The 440 Megatonnes Early Estimate of National Emissions shows that accelerating emissions reductions in the transportation sector is essential to getting on track to Canada’s 2030 climate target.

What’s new?

In February 2023, 440 Megatonnes released the first Early Estimate of National Emissions (EENE), showing that Canada is making steady progress on major drivers of emissions reductions and in decoupling economic growth from emissions. 

We estimate that Canada’s greenhouse gas emissions in 2021 were 691 Mt—6.7 per cent lower than 2005 levels but 2.8 per cent higher than in 2020. The transportation sector was one of the main drivers of the rise in emissions between 2020 and 2021, due primarily to increased activity following COVID-19 restrictions.  

As the second largest source of emissions behind oil and gas, reducing emissions from the transportation sector is essential to achieving Canada’s 2030 climate target. Yet without significant improvements in emissions intensity, energy efficiency, and decarbonization—driven by effective policy—Canada will struggle to meet this critical target on the path to net zero by 2050.

Rising activity overwhelms progress on emissions reductions

The EENE estimates that although emissions in the transportation sector fell by 14 per cent in 2020 from their peak of 185 Mt in 2019, 2021 emissions rebounded sharply—a rise of 6 per cent between 2020 and 2021 (Figure 1). Almost all of the sector’s change in emissions can be attributed to a partial rebound after COVID-19 restrictions were lifted in the second half of 2021 and economic activity increased.

However, this rebound is mostly due to the freight transportation sector (road, rail, aviation, and marine transport), which saw a 60 per cent increase in activity in 2021 when compared to 2020. The passenger transportation sector (passenger cars, transit, rail, and air transport) only saw a 34 per cent increase in activity compared to 2020. 

We also analyzed the main drivers contributing to changes in greenhouse gas emissions in the transportation sector between 2016 and 2021, to capture trends in the post-Paris Agreement era. The isolated effect of activity decreased overall transportation emissions by roughly 3.9 Mt. Improvements in decarbonization and energy efficiency, driven by climate policy and market drivers, further decreased emissions to a net decrease of 4.9 Mt. This means that the estimated fall in activity was the primary contributor to lower emissions in the transportation sector between 2016 and 2021. 

Note: Activity: Refers to change in weighted emissions per unit of activity (e.g., passenger·km or tonne·km). Energy Decarbonisation: Refers to the change in energy emissions per unit of energy. Energy Efficiency: Refers to the change in energy consumption per unit of economic activity.

The data doesn’t tell the whole story

Tracking transportation decarbonization drivers is challenging as there are gaps in both the energy data collected by Statistics Canada and the activity data that is collected and analyzed by Natural Resources Canada. Activity in the passenger and freight transportation sectors is based on many different surveys performed by Statistics Canada and other agencies that track vehicle registration and vehicle fuel economy and is often not conducted or updated on an annual basis. There is also a strong expectation that the increase of electric vehicles in the passenger vehicle fleet will lead to increased decarbonization and energy efficiency. However, the data reported by Statistics Canada (and used for these early estimates) indicates that electricity use in Canada’s transportation sector is virtually unchanged between 2017 and 2021 even though electric vehicles sales rose from 1 per cent to 5 per cent in that same time period. This is likely because the electricity used for charging electric vehicles, which should have been allocated to the transportation sector, was instead allocated to the residential or commercial sectors. 

Improvements in allocating electricity used in the transportation sector will help better understand how electric vehicles are displacing internal combustion engine (ICE) vehicles and contributing to lower transportation sector emissions. 

Policy implementation must accelerate 

Our estimates show that the transportation sector has only made modest improvements in absolute emissions and emissions intensity since 2016. The impact of policy and market drivers on reducing transportation emissions, including energy efficiency and decarbonization, is small compared to the impact of activity that is increasing emissions. Between 2020 and 2021, emissions intensity decreased by 1.4 per cent, which is much lower than the 6 to 7 per cent average annual change in emissions intensity that is required in the future if we expect activity (kilometers driven) to rise with increasing population or demand per capita, which has been the case historically. 

To reach Canada’s target of reducing emissions to 440 Mt by 2030, emissions intensity and absolute emissions in the transportation sector will need to accelerate. There is reason to believe that the transportation sector is at an inflection point, with new major policies like the federal zero-emissions vehicle mandates and Clean Electricity Standard slated for implementation this year. Governments are also exploring additional policies for the transportation sector, including support for public transit and active transportation, and developing a zero-emissions vehicle mandate for medium- and heavy-duty vehicles. If implemented effectively, these policies can ensure Canada is travelling in the right direction and at the right speed toward the 440 Mt target.