A deeper dive into the latest National Inventory Report
On May 2, the federal government released the latest greenhouse gas emissions numbers for 2022. The National Inventory Report (NIR) shows evidence of progress—Canada’s emissions are down from their peak and the economy is decoupling emissions from growth. That’s good news, but progress will need to speed up to hit the 2030 target.
Overall, national emissions are now 7.1 per cent below 2005—the baseline year for Canada’s official target of at least 40 per cent reduction by 2030—and 5.9 per cent lower than pre-pandemic levels in 2019. That’s despite the economy growing 3.2 per cent since that time.
There’s a lot of going on in the NIR data. We’ve taken a deeper dive to tease apart some of the broader takeaways.
Here are five things you need to know.
1. The decoupling of economic growth from emissions is accelerating
The challenge of decarbonization is to reduce emissions while growing the economy. The federal government’s latest National Inventory Report confirms that Canada continues to decouple emissions from economic growth and is consistent with overall trends estimated by the Canadian Climate Institute earlier this year (Figure 1).
Growth in the economy between 2020 and 2022 also resulted in a rebound in emissions, but emissions are still well below pre-pandemic levels in 2019. A positive sign is that emission intensity (tCO2e/$GDP) declined significantly more after 2019 than in the previous years, meaning that the decoupling of emissions from economic growth is accelerating—from an average annual rate of 1.9 per cent before 2019 to 3 per cent since then. However, decoupling now needs to accelerate further—more than double to 6 per cent—if Canada is to hit its 2030 target of between 419 to 457 Mt CO2e.
2. Oil sands emissions are larger than ever while methane emissions show progress
Every year, the NIR undergoes a routine process of updates and improvements to reported information from past years. The most significant methodological updates this year were the integration of atmospheric measurements to estimate venting methane emissions from upstream oil and gas equipment, as well as the revision of the 100-year global warming potential for methane to align with the IPCC’s fifth assessment report.
Overall, this year’s updates revised total 2021 emissions upward from 670 Mt to 698 Mt CO2e— a 28 Mt CO2e increase. But the impact on the oil and gas sector was the most significant with emissions increasing by 26.6 Mt CO2e. Oil and gas emissions now represent 31 per cent of total national emissions, not including land-use and land-use change.
The impact of this recalculation was not uniform across the sector. The methane revisions had large implications for upstream natural gas production and processing, as well as conventional oil production. This only adds to the importance of oil and gas methane regulations. Progress in reducing methane emissions, particularly from venting, accelerated in 2022, which more than offset emission increases from recalculations and more conventional oil and gas production.
Oil sands operations and downstream oil and gas activities, including petroleum refining and natural gas distribution, emit less methane and the impact of the methane recalculations in this subsector are therefore not large. Despite this fact, oil sands emissions increased just under 1 Mt in 2022 to reach its highest level ever at 83.3 Mt CO2e.
3. The electricity sector is (mostly) a model for decarbonization
The electricity sector has steadily decreased emissions since 2005 and is the only sector where legislated and developing policy efforts look reasonably compatible with net zero targets. An average annual decline in emission intensity of 5 per cent per year since 2005 has contributed to a 54 per cent decline in emissions since 2005 (Figure 2).
Alberta has led the pack in the last five years, shedding 54 per cent of its electricity emissions, or 23 Mt. Alberta electricity reduced 3.3 Mt CO2e of emissions in 2022, the largest single reduction in the national inventory from any economic sector in the country. Updates to Alberta’s large-emitter trading system in 2017 and other policies that create incentives for non-emitting generation clearly have had a large effect, which when combined with the provincial and federal bans on coal powered electricity and declining renewable generation costs, all worked together to drive rapid decarbonization. Two outliers bucked this national decarbonization trend: New Brunswick’s electricity sector emitted 22 per cent more in 2022 than the previous year, while Ontario’s sector emitted an additional 12 per cent.
4. Transport emissions continue to be a challenge
A rise in transportation emissions from last year is driven by strong demand growth from passenger vehicles, aviation, and on-road heavy-duty trucks and vehicles. Policy has to work hard to dampen emissions from this sector to counter economic growth and fast-paced population growth. This impact of more activity and population is particularly felt in Ontario (+2.7 Mt), Quebec (+1.5 Mt), and B.C. (+1.18 Mt).
5. Agriculture emissions remain high and include a warning on climate variability
In 2022 agricultural emissions were as high as they have ever been in history—at 70 Mt—and are 4 Mt higher than in 2005. The results are not uniform: on-farm fuel use has grown 52 per cent from 2005, crop production has increased 78 per cent, while animal production has fallen 19 per cent. However, the combined effect of these three agriculture sector emission sources means that emissions have remained between the relatively narrow band of 61 to 70 Mt between 2005 and 2022.
However, there is another important story related to the agriculture sector and the carbon stored in agricultural soils and crops. The most recent NIR has a chilling warning of potential climate change impacts. In 2022, agriculture croplands released a whopping 22 Mt due to drought, which limits the ability of soils and crops to sequester carbon. That number is nearly triple the previous high of 8 Mt released in 2003. The average since 2005 has been -20 Mt, indicating croplands have typically sequestered significantly more carbon than they have released. These large releases of emissions from land-use need to be better understood to see if they can be slowed or abated as they have the potential to be massive.
We’re tracking progress
The Canadian Climate Institute releases an Early Estimate of National Emissions (EENE) ahead of the release of the NIR to provide more timely emissions estimates to inform decision making. The 2022 EENE was released in September of last year, more than seven months ahead of this year’s NIR.
In order to make a direct comparison between the two datasets, we had to perform recalculations to capture the significant methodological improvements mentioned above. After accounting for these changes, emissions from 2005 to 2021 were adjusted, and the 2022 EENE increased from 685 Mt to 712 Mt—an overall increase of 27 Mt.
This brought the 2022 EENE within 4 Mt of the emissions reported in the NIR, a difference of less than 1 per cent.
Our next EENE covering the 2023 data will be out in September, roughly seven months ahead of the release of the official numbers. We’ll be tracking progress on decoupling and sector-by-sector emissions. With only eight reporting years remaining before the end of 2030, the clock is ticking loudly—policies must be implemented quickly to achieve the deep emissions cuts required to meet Canada’s target and support a cleaner economy.
Seton Stiebert is a 440 Megatonnes Advisor and Dave Sawyer is the Principal Economist at the Canadian Climate Institute.