Canada climate policy: The plans look great, now let’s go!

OECD Environment Directorate

"The markets have moved on, the world has moved on, coal is not coming back," said Catherine McKenna, Environment and Climate Change Minister of Canada when she launched the Powering Past Coal Alliance with the UK and 23 partner countries, states and regions at the COP23 climate conference in Bonn on 16 November 2017.

As one of the OECD’s most energy-intensive economies, Canada is embarking on an ambitious transition to greener energy. After a decade in which environmental policies were driven by its provinces, Canada unveiled the Pan-Canadian Framework on Clean Growth and Climate Change in December 2016. In its first-ever collective vision on climate change, the federal government developed the framework with the country’s ten provinces and three territories. It sets a federal benchmark on carbon pricing, a clean fuel standard, and a range of complementary mitigation actions. It builds on the provinces’ and territories’ previous progress, allowing them to keep their different carbon pricing systems, while requiring provinces without carbon pricing to introduce one in 2018.

Canada certainly has its challenges on the climate front. It is the second most carbon-intensive economy in the OECD: for every US$1,000 of GDP generated by the Canadian economy, it emits 369kg of CO2 into the atmosphere. The OECD average is 256kg. The OECD Environmental Performance Review of Canada, which was launched on 19 December 2017, highlights two key reasons for this.

Firstly, Canada has vast fossil fuel resources and uses large amounts of energy to extract and process them. Between 2000 and 2015, oil production increased by 76%, owing mainly to a threefold increase in unconventional production from oil sands in Alberta. Oil production from oil sands emits roughly four times as much greenhouse gas per barrel as conventional crude produced in North America. Oil sands development in Alberta drove a 20% increase in greenhouse gas emissions from oil and gas extraction between 2011 and 2014 alone. And projections indicate a 50% increase in Canadian oil production between now and 2040. New pipelines will likely stimulate further production and export capacity. The Environmental Performance Review (EPR) recommends implementing regulations on methane emissions from the oil and gas industry without delay.

The second reason for Canada’s carbon intensity is its transport sector. Canada is the second largest country in the world–so large that it takes five days to drive from Moncton, New Brunswick to Vancouver, British Columbia. The Environmental Performance Reviews points out that Canada generates more road and rail freight transport both per unit of GDP and per capita than almost any other country in the OECD. And while 90% of Canadians are satisfied with the quality of the air and water, only 60% are happy with their public transport systems. The announced measures in the Pan-Canadian Framework will help reduce transport emissions. Higher taxes on fuels and on the purchase of pickup trucks and SUVs would further encourage cleaner forms of transport.

Emissions from transport and the oil sands are growing steadily, eclipsing reductions achieved in other sectors. For example, since 1990, emissions in heavy industries such as iron, steel, and pulp and paper have dropped 23% while the electricity sector shows a 17% cut in emissions. Electricity is now low-carbon in Canada with 60% coming from hydroelectric dams and 17% from nuclear energy. Ontario put an end to coal use in 2014.

The Powering Past Coal announcement follows Ontario’s lead as well as the national pledge under the Pan-Canadian Framework to phase out coal by 2030. What is new is that Canada is taking the international lead on coal, too. A month after COP23, at the One Planet Summit in Paris, Ms McKenna welcomed more members to the Powering Past Coal Alliance.

Canada’s global leadership on climate will be strengthened by domestic follow-through in lowering greenhouse gas emissions. Success requires close monitoring of and co-ordination with provincial climate policies. It will also require efforts to bring the energy and transport sectors into line with Canada’s vision on climate.

References

 Read “Canada needs to speed up efforts to green its energy and transport sectors” in the OECD Newsroom

OECD (2017), OECD Environmental Performance Reviews: Canada 2017, OECD Publishing, Paris.

http://oe.cd/epr-canada

Climate Action – Time for ImplementationRemarks by Angel Gurria, Toronto, 1 Nov 2017. Read at http://oe.cd/2ak

OECD (2017), Investing in Climate, Investing in Growth, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264273528-en

Read “Moving forward on climate: Looking beyond narrow interests” at http://oecdinsights.org/2017/11/10/moving-forward-on-climate/

©OECD Observer No 312, Q4 2017




Economic data

GDP growth: +0.6% Q4 2017 year-on-year
Consumer price inflation: 2.2% Feb 2018 annual
Trade: +2.7% exp, +3.0% imp, Q4 2017
Unemployment: 5.4% Feb 2018
Last update: 11 Apr 2018

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