Minister’s response to the Net-Zero Advisory Body’s Third Annual Advice Report – April 17, 2026

Dear Members of the Net-Zero Advisory Body,

As Minister of the Environment, Climate Change and Nature, I welcome the Net-Zero Advisory Body’s (NZAB’s) third annual advice report under the Canadian Net-Zero Emissions Accountability Act. The NZAB remains a central pillar of Canada’s climate policy framework, established by law under the Act to provide independent expert advice on achieving net-zero emissions by 2050. The report contains advice in four thematic areas: Unlocking Investment and Reducing greenhouse gas (GHG) emissions; Net-Zero Industrial Policy; Net-Zero Energy Systems Vision; and Developing a Carbon Budget for Canada and Addressing Excess Emissions.

In addition to this advice, the Government of Canada appreciates the NZAB’s work to advance its thinking in other areas. Section two of the report highlights the outcomes of two research projects, one on the role of federal entities and one on agriculture.

The Government also recognizes the importance of the engagement activities conducted by the NZAB to inform its advice. Section three of the report highlights the NZAB’s recent engagement and collaboration activities, including with federal entities and Indigenous partners.

Previous advice from the NZAB has played an important role in helping shape Government of Canada policies, such as its focus on methane regulations and strengthening industrial carbon pricing as key underpinnings of its climate plan. In Budget 2025, the Government announced its Climate Competitiveness Strategy, which aims to boost Canada’s economy and position Canadian firms as leaders in clean growth and decarbonization.

The Government will carefully consider this new round of advice in its current and future policy development. There are already areas of alignment between these policies and the latest NZAB advice.  The Government will continue to give full consideration to the NZAB's advice as it advances next elements of its climate approach.

Unlocking Investment and Reducing GHG Emissions 

A key focus of the NZAB’s recommendations was on reinforcing core foundations of the Government’s climate policy: strengthening the industrial carbon pricing system, adjusting existing policies to maximize emissions outcomes, using equivalency agreements to promote provincially-driven solutions, expediting methane regulations and programs targeted at buildings, and finalizing the implementation of measures in the 2030 Emissions Reduction Plan.

The Government acknowledges that strong and efficient climate actions are key to supporting long-term economic prosperity, and that the Government cannot achieve this alone. This is why the Government is taking strong action to address climate change, enhance economic competitiveness and build certainty for investors, and continues to implement climate policies designed to unlock investment and reduce emissions.

Climate Competitiveness Strategy

Canada's Climate Competitiveness Strategy, announced in Budget 2025, creates the conditions to attract the investments needed to build an affordable net-zero future, in which Canadian businesses and industry are well-positioned to compete and lead in the global low-carbon economy.

The Government of Canada recognizes that well-functioning industrial carbon pricing systems, complemented by a long-term price trajectory, are essential to providing certainty to businesses looking to invest and compete internationally. The Government is working with provinces and territories to update the federal benchmark (which sets minimum stringency requirements for all industrial pricing systems) to ensure that industrial pricing provides the necessary incentives to drive decarbonization and clean technology investment while protecting and ultimately enhancing competitiveness over the short- and long-term. To this end, the Government published a discussion paper in December 2025 which outlined the need for changes to the benchmark and included technical proposals. The Government is reviewing input received to help inform the path forward and intends to move forward with the updated federal benchmark expeditiously to provide long-term certainty.

The Government of Canada is also taking action to ensure its regulations complement industrial pricing. This includes the recently finalized enhanced methane regulations for oil and gas, which were published in December 2025 and build on the success of the previous regulations that have put Canada on a path to meet its goal of reducing methane emissions 40-45% below 2012 levels by 2025. The Government of Canada and the Government of Alberta recently announced an agreement-in-principle to lower methane emissions in the oil and gas sector. Pursuant to the November 2025 Canada-Alberta Memorandum of Understanding (MOU), this new agreement includes the objective to achieve equivalent emissions outcomes to the federal regulation. It also commits to engage a third party to assess emission reductions, providing an independent perspective as a step towards a new equivalency agreement under the Canadian Environmental Protection Act, 1999. The Government is also working constructively with both BC and Saskatchewan to advance equivalency agreements that would stand down the Enhanced Methane Regulations in those provinces in favour of provincial regulations that deliver equivalent environmental outcomes.

