e-4225 (Environment)

We understand that accelerated efforts are crucial to reduce greenhouse gas (GHG) emissions rapidly by 2030, achieve net-zero emissions by 2050, and avoid the worst impacts of climate change. Since 2016, the Government of Canada has demonstrated its leadership on climate change and clean growth. Greenhouse gas emissions are trending downwards, and the Government of Canada has introduced more than 100 measures and targeted investments to support climate and environmental action, including through the 2016 Pan-Canadian Framework on Clean Growth and Climate Change (PCF), and Canada’s Strengthened Climate Plan: A Healthy Environment and a Healthy Economy (SCP).

In 2021, Canada adopted an enhanced 2030 emissions reduction target of 40-45% below 2005 levels, and passed legislation to enshrine its commitment to achieve net-zero emissions by 2050 in law. The Canadian Net-Zero Emissions Accountability Act provides a durable framework of accountability and transparency to deliver on this commitment. In March 2022, Canada tabled the 2030 Emissions Reduction Plan: Canada’s Next Steps for Clean Air and a Strong Economy (2030 ERP) in Parliament. Building on the PCF and the SCP, the 2030 ERP is the Government’s most recent, major step to take action to meet Canada’s climate objectives, and create good, sustainable jobs in Canada.

Since the launch of the 2030 Emissions Reduction Plan in March 2022, the Government of Canada has:  

• Continued to work with provincial and territorial governments to ensure carbon pricing systems align with the strengthened federal benchmark stringency.  
• Published the Clean Fuel Regulations on July 6, 2022, which came into force on January 1, 2023. They require gasoline and diesel primary suppliers to reduce the carbon intensity (CI) of the gasoline and diesel they produce in, and import into, Canada. Between 2022 and 2040, the regulations are estimated to reduce emissions by 151 to 267 Mt CO2e. 
• Distributed $842 million to 137 projects over multiple funding streams under the Low Carbon Economy Fund, which is anticipated to achieve approximately 4 Mt CO2e per year of GHG reductions in 2030. 
• Published Canada’s Methane Strategy that provides a pathway to further reduce methane emissions from across the economy. 
• Under the 2 Billion Trees initiative, over $59 million to fund 72 projects were committed and disbursed, with approximately 29 million trees planted in 2021-22. 
• Provided over $106 million to homeowners under the Greener Homes Grant for over 25,000 home retrofit journeys. By 2030, the program is expected to target 700,000 retrofits. 
• Continued to phase out unabated coal-fired electricity by 2030 and is developing Clean Electricity Regulations to achieve a net-zero electricity grid by 2035. A consultation is currently underway on the Regulatory Frame paper published in July 2022.  
• Going further in reducing oil and gas methane emissions by committing to at least a 75% reduction by 2030 from 2012 levels. 
• Provided $2.29 billion towards 14 projects under the Net-Zero Accelerator. Currently, 16 projects are in development with an estimated GHG reduction of 10.7 Mt CO2e / year. 
• Incentives were provided for over 150,000 vehicles under the Incentives for Zero-Emission Vehicles (iZEV) Program bringing the ZEV market share to 7.9%. 

The 2030 ERP is designed to be evergreen—a comprehensive roadmap that reflects levels of ambition to guide emissions reduction efforts in each sector. As governments, businesses, non-profits, and communities across the country work together to reach these targets, Canada will identify and respond to new opportunities.

Budget 2023 confirmed Canada’s intention to continue working towards clean energy and clean growth, with some $80 billion in climate measures, including tax credits to support Canadian businesses and spur innovation. Some significant proposals include:

• The Clean Electricity Investment Tax Credit – a 15% refundable tax credit for eligible investments in non-emitting electricity generation systems, abated natural gas electricity-fired electricity generation, stationary electricity storage systems that do not use fossil fuels in operation, and equipment for the transmission of electricity between provinces and territories.
• The Clean Technology Manufacturing Investment Tax Credit – equal to 30% of the cost of investments in new machinery and equipment used to manufacture or process key clean technologies, and extract, process, or recycle key critical minerals essential to clean technology supply chains.
• The Clean Hydrogen Investment Tax Credit – a credit of 15 to 40% of eligible project costs, with the projects that produce the cleanest hydrogen receiving the highest levels of support.
• Expanding eligibility for the Clean Technology Investment Tax Credit – expanding the eligibility for the refundable Clean Technology Investment Tax Credit to include eligible geothermal energy systems, further supporting the growth of Canada’s growing clean technology support.
• Enhancing the Carbon Capture, Utilization, and Storage Investment Tax Credit – to be expanded to cover additional equipment, and now be available for dedicated geological storage projects in British Columbia.
• Providing $3 billion over 13 years to recapitalize funding for the Smart Renewables and Electrification Pathways Program to support critical regional priorities and Indigenous-led projects, and renew the Smart Grid program to continue grid innovation support.

