The methodology for short and long-term forecasts of Emissions Reduction Plan scenarios
The compatibility of current and proposed climate policies with the Emissions Reduction Plan and a Net Zero by 2050 future is assessed by analysing past and potential future greenhouse gas (GHG) emissions of various sectors. An approach using historical and long-term forecasts was devised to include different assumptions about the policies that will be in-place and applicable to energy and GHG emissions. To integrate the approaches into a coherent representation of the sectors analyzed, we include information on GHG emissions, emitting and non-emitting energy use, and physical industrial production, GDP, or population (where appropriate).
To establish the past behaviour of the sectors represented, we include GHG 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 GHG 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 GHG emitting energy include coal, coal products, natural gas, and refined petroleum products and totals for non-emitting energy include electricity and biomass.
Long-term Forecast (2025-2050)
The long-term forecast period covers the modelled data from Navius Research for the Emission Reduction Plan scenarios (2020-2030) and the ensemble of 62 Net Zero scenarios (2020-2050). Each of these sets of scenarios were completed for the Canadian Climate Institute for previous projects that occurred before the ECCC NIR release in April 2022. As such, we adapted the results from the modelling work to be coherent with the historical data to 2021. Compound annual growth rates were calculated for 5-year time steps available from the model results and for the factors used in this analysis (activity, emitting and non-emitting energy use, and GHG 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 values.
The ERP long-term forecast to 2030 is based on three of Navius’ ERP scenarios (Legislated, Developing, and Announced).
The Net Zero long-term forecast to 2050 is based on Navius’ Net Zero scenarios, 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. The 20th percentile represents higher effort, shown as the lower edge.
Decomposition of emissions reductions
To better understand the drivers behind past and future GHG emission reductions, we analyzed the change in GHG 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 – GHG Decarbonization effect
The Economic Activity effects 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 GHG Decarbonization effect includes changes in the share of renewable energy, fuel decarbonization, use of carbon capture technology, and reduced fugitive emissions like methane.