A Climate Change Plan for the Purposes of the Kyoto Protocol Implementation Act – 2007

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Actions to Address Climate Change

The Government takes its responsibilities under the Kyoto Protocol very seriously. Its approach to meeting the requirements of the Protocol is informed by the extensive review and analysis of the climate change issue undertaken since early 2006. The key conclusions from this review are as follows:

• Canada stands out as an exception to the emissions trend in many other industrialized countries that have ratified the Kyoto Protocol and assumed reduction targets. While most EU countries and Japan have reduced or generally stabilized emissions relative to 1990 levels, Canadian greenhouse gas emissions have grown steadily since the Kyoto Protocol was signed in 1997. As a result, to meet its obligations under the Kyoto Protocol, Canada would have to achieve an average 33% reduction in annual emissions for each of the next five years.
  
  
• Canada's options for meeting the Kyoto Protocol's 2008-2012 target through domestic action alone are very limited. There is also a very limited supply of environmentally sound international credits under the Kyoto Protocol's Clean Development Mechanism (CDM) and Joint Implementation (JI) compliance options available for purchase.

Notwithstanding the above challenges, the Government is convinced that the adjustments required to reduce greenhouse gas emissions without negatively impacting the economy are manageable over a reasonable period of time, with an appropriate range of regulatory and market-based instruments to provide Canadian firms and individuals with the right incentives. Under such an approach, and given a longer timeframe, firms and individuals could adopt currently available technologies that emit fewer greenhouse gas emissions, as well as implement new technologies with limited costs as existing facilities and equipment wear out and are replaced.

The Government's Clean Air Agenda, as laid out in Turning the Corner, takes an integrated approach to reducing greenhouse gas emissions and air pollution. For the purposes of this Climate Change Plan, however, the elements of Turning the Corner that specifically address greenhouse gases will constitute the policies and measures to be pursued. For more information on Turning the Corner, please see http://www.ecoaction.gc.ca.

The real reductions in emissions that will be driven by the Government's new regulations, coupled with the impacts of both the non-regulatory actions and ambitious new initiatives being taken by provincial and territorial governments, mean that Canada's greenhouse gas emissions from all sources are expected to begin to decline as early as 2010 and no later than 2012. Thereafter, absolute emissions will continue to decline.

The Government is committed to reducing Canada's total emissions of greenhouse gases, relative to 2006 levels, by 20% by 2020 and by 60% to 70% by 2050.

Regulatory Framework for Greenhouse Gas Emissions

This Climate Change Plan incorporates Turning the Corner's short, medium and long term emission targets for greenhouse gas emissions, regulations to ensure that air emission targets are achieved, compliance mechanisms and program investments to support regulatory action. Turning the Corner also recognizes the fact that climate change is a shared priority across all jurisdictions and communities in Canada, and that other levels of government, as well as industry and individual citizens, will be taking significant action to reduce greenhouse gas emissions beyond the reductions achieved by federal action alone. The Government is working with all of its partners through meaningful consultations on its integrated approach to clean air and climate change.

The Government understands that any strong action to reduce greenhouse gas emissions will impose a cost on Canadians. Canadians understand that these costs are unavoidable and continue to demand rightly that all orders of government take strong action to combat climate change while also ensuring a strong and growing economy. There are a number of actions that individuals can take to reduce both Canada's overall greenhouse gas emissions, as well as their personal costs that stem from the new regulations. In the short term, such action can be as simple as making greater use of public transportation. Over the longer term, Canadians will need to be prepared to change their driving habits, the way they heat and cool their homes, as well as make more sustainable choices as consumers.

Pursuant to the requirements of paragraph 5 (1) (a) (iii.1) regarding measures respecting a just transition for workers affected by greenhouse gas emission reductions, the government has duly considered the requirement and determined that the implementation of regulatory or other measures proposed in this plan will not require significant worker adjustment in regulated industries. Therefore the Government is not bringing forward any specific measures at this time.

Regulatory Framework for Industrial Air Emissions

The following provisions address the requirements of paragraphs 5 (1) (a) (i) and (ii) of the Kyoto Protocol Implementation Act as well as paragraphs 5 (1) (b) (i) and (ii).

Greenhouse Gas Targets

Emission reduction targets from major sources in industrial sectors are based on an initial required reduction of 18% in emissions intensity from 2006 levels starting in 2010. This reduction represents an improvement of 6% each year from 2007 to 2010. Every year thereafter, a 2% continuous improvement in emissions intensity will be required.

New facilities, whose operations started in 2004 or later, will have three years in which to reach normal operating levels. Their initial intensity target will be based on cleaner fuel standards. After this, new facilities will also be required to improve their emissions intensity by 2% annually.

The intensity-based targets will produce an absolute reduction in industrial greenhouse gas emissions in the 2010-2012 period and are ambitious enough to support the establishment of a fixed cap on emissions at an appropriate juncture in the future.

