Canada releases plan for 40% reduction in carbon emissions by 2030

Environment Minister Steven Guilbeault today released the government’s plan to significantly reduce greenhouse gas emissions over the next eight years to meet ambitious 2030 reduction targets.

It is a plan that relies heavily on deep cuts in the electricity, oil and gas, and transport sectors.

To reduce emissions 40-45% below 2005 levels by 2030, the federal government has announced some $9.1 billion in new investments that will, among other things, boost incentives for zero-emission vehicles (ZEVs ), will soften tax breaks for fossil fuel companies that adopt carbon capture, utilization and storage (CCUS) technology and work to make Canada’s electricity grid cleaner.

Speaking at an event in Vancouver, Prime Minister Justin Trudeau called the report “the government’s boldest and sharpest move yet. It’s ambitious and it’s achievable.”

The report, titled 2030 Emissions Reduction Plan: Canada’s next steps for clean air and a strong economy, says the current carbon pricing regime will remain the cornerstone of the federal climate plan. The price of carbon is expected to rise sharply from its current level of $50 per ton of emissions to $170 by 2030 to push consumers towards cleaner energy sources.

To preserve this carbon tax after the next change of government, the report says Ottawa is “exploring legislative approaches to support a sustainable price on carbon pollution.” Ottawa may also soon adopt a “carbon border adjustment,” which would impose tariffs on imports from jurisdictions that do not have a carbon price, according to the report.

The oil and gas sector is the largest contributor to greenhouse gas emissions in Canada. In 2019, this sector accounted for 26% of national emissions, or around 191 megatonnes. According to the plan released Tuesday, the federal government wants to see that number reduced to just 110 megatons by the end of the decade.

As Trudeau announced at COP26 in Glasgow last fall, the government will soon put in place a hard cap on emissions, which means that if companies want to pump more fossil fuels over the next few decades, they will have to do so with significantly lower emission intensity.

Ottawa bets on carbon capture

To accomplish such a significant reduction – the government projects a 42% reduction from current levels in just eight years – Ottawa is adopting CCUS, a process that captures and reuses or stores carbon dioxide emissions.

This is a technology that has already been used, with some success, in Saskatchewan and elsewhere. The federal government has said it wants to see the technology deployed more widely to reduce the emissions intensity of Alberta’s oil patch and other oil-producing regions.

Pumpjacks extract oil from the ground near Olds, Alberta on July 16, 2020. (Jeff McIntosh/The Canadian Press)

To encourage the adoption of CCUS, the government has announced that it will introduce a substantial new investment tax credit. The plan released today does not include any details on how such an incentive would be structured.

Beyond the upcoming tax credit, the government is urging oil and gas companies – many of which have just been showered with cash thanks to rising fossil fuel prices – to invest more in emissions reduction projects.

Report calls on Oilpatch to do its ‘fair share’

An industry that has developed creative ways to extract oil from the ground is also able to pursue new technologies to make the whole process cleaner and greener, the report says.

“Canada’s oil and gas industry is currently generating record cash flow. If deployed strategically, these funds could improve carbon competitiveness and enable the sector to do its fair share in contributing to the country’s climate goals,” the report says.

To further limit the sector’s growth, the federal government has said it will eliminate all “ineffective” fossil fuel subsidies and develop a plan to “phase out funding for the fossil fuel sector, including from Crown corporations.” federal”. This would effectively eliminate a source of funding for businesses looking to expand.

An electric vehicle refuels at a charging station. (Brittany Spencer/CBC)

Because hundreds of thousands of people directly or indirectly employed in the energy sector face an uncertain future under these more constrained conditions, the federal government has said it is working on a “just transition” plan so that displaced workers “are able to succeed in low carbon”. economy.”

Federal money will be directed to new so-called “term funds” in Alberta, Saskatchewan and Newfoundland and Labrador to “help workers in all sectors upgrade or learn new skills for to be at the forefront of the zero-carbon industry”.

The report suggests that some displaced oil and gas workers could also find jobs in emerging industries such as low-carbon hydrogen.

“A hydrogen production facility using carbon capture technology will not be much different from an existing refinery – and the same goes for a biofuels plant,” the report says.

Trudeau said “the big oil lobbyists have spent their time in the field” and now it’s “up to the workers and engineers creating solutions” to chart the way forward for the industry.

Zero-emission vehicles

The second largest source of emissions is the transportation sector. According to data from the most recent national inventory report, emissions from transportation were 186 megatonnes in 2018, representing 25% of total emissions in Canada. The government wants to see that drop to 143 megatons by 2030.

To achieve this goal, the government is proposing more aggressive measures to attract more people to ZEVs, zero-emission vehicles that do not emit exhaust fumes or other pollutants.

The government says it will spend $1.7 billion to expand existing incentives that offer credits to people who buy zero-emission cars and trucks. The upcoming federal budget “will provide additional details on the design of the program,” the report said.

The government will also require that 20% of all new light-duty vehicle sales in Canada be ZEVs by 2026, a rapid turnaround in a country where the vast majority of new cars sold are still equipped with internal combustion engines. According to market research firm IHS Markit, ZEVs’ share of light-duty vehicle sales in Canada was just 5.6% in 2021.

The federal mandate will then dictate that at least 60% of all new vehicles sold in 2030 be ZEVs, before increasing to 100% in 2035. Under this plan, Canadians will not be able to buy a new motor car internal combustion engine or truck by the middle of the next decade.

“With growing consumer demand for ZEVs and exciting new products from traditional and new manufacturers, the world is approaching a tipping point. The global electric car inventory reached 10 million in 2020 and the trend line curves higher for 2021,” reads the report.

This transition will require a dramatic expansion of the ZEV charging station infrastructure. The government is promising $400 million in new funding to help add 50,000 charging stations to the Canadian network. The Canada Infrastructure Bank, the federal agency that supports revenue-generating infrastructure projects that are in the public interest through public-private partnerships, will also spend some $500 million on infrastructure large-scale recharging and refueling for ZEVs.

The government also wants to encourage the reduction of emissions from medium and heavy vehicles, which have been slower to adopt zero-emission technology.

The transition from petrol-powered vehicles to those that rely on electricity will lead to a significant increase in demand for electricity – and the government wants the future grid to be zero emissions by 2035. The government says it will work with provinces and territories to create a “Pan-Canadian Grid Council” to promote investment in clean electricity infrastructure.