Canada Releases Its New 2030 Emissions Reduction Plan

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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")...
Canada Environment

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.

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