Complying with Regulated Targets

The regulations of greenhouse gas emissions required to implement the Regulatory Framework for Industrial Air Emissions are intended to come into effect in 2010. Regulated industries will have several options for fulfilling their regulatory obligations, including:

• reducing emissions through abatement actions such as energy efficiency measures, improved energy management systems, deployment of carbon capture and storage or other emission-reducing technologies;
  
  
• contributing to a climate change technology fund. Investments from this fund will focus on technology development and deployment, and related infrastructure projects, which are likely to reduce greenhouse gas emissions in the short term;
  
  
• using emissions trading, which includes inter-firm trading and emission reduction credits from non-regulated activities;
  
  
• using a one-time recognition of early action, if verified actions to reduce their greenhouse gas emissions were taken in the period from 1992 to 2006; and
  
  
• purchasing certain types of credits from the Kyoto Protocol's Clean Development Mechanism.

Regulating Energy Efficiency -- Strengthening Energy Efficiency Standards

The Government intends to amend energy efficiency regulations under the Energy Efficiency Act. This will include the introduction of new performance requirements for 20 currently unregulated products, such as commercial clothes washers and commercial boilers, and tightened requirements for ten products, such as residential dishwashers and dehumidifiers, for which efficiency standards are already in place.

Phasing Out Incandescent Light Bulbs

The Government is developing regulations under the Energy Efficiency Act that will phase out the use of inefficient incandescent light bulbs in most areas of regular use by 2012. The regulations will ensure customers that the lighting choices they make will always meet a high standard of energy efficiency. The new standards will also provide certainty for manufacturers and support investments in new products they will meet both the Government's standards and the public's demand for efficient lighting sources. The Government's efforts to regulate lighting efficiency will lead to 5.70 Mt of expected reductions for 2012. This amount is included in the table above for Regulating Energy Efficiency.

Regulating Transportation

Fuel Efficiency of New Cars and Light Trucks

The Government intends to regulate the fuel consumption of cars and light trucks sold in Canada under the Motor Vehicle Fuel Consumption Standards Act after the expiration of the Memorandum of Understanding (MOU) between the auto industry and the Government. This MOU aims to reduce greenhouse gas emissions by 5.3 Mt in 2010. A mandatory fuel efficiency standard, beginning with the 2011 model year, will be published by the end of 2008. It will be benchmarked against a stringent, dominant North American standard. As the regulations for fuel consumption are still being developed, the Government is not in a position to provide expected emission reductions.

Reducing Emissions from Rail, Air and Marine Transportation

The Government intends to develop and implement new regulations coming into effect in 2011 under the Railway Safety Act to reduce air emissions from the rail industry in Canada. In the meantime, the Government supports a Memorandum of Understanding that has been signed with the Railway Association of Canada that ensures that the rail industry continues to reduce its emissions of greenhouse gases between 2007 and 2010. As the regulations are still being developed, the Government is not in a position to provide expected emissions reductions.

The Government will also support the development of international standards and recommended practices with the International Civil Aviation Organization concerning emissions from aviation sources. These standards and recommended practices will be considered in the development of domestic regulations under the Aeronautics Act. As the standards are still being developed, the Government is not in a position to provide expected emissions reductions. Canada is the first country in the world to have negotiated a memorandum of understanding with its aviation industry to reduce emissions of greenhouse gases from aviation sources. The agreement sets a clear and measurable annual fuel efficiency target that will achieve a cumulative improvement of 24% by 2012 relative to 1990 levels.

Regulating Renewable Fuels Content

The Government has announced its intention to develop and implement a regulation under the Canadian Environmental Protection Act, 1999, which will require fuel producers and importers to have an average annual renewable fuel content of at least 5% of the volume of gasoline that they produce or import, commencing in 2010.

In addition, the Government intends to put in place a requirement for an average 2% renewable fuel content in diesel fuel and heating oil, no later than 2012, upon successful demonstration of renewable diesel fuel use under the range of Canadian conditions.

ecoACTION Investments

Consistent with the fact that the Kyoto Protocol Implementation Act was identified as a non-money bill by the Speaker of the House of Commons on February 14, 2007, this plan is not announcing any new expenditures beyond those already committed by the Government of Canada.

As a means to support these regulatory actions and further reduce greenhouse gas emissions, the Government is investing in a series of ecoACTION programs intended to promote the development and deployment of new technologies. This section outlines ecoACTION programs including: ecoENERGY, ecoTRANSPORT and ecoAGRICULTURE. Implementation of these initiatives began in 2007.

The following sections detailing ecoACTION investments address the requirements of paragraph 5 (1) (a) (iii) of the Kyoto Protocol Implementation Act as well as paragraphs 5 (1) (b) (i) and (ii).

ecoENERGY Initiatives

The ecoENERGY Technology Initiative is investing $230 million over 4 years in the research, development and demonstration of clean transformational energy technologies and systems. Given the longer term nature of this project, the investment is expected to lead to reductions in greenhouse gas emissions in the post-2012 period.

