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Canada’s federal government released its latest climate report on Tuesday, and with Passover approaching, we might ask, “what makes this Canadian climate report different from all other climate reports?” The answer is this marks the first report published per the requirements of the Canadian Net-Zero Emissions Accountability Act passed last year.
Unlike other national climate accountability laws, Canada’s Act doesn’t legally require the federal government to reduce emissions, but rather, it requires the release of national climate reports at set intervals (typically every five years) detailing how Canada will lower its emissions to net-zero by 2050. If targets are missed, that must be explained as well.
The recent 271 page report describes, sector by sector, how Canada’s emissions are being generated, and what policies the federal government - budgeting $9.1 billion in new climate-related spending - is planning or implementing to decarbonize Canada’s economy, with a near term goal of 40-45% emissions reduction (as compared to 2005 levels) by 2030.
The report breaks Canada’s total emissions down among the following industrial sectors:
Energy (Oil and Gas, Electricity)
Transportation
Buildings
Agriculture
Heavy Industry
Waste and Others
Aside from the federal carbon price, which remains the core of the current government’s emission reduction strategy, the two largest sectors in terms of emissions, transport and energy (oil and gas, in particular), feature what are likely the most consequential policies for Canada’s economy.
With 26% of emissions attributable to oil and gas, and another 8.4% attributable to electricity, the energy sector represents the largest source of emissions in Canada.
Policies to decarbonize electricity largely take the form of investments in renewables, grid modernization, and improving distribution. The plan also highlights efforts to advance development and deployment of Small Modular (Nuclear) Reactors.
That’s the easy part. The oil and gas sector presents more of a challenge.
Canada’s oil and gas industry constitutes nearly 6% of GDP. The industry is enormously important to Western Canada’s economy in particular. The report finds the federal government walking a fine line between a commitment to eventually zero out the sector’s emissions and not alienating those whose livelihoods depend on it. It’s not clear they succeed.
The policy approaches to reducing oil and gas emissions fall largely into three camps:
reducing emission intensity (i.e., more energy with less emissions);
reducing methane emissions associated with oil and gas operations; and
incentivizing the development of Carbon Capture, Utilization, and Storage (CCUS) through tax incentives.
The latter approach has recently come under intense scrutiny as being both an expensive distraction and an effective subsidy providing oil companies an excuse for continued extractionism.
The report says the federal government is committed to “cap and cut emissions from the oil and gas sector”, but it doesn’t explicitly state that the industry must ultimately transition or disappear. Rather, it somewhat lightly suggests that industry participants must move to providing “low-carbon and non-emitting energy products…such as low-carbon hydrogen, geothermal heat and power, carbon fiber, and asphaltenes.”
Accounting for 25% of Canada’s emissions, transportation is the second largest sectoral emissions contributor, but the highest source of emissions across most provinces (whereas only a few provinces account for the majority of energy-related emissions). Of the sector’s total emissions, the vast majority of emissions are attributable to heavy and light duty trucks.
The federal government’s decarbonization strategy here is primarily aimed at reducing emissions from light duty vehicles through policies incentivizing widespread EV adoption, including rebates on purchases, funding for and investments in charging infrastructure, and government procurement of zero emission vehicle fleets. Funding and policies to support “medium-and-heavy-duty” vehicle electrification, as well as public transit expansion and decarbonization, are also featured in the plan.
For those interested in the report’s numerous other policy proposals, our friends at The Energy Mix wrote a piece with a more comprehensive overview, as well as the Canadian environmental community’s response.
(The Canadian Net-Zero Climate Accountability Act also mandated the establishment of a Net-Zero Advisory Body (NZAB) with rotating membership consisting of environmental experts and representatives of various stakeholders and communities across Canada, including Indigenous groups. The NZAB is meant to help inform the government’s emission reduction strategy. Their submission can be found starting on page 176 of the report.)
Please contact our firm at 647-725-4308 or info@greeneconomylaw.com for legal assistance in connection with climate and environmental law policy guidance and/or regulatory compliance.