New analysis shows the workhorses of emission reduction are policies that apply across Canada, with federal minimum standards backing up provincial and territorial efforts.
In Canada, responsibility for climate policy—and credit for its successes—is shared across all orders of government. The federal government has set national targets for emission reductions and a set of policies aimed at achieving them. In parallel, most provinces and territories have announced their own emission reduction targets—several with accountability processes attached—and have implemented policies aimed at achieving them.
So how effective are the policies implemented by different orders of government at reducing emissions? And how can federal, provincial, and territorial governments better coordinate action, given that many of these policies inevitably overlap? It’s an important set of questions given the recent flatlining of emissions progress at a national level, in part due to policy backsliding at the federal and provincial level.
In collaboration with the Net-Zero Advisory Body (NZAB), the Canadian Climate Institute (the Institute) set out to answer these questions. What we found is that the climate policies that make the biggest impact on emission reductions are those where federal, provincial, and territorial action is aligned and underpinned by a strong national standard.
Harmonized policies can be mutually reinforcing, with the added insurance that more than one jurisdiction holding the policy provides some protection against repeals from any one order of government. Redoubling efforts to strengthen coordination among all orders of government—including resolve from the federal government to hold firm on minimum standards—can restore certainty and reset ambition at a key time for climate action in Canada.
Working with Navius Research, we modeled a set of policy scenarios using their g-Tech energy-economy model. Nationally, our modelling projects that the legislated policies currently in place by federal, provincial and territorial governments would reduce Canada’s emissions to 24 per cent below 2005 levels in 2030 and 27 per cent below 2005 levels in 20351. Policy effort from all orders of government is making a difference, even as a sizable gap remains to Canada’s national targets.
Looking deeper into how policies from multiple orders of government are driving emission reductions, we offer three lessons for the next steps of climate policymaking in Canada:
1. More than half of Canada’s emission cuts come from policies harmonized across governments
Not all climate policies can be clearly sorted as strictly federal or strictly provincial/territorial. The most important subset of climate policies in Canada are implemented through harmonization frameworks, which leave a mix of federal and provincial measures in place. This includes industrial carbon pricing, with its federal backstop regulation and benchmark to assess whether provincial systems can be used in lieu, and instances where provincial regulations stand in place of a federal regulation, such as regulations on methane from oil and gas in B.C., Saskatchewan and Alberta.
For these harmonized policies, responsibility for the policies’ effectiveness and credit for their successes belongs to both orders of government. Harmonized federal-provincial-territorial (FPT) policies are so impactful in part because they take on major emissions sources from important sectors: industry, oil and gas, and coal-fired electricity.
These harmonized policies are responsible for the greatest portion of emission reductions in Canada, delivering 53 to 58 per cent of Canada’s projected emission reductions in 2030, and 53 to 61 per cent of Canada’s projected emission reductions in 2035, according to our analysis.
Meanwhile, federal policies—such as the low-emission vehicle regulations, Clean Fuel Regulations (CFR), and investment tax credits—account for 19 to 38 per cent of reductions in 2030 and 17 to 36 per cent in 2035. Provincial policies—such as transportation policies and renewable portfolio standards—account for 3 to 32 per cent in 2030 and 6 to 28 per cent in 2035 (Figure 1). The wide range in the results for the provincial policy contributions reflects the extent that these provincial policies overlap with harmonized FPT and federal policies.
Figure: Harmonized policies will deliver most of Canada’s emission reductions
The dominance of harmonized FPT policies in Canada’s emissions reductions reflects how climate policy has evolved over the past 20 years, with some provinces and territories leading and others following federal action to address large emitters.
Policies that fall into this category were first implemented in one or more provinces, before the federal government extended its application across Canada, expanding its emission reduction potential. For example, Alberta was the first jurisdiction in Canada to issue regulations on methane from oil and gas facilities, and the first with industrial carbon pricing.
Two types of harmonization frameworks are typically followed by the federal government recognizing provincial or territorial policy or regulations, and standing down their own policy, thereby harmonizing policy. These can include either a legal equivalency agreement or a benchmark-backstop framework.