Canada has also committed to phasing out or rationalizing inefficient fossil fuel subsidies by 2023. It has already taken actions to phase out or rationalize eight tax preferences supporting the fossil fuel sector. Addressing inefficient fossil fuel subsidies supports Canada’s efforts to take action on climate change and transition to a low-carbon economy.

Canada acknowledges that any oil and gas produced and consumed beyond 2050 must be done in a way that is consistent with Canada’s plan to achieve net-zero emissions. Competing in this future means diversifying our domestic energy mix while working to ensure that any oil and gas Canada does supply to the world is the lowest carbon intensive relative to other global producers. The oil and gas sector is Canada’s top emitting sector, accounting for 28% of Canada’s total greenhouse gas emissions in 2021. The 2030 Emissions Reduction Plan is clear that reducing oil and gas sector emissions is critical to reaching Canada’s climate objectives.

The Government of Canada has committed to cap and cut emissions from the oil and gas sector at the pace and scale needed to reach Canada’s 2030 goals in addition to net zero by 2050. Capping GHG emissions is no small task for a major oil and gas-producing country, but the Government believes it is an important and necessary step.  

Since December 2021, Canada has been engaging with provinces and territories, Indigenous groups, as well as key industry associations and environmental organizations on this key climate initiative. On July 18, 2022, Environment and Climate Change Canada released a Discussion Paperhttps://www.canada.ca/en/services/environment/weather/climatechange/climate-plan/oil-gas-emissions-cap/options-discussion-paper.html that proposes two regulatory options to cap and cut oil and gas sector emissions in Canada. The Government received over 25,000 submissions in response to the discussion paper. Officials at Environment and Climate Change Canada, together with colleagues from the Department of Natural Resources, reviewed each comment received. The feedback received is being considered as the regulatory approach is developed.  

Continued engagement will be key to getting this policy right, from development and design to implementation. At the United Nations Conference of Parties in Egypt last year, the Minister of Environment and Climate Change signaled that Environment and Climate Change Canada is working toward publishing draft regulations on an accelerated basis while balancing the need for meaningful engagement with Canadians.   

Canada also contributes to reducing emissions in developing countries through its climate finance. Initiatives under Canada’s previous $2.65 billion climate finance commitment led to significant emissions reduced or avoided. In addition, our current $5.3 billion commitment (2021-2026) features Clean Energy Transition and Coal Phase-Out as a focus area.

Under this focus area, Canada supports efforts to reduce GHG emissions in developing countries by investing in initiatives that phase out coal-powered emissions, foster equitable access to clean energy solutions, promote energy efficient technologies, and support the clean energy sector enabling environment in key coal-dependent regions. In line with this, Canada has recently dedicated $43 million to energy transition programming, including a $5 million contribution to the South East Asia Energy Transition Partnership, and an $8 million contribution to the International Energy Agency’s Clean Energy Transitions Programme. With G7 partners, Canada is also providing support to new Just Energy Transition Partnerships (JETP) with countries such as South Africa, Indonesia, and Vietnam, including through its $1-billion commitment to the Climate Investment Funds Accelerating Coal Transitions Program among other sources of support. JETPs are a new model of international energy, climate, and economic assistance for emerging and developing countries to accelerate their transitions to cleaner, more climate resilient economies, while also including the perspectives and needs of workers and communities.

This priority complements Canada’s leadership through the Powering Past Coal Alliance. This initiative, which Canada co-leads with the United Kingdom, works to increase global ambition on coal phase-out and supports developing countries by sharing expertise and best practices. Canada’s public climate finance also helps mobilize private capital, which is a key component of climate action, including for clean energy transition.

As previously announced, the Government of Canada is taking action to cap and cut GHG emissions from the oil and gas sector at a pace and scale necessary to contribute to achieving Canada’s 2030 and 2050 climate targets. The objective is to limit the emissions from the production of oil and natural gas as the cap becomes more stringent over time, irrespective of whether the production is for domestic consumption or for export. Accordingly, the purpose of the emissions cap is to encourage private sector investment in decarbonizing the oil and gas sector; it is not a cap on oil and gas production.

The International Energy Agency (IEA) expects there to be demand for oil and natural gas by 2050. As the Canadian oil and gas sector decarbonizes to meet our climate targets, it can position itself to be the lowest emission intensity supplier of oil to meet this demand.

Canada continues to work with other developed nations on the Climate Finance Delivery Plan to achieve $100 billion in support of developing countries to assist them with meeting their own climate change goals. At the 2021 G7 Leaders’ Summit, Canada announced a doubling of its international climate finance commitment, to $5.3 billion over the next five years to support developing countries as they adapt to climate change and transition to a cleaner economy, such as increasing the use of renewable energy to help lessen the overall global demand for fossil fuels and associated combustion emissions.