On March 29, 2022, the Minister of Environment and
Climate Change, supported by Prime Minister Justin Trudeau, tabled
Canada's new
2030 Emissions Reduction Plan (the
"Plan"). The Plan describes the existing and new measures
that seek to ensure that Canada reaches its emissions reduction
target of 40 to 45 percent below 2005 levels by 2030 and sets
Canada on a path to achieving net-zero emissions by 2050. The Plan
is the first emissions reduction plan issued under
the
Canadian Net-Zero Emissions Accountability
Act (the "Act"), which
came into force on June 29, 2021. While the government of Canada
recognizes that the Plan is a living document and will evolve in
the coming years, it is evident that the government of Canada is
contemplating an increase in climate related regulation which could
have material implications on doing business in all sectors of the
Canadian economy. As climate regulation in Canada becomes more
stringent, the effects will be felt across a greater range of
industries. As a result, it will be important for businesses not
yet affected by climate regulation to adapt their own operations
and policies accordingly. By not doing so, these businesses may
have a harder time accessing the capital needed to achieve
long-term sustainable growth and will risk missing out on new
market opportunities that will arise because of the shift to a
low-carbon economy.
Canadian Net-Zero Emissions Accountability Act
The Act enshrines in legislation the Government of Canada's commitment to achieve 40 percent below 2005 greenhouse gas (GHG) emissions levels by 2030 and net-zero GHG emissions by 2050. Among other things, the Act establishes a requirement that the Government of Canada set additional emissions reduction targets for 2035, 2040, and 2045, ten years in advance. Once a target is set, the Government of Canada must issue a credible, science-based emissions reduction plan to achieve the target. Each emission reduction plan must contain, among other things, the GHG emissions target for the year to which the plan relates, a summary of Canada's most recent GHG emissions inventory, and a description of the key emissions reduction measures that the Government of Canada intends to take to achieve the target. The Act requires that the Minister establish an emissions reduction plan for 2030 within six months after the day on which the Act came into force.
2030 Emissions Reduction Plan
The Plan serves as the Government of Canada's roadmap for achieving the 2030 emissions reduction target. In the Plan, the Government of Canada proposes taking numerous actions which could pose risks and create opportunities for businesses operating in certain sectors, notably:
1. Maintaining Canada's approach to pricing pollution
The Government of Canada is committing to exploring measures that help guarantee the price of pollution. This includes continuing the development of the federal GHG off-set credit system, implementing border carbon adjustments for imports to protect against carbon leakage, and investment approaches, like carbon contracts for differences, which enshrine future price levels in contracts between the Government and low-carbon project investors, thereby de-risking private sector low-carbon investments.
2. Driving down carbon pollution from the oil and gas sector
The Plan includes a projected contribution from the oil and gas sector of emission reductions to 31 percent below 2005 levels in 2030 (or to 42 percent below 2019 levels). To help achieve this objective the Government of Canada is developing Oil and Gas Methane Regulations to reduce methane emissions and is working on establishing a cap on oil and gas sector emissions, among other things.
3. Increasing funding for clean energy and climate solution projects
The Government of Canada is committing to $9.1 billion in funding to support climate friendly projects, the adoption of new technologies, and capital investments among other things. These investments include: (1) an additional $780 million for the Nature Smart Climate Solutions Fund, which supports projects that conserve, restore, and enhance Canada's wetlands, peatlands, and grasslands to store and capture carbon; (2) an investment of $470 million in the Agricultural Climate Solutions: On-Farm Climate Action Fund to help farmers adopt sustainable practices such as cover crops, rotational grazing and fertilizer management; (3) an investment of $330 million in the Agricultural Clean Technology Program, which supports the development and purchase among farmers of more energy-efficient equipment; (4) a $1.7 billion investment to extend the Incentives for Zero-Emission Vehicles (iZEV) program, which will make it more affordable and easier for Canadians to buy and drive new electric light-duty vehicles; (5) expanding the Low Carbon Economy Fund through a $2.2 billion renewal; and (6) boosting climate resiliency through the development of the $150 million Canada Green Buildings Strategy.
Conclusion
We will continue to monitor the developments associated with the Plan, and the proposed actions set out therein.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
