Language selection

Government of Canada / Gouvernement du Canada

Search

Net-Zero Emissions Primer for Pharmaceutical Manufacturing Companies

Section 1 – Primer audience

The objective of this primer is to help companies and organizations in the pharmaceutical manufacturing industry reach net-zero emissions by 2050. This industry group can include bio-pharmaceutical companies, biotech companies, biologics companies, animal health companies and vaccine manufacturers among others.

It can be used by either companies and organizations who are just starting out on their journey towards net-zero emissions, or those who are further along in the process and are looking for more concrete advice on what steps they can take.

1.1 Overview of the industry

The pharmaceutical industry consists of companies that design, discover, develop, test and sell medicines and related products to improve the health of humans or animals. The pharmaceutical manufacturing industry in Canada concentrates on producing medicines in large volumes for sale to hospitals, pharmacies and the public.

The North American Industry Classification System (NAICS) code for this industry is 3254 - Pharmaceutical and medicine manufacturing. This Net-Zero Primer may also be relevant for pharmaceutical research and development facilities classified under the NAICS code 541710 - Research and development in the physical, engineering and life sciences.

Examples of substances produced by the pharmaceutical manufacturing industry include:

In Canada, there were 771 establishments in this industry in 2024, most of which were “micro”, small and medium establishments with less than 500 employees. There were 16 pharmaceutical manufacturing establishments with 500 employees or more. The sector employed over 35,000 people in 2024. Pharmaceutical manufacturing in Canada is concentrated in Quebec, Ontario and British Columbia, however, establishments in this sector operate in every province and territory.

The main types of pharmaceutical manufacturing companies in Canada include:

The types of pharmaceutical manufacturing include:

The processes undertaken by pharmaceutical companies include chemical synthesis, fermentation, distillation and solvent extraction; grading, grinding and milling; and packaging products into tablets, vials, ampoules or ointments.

Most pharmaceutical manufacturing companies in Canada do not have high direct emissions, since the most emissions intensive part of the supply chain is API manufacturing and that is usually done in other countries. The estimated direct GHG emissions from this industry in Canada were estimated to be 251 kt CO2 equivalent (eq) in 2022. Although the direct emissions from individual facilities in this sector are generally small, the indirect emissions are typically much higher, especially from purchased goods. The aggregate emissions of the pharmaceutical industry are significant and must be addressed if Canada is to meet its net-zero target. Doing so will also help position pharmaceutical companies to operate in Canada to operate in a decarbonized economy.

Section 2 - The shift to net-zero emissions

The purpose of this section is to provide relevant background and context on the shift to net-zero emissions, to help pharmaceutical manufacturing companies understand their role in the transition and prepare to develop their net-zero strategy and plan.

This section describes why planning for net-zero is important, and what the shift to net-zero could look like for companies and organizations in the pharmaceutical manufacturing industry in Canada. It also gives an introduction on how to measure emissions using internationally recognized GHG emissions accounting practices.

2.1 The importance of planning for net-zero emissions by 2050

For the pharmaceutical manufacturing industry, reaching net-zero emissions is important, since the aggregate emissions from the sub-sector are significant, even if those from individual firms are usually small. The sector as a whole has a role to play in the global transition to net-zero.

For individual companies in the pharmaceutical manufacturing industry, planning for net-zero emissions is also important, as it allows firms to prepare for the future and increase their resilience to climate risk. Net zero planning can also help identify business opportunities, secure a competitive advantage, build their reputation with clients and investors and be better positioned for trade and export opportunities. Net-zero planning can also be useful for ensuring compliance with evolving regulatory standards and meeting conditions for participation in voluntary emissions accounting programs (such as the Government of Canada’s Net-Zero Challenge).

2.2 The shift to net-zero for the pharmaceutical manufacturing industry in Canada

This section describes what the shift to net-zero could look like for the pharmaceutical manufacturing industry as a whole in Canada (what this could look like for your company specifically is addressed in Section 3).

2.2.1 Where emissions in the pharmaceutical manufacturing industry come from

Direct emissions from pharmaceutical companies come from on-site energy use and transportation. Heating, ventilation, air conditioning and refrigeration (HVAC/R) systems are the largest consumers of on-site energy (typically about 70% of energy use), given that facilities have strict requirements for temperature, humidity, pressure and air purity to ensure product integrity. Other categories of emissions include plug loads, processes, employee and product transportation, emissions from the manufacturing of raw materials, and packaging. Details on where these emissions typically come from are listed below.