The Government also finalized regulations to reduce methane emissions from landfills in December 2025.

The Government is making targeted changes to the Clean Fuel Regulations to both strengthen the resiliency and support the development of Canada’s low-carbon fuel sector, while maintaining the Regulations’ primary focus on lowering GHG emissions and transitioning to a lower carbon economy.

Complementing these efforts, the Clean Electricity Regulations aim to reduce emissions from the electricity sector and ensuring a net-zero electricity grid by 2050 as electricity systems expand to meet growing demand.

The Government has an ambitious agenda to build a stronger, more competitive, and more prosperous economy by getting major projects built in Canada. Through Canada's new Major Projects Office, the Government is accelerating approvals for key low-carbon projects like Ontario's Darlington Small Modular Reactor and the Wind West project, aiming for a “one project, one review” approach and a maximum two-year timeline. The Government will continue to prioritise clean growth and climate objectives as new projects are considered.

Net-Zero Industrial Policy 

The NZAB provided recommendations on a strategic approach to net-zero industrial policy. Recommendations include prioritizing sectors, convening stakeholders, setting net-zero competitiveness goals for priority sectors, and aligning policies, programs, and funds with these priorities.

The Government of Canada agrees that a strategic approach to industrial policy will be required to build a low-carbon economy. The Government is focused on transforming our economy to be stronger, more sustainable, and more independent, building on the solid foundation of strong Canadian industries. The Government has been taking action to help Canadian businesses compete internationally, drive clean growth and decarbonization, and prepare Canada to succeed in a low-carbon economy.

The Government is implementing a series of six refundable Clean Economy Investment Tax Credits (ITCs) to help Canada transition to clean energy while growing the economy and supporting green innovation. These ITCs will also provide businesses and other investors with the certainty they need to invest and build in Canada.

To boost productivity and attract investment, the Government is introducing a Productivity Super-Deduction—a set of enhanced tax incentives covering all new capital investment that allows businesses to write off a larger share of the cost of these investments right away. These will also make it easier for businesses to invest and grow.

Canada’s Automotive Strategy

The recently announced Automotive Strategy rewards the production of made-in-Canada vehicles and harnesses our world-class capabilities in artificial intelligence and technology expertise to build the cars of the future. This Strategy positions Canada to become a global leader in electric vehicle (EV) production.

Canada’s new Automotive Strategy includes:

• launching an Electric Vehicle Affordability Program, which will provide incentives of up to $5,000 to lower the cost of EVs for Canadians and create a stronger domestic consumer market
• supporting EV charging infrastructure with $1.5 billion in investments through Canada Infrastructure Bank’s Charging and Hydrogen Refuelling Infrastructure Initiative and $84.4 million for 122 projects to install more than 8,000 electric vehicle chargers to enhance the national EV charging network, making it easier and more convenient for drivers to charge their EVs across the country
• introducing stronger, Canada-specific greenhouse gas emission standards that put Canada on a path to achieve a goal of 75% EV sales by 2035 and 90% EV sales by 2040 – reducing our carbon footprint and securing Canada’s global leadership in clean energy. These more stringent emissions standards will enable the Government to repeal the Electric Vehicle Availability Standard

The Government also continues to develop and implement strategies, and policies and programs to support priority industrial sectors. Some examples include:

