The methodology for developing emissions reduction pathways
By Brad Griffin
The compatibility of current and proposed climate policies with Canada’s Emissions Reduction Plan and reaching net zero by 2050 is assessed by analyzing past and potential future greenhouse gas emissions pathways of various sectors. An approach using the three time periods of historical, short-term, and long-term projections was devised to include different assumptions about the policies that will be in-place and applicable to energy and emissions. To integrate the three periods into a coherent representation of the sectors analyzed, we include information on emissions, emitting and non-emitting energy use, and physical industrial production, GDP, or population (where appropriate).
Historical (2005-2020)
To establish the past behaviour of the sectors represented, we include greenhouse gas emissions based on multiple sources: industrial and upstream oil and gas are taken from the Canadian Energy and Emissions Data Centre (CEEDC), and buildings and transportation emissions, as well as the national greenhouse emissions, come from Environment and Climate Change Canada’s National Inventory Report (ECCC NIR).
Historical energy use for industrial and upstream sectors is again provided by CEEDC, while transportation energy comes from the ECCC NIR, and energy use in residential and commercial buildings is taken from Statistics Canada’s Report on Energy Supply and Demand (StatCan RESD). Totals for greenhouse gas emitting energy include coal, coal products, natural gas, and refined petroleum products and totals for non-emitting energy include electricity and biomass.
Economic activity within a sector is an input to the short-term projection. We use historical data on physical industrial production like tonnes of steel or cement (CEEDC), GDP (StatCan), or population (StatCan) where appropriate to the sector analyzed.
Short-term projection (2021)
While historical data for activity, energy, and emissions is currently available until 2020, only economic activity data is publicly available for the most recent historical year 2021 even though most energy and emissions data for 2021 has already been collected by government agencies. To represent the greenhouse gas emissions for 2021 we use energy and emissions intensities primarily based on weighted historical trends but also include input from the 2020-2025 annual growth rates from the long-term Navius projections, which model future policy effects (thereby including effects from currently legislated policies that have not yet been detected in the historical data). Intensity factors used to estimate the short-term greenhouse gas emissions and energy use include physical production per activity (if applicable), total energy per production (or activity if applicable), greenhouse gas emitting energy per total energy, and emissions per emitting energy.
Long-term projection (2025-2050)
The long-term projection period covers the modelled data from Navius Research for the Emissions Reduction Plan scenarios (2020-2030) and the ensemble of 62 scenarios from Canada’s Net Zero Future (2020-2050). Each of these sets of scenarios were completed for the Canadian Climate Institute for previous projects that occurred before the most recent ECCC NIR was released in April 2022. As such, we adapted the results from the modelling work to be coherent with the historical data to 2020 and the short-term for 2021. Compound annual growth rates were calculated for five-year time steps available from the model results and for the factors used in this analysis (activity, emitting and non-emitting energy use, and greenhouse emissions). These growth rates include the effects of modelled policies throughout the economy. Annual growth rates for each of the factors were applied to 2021 estimates.
The Emissions Reduction Plan long-term projection to 2030 is based on three of Navius’ Emissions Reduction Plan scenarios (legislated, developing, and announced). Note that 44 Mt of land use reductions, LULUCF accounting (land use, land-use change, and forestry), and Western Climate Initiative credits are deducted from projected emissions. This approach to adjusting downward the modeled emissions projections is consistent with the federal Emissions Reduction Plan (ERP) and the Institute’s independent assessment of the ERP.
The long-term projections to net zero by 2050 are based on work completed by Navius for the publication of Canada’s Net Zero Future, using the 80th and 20th percentiles of indicators from the 62 scenarios. The 80th percentile of indicator results represents less emission reduction effort and is shown as the upper edge of the shaded net zero band. Before 2030, a linear pathway to 440 megatonnes in 2030 is used as the upper edge of the net zero pathway. The 20th percentile represents higher effort, shown as the lower edge throughout the entire time period.
Decomposition of emissions reductions
To better understand the drivers behind past and future emissions reductions, we analyzed the change in greenhouse gas emissions using a Kaya identity model and logarithmic mean Divisia index (LMDI) factor decomposition. The identity model was based on three factors:
- Activity (GDP or population) – economic activity effect
- Total energy per activity – energy efficiency effect
- Total emissions per total energy – decarbonization or carbon intensity effect
The activity effect captures changes in emissions due to increases or decreases in output from a sector. The energy efficiency effect captures energy intensity changes due to more or less energy overall to produce a good or provide a service. The decarbonization effect includes changes in the share of renewable energy, fuel decarbonization, use of carbon capture technology, and reduced fugitive emissions like methane.