Category: Heating, Ventilation, Air Conditioning and Refrigeration (HVAC/R)

Description: Ventilation required for clean rooms and fume hoods, make-up air (MUA) units, chilled water, hot water and steam for manufacturing processes, space heating and cooling, refrigeration.

Explanation: Direct emissions from the burning of fossil fuels onsite, or indirect emissions from purchased electricity. Direct emissions from high Global Warming Potential (GWP) refrigerants.

Relative magnitude of emissions: Medium 

Degree of company control: High 

Category: Plug loads and processes

Description: Lighting, mixers, centrifuges, microscopes, sterilization, office equipment, water heating, dryers, forklifts etc.

Explanation: Direct emissions from the burning of fossil fuels onsite, or indirect emissions from purchased electricity.

Relative magnitude of emissions: Low to medium

Degree of company control: High 

Category: Raw materials

Description: Manufacturing of raw materials, including active pharmaceutical ingredients (APIs), excipients (non-active ingredients), bulk chemicals and biological products.

Explanation: Emissions from manufacturing raw materials depend on the feedstocks used, energy sources and chemical synthesis processes.

Relative magnitude of emissions: Low to High   

Degree of company control: Low to medium

Category: Downstream use of Metered Dose Inhalers (MDIs)

Description: Patient’s downstream use of MDIs, which are used to treat chronic respiratory diseases, such as chronic obstructive pulmonary disease (COPD) and asthma.  

Explanation: MDIs use hydrofluorocarbon (HFC) propellants, which are potent GHGs.

Relative magnitude of emissions: Medium to High

Degree of company control: Medium to High

Category: Product and material transportation

Description: Common modes of transportation include refrigerated heavy ground vehicles (HGVs), small, refrigerated vehicles (last mile delivery), temperature-controlled vans, cargo aircraft with cold chain containers and refrigerated shipping containers.

Explanation: Direct emissions from the burning of fossil fuels in each of these modes of transportation

Relative magnitude of emissions: Medium to High

Degree of company control: Low to High

Category: Employee transportation

Description: Employee commuting and business travel.

Explanation: Emissions from employee vehicles commuting and company-related travel for meetings, sales or logistics purposes.

Relative magnitude of emissions: Medium to High

Degree of company control: Medium to High

Category: Packaging

Description: Plastics (syringes, vials, IV bags, etc.), aluminum (blister foils, tubes), glass (vials, bottles) or paper.

Explanation: Emissions come from energy use in the manufacturing of materials, sterilization processes, and end-of-life disposal (incineration, landfill methane, hazardous waste treatment).

Relative magnitude of emissions: Low to Medium

Degree of company control: Low to Medium

2.2.2 How to reduce emissions in the pharmaceutical manufacturing industry

There are several actions that can be taken to reduce emissions in the pharmaceutical manufacturing industry. Some actions are under the control of the company, whereas others are actions that need to occur across the broader economy.

The main mitigation actions that need to happen in order for the pharmaceutical manufacturing industry to reach net-zero emissions are listed below:

Category: Heating, Ventilation, Air Conditioning and Refrigeration (HVAC/R)

Actions companies could take:

Actions across the broader economy:

Category: Plug loads and processes

Actions companies could take:

Actions across the broader economy:

Category: Manufacturing of raw materialsFootnote 1 

Actions companies could take:

Actions across the broader economy:

Category: Downstream use of Metered Dose Inhalers (MDIs)

Actions companies could take:

Actions across the broader economy:

Category: Product and material transportation

Actions companies could take:

Actions across the broader economy:

Category: Employee transportation

Actions companies could take:

Actions across the broader economy:

Category: Packaging

Actions companies could take:

Actions across the broader economy:

The emissions mitigation actions listed above cover emissions sources that can be quantified using internationally recognized accounting practices, such as the GHG Protocol and the International Organization for Standardization (ISO) 14064 standards.

Pharmaceutical manufacturing companies can also reduce emissions indirectly through:

2.3 Measuring GHG emissions

Accurately measuring a firm’s emissions profile is critical to identify where to direct the mitigation actions. There are several widely accepted international resources that can be used to measure a company’s GHG emissions. Two widely used resources are explained below, the international GHG Protocol and ISO 14064 standards.

