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Canada's Energy Policy and Transition Summary

Core Content

The International Energy Agency (IEA) has conducted an in-depth review of Canada's energy policies and climate strategies, highlighting the country's progress and outlining key recommendations for further action. Canada has made significant international and domestic commitments to transform its energy system and achieve net-zero emissions by 2050, with a focus on sustainability, affordability, and reliability.

Main Viewpoints

• Climate Commitments and Targets:

  • Canada has pledged to reduce greenhouse gas (GHG) emissions by 40–45% from 2005 levels by 2030.
  • It has legislated a net-zero emissions target by 2050, aligning with the Paris Agreement.
  • The Strengthened Climate Plan (2020) includes 64 new measures and CAD 15 billion in investments to support these goals.

• Energy System Overview:

  • Canada is a major producer, consumer, and exporter of energy.
  • Its electricity system is among the cleanest in the world, with 83% of generation coming from non-emitting sources (hydro and nuclear).
  • The oil and gas sector accounts for 25% of national GHG emissions and is a key focus for decarbonisation.

• Policy Measures:

  • A carbon pricing scheme is in place, with a CAD 40 per tonne price in 2021, rising to CAD 50 per tonne in 2022, and further increasing to CAD 170 per tonne by 2030.
  • The Pan-Canadian Framework on Clean Growth and Climate Change (PCF), launched in 2016, outlines four pillars: carbon pricing, emissions reduction actions, adaptation and resilience, and clean technology and innovation.
  • Clean fuel regulations, nuclear plant extensions, upstream methane regulations, and energy efficiency programs are key policy tools.

• Decarbonisation Efforts:

  • Methane emissions from oil and gas are targeted for a 75% reduction by 2030 below 2012 levels.
  • Canada joined the Global Methane Pledge to reduce global methane emissions by 30% by 2030.
  • The Strengthened Climate Plan includes a CAD 750 million Emissions Reduction Fund to support oil and gas workers and reduce emissions.

• Technology and Innovation:

  • Canada is investing in carbon capture, utilization, and storage (CCUS), hydrogen, and small modular nuclear reactors (SMRs).
  • The IEA framework for energy innovation policies emphasizes the need for market pull and resource push to drive technology development.
  • Public and private R&D spending on energy innovation is growing, with a focus on clean technologies and energy efficiency.

• People-Centred Transition:

  • Canada promotes a people-centred approach to its energy transition, including gender equity in clean energy sectors.
  • Initiatives support Indigenous communities in accessing clean energy and just transitions for fossil fuel workers.
  • Green stimulus measures have been developed post-COVID-19 to align recovery with climate goals.

• Energy Security and Decentralization:

  • Canada's decentralized government structure requires coordinated efforts among federal, provincial, and territorial levels.
  • Interprovincial interconnections are crucial to balance progress and ensure a stable electricity supply.
  • Canada aims to increase its production and supply chains of critical minerals to support global energy security.

• Sector-Specific Progress:

  • Transportation: Canada is promoting zero-emission vehicles, electric car registrations, and stringent vehicle emissions standards.
  • Buildings: The Build Smart strategy focuses on energy efficiency in new and existing buildings, supported by updated building codes and retrofit programs.
  • Industry: Energy efficiency programs and benchmarking tools such as ENERGY STAR Certification are being used to reduce emissions.
  • Renewables: Canada has made progress in renewable energy adoption, especially in hydro, wind, and solar. The renewable energy share in total final consumption is growing.

• Challenges and Opportunities:

  • Achieving net-zero emissions by 2050 requires greater emissions reductions in sectors like transport, industry, and oil and gas.
  • The clean energy transition brings new security risks, particularly for fossil fuel-dependent provinces, necessitating investment in infrastructure and diversification.
  • Canada has a strong position in global clean energy leadership, with 12 Canadian companies in the Global Cleantech 100.

Key Recommendations

• Strengthen carbon pricing and ensure it continues to drive clean fuel adoption.
• Accelerate the decarbonisation of the oil and gas sector, with a focus on methane reduction and CCUS.
• Improve electricity interconnections to support balanced regional progress and grid stability.
• Expand the use of clean fuels and renewable energy sources across all sectors.
• Enhance energy efficiency measures in buildings, transport, and industry.
• Support innovation and R&D in clean technologies like hydrogen, SMRs, and CCUS.
• Ensure a just transition for fossil fuel workers and Indigenous communities.
• Coordinate federal and provincial efforts to align energy and climate policies.
• Invest in infrastructure to maintain energy security and supply reliability.
• Promote international collaboration to share clean energy solutions and best practices.

Conclusion

Canada is on a path to achieve its ambitious climate and energy transition goals, with a strong focus on clean electricity, carbon pricing, and technology innovation. While the country has made significant strides, challenges remain in sectoral decarbonisation, policy coordination, and energy security. The IEA report highlights the need for continued investment, policy alignment, and inclusive growth to ensure a successful and equitable transition to a net-zero energy system by 2050.