance the quality of company reporting on climate change and other environmental, social, and governance factors.
What was heard from the 2030 ERP engagement process?
- Canadians often mentioned that a more sustainable financial sector is key in transitioning to a green economy. Support was also expressed for greater and reliable disclosure on climate impacts of investments.
- Stakeholders also noted the importance of public and private sector partnership, and the need to attract capital and incent investment in clean technologies.
- Jurisdictions also recognized the importance of sustainable finance activities.
In December 2021, the Government committed to develop a net-zero capital allocation strategy to accelerate Canada's transition to a prosperous net-zero future in consultation with financial experts and the Sustainable Finance Action Council.
Climate-related financial disclosures
In December 2021, the Government expanded on its support for TCFD-aligned climate-related disclosures, committing to work with provinces and territories to move toward mandatory disclosures and require federally-regulated institutions, including financial institutions, pension funds and government agencies, to issue climate-related financial disclosures and net-zero plans. The Government is also committed to develop a climate data strategy to ensure that the private sector and communities have access to data to inform decisions on planning and infrastructure investments.
Additionally, the Canadian Net-Zero Emissions Accountability Actwill require the Minister of Finance, in cooperation with the Minister of Environment and Climate Change, to publish an annual report respecting key measures that the federal public administration has taken to manage its financial risks and opportunities related to climate change.
2.12. Sustainable jobs, skills, and communities
As Canada continues to address climate change and grow a cleaner, stronger and more resilient economy, investing in Canadians will always be at the heart of the path forward. "Putting people first" is an essential principle identified by the Net-Zero Advisory Body (NZAB) in their first publication, Net-Zero Pathways: Initial Observations. Canadian workers and industries are the backbone of the Canadian economy, and the lifeblood of our communities. To get to a net-zero future, no individual or region can be left behind. Global clean technology activity is expected to exceed $2.5 trillion by 2022, and Canada is well-positioned to seize the numerous job opportunities this growth presents. By continuing to invest in climate action now, Canada is creating good middle class jobs today, and a clean, healthy world for tomorrow. Canada is committed to ensuring that workers have the skills and opportunity to thrive in a net-zero world, regardless of who they are, where they live, or what they do.
What have we done so far?
Supporting sustainable jobs for workers and communities in the phase-out of coal power
The Government of Canada is supporting sustainable jobs in response to the accelerated phase-out of coal power. In 2018, the federal government established the Task Force on Just Transition for Canadian Coal Power Workers and Communities to engage relevant stakeholder groups, and provincial and municipal governments, in order to provide a series of recommendations on how it can support coal power workers and communities. In response, the Government committed $185 million to support affected workers and communities, including $35 million for the Canada Coal Transition Initiative focused on skills development and economic diversification, as well as $150 million for a dedicated infrastructure fund.
Advancing skills and training initiatives to allow workers and communities to thrive in a net-zero world
Climate action will create new opportunities for engineers, scientists, farmers, construction workers, tradespeople, resource workers, energy workers, researchers, and more, while strengthening Canada's workforce. The Government of Canada has already taken action to prepare the workforce for a net-zero emissions economy by identifying skills that are in demand now and in the future, developing novel approaches to skills development and training, and providing new opportunities for Canadians.
The Government of Canada is making significant investments in training, including supporting Canadians as they build new skills in growing sectors, receive the accreditation they need to succeed, and strengthen their futures, by connecting them to employers and good jobs. This includes the following initiatives:
- The Sectoral Workforce Solutions Program, a $960 million fund over three years, works primarily with sector organizations and employers to design and deliver training that is relevant to the needs of businesses, especially small- and medium-sized businesses, and to their employees. A portion of this funding will be allocated to clean energy sector businesses, organizations and jobs.
- The Skills for Success Program, a $298 million fund over three years, will help create 90,000 job-training opportunities for foundational and transferable skills training.
- The new Apprenticeship Service, with $470 million over three years, connects 55,000 first-year apprentices in eligible Red Seal trades with opportunities with small and medium-sized employers, while supporting underrepresented groups.
Communities must be at the heart of determining their economic futures. That is why the Government of Canada launched:
- The new Community Workforce Development Program, a $55 million fund over three years, to support communities to develop local plans that identify high potential growth organizations and connect these employers with training providers to develop and deliver training and work placements to upskill and reskill jobseekers to fill jobs in demand. Part of this funding will focus on decarbonization efforts and supporting sustainable jobs for workers in transforming sectors like energy.
