Environment and Climate Change Canada (ECCC) today released the 2030 Emissions Reduction Plan (the Plan) under the Canadian Net-Zero Emissions Accountability Act (the Act; read our earlier bulletin on the Act here). The Plan sets out current actions, additional funding of $9.1B, and several new initiatives to meet Canada’s emissions reduction target of 40-45% below 2005 levels by 2030, as provided last year in an update to Canada’s Nationally Determined Contribution (NDC) under the Paris Agreement (read our earlier bulletin on Canada’s updated NDC targets here).
The Plan also sets a new interim objective of reducing GHGs by 20% below 2005 levels by 2026, noting that this interim objective is not an official target akin to Canada’s 2030 NDC, but that progress towards achieving the objective will be a cornerstone of progress reports associated with the Plan in 2023, 2025, and 2027.
This bulletin highlights key parts of the Plan and summarizes the newly announced funding and initiatives, across the following categories:
- Carbon pricing
- Clean fuels
- Clean growth funding
- Methane
- Buildings
- Electricity
- Heavy industry
- Oil and gas
- Transportation
- Agriculture
- Waste
- Nature-based solutions
- Clean technology and climate innovation
- Sustainable finance
- Jobs, skills, and communities
Prime Minister Justin Trudeau launched the Plan in an address at the GLOBE Forum in Vancouver earlier today.
Carbon pricing. The Plan notes the measures undertaken to address economy-wide emissions including the federal fuel charge and the Output-Based Pricing System for industrial emitters under the Greenhouse Gas Pollution Pricing Act. Escalating the federal benchmark price to $170 by 2030 is meant to further support the 2030 targets of the federal government along with continued consultations on a possible border carbon adjustment (read our earlier bulletin here). Very significantly, the Plan puts forward the concept of investment approaches, like carbon contracts for differences, which enshrine future price levels in contracts between the federal government and low-carbon project investors, with the intention of de-risking private sector low-carbon investments.
Clean fuels. The Plan notes that Canada has already published proposed Clean Fuel Regulations, developed the Hydrogen Strategy for Canada, made investments in the Energy Innovation Program and dedicated $1.5B to the Clean Fuels Fund and further notes that the government will continue to study the feasibility of a bioenergy strategy and continue consulting on the Clean Fuel Regulation.
Clean growth funding. The federal government has existing commitments of over $100B in 2016-2021 to target barriers and encourage early adoption of new technologies supporting the transition to a clean growth economy. Specific funding includes the Low-Carbon Economy Fund, the Climate Action and Awareness Fund, investments through the Canada Infrastructure Bank, and the Greening Government Strategy. The Plan notes that there will be new funding of $2.2B for the Low Carbon Economy Fund to support further climate actions from provinces, territories, municipalities, civil society institutions and organizations, businesses, and Indigenous communities and organizations.
Methane. Methane emissions accounted for 13% of Canada’s total GHG emissions in 2019, with over 90% coming from the oil and gas, agriculture, and waste sectors. Last year Canada joined the Global Methane Pledge, committing to reduce methane emissions by at least 30% below 2020 levels by 2030. Recently, the government launched negotiations on designing more stringent oil and gas regulations to reduce emissions by 75%. The Plan notes that the government intends to release its strategy to reduce methane emissions across the economy and establish a global centre of excellence on methane detection and elimination.
Buildings. Buildings accounted for 12% of Canada’s GHG emissions in 2019 and emissions have been trending upwards, with the majority from space and water heating. Government programs and funding to reduce building emissions include the Canada Greener Home Grant, Green and Inclusive Community Buildings program, Canada Infrastructure Bank’s Growth Plan, and the First Nation Infrastructure Fund and the Northern REACHE program. The Plan notes the following new funding and initiatives to further reduce emissions from buildings:
- $150M to develop a national net zero by 2050 buildings strategy, the Canada Green Buildings Strategy;
- $458.5M in contribution and loan funding to support the low-income stream of the Greener Homes Loan Program;
- $33M 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;
- $200M to support deep retrofits of large buildings through a retrofit accelerator initiative; and
- $183M 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, and a procurement challenge.
Electricity. The most significant decrease in emissions in the electricity sector has been the continuing phase-out of coal-fired power. To support further reductions, the Plan notes the following new funding and initiatives for the electricity sector:
- develop a Clean Electricity Standard (see our earlier bulletin here);
- $600M to the Smart Renewables and Electrification Pathways Program to support additional renewable electricity and grid modernization projects;
- $250M to support predevelopment work for large clean electricity projects, in collaboration with provinces, through the Electricity Predevelopment Program;
- $2.4M for the creation of the Pan-Canadian Grid Council to provide external advice to the Government of Canada to promote clean electricity infrastructure investments;
- $25M investment to establish the Regional Strategic Initiatives to work with provinces, territories and relevant stakeholders to develop regional net-zero energy plans; and
- further implement the SMR Action Plan including establishing a SMR Leadership Table
Heavy industry. Emissions from heavy industry have decreased by 10% since 2005 as a result of cleaner and more efficient manufacturing processes. To support further reductions to meet Canada’s 2030 and 2050 emission reduction goals, the Plan notes the following new funding measures and initiatives:
- introduce new Buy Clean Strategy for federal investments to support and prioritize the use of made-in-Canada low-carbon products in Canadian infrastructure project;
- $194M 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.