2.3.1 The GHG Protocol

The GHG Protocol is the most widely used framework for GHG accounting and identifies, explains, and provides options for GHG emissions inventory best practices. It is used widely across many voluntary GHG initiatives including the Government of Canada’s Net-Zero Challenge and the Science Based Targets initiative.

The GHG Protocol adopts standard accounting categories companies can use to effectively communicate their emissions data with stakeholders, investors, and regulatory bodies. The GHG Protocol’s categorization provides a holistic view of a company’s entire value chain, offering deeper insights into emission sources and potential areas for cost and carbon reductions. These emissions categories will also be referred to throughout this primer, and are as follows:

Scope 3 emissions

In the GHG Protocol there are fifteen categories for Scope 3 emissions:

2.3.2 International Organization for Standardization

The ISO Standards 14064 standards can be used to quantify, monitor, report, and verify GHG emissions. Relevant standards include:

The ISO 14064 series is complementary to the GHG Protocol and companies could benefit from using both sets of guidance. Specifically, if a company wishes to have their GHG emissions inventory verified by an accredited third-party, it is recommended that they use the ISO 14064-1 standard to ensure that their GHG emissions inventory is developed in a way that can be easily verified and compared to the inventories of other organizations.

Section 3 - Net-zero strategy and planning for pharmaceutical manufacturing companies

The purpose of this section is to help pharmaceutical manufacturing companies make a strategy and a plan to reach net-zero emissions by 2050 or earlier and position their company competitively in a net-zero world. This section is for companies who understand the background and context provided in Section 2 and are ready to act.

Note that this primer is based on the typical activities of a firm in the pharmaceutical manufacturing sector. While it provides a guide to simplify the process of net-zero planning, your company or organization must apply it to its own specific circumstances to develop a path forward.

3.1 Corporate strategy in a net-zero world

Before creating a detailed net-zero plan, your company should create a corporate strategy that determines broadly how your company wants to position itself in a net-zero emissions world. Your company should research and evaluate both the external competitive landscape and the company’s internal strengths and weaknesses, to determine the best path forward for the company.

Some of the questions you could ask are:

3.1.1 Net-zero business model

Next, you should reflect on whether your company should make any changes to its business model.

For many companies in the pharmaceutical manufacturing industry, reaching net-zero emissions and operating in a net-zero world will not result in a significant change to their business models or everyday working practices. There will be changes in how facilities are heated and powered and how products and employees move from place to place, but the drug manufacturing processes is not likely to be affected.

3.1.2 The competitive advantage of net-zero

Moving to net-zero is not just about managing risk—it also presents real opportunities.

Businesses that take early action in moving towards net-zero may be able to gain a competitive edge, reduce costs, attract and retain talent, build stronger relationships with clients and investors and be better positioned for trade and export opportunities. Operational costs can be reduced by prioritizing cost-saving mitigation actions and taking advantage of available funding, grants or incentives.

In the pharmaceutical sector, being ahead of the curve on climate action is quickly becoming a marker of leadership and credibility. For example, in the Canadian pharmaceutical industry, many major companies have already made emissions reductions commitments, through the Net-Zero Challenge or the Science-Based Targets Initiative. There are also several industry specific sustainability initiatives, such as:

Internationally, the World Health Organization (WHO) is calling for pharmaceutical companies to take action on climate change, recognizing that the effects of climate change and human health are interlinked. The WHO is urging global regulatory bodies and stakeholders to reduce the environmental impact of the pharmaceutical and healthcare sectors, through changes to standards, guidance, and regulations.

Planning for net-zero can help companies stay ahead of future changes to regulations, codes and standards, as well as understanding upcoming technological advances.

3.2 Net-zero planning for pharmaceutical manufacturing companies

Once you have an understanding of what the net-zero transition could look like globally, and for your sector, and you have considered your company’s strategy in a net-zero world, you are ready to create a net-zero plan, that will outline the tangible actions you can take.

This section goes over the steps your company will need to complete a credible and achievable net-zero plan, which include:

Step 1: Create a base year GHG inventory

Step 2: Identify GHG mitigation actions

Step 3: Evaluate and prioritize GHG mitigation actions

Step 4: Establish targets and develop an implementation timeline

Step 5: Monitor implementation and periodically revise your plan

Details on how to complete each of these steps are given in the sections below.