- Legal equivalency agreement. Equivalency agreements allow a provincial regulation to stand in place of a federal regulation under Canadian Environmental Protection Act , if the federal government determines that the provincial regulation achieves equivalent emissions outcomes and meets transparency and reporting requirements. Provinces and territories can use equivalency agreements to retain pre-existing regulations or design new ones suited to their jurisdictions while pursuing the same emissions reduction goals. Current emissions-related equivalency agreements cover methane regulations for upstream oil and gas facilities in Alberta, Saskatchewan and B.C., and coal phase-out regulations in Nova Scotia and Saskatchewan.
- Benchmark-backstop framework. This type of framework includes a federal benchmark that sets minimum standards for provincial systems to meet. In addition, a federal backstop system can be applied if a province or territory opts for it or fails to implement a system that meets the federal benchmark. This benchmark–backstop design allows the federal government to ensure minimum stringency and consistency across the country, while enabling provinces to implement their own regulations. The most prominent example is the federal government’s industrial carbon pricing system, which was designed from the outset to accommodate existing provincial programs, recognizing that some provinces and territories were first movers on carbon pricing. Provinces such as B.C., Alberta, and Quebec had operated their own, very different systems for many years before the federal system was introduced. Today, Canadian industrial carbon pricing is a mix of diverse provincial systems and a federal benchmark and backstop regulation.
Harmonization frameworks are a foundation to build on. Our modelling finds that a stronger version of policies already in place—a more binding industrial carbon pricing system, more stringent regulations for oil and gas methane and finalized regulations for landfill methane—could achieve an additional 65 Mt of reductions in 2030 and an additional 58 Mt in 2035, beyond what we project from currently legislated policies.
That’s an enormous amount of avoided emissions. To put it into perspective, it would knock nine percentage points off the gap to Canada’s 2030 target.
2. Policy ambition from the provinces and territories matters
Beyond these harmonized policies, all provinces and territories have been advancing their own climate policies for decades, and action has accelerated over the last ten years.
In some cases, provinces and territories have articulated their obligations in legislation, alongside reporting requirements and accountability measures, such as soliciting advice from external climate councils. In many cases, these jurisdictions have been the birthplace of effective national policies.
The impact of a policy expands when it is adopted in more provinces and territories, or inspires a federal policy that applies across the country. In the transportation sector in particular, provincial and territorial policy in some places led to federal action. In some cases, provincial or territorial policies now coexist with similar federal ones. For example, Quebec and B.C. announced their 100 per cent zero-emission vehicle (ZEV) sales mandates in 2017 and 2019 respectively, well before the introduction of the federal mandate. Similarly, B.C.’s Low Carbon Fuels Standard began in 2010, more than a decade before the federal Clean Fuel Regulation (CFR)’s start date of 2022. Alberta, Saskatchewan, Manitoba, Ontario, and Quebec also had minimums for renewable fuel content much earlier than the federal CFR.
Where similar federal regulations now exist, leading provinces and territories often maintain versions that are more stringent or differently designed. For example, B.C. and Quebec have more ambitious ZEV mandates than the federal standard, and Ontario and Quebec include lifecycle carbon intensity requirements for transportation fuels.
For the federal government, good provincial and territorial climate policy presents an opportunity to broaden the impact of the best provincial ideas by pushing for wider adoption or turning them into national standards. In our modelling, we found that stronger building codes (based on B.C.) and heat pump purchase subsidies for low-income households (similar to programs in the Maritimes), extended nationally, could cut an additional 14 Mt in 2035, with reductions continuing to deepen over time.
3. National standards and federal backstops are essential to cut emissions and protect regional fairness
The prominent role of provincial and territorial governments here shows the importance of federal climate policy that works with regional differences while holding a firm line that every province and territory must be part of national efforts.
The most impactful climate policies in place today are harmonized FPT policies. This has important implications for maintaining and strengthening climate policy in Canada.
First, these policies are the most impactful in part because they effectively target large sources of emissions. This means that improving their stringency and efficiency has an outsized impact on Canada’s emission reduction performance.
Second, they offer a model for working within shared jurisdiction. Shared responsibility and credit for their success can make these policies more resilient, since rescinding or weakening them requires action from both levels of government. Space for province- or territory-specific tailoring means the federal government can deliver pan-Canadian climate action while allowing for regional differences within a diverse federation. Provinces can adapt the policy design to local circumstances and consider other policies in place or under development in their jurisdiction, but PTs cannot opt out of the national endeavour.
