Clean technologies and clean power continue to grow, but policy rollbacks have slowed the country’s progress.
Nobody can say that 2025 was dull. Looking just at climate policy space, the year has been marked by dramatic changes.
Abroad, the Trump administration did all it could to forestall the energy transition, cancelling emissions-reducing projects, undoing laws and regulations, and opposing multilateral efforts to slow climate change. Yet the deployment of renewable energy and clean technologies continued apace. In China, about half of passenger vehicles sold this year will be electric, and the country—the world’s largest producer of greenhouse gases—set its first absolute target for reducing emissions.
At home, Canada got a new government that has rolled back some climate measures while promising to strengthen others, all as the country experienced its second most destructive wildfire season in recorded history.
It was a lot to take in. So to mark the end of 2025, 440 Megatonnes has reviewed its Insights and chosen five big signals that dominated Canada’s climate progress this year.
#1 Canada’s progress stalled and its 2030 target slipped out of reach
The momentum behind Canada’s emissions is shifting, and not in a good way. In this year’s annual Early Estimate of National Emissions, we observed that Canada made no progress reducing emissions between 2023 and 2024. When we set that data against the rollbacks of climate policy at the federal and provincial level this year, and the trajectory of fossil fuel development, we concluded that Canada’s 2026 and 2030 targets are out of reach.
The federal government admitted as much in its recent progress report. In early 2026, we will publish our own independent assessment of that report, along with our recommendations for what should come next.
Figure 1
#2 Canada made a big bet that it could get industrial carbon pricing right
In 2024, we learned that industrial carbon pricing is the single most important policy for reducing emissions in Canada. In 2025, we learned more about why these systems matter, and just how badly they need reform.
On the one hand, these systems are crucial for protecting industrial competitiveness, and have near-zero impact on consumers. On the other hand, poor design in some provinces has undermined these systems, threatening both emissions reductions and investments.
The Canada–Alberta Memorandum of Understanding put an outsized emphasis on industrial carbon pricing, crowding out other high-impact policies like methane. It’s a big bet, and whether it pays off will depend on sustained, thoughtful execution. The Canadian Climate Institute and 440 Megatonnes have published extensively about how to fix these systems; keep an eye out for more analysis in 2026.
Figure 2
#3 The electricity sector remained a beacon of success
Now for some better news. The electricity sector was the source of at least three success stories at 440 this year, though it also set an ominous precedent.
First, in absolute terms the sector leads the country in emissions reductions, thanks largely to successful phaseouts of coal power in Alberta and Ontario (though their rising reliance on gas use may lead to problems in the future, especially if the federal Clean Electricity Regulations are weakened).
Second, the story is much the same when looking at emissions intensity, thanks not only to those phaseouts but also to the rising deployment of renewables.
Third, utilities across the country are leaning increasingly on clean power, with the amount of wind and solar on grids set to double in the coming years. This mirrors international progress, where investment in non-emitting power was double the investment in fossil fuels.
Yet there were ominous signs of things to come, as the Canada-Alberta MOU suggested that the province would get a carve-out from the Clean Electricity Regulations, threatening to start a race to the bottom on climate policies.
Figure 3
#4 Heat pumps continued to spread
Speaking of progress and electricity, electric heat pumps continue to show strength in Canada. New data on household heating showed that this clean technology continues its rapid growth, reaching 9 per cent of the country’s primary heating systems and between (a whopping) 30 and 50 per cent in the Maritimes.
Part of the appeal of this technology is the way that (generally) more stable electricity prices insulate consumers from more volatile fossil fuel prices, especially that of expensive heating oil.
Figure 4
#5 The country succeeded in cutting methane
Canada is on track for one target: to cut methane emissions by 40 to 45 per cent below 2012 levels by 202025. This is a success story for climate policy and for federal-provincial cooperation, as the targets were achieved thanks to local regulations that were backed by minimum federal standards for methane emissions.
The year ended with a climate policy win as the federal government published strengthened regulations intended to deliver deeper cuts from oil and gas methane—though the Canada-Alberta MOU leaves it unclear how the rules will apply in that province.
Figure 5
Stay tuned in 2026
Progress rarely follows a straight line, and the climate news this year certainly had its share of ups and downs. Technology is being deployed, the electricity sector is delivering lower emissions, and methane is being cut. But policies are being cut too and emission trends look to be moving the wrong way. Canada cannot meet its long term goals if climate policies and accountability measures continue to be weakened.
In 2026, 440 Megatonnes will continue to follow the signals and trends in climate policy, and we plan to build new tools for tracking the country’s progress. Stay tuned for more in the new year.
Ross Linden-Fraser is a Research Lead at the Canadian Climate Institute. Dave Sawyer is Principal Economist and Head of 440 Megatonnes at the Canadian Climate Institute. Alison Bailie and Arthur Zhang are Senior Research Associates at the Canadian Climate Institute.