For some pharmaceutical manufacturing companies, doing a simple net-zero plan in house is possible. However, many companies may have more complex facilities and operations or lack the internal resources to create a credible net-zero plan. In these cases, companies may wish to seek out external expertise on clean technology, the energy transition, energy and climate policy and finance.

3.2.1 Step 1: Create a base year GHG inventory

The first step in creating a net-zero plan is creating an inventory of your GHG emissions for a one-year period, that will be the base year. To create the base-year inventory you will need to set inventory boundaries for your organization, identify your sources of emissions, and quantify the emissions over 12 consecutive months.

Set inventory boundaries for your organization

Setting the inventory boundary allows you to determine what sources of emissions are the result of their activities and accordingly, what emissions will need to be addressed in order to reach net-zero emissions.

Generally, inventory boundaries can be set through three criteria: equity share, financial and operational boundaries. Please refer to Environment and Climate Change Canada’s (ECCC’s) Net-Zero Challenge Technical Guide 2.0 and the GHG Protocol Corporate Standard for details on how to set inventory boundaries for your organization.

Identify sources of emissions

The lists below show common sources of emissions for pharmaceutical manufacturing companies. Identify which of these sources apply to your organization.

Common sources of emissions for the heating, ventilation, air conditioning and refrigeration (HVAC/R) category:

Common sources of emissions for the plug loads and processes category:

Common sources of emissions for the manufacturing of raw materialsFootnote 2 category:

Common sources of emissions for the downstream use of Metered Dose Inhalers (MDIs) category:

Common sources of emissions for the product and material transportation category:

Common sources of emissions for the employee transportation category:

Common sources of emissions for the packaging category:

Once you have identified the sources of emissions, you will need to identify which category each emissions source falls into (Scope 1, 2 or 3), as described in the International GHG Accounting Protocol.

While the list above identifies the most common sources of emissions for pharmaceutical manufacturing companies, the full list of Scope 3 emissions should be reviewed, to determine if there are any other sources that could be relevant to your business.

Quantify your emissions

Once emissions sources have been identified, you must quantify your emissions. This is done by gathering activity data and emission factors that quantify the GHG emissions associated with each type of activity.

Activity data are quantitative measures of activities that result in GHG emissions. Examples of activity data could include:

Emissions factors are calculated ratios, that specify the amount of GHGs that are emitted per unit of activity. Multiplying the activity data by the correct emissions factor will produce an estimate of total emissions associated with this activity.

There are several reputable organizations that provide publicly available emissions factors. Environment and Climate Change Canada publishes the following resources to find emissions factors:

Other helpful resources to create your GHG Inventory include:

3.2.2 Step 2: Identify GHG mitigation actions

Once the base year GHG inventory is complete, the second step is to identify possible actions your company could take to mitigate those emissions. Possible mitigation actions for each category of emissions are given in the sections below. It should be noted that while these mitigation actions are all technically feasible, many of them will not be possible in the short term due to financial, regulatory, and supply chain constraints. Step 3 will explain how to identify these constraints and prioritize mitigation actions for the short, medium and long term.

In many cases, the recommendation is to electrify fossil fuel equipment. Once that is complete, you will also need to address your emissions from purchased electricity which are addressed at the end of this section.

If none of these mitigation actions are feasible for your company, the recommendation is to purchase carbon offset credits.

Heating, Ventilation, Air Conditioning and Refrigeration (HVAC/R)

The top mitigation actions for GHG emissions from HVAC/R systems are listed below. These possible mitigation actions are presented roughly in order of what will be the most impactful and practical, to the least.

Several examples of energy efficiency improvements are presented below, however the best choices to prioritize for your specific facilities will depend on several different factors, therefore it is recommended to conduct an energy audit of your facilities prior to making a decision. 

Additional tools and information resources related to energy efficiency are available from Natural Resources Canada’s Office of Energy Efficiency.

Practical actions to reduce GHG emissions for HVAC/R systems

Process heat (hot water or steam):

Space or water heating:

Ventilation:

Air Conditioning and chillers:

Refrigerants used in air conditioners, heat pumps, chillers:

Plug loads and processes (non-HVAC)

The top mitigation actions for GHG emissions from plug loads and non-HVAC heating processes are listed below. These possible mitigation actions are presented roughly in order of what will be the most impactful and practical, to the least.

