Canada is improving on critical indicators of climate progress, but policy implementation must accelerate.
WHat’s new?
To inform more timely and data-driven decision-making, the 440 Megatonnes team released our first Early Estimate of National Emissions (EENE) for 2021. Our estimates show that Canada is making steady progress on major drivers of emissions reductions and in decoupling economic growth from emissions. To stay on course to Canada’s 2030 emission reduction target, however, policy implementation will need to accelerate.
Releasing our EENE aims to improve decision making by providing more timely data on how Canada is progressing towards its emissions reduction targets. The official National Inventory Report is published each spring for the previous calendar year, representing a 16 month lag. This reporting lag makes it difficult for governments to take early action to course correct if the data shows Canada is not on track.
Signs of progress
We estimate that Canada’s greenhouse gas emissions in 2021 were 691 Mt–2.8 per cent higher than 2020, but 6.7 per cent below 2005 levels. Between 2020 and 2021, our estimates show an overall decrease in emissions intensity of 2 per cent, representing a steady decoupling of economic growth from carbon emissions, in line with the average annual change in emissions since 2005. This trend is especially promising given the rebound in economic growth following widespread COVID-19 restrictions. It is also a critical indicator of climate progress.
We note that the Government of Canada recalibrates the National Inventory Report on a routine basis due to methodological changes. If this occurs, every emission year, including 2005, is adjusted, implying that our estimates will need to be adjusted as well. Care must therefore be taken when comparing different vintages of the emission inventory.
Figure 1: Trend in national GHG emissions for select years (not including LULUCF)
Figure 2: Trends in GDP, GHG emissions and emission intensity
While the isolated effect of rising economic activity increased emissions by over 30 Mt from 2020 to 2021, improvements in decarbonization and energy efficiency contributed to a net overall increase of 19 Mt (Figure 3). This means that policy and market drivers cut emissions by 13 Mt. Canada’s two biggest sources of emissions—the oil and gas and transportation sectors—were the main drivers of rising emissions between 2020 and 2021, due to a strong rebound in economic activity for both sectors.
Figure 3: Main drivers contributing to the change in GHG emissions (2020–2021)
Since 2020 was an unusual year—where emissions fell dramatically due to unprecedented decreases in activity—we also analyzed the drivers of emissions from 2016 and 2021, which indicate progress on emissions reduction policies implemented in the post-Paris Agreement era (Figure 2). While the rise in economic activity between 2016 and 2021 drove emissions up by 60 Mt, improvements in decarbonization and energy efficiency reduced emissions by 35 Mt and 48 Mt respectively, leading to a net overall decrease in emissions of 24 Mt.
Figure 4: Main drivers contributing to the change in GHG emissions (2016–2021)
Progress must accelerate
While promising, the trends we observe for 2021 emissions data must accelerate to achieve Canada’s 2030 target. The average annual emission intensity between now and 2030 must outpace the growth in economic activity by nearly 5 per cent annually to reach 440 Mt in 2030. For instance, if average national economic growth from 2022 to 2030 is 1.5 per cent, the annual decline in emission intensity will need to be 6.3 per cent.
Reaching 440 Mt will require greater strides in both energy efficiency and decarbonization. Previous Institute analysis found that quick and effective implementation of the policies laid out in Canada’s 2030 Emission Reduction Plan, alongside provincial and territorial action, can accelerate emission reductions at the scale and pace required this decade. 2023 is an especially critical year, as the federal government moves ahead with major policies, including the Clean Electricity Regulation, the cap on oil and gas emissions, the sales mandate for zero-emissions vehicles, and stronger methane regulations. These policies are all expected to drive significant progress, if they are implemented quickly and effectively.
Going forward, we will release the annual EENE each Fall–eight months ahead of the official National Inventory Report–with the 2022 EENE published in Fall 2023.
Seton Stiebert is a 440 Megatonnes project Advisor, and Dave Sawyer is the Principal Economist at the Canadian Climate Institute.