Third, robust minimum federal standards can prevent a race to the bottom and protect space for provincial leadership. Without a credible national standard, leaders among the provinces and territories may face more pressure to weaken their policies. For example, since the federal government removed the consumer carbon price, both B.C. and the Northwest Territories removed their own consumer carbon prices, and Quebec has faced pressure to remove fuel suppliers from the provincial carbon market.
However, harmonized FPT policies also bring added complexity. They depend on FPT coordination, which can be challenging and time consuming. The effectiveness of these policies in delivering fair and efficient emissions reductions depends on the clarity and ambition of the national standard and the strength of the assessment process for provincial systems. It demands rigour and transparency in the federal government’s assessment of provincial measures, and depends on the federal government’s resolve to implement the backstop if a province attempts to opt out or does not meet the standard.
Canada’s federal government can use existing FPT policy harmonization and coordination as a foundation to build on. This includes:
- Strengthening the federal minimum standards for FPT harmonized policies in place now, by making industrial carbon pricing binding and finalizing stronger methane regulations.
- Enforcing backstops and applying rigorous and transparent federal assessments of PT equivalency. The federal government’s ability to build on the success of harmonized FPT policies depends on federal government’s rigour, transparency, and resolve in upholding the equivalency agreements currently in place, in the face of conflict with PT policy changes—such as Saskatchewan’s recent reversal on coal — and in the execution of potential new equivalency agreements. For example, the federal government has signalled openness to discuss equivalency under the Clean Electricity Regulations.
- Securing deeper emission reductions and greater policy coordination by broadening the impact of good provincial and territorial policies. Beyond formal harmonization through equivalency agreements and benchmark-backstop policy frameworks, this could mean making PT policy national in the way the national ZEV mandate came to be, or through enabling measures, such as the development of model building codes based on the strongest provincial measures. It could involve funding and cost-sharing agreements with the PTs for programs like heat pump and retrofit incentives.
Sturdy climate policy is built on federal, provincial, and territorial powers
Responsibility for effective climate policy does not only fall on the federal government’s shoulders. Provinces and territories are also responsible for reducing their own emissions.
That’s more important than ever: our latest analysis shows that emissions progress has stalled. Recent policy backsliding from the federal government and the provinces will make it harder to get emissions back on track. But it’s not too late for a coordinated policy reset.
In their own jurisdictions, provincial and territorial governments can design their own policies to fit their priorities and local emission reduction opportunities. They can wield policy levers that are specific to the provinces and territories in key areas like electricity regulation, provincial and territorial investments, and energy building codes. Within the federation, provincial and territorial climate leaders can reap the first-mover advantages of setting the first policy design to meet their own needs, and seeing it accommodated or replicated in national policy.
None of this lessens the onus on the federal government to deliver on national climate goals, however.
Without strong federal coordination, Canada risks a patchwork of ambition, greater policy churn, less effective market signals, and ultimately, failure to meet national and international emissions targets. Minimum federal floors, backed by robust monitoring and transparent performance tests, are essential to protect national outcomes and economic cohesion.
Despite successes from both orders of government, insufficiently ambitious and inconsistent coordination leaves achievable emission reductions on the table and undermines investment. What’s needed now is a reboot of coordinated policy action across governments in Canada. Shared jurisdiction can work for both orders of government, creating opportunities for tailoring policy to unique regional contexts and priorities while also ensuring national goals can be met. It’s time for both orders of government to recognize what works and build a strong, durable framework together.
Sachi Gibson is the Research Director for Mitigation at the Canadian Climate Institute. Dave Sawyer is Principal Economist at the Canadian Climate Institute. Alison Bailie is a Senior Research Associate at the Canadian Climate Institute.
1 These projections of emission reduction include the modelled contributions of existing policies, as well as the federal government’s projections for accounting contributions from the Land Use, Land Use Change and Forestry (LULUCF) sector (-28 Mt in 2030 and -31 Mt in 2035) and reductions from nature-based climate solutions and agriculture measures (-12 Mt in both years).