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The delicate art of cross-border climate policy comparison

Comparing Canadian and American progress on climate action is important, but requires a deeper dive beyond national trends and targets.

With climate action on the agenda for President Biden’s visit to Ottawa, comparisons between climate policy progress in Canada and the U.S. are inevitable—not just because we want to “keep up” with our southern neighbours, but also because shifts in American ambition have implications for Canadian competitiveness in the global energy transition.

But simple comparisons of national emissions trends, targets, and policy packages don’t paint a complete picture. Major differences in our emissions profiles and policy tools necessitate a more nuanced comparison. 

Comparing progress to date

Both Canada and the U.S. have set 2030 emissions reduction targets, en route to net zero by 2050, and have plans in place for how they expect to reach them. Canada has committed to reducing emissions by between 40 and 45 per cent below 2005 levels and, in March 2022, released its 2030 Emissions Reduction Plan. The U.S., meanwhile, has committed to reducing emissions by between 50 and 52 per cent below 2005 levels this decade, and in August of last year passed the Inflation Reduction Act. Independent assessments in Canada and the U.S. (here, here, and here), have found that both plans deliver significant emissions reductions this decade, but that more work is needed in both countries to achieve the 2030 targets—whether by implementing announced policies or introducing new ones.

While Canada’s emissions have remained relatively flat since 2005 at around 740 Mt, our Early Estimate of National Emissions shows signs of progress, with 2021 emissions estimated to decline to 691 Mt, or 7 per cent below 2005 levels. The U.S. has made more progress towards its 2030 emissions reduction goal, with 2021 emissions estimated to decline to 6,360 Mt by 2030, or 15 per cent below 2005 levels (Figure 1).  

Figure 1: Greenhouse gas emissions totals and by economic sector from 2005 to 2021 for Canada and the United States (Mt CO2e)

At a sector level, electricity has seen the biggest transformation in both countries. In Canada, emissions from the sector dropped by 54 per cent between 2005 and 2021—equivalent to a 9 per cent drop in national emissions—and in the U.S., emissions from the sector declined by 35 per cent in the same time period, or a 12 per cent drop in national emissions. 

The road to 2030 and 2050

While both countries have leaned on the electricity sector to do the heavy lifting to date, the path to 2030 and 2050 will likely look different for Canada and the U.S., given the differences in their emissions profiles. 

In Canada, the biggest source of emissions is by far the industrial sector, accounting for 42 per cent of national emissions in 2021. Oil and gas contributes the bulk of this sector’s emissions—an estimated 65 per cent, or 28 per cent of total emissions. By contrast, U.S. industrial sectors represented 23 per cent of national emissions in 2021, with only one fifth of those emissions generated by the oil and gas sector. 

Despite progress in the U.S. on reducing electricity sector emissions (noted above), it still accounts for a quarter of their national emissions—second only to transportation. By comparison, Canada’s electricity sector represents only 8 per cent of national emissions. A main reason for this difference is that about 60 per cent of electricity in the U.S. is generated from fossil fuels, compared to less than 20 per cent in Canada (thanks to abundant hydropower). And while coal accounts for only 20 per cent of electricity generation in the U.S., it's responsible for over half of the emissions from the sector and 11 per cent of national emissions (Figure 2). 

Figure 2: Emissions from electricity generation as a share of total emissions (%)

Reducing reliance on coal-fired electricity is widely seen as cheap, low-hanging fruit when it comes to meeting emissions reduction targets, especially given that electricity generated from renewables is now significantly cheaper than coal. Phasing out coal this decade could reduce U.S. national emissions by an additional 11 per cent below 2005 levels. And completely decarbonizing the grid would almost double the potential emissions reductions from the sector. In other words, making the switch to non-emitting electricity can put a significant dent in U.S. emissions. While cleaning electricity generation will also play an integral role in Canada’s progress to 2030 and 2050, its relatively smaller share of national emissions means that its contribution to emissions reductions will also be smaller.  

Canada’s biggest source of emissions—the oil and gas sector—presents a unique set of challenges. For starters, unlike most other industries in Canada, emissions from the sector continue to rise and current policies are not enough to bend the curve. In addition, Canadian oil production is much more carbon intensive than in the U.S. And, whereas the bulk of Canada’s emissions come from concentrated oil sands sources, about three-quarters of emissions from onshore oil production in the U.S. come from venting, flaring, and fugitive methane emissions. These differences are important as they underpin the unique decarbonization opportunities in each country. For instance, there is a stronger case for deploying carbon capture, utilization, and storage (CCUS) in Canada than in the U.S.

Match ambition, not action

Until recently, another key difference between Canada and the U.S was ambition. However, actions by the Biden administration, in particular the passing of the Inflation Reduction Act, have made Canada and the U.S more aligned than ever. And while Canada should respond to increased climate action south of the border, the federal government should not try to copy the U.S. approach. 

Beyond different emissions profiles, Canada and the U.S. also have very different policy approaches for driving down emissions and meeting climate targets. Whereas the U.S. has doubled down on public investments as its primary policy instrument through the historic Inflation Reduction Act, Canada’s mixed approach leverages a breadth of tools, including carbon pricing. This means that policy comparisons that selectively look at public investments will paint an incomplete picture. For instance, recent analysis found that Canada’s suite of supports for CCUS actually exceed the measures announced under the Inflation Reduction Act, contrary to claims by industry that new measures are needed to compete with U.S. tax incentives. 

Ultimately, high-level comparisons of emissions trends and policy instruments don’t tell a complete story of climate progress in Canada and the U.S. The delicate art of cross-border climate policy comparison requires a nuanced approach that considers the unique features of  each country's emissions inventories and the distinct policy levers that governments pull to reduce them. Both countries have come a long way, and both still have a lot of work to do, but thankfully the days of significantly mismatched ambition are over.

Anna Kanduth is a Research Lead/440 Project Manager with the Canadian Climate Institute. Arthur Zhang is a Research Associate with the Canadian Climate Institute.