• Canada’s Hydrogen Strategy positions Canada as a world-leading producer, user and exporter of low-carbon hydrogen and associated technologies
• the Canadian Critical Minerals Strategy increases the supply of responsibly sourced critical minerals and supports the development of domestic and global value chains for the green and digital economy. The Strategy includes the First and Last Mile Fund, which will provide up to $1.5 billion in federal funding until 2030 to support strategic mining and infrastructure projects that are key to developing Canada’s critical minerals supply chains and getting critical minerals to market. It also includes the $2 billion Critical Minerals Sovereign Fund, which will make strategic investments in critical minerals projects and companies
• Canada’s Net‑Zero Challenge supports businesses across sectors in developing and implementing ambitious, credible plans to transition their operations to net‑zero emissions by 2050 or earlier, positioning Canadian industry to compete in the global net‑zero economy
• investments in industrial energy efficiency, including through the Green Industrial Facilities and Manufacturing Program, to reduce industrial energy use, lower GHG emissions, and enhance competitiveness

Net-Zero Energy Systems 

The NZAB provided recommendations on working with stakeholders to develop and promote a net-zero energy systems vision for Canada, and on directing all federal agencies and departments to articulate their roles in advancing that vision.

The Government of Canada acknowledges that low-carbon energy systems are not only essential to achieve our climate goals, but also an economic opportunity, with Canada well positioned to take advantage of new growth opportunities.

The transition to a low-carbon economy will require clean, reliable power. The Clean Electricity Regulations aim to reduce emissions to protect the environment and human health from the threat of climate change. The Government is working with provinces and territories to advance these goals and ensure that Canada's grid is clean as electricity demand grows.

On March 26, 2026, legislation for a new Clean Electricity Investment Tax Credit received Royal Assent. This tax credit will provide foundational support for investments in clean electricity, and will become available to businesses soon.

The Government’s approach to reducing emissions in energy systems includes a focus on energy efficiency. By modernizing building codes and regulations (e.g. through the Codes Acceleration Fund), implementing residential, industrial, and commercial programs that enhance energy efficiency (e.g. the Canada Greener Homes Affordability Program and the Oil to Heat Pump Affordability Program), and deploying information programs that promote the benefits of adoption energy efficient technologies (e.g. the National Approach to Home Labelling), the Government aims to reduce energy costs while managing peak electricity demand and reducing grid loads.

Developing a Carbon Budget for Canada and Addressing Excess Emissions 

The NZAB provided recommendations on addressing excess emissions, including on the role of carbon dioxide removal (CDR), and supporting mitigation in other countries, through the trading of Internationally Transferred Mitigation Outcomes (ITMOs) under the Paris Agreement.

Canada’s Carbon Management Strategy, announced in 2023, creates a vision for how CDR and carbon capture, utilization and storage (CCUS) can help Canada reach net-zero emissions.  The Government of Canada also recently announced that it is a founding member of the Advance Carbon Removal Coalition, which will mobilize $100 million to build a high-integrity carbon removal market in Canada.

Conclusion

I would like to thank the NZAB for its continued work to provide expert advice to the Government of Canada on how to achieve net-zero emissions by 2050. The Government of Canada is committed to reducing emissions and building a competitive, low-carbon economy for the future. The Government will continue to rely upon the NZAB as an important source of independent advice as it develops and implements policies to advance our climate and economic objectives.

At the same time, we are eager to work with the NZAB to embark on a new chapter for the Body. Informed by the experience gained since the establishment of the NZAB in 2021, considering last year’s departures from the Body, and accounting for the government’s shift in focus toward driving investment and growth in a low-carbon economy, the Government of Canada—in collaboration with the NZAB—will be implementing a series of updates to strengthen the Body’s efficiency and functionality. At the same time, we will be working with the existing NZAB members to refine its structure and operations with a view to enhancing the NZAB's contribution to the development, implementation, and assessment of Canada's commitment to a net-zero future by 2050. I remain committed to working collaboratively with the NZAB members to renew its membership and leadership so that the Government can continue to receive NZAB’s timely and relevant advice.

Please accept my best regards.

Sincerely,
The Honourable Julie Dabrusin, P.C., M.P.