Oil and gas. The Plan notes that modelling to meet Canada’s 2030 target means emissions in the oil and gas sector must decrease by 31% from 2005 levels to 110Mt in 2030 (representing about a 42% reduction from current levels). The Plan notes that the government commits to:
- cap and cut emissions from the oil and gas sector at the pace and scale needed to get to net zero by 2050;
- work closely with provinces and the sector to manage competitiveness challenges;
- a new CCUS investment tax credit;
- develop new measures to reduce oil and gas methane emissions by at least 75% below 2012 levels by 2030; and
- eliminate inefficient fossil fuel subsidies, and develop a plan to phase-out public financing for the fossil fuel sector, including by federal Crown corporations.
Transportation. Emissions from transportation accounted for 25% of total emissions in Canada and were 186Mt in 2019. The Plan notes new funding and initiatives to further reduce emissions in the transportation sector, including:
- $2.2M to support electrifying the entire federal fleet of light duty vehicles by 2030;
- launch of a Low-Carbon Fuel Procurement Program to support the purchase of low-carbon fuels for use in the federal air and marine fleets;
- develop a light duty vehicles (LDV) 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 of 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;
- $1.7B to extend the iZEV purchase incentive program for LDVs for three years;
- $400M in additional funding for ZEV charging stations;
- Canada Infrastructure Bank will invest $500M in large-scale ZEV charging and refueling infrastructure;
- $547.5M for a purchase incentive program for MHDVs;
- $199.6M to retrofit large trucks currently in use;
- $33.8M for hydrogen trucking demonstration projects; and
- support for transit agencies and school boards to transition bus fleets to zero-emission technology.
Agriculture. Emissions from agriculture accounted for 10% of Canada’s total emissions in 2019. The Plan notes new funding and initiatives to further reduce emissions from the agriculture sector, including:
- $470M to the Agricultural Climate Solutions: On-Farm Climate Action Fund;
- $150M for a resilient agricultural landscapes program to support carbon sequestration, adaptation and address other environmental co-benefits;
- $330M to triple funding for the Agricultural Clean Technology program; and
- $100M in transformative science for a sustainable sector in an uncertain climate and net-zero economy for 2050.
Waste. The waste sector accounted for 4% of Canada’s total emission in 2019, or 28Mt. The Plan notes new funding and initiatives to further reduce emissions from the waste sector, including:
- continue to engage stakeholders and propose new regulations under the Canadian Environmental Protection Act to significantly reduce methane emissions from municipal solid waste landfills by 2030;
- continue to explore opportunities in the circular economy;
- finalize the Food Waste Reduction Challenge and explore opportunities to continue supporting innovators working to prevent and divert food waste;
- examine opportunities for commercializing and adopting ways to eliminate, reduce or repurpose food waste; and
- explore approaches to support waste and water capital projects, plans, studies, and to accelerate deployment and scaling-up of waste and water solution.
Nature-based solutions. To further support the adoption of nature-based climate solutions, the Plan notes the following commitments and investments:
- invest $780M in the Nature Smart Climate Solutions Fund to deliver additional emission reductions from nature-based climate solutions;
- help protect old growth forests, notably in British Columbia;
- ensure Canada is positioned to succeed in the fast-growing global ocean sectors of the blue economy and advancing reconciliation, conservation and climate objectives; and
- commit 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.
Clean technology and climate innovation. The Plan notes that global clean technology activity is projected to reach $3.6T by 2030. To ensure that Canadian companies are positioned to take advantage of clean technology investments and opportunities, the Plan notes the following commitments:
- 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;
- transformative investments in the infrastructure needed to enable clean electrification solutions and the shift to clean fuels, including battery storage and renewable energy;
- finalize the extension of the accelerated capital cost allowance to critical clean energy and energy efficient technologies;
- develop an investment tax credit for carbon capture, utilization, and storage; and
- 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.
Sustainable finance. The Plan notes that the government will continue to support sustainable finance initiatives such as the Task Force on Climate-related Financial Disclosures. Specifically, the Plan notes the following previously announced government commitments:
- 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; and
- 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.
Jobs, skills, and communities. The Plan notes that Canada is committed to ensuring workers have the necessary skills and opportunities to take advantage of the expected $2.5T global clean technology activity in 2022 and beyond. To support workers for the transition to a decarbonized economy, the Plan notes the following commitments:
- create a new Futures Fund for Alberta, Saskatchewan, and Newfoundland and Labrador to support local and regional economic diversification;
- establish 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;
- continue work on proposing legislation to enable a just transition that supports workers and communities as the shift to a low-carbon future advances.
For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com.