Several examples of energy efficiency improvements are presented below, however the best choices to prioritize for your specific facilities will depend on several different factors, therefore it is recommended to conduct an energy audit of your facilities prior to making a decision.

Practical actions to reduce GHG emissions for plug loads and processes

Steam and heat processes:

Electric plug loads:

Raw materials

The top mitigation actions for GHG emissions from the manufacturing of raw materials, including active pharmaceutical ingredients (APIs), excipients (non-active ingredients), bulk chemicals and biological products are listed below. These are often indirect emissions, as most Canadian companies do not manufacture raw materials on-site.

Practical actions to reduce GHG emissions for raw materials

Manufacturing of raw materials:

Downstream use of Metered Dose Inhalers (MDIs)

The list below presents the top mitigation actions for GHG emissions from product and material transportation. These possible mitigation actions are presented roughly in order of what will be the most impactful and practical, to the least.

Practical actions to reduce GHG emissions from downstream use of MDIs

Downstream use of Metered Dose Inhalers (MDIs):

Product and material transportation

The list below presents the top mitigation actions for GHG emissions from product and material transportation. These possible mitigation actions are presented roughly in order of what will be the most impactful and practical, to the least.

Practical actions to reduce GHG emissions for product and material transportation

Refrigerated ground vehicles:

Transport of cold chain containers though air, rail or marine freight:

Employee travel and commuting

The list below presents the top mitigation actions for GHG emissions from employee travel and commuting. These possible mitigation actions are presented roughly in order of what will be the most impactful and practical, to the least.

Practical actions to reduce GHG emissions for employee travel and commuting

Daily commuting by employees in gasoline or diesel vehicles:

Business travel by car or plane for supplier meetings, sales, trade shows, etc.:

Packaging

The list below presents the top mitigation actions for GHG emissions from product packaging. These possible mitigation actions are presented roughly in order of what will be the most impactful and practical, to the least.

Practical actions to reduce GHG emissions for packaging

Product Packaging:

Emissions from purchased electricity

Many of the actions presented above require electrification of activities that are currently powered by fossil fuels. In most cases, this is the most effective action a company can take to transition to net-zero. However, even if your facilities are fully electrified, there may be remaining emissions if your facilities are located in a province with a high emitting grid (for example, Alberta, Saskatchewan or Nova Scotia). Emissions from remaining electricity consumption can be addressed by either:

Carbon offset credits

Purchasing carbon offset credits is a mitigation action that can be taken when no other option is feasible.

Carbon offset credits represent GHG emissions reductions or removals generated from activities that are additional to what would have occurred in the absence of the offset project (that is generated from activities that go beyond legal requirements and a business-as-usual scenario). Each offset credit generated by an offset project represents one tonne of CO2e reduced or removed from the atmosphere.

Today, most offsets are emissions reductions. But as the economy approaches net-zero, emission reduction offset opportunities will decline, as emissions fall across all sectors of the economy. Companies that do rely on offsets should therefore over time increase the proportion of offsets that come from carbon removals.

3.2.3 Step 3: Evaluate and prioritize GHG mitigation actions

Now that several possible mitigation actions have been identified, companies will need to evaluate and prioritize them. Each company will have a different evaluation framework depending on various factors including their level of ambition, financial position, resourcing and management support. Common factors that companies should consider when evaluating and prioritizing emissions mitigation actions are listed below:

Emissions impact

Possible pro(s):

Possible con(s):

Technological maturity

Possible pro(s):

Possible con(s):

Capital cost

Possible pro(s):

Possible con(s):

Operation and Maintenance (O&M) Costs

Possible pro(s):

Possible con(s):

Regulatory barriers

Possible pro(s):

Possible con(s):

Availability

Possible pro(s):

Possible con(s):

Timing

Possible pro(s):

Possible con(s):

Lifestyle considerations

Possible pro(s):

Possible con(s):

Completing this analysis of the mitigation actions, along with understanding your company’s available resources, can help identify the top mitigation actions that your company would like to pursue. You will complete this exercise based on the situation today but note that all of these factors are constantly changing, and this exercise will need to be repeated regularly as the landscape changes.