These initiatives build on Canada's world-class income support system, including Employment Insurance, which will continue to support Canadians. This includes the temporary Employment Insurance measures announced in Budget 2021 that will increase access to income support through reduced entrance requirements and program simplification. Building on the Canada Training Tax Credit, the Government will redesign the Employment Insurance Training Support Benefit that was announced following recommendations from the Just Transition Task Force.
Identifying emerging jobs, skills and workforce trends in a low-carbon future
As the realities of work change, it's important to understand what jobs will be in the highest demand. That is why the Government is investing $72.7 million per year in the Future Skills Centre, to identify emerging skills and workforce trends and to ensure that Canada's skills development policies and programs evolve to align with a rapidly changing labour market, and that Canadians have the tools they need to grow and succeed in high-growth sectors.
The Canada Greener Homes Grant initiativeis spurring interest and activity in the retrofit economy, and creating greater demand for skilled trade workers (i.e. energy advisors, retrofit contractors, product manufacturers, etc.). The Government of Canada is investing over $10 million to support recruitment, training and mentoring of new energy advisors in regions across Canada – with a specific focus on building full participation of underrepresented groups (i.e. women, Indigenous Peoples, racialized peoples), and workers in rural, remote and Northern communities. Hundreds of new jobs have already been created through this grant initiative.
What was heard from the 2030 ERP engagement process?
- Canadians highlighted the importance to support workers in high-emitting sectors with training and education opportunities to transition to new jobs, especially jobs in clean tech and the renewable energy sector. Greater collaboration between governments, educational institutions, including in Indigenous communities, and the private sector to enable Canada's workforce to succeed in a net-zero emissions economy was also mentioned.
- Indigenous partners emphasized the need for a just transition that supports socio-economic well-being, recognizing that many of the economic structures imposed on First Nations' lead to a reliance on the fossil fuel industry. Indigenous partners also highlighted the role of Metis women as environmental stewards and intergenerational knowledge transfer, as well as the importance of Inuit capacity and knowledge in climate decision-making.
- Provinces and territories also emphasized the importance of taking action to support workforce and skills development.
Positioning Canada as a global leader in the low carbon economy, and supporting workers and communities along the way
The global move to net-zero emissions will create opportunities—but also challenges – for some energy-intensive industries and regions. Canada's oil and gas sector is an important employer and driver of economic growth in many Canadian communities and regions, supporting 593,500 direct and indirect jobs across Canada, with the majority located in Alberta, Saskatchewan, and Newfoundland and Labrador. The Government of Canada is committed to ensuring that workers and communities are able to benefit from the opportunities that the transition to cleaner energy presents. Many workers also have the essential skills, knowledge and ambition to help build our low-emissions energy future and lay the groundwork for net-zero emissions by 2050.
Canada and Canadians are uniquely positioned to thrive in this new world and become leaders in clean energy, clean technology, natural resources management, nature-based solutions, agri-food, and more. For workers and communities, this will mean new jobs and businesses, and make Canada a destination of choice for investments in low-carbon solutions.
Recognizing this opportunity, the Government of Canada has made commitments in skills training to ensure that workers are able to succeed in the low-carbon economy, for example:
- Creation of a new Futures Fund for Alberta, Saskatchewan, and Newfoundland and Labrador to support local and regional economic diversification.
- Establishing a new Clean Jobs Training Centre to help workers across sectors upgrade or gain new skills to be on the leading edge of the zero carbon industry.
Engaging with Canadians on what it means to achieve a just and inclusive transition
As Canada looks to a clean future and a strong economy, the Government is continuing to put people first, and ensure everyone has a real and fair chance at success. That is why, in July 2021, the Government of Canada launched public consultations on proposed legislation to enable a just transition that supports workers and communities as the shift to a low-carbon future advances. The Government of Canada will continue to engage with provinces and territories, Indigenous Peoples, and a diversity of stakeholders — including unions and industry — to inform the proposed legislation.
A just and inclusive transition to sustainable jobs is an opportunity to advance equity, inclusion and justice, by embedding these principles in policies, programs, frameworks and pathways to 2030 and beyond. The move to a low-carbon economy also represents an opportunity to address existing inequalities in the workplace, and enhance and improve training supports for those facing barriers in the workforce, such as Indigenous Peoples, racialized people, skilled newcomers, youth, women, LGBT+ people and persons with disabilities. The Government of Canada will continue to work with its partners, including labour unions, to design programs that take into account current barriers and underrepresentation, so that there is a level playing field.
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