On 14 April 2023, Environment and Climate Change Canada (ECCC) published Canada’s 2023 National Inventory Report, covering greenhouse gas (GHG) emissions from 1990 to 2021 inclusive. 2021 data for the Greenhouse Gas Reporting Program (GHGRP) has also been reported.
The National Inventory Report is prepared and submitted on an annual basis to the United Nations Framework Convention on Climate Change (UNFCCC). The UNFCCC is a 1992 international treaty Canada has ratified to cooperatively address climate change issues and stabilize GHG emissions. In 2021, Canada also submitted an enhanced Nationally Determined Contribution (NDC) to the UN to commit to reducing national GHG emissions by 40-45% below 2005 levels by the year 2030.
In 2021, national GHG emissions were 670 megatonnes of carbon dioxide equivalent (Mt CO2e), representing an 8.4% (62 Mt) decrease from 2005 levels. Measured in GHG per gross domestic product (GDP), however, emissions intensity has decreased by 29% over 2005 levels and 42% over 1990 levels. This is attributed to technological advancements, such as energy efficiencies, fuel switching, and modernization of industrial processes.
Focusing on emissions from sectors regulated by carbon pricing programs, as carbon pricing is a central pillar of Canada’s national climate action and ambition, the Industrial Processes and Product Use (IPPU) sector is also steadily decreasing. In 2021, there was a slight increase in emissions over 2020 levels (4% or 2 Mt), but this can be attributed to abnormal levels in 2020 with pandemic shutdowns. Compared to pre-pandemic levels in 2019, emissions decreased by 1.9% (1 Mt) and a total decrease of 8.8% (5 Mt) compared to 2005 levels.
By economic sector, oil and gas (28%) was the largest contributor to emissions, followed by transport (22%), buildings (13%), and heavy industry (11%). Focusing on heavy industry, levels increased from 2020 to 2021 within the pandemic but decreased overall by 13.5% (12 Mt) in 2021 compared to 2005 levels.
The values and trends presented in this report provide a quantitative basis for the broader framework of GHG emission reduction strategies in Canada, including Canada’s 2030 Emissions Reduction Plan outlining the national approach to achieving the emissions reductions established in the updated NDC.
The sector breakdowns also contribute to more targeted emissions reduction initiatives. For instance, with the oil and gas sector consistently representing the greatest portion of GHG emissions, policies are in development to address the sector directly. These include an Oil and Gas Emissions Cap to supplement existing carbon pricing and Guidance for Best-in-Class GHG Emissions Performance by Oil and Gas Projects.
ClearBlue will continue to follow developments resulting from the 2023 National Inventory Report and related emission reduction policies and provide additional information and support to our clients. Please reach out to us at marketanalysis@clearbluemarkets.com with any questions or to further discuss what this means for your business.