3.2.4 Step 4: Establish targets and develop an implementation timeline

Now that you have identified your main emissions sources and potential actions to decarbonize your activities it is time to bring it all together, to assess what is possible within specific time horizons, and to formulate or adjust targets.

Task 1: Consider interim targets to reach net-zero by 2050

Targets provide crucial grounding for decarbonization efforts. They communicate a company’s ambition, allow the organization to coordinate its response, and provide a benchmark against which progress can be measured. Many voluntary initiatives, including the Government of Canada’s Net-Zero Challenge, requires member companies to set interim targets as part of a plan to reach net-zero emissions by 2050 or earlier. This aligns with Canada’s legislative commitments to net-zero and the recommendation of the Science Based Targets initiative.

Interim targets are important to focus attention on what can be done in the short term and to ensure progress. Some companies have adopted shorter term targets based on an aspiration to be a leader in their sector and/or to harmonize with Canada’s national goal of a 40% emissions reduction by 2030. Nevertheless, interim targets are more likely to be achieved when they are grounded in a solid analysis of the costs, timing, and effectiveness of proposed mitigation measures.

Task 2: Draft an implementation timeline

The mitigation actions should be placed on a timeline to establish and/or confirm interim targets and to form the basis for a phased decarbonization plan.

In Step 3 – Evaluate and Prioritize GHG Mitigation Actions, you evaluated several possible emissions mitigation actions, and this evaluation can help you determine a realistic implementation timeline.

Factors that influence the implementation timeline will include:

Task 3: Sum your emissions reductions over time

Each of the actions you have decided to take can be included in your plan together with the anticipated reductions over time. Summing up the proposed reductions at key interim dates (2030, 2035, etc.) can then allow you to validate (or establish) appropriate interim targets.

It is important to remember at this point, that you can only fully decarbonize your company if other firms up and down multiple intersecting value chains are also decarbonizing their activities, and if broader decarbonization efforts beyond your control are also occurring (for example, the decarbonization of the electricity grid). Therefore, the pathway to net-zero emissions may seem rather opaque.

But over time, as manufacturing, transport, and energy production are increasingly decarbonized the carbon intensity of these goods needed by your business will fall and net-zero will become achievable.

3.2.5 Step 5: Monitor implementation and periodically revise your plan

Full decarbonization of the economy will take time. It is hard to anticipate developments five years from now, let alone in thirty years. Net-zero planning will necessarily be an iterative process, with plans adjusted periodically to reflect changing circumstances.

Net-zero plans will need to be periodically revised and updated as your company and the whole economy moves towards net-zero emissions. Technological, economic, social and geo-political circumstances will evolve, shifting the environment within which your company operates, and presenting new challenges and opportunities.

You should establish a regular process for monitoring the implementation of your plan, such as:

Next steps

If you are ready to take the next step, learn more about how to join the Government of Canada’s Net-Zero Challenge.

Glossary

Active Pharmaceutical Ingredient (API): The component in a tablet, injection or other type of medicine that produces the therapeutic effect, such as curing, treating, or preventing a disease, or affecting the body's structure or function.

Base Year: A year in history against which a company’s emissions are tracked over time to compare it with future emissions. It must be a consecutive twelve months, either as a full calendar year or consecutive over two calendar years. 

Biologics: A broad category of complex drugs derived from living organisms or their components, including proteins, sugars, and nucleic acids. Biologics can be extracted from living sources such as yeast or bacteria or chemically synthesized.

Biosimilars: A biosimilar is a ‘generic’ version of a currently marketed biologic drug or ‘reference product’. Biosimilars are rarely, if ever, identical to the reference product but instead are ‘highly similar’ in structure and function.  Biosimilars must have no clinically meaningful differences in terms of safety, purity, and potency versus the reference product and must be just as safe and effective.

Carbon dioxide equivalent (CO2 eq): A unit of measure for comparison between greenhouse gases (GHGs) that have different global warming potentials (GWPs). This unit of measure allows other GHGs to be expressed in terms of the GWP of one unit of CO2. To express GHG emissions in units of CO2 eq, the quantity of a given GHG is multiplied by its GWP.

