Twelfth time’s the charm? Canada unveils new Emissions Reduction Plan

On March 29, the federal government unveiled the road to achieving Canada’s 2030 greenhouse gas emission reduction targets—including $9.1 billion in new investments. The eight-year journey aims to cut emissions by 40 to 45 per cent below 2005 levels.

The evergreen report, titled 2030 Emissions Reduction Plan: Canada’s Next Steps for Clean Air and a Strong Economy, highlights that the current carbon pricing regime will remain the cornerstone of federal climate action.

This is the first Emissions Reduction Plan (ERP) issued under the Canadian Net-Zero Emissions Accountability Act, but by no means the first time Ottawa takes a kick at the carbon can. Chantal Hébert, one of federal politics' most seasoned observers, lamented that this was the twelfth federal climate plan she had covered since 1988; none had ever come close to achieving their stated emissions goals. Will this one be any different?

Solid white lines have been painted to direct government attention towards several milestones over the coming years. In an effort to slash emissions, the federal government, among other things, will sweeten tax breaks for companies in the fossil fuels sectors that support carbon capture methods, boost incentives for zero-emission vehicles and work to make Canada’s electricity grid sparkling clean. Additional points of interest within the plan include:

• Expanding the Low Carbon Economy Fund through a $2.2 billion renewal
• An additional $458.5 million investment to the Canada Greener Homes loan program
• $400 million for zero-emission vehicles charging stations and a $1.7 billion extension to the Incentives for Zero-Emission Vehicles program.
• $194 million to expand the Industrial Energy Management System for ISO 50001 certification
• An additional $780 million for the Nature Smart Climate Solutions Fund

In particular, Ottawa has indicated it expects the oil and gas sector to cut its emissions by 42 per cent from 2019 levels by 2030. In the absence of a cap in production—an aspect of the plan deplored by most environmental advocates—Ottawa is relying on drastic methane cuts in conventional production and exciting-yet-unproven technologies like carbon capture to achieve its goals.

The plan is ambitious, yet it projects Canadian oil producers will raise output by as much as 1 million barrels per day by 2030, underscoring Canada’s challenge of balancing climate change commitments concerns about geopolitical instability and runaway energy inflation.

Political analysis

Tory environment critic, Kyle Seeback, was clear—the Conservative Party doesn’t support the proposed plan. He, along with his blue colleagues, favour Stephen Harper’s targets from 2015.

With a large base of Conservative support coming from Western Canada—home of proud oil-producing provinces that are now switching to survival mode—it is clear that the plethora of Conservative leadership candidates will need to speak to their concerns while simultaneously tackling climate action.

Although the Liberals have made room for the NDP as a friendly passenger in their car, it didn’t stop NDP environment critic, Laurel Collins, from calling out the plan for lacking urgency to Canada’s climate crisis. The NDP highlighted that the Liberals “are headed in the wrong direction.”

What it means for you

Despite harsh words from some—Alberta Environment Minister Jason Nixon qualified it as “insane”—the federal government’s plan gained acceptable reviews, including from the energy industry itself.

For the energy industry, some of the crucial details will be contained in Budget 2022. Notably, will it include the carbon capture tax credits that the industry has been asking for? While most observers believe it will, the Prime Minister made clear he expects industry to do some of the heavy lifting. “With record profits, this is the moment for the oil and gas sector to invest,” he said.

The plan calls for 20 per cent of all new vehicles sold to be zero-emission by 2026. With electric vehicles currently representing only 6 per cent of sales, it will be interesting to see how the government expects to reach its target in only four years. Clients in the transportation sector should take note of the voices already calling for additional resources and incentives in support of electric vehicle ownership.

More is expected in next week’s federal budget. But regardless of any new funding envelopes contained in Budget 2022, the real challenge will be in aligning policy decisions with the ERP’s ambitious emissions goals across government.

Reach out to our Public Affairs and Government Relations experts to learn more about how we can help. We have the expertise and reach to help you navigate the federal government’s climate plan.