Cleanroom: An enclosed area in which ambient conditions—including airborne particles, temperature, noise, humidity, air pressure, air motion, vibration, and lighting—are strictly controlled to avoid contamination of a drug during its manufacturing.

Contract Development and Manufacturing Organization (CDMO): A company that provides manufacturing services to other pharmaceutical companies on a contract basis, producing products according to client specifications.

Contract Research Organization (CRO): A company that provides research and clinical trial services to the pharmaceutical, biotechnology, and medical device industries. 

Cold chain: A cold chain is a temperature-controlled supply chain for perishable goods like pharmaceuticals, vaccines, and certain foods.

Decarbonization: The process of reducing carbon dioxide emissions from a product, process, facility, or sector.

Direct emissions: Emissions from sources that are owned or controlled by a company (GHG Protocol 2004: 97).

Downstream emissions: Emissions from downstream activities associated with the operations of a company, including processing of sold products, use of sold products, investments, franchises, downstream transportation and distribution, end-of-life treatment of sold products, and downstream leased assets.

Emission factor: A value that quantifies an average amount of emissions associated with an activity. For more details on Canada-specific emission factors, see the latest National Inventory Report for Canada.

Emissions: The release of greenhouse gases into the atmosphere.

Emissions inventory: A quantified list of a company’s greenhouse gas emissions and sources.

Energy Efficiency: A measure of how effectively energy is used for a given purpose. It is a ratio or other quantitative relationship between an output of performance, service, goods, commodities, or energy, and an input of energy. 

Excipient: An inactive substance that serves as the vehicle or medium for a drug or other active substance. Excipients are mixed with API’s to generate the final ‘drug product’ (medicine) administered to the patient.

Generic drug:  A generic drug is a copy of a brand name small molecule drug, also known as the 'reference product'. Generic drugs contain the same API as the brand name drug and are considered bioequivalent (in other words to have the identical efficacy and safety) to the reference product. There may be many generic versions of the same reference product.

Global Warming Potential (GWP): Allows the comparison of the global warming impacts of different gases or particles (such as black carbon). It is a measure of how much energy the emissions of 1 tonne of a gas or particle will absorb over a given period of time, compared to the emissions of 1 tonne of carbon dioxide. For the purposes of net-zero planning, use of 100-year GWP is recommended.

Greenhouse gas (GHG): A gas that absorbs and re-emits radiation, resulting in the greenhouse effect, which contributes to a warming climate. For the purposes of this guidance and for the Net-Zero Challenge, GHGs include all of those that are subject to reporting for the Greenhouse Gas Reporting Program. As of 2021, this includes carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulphur hexafluoride (SF6), 13 different hydrofluorocarbons (HFCs), and 7 different perfluorocarbons (PFCs).

Indirect emissions: Emissions that are a consequence of the activities of a company but occur at sources owned or controlled by another company (GHG Protocol 2004: 99).

Inventory boundary: Allows a participant to determine what sources of emissions are the result of their activities and accordingly, what emissions will need to be addressed in order to reach net-zero emissions by 2050. Generally, the inventory boundary includes geographical boundaries and organizational boundaries.

Metered Dose Inhaler (MDI): A common medical device used to deliver a specific, pre-measured amount of aerosolized medication directly to the lungs, typically for treating chronic respiratory conditions like asthma and chronic obstructive pulmonary disease.

Mitigation strategy: A practice, process, or technology that contributes to mitigation, for example,, enhancing energy efficiency and adopting renewable energy sources.

Net-Zero Challenge: A voluntary Government of Canada program that encourages businesses to develop and implement credible and effective plans to transition their facilities and operations to net-zero emissions by 2050.

Net-zero emissions: Achieving net-zero emissions means that anthropogenic emissions of greenhouse gases into the atmosphere are balanced by anthropogenic removals of greenhouse gases from the atmosphere over a specified period; for organizations, net zero GHG emissions is commonly considered as the condition in which emissions have been reduced such that only residual emissions remain, and offsetting is restricted to removal credits only (ISO 14068).

Net-zero plan: A net-zero plan includes an emissions inventory and base year, interim targets, descriptions of the considered scenarios, pathways and mitigation strategies, and an outline of how net-zero planning will be incorporated into a company’s governance and disclosures.

New chemical entity (NCE): A drug with an active chemical molecule not previously approved by regulatory agencies, representing a novel treatment option rather than a reformulation or new use of an existing drug.

Offset credits: Represent GHG emissions reductions or removals generated from activities that are additional to what would have occurred in the absence of the offset project (that is generated from activities that go beyond legal requirements and a business-as-usual standard). Each offset credit generated by an offset project represents one tonne of carbon dioxide equivalent (CO2 eq) reduced or removed from the atmosphere.

Organizational boundaries: The boundaries that determine the operations owned or controlled by a company, depending on the consolidation approach taken (equity share, operational control, or financial control).

Scope: Defines the operational boundaries in relation to direct and indirect emissions (GHG Protocol 2004: 101).

Scope 1 emissions: A company’s direct emissions, principally the generation of electricity, heat, or steam, physical or chemical processing, transportation, and fugitive emissions (GHG Protocol 2004: 101).

Scope 2 emissions: A company’s indirect emissions associated with the purchase of electricity, heating/cooling, and steam for own consumption (GHG Protocol 2004: 101).

Scope 3 emissions: A company’s indirect emissions excluding those covered in scope 2. Also known as value chain emissions (GHG Protocol 2004: 101).

Small molecule drug: Low-molecular-weight APIs that are chemically synthesized. These drugs are commonly administered orally in tablets or capsules but are also available in injections, inhaled medicines, creams and ointments.

Upstream emissions: Emissions from upstream activities associated with the operations of a company, including purchased goods and services, capital goods, fuel- and energy-related activities, upstream transportation and distribution, waste generated in operations, business travel, and employee commuting.

Value chain: All business processes or activities involved in the production of a good or service for market, from conception to end use and beyond. A simplified value chain would include corporate services (for example, marketing, logistics), research and development, inputs, assembly, distribution, sales, and after-sales service.

Value chain emissions: These are indirect emissions that may exist upstream or downstream of a company’s direct operations. “Value chain emissions” are also known as scope 3 emissions.

Annex 1 - Technology descriptions

Descriptions of technologies commonly used to decarbonize the pharmaceutical manufacturing industry.

Electric heat pump

Description

An electric heat pump is a device that extracts heat from a low temperature place and delivers it to a higher temperature place. The two most common types of heat pumps are:

Applications

Heat pumps can be used for space heating, water heating and space cooling, replacing traditional HVAC technology (that is furnaces, boilers, ACs).

Considerations

Heat pumps are very efficient, often over three times more efficient than furnaces or boilers.

Heat pumps have a higher upfront cost than traditional HVAC equipment.

Additional resources

Heating and Cooling with a Heat Pump - Natural Resources Canada

District heating

Description

District heating involves distributing heat generated from a central plant to residences, businesses or industries in a local area. The central heat source can be generated from either from clean energy or fossil fuels.

Applications

Considerations

Additional resource

Combined Heat and Power Technology Fact Sheet Series: District Energy (PDF)

District Heating - Energy System - IEA

Building envelope improvements

Description

Upgrading windows and doors to higher efficiency options can reduce heat loss from the building.

Controlling air leakage can greatly reduce heart loss from a building. A systematic identification of air leaks should be followed by sealing leaks through weatherstripping and caulking and by applying gaskets and tapes.

Adding insulation to a building’s walls, roof, attic, basement reduces the amount of energy required for heating and cooling. There are many different types of insulation materials, with different applications, efficiency and costs.

Applications

Residential and commercial buildings.

Additional resources

Keeping the heat in - Natural Resources Canada (PDF)

Smart thermostats

Description

A smart thermostat reduces the amount of energy required to heat or cool a building by learning the temperatures the occupants prefer and establishing a schedule that automatically adjusts to energy-saving temperatures while occupants are away or sleeping to help reduce energy usage.

Applications

Residential and commercial buildings.

Considerations

Saves money on heating and cooling bills, while keeping building at a comfortable temperature.

Additional resources

Smart Thermostats - Natural Resources Canada

Zero emission vehicle (ZEV)   

Description

A ZEV is a vehicle that has the potential to produce no tailpipe emissions. They can have a conventional internal combustion engine (ICE) but must also be able to operate without using it.

There are three types of ZEVs:

Applications

ZEVs can be used to replace traditional ICE vehicles.

Considerations

Additional resources

Types of zero-emission vehicles - Natural Resources Canada

Page details

2026-06-18