The ecoENERGY for Renewable Power program is investing $1.48 billion over 14 years to provide incentives to increase Canada's supply of clean electricity from renewable sources such as wind, biomass, small hydro and ocean energy.

The ecoENERGY for Renewable Heat initiative is investing approximately $36 million over 4 years in incentives and will support the adoption of clean renewable thermal technologies such as solar air and hot water heating for water and space heating in buildings.

The ecoENERGY for Buildings and Houses program is investing $60 million over 4 years to encourage the construction and operation of more energy-efficient buildings and houses using complementary activities such as rating, labelling and training.

The ecoENERGY Retrofit Initiative is investing $220 million over 4 years to provide financial support and information to encourage retrofitting by home owners, small and medium sized businesses, public institutions and industrial facilities.

The ecoENERGY for Industry program is investing $18 million over 4 years to encourage information-sharing on new technologies and best practices in energy use, as well as training for energy managers to identify and implement energy-saving projects.

The Canada-Alberta ecoENERGY Carbon Capture and Storage Task Force is assessing the economic technical, and regulatory challenges associated with the implementation of carbon capture and storage. The Task Force will provide advice to the Government of Canada and the Government of Alberta on how best to facilitate the large-scale deployment of this technology. Carbon capture and storage has the potential to achieve substantial reductions in greenhouse gas emissions associated with a broad array of industrial activities beyond 2012.

ecoTRANSPORT Initiatives

The ecoAUTO Rebate Program is investing $160 million over 2 years, offering up to $2,000 for the purchase of new fuel-efficient vehicles. In addition, a new green levy ranging from $1,000 to $4,000 is being imposed on fuel-inefficient vehicles.

The ecoENERGY for Personal Vehicles Initiative is investing $21 million over 4 years to provide information to consumers on fuel consumption and decision-making tools such as vehicle labels, guides and information, to encourage more fuel efficient buying, driving and maintenance practices. It also supports the MOU that has been signed between the auto industry and the Government of Canada.

The ecoMOBILITY Initiative is investing $10 million over 4 years to work with municipalities across Canada to help develop programs, services and products to improve choice and make it easier for Canadians to adopt transportation choices such as public transit, car pooling and other sustainable transportation options.

The Vehicle Scrappage Initiative is investing $36 million over 2 years to remove older vehicles from Canadian roads.

The ecoTECHNOLOGY for Vehicles Program is investing $15 million over 4 years to test the safety and environmental performance of a range of emerging technologies for use in light duty vehicles in the Canadian context. The program raises public understanding of these advanced technologies through showcasing across Canada, and collaborates with the auto industry to remove barriers to the introduction of advanced technology vehicles in Canada.

The ecoENERGY for Fleets initiative is investing $22 million over 4 years to generate reductions in fuel use and related costs, air pollutants and greenhouse gas emissions through measures targeted at both operators and managers of Canada's commercial and institutional road vehicle fleets.

The Government is investing $33 million over 4 years in four initiatives under the ecoFREIGHT program to test new freight technologies and remove financial barriers to their adoption. These initiatives include the National Harmonization Initiative for the Trucking Industry ($6 million), the Freight Technology Demonstration Fund ($10 million), the Freight Technology Incentives ($10 million) and the ecoFREIGHT Partnership Initiative ($7 million).

The Marine Shore Power Program is investing up to $6 million over 4 years to support as many as four pilot projects to demonstrate the installation and use of shore-based power for marine vessels in Canadian ports.

Encouraging Canadians to use Urban Transit - The Government provided a 15.5 % tax credit for public transit passes and recently extended this tax credit to electronic fare passes and weekly passes when used on a regular basis.

Renewable Fuels Strategy

In addition to increasing the availability of renewable fuels through regulations, the Government's Renewable Fuels Strategy includes three other components. Through the ecoENERGY for Biofuels Initiative, the Government is providing $1.5 billion over nine years to boost Canada's production of renewable fuels. The $10 million expansion of the Biofuels Opportunities for Producers Initiative will help farmers seize new opportunities in this sector. Finally, an additional $500 million is being provided to Sustainable Development Technology Canada to invest with the private sector in establishing large scale production facilities for next-generation renewable fuels. Reductions under these measures have already been accounted for in the expected reductions for Regulating Renewable Fuels Content.

ecoAGRICULTURE Initiatives

The Government has announced almost $365 million for the Agricultural Bioproducts Innovation Program, the Agri-Opportunities Program, the ecoAGRICULTURE Biofuels Capital Initiative and the Co-operative Development Initiative to assist farmers and rural communities to seize new opportunities in the agriculture bioproducts sector through biofuels and bioproducts initiatives. Reductions under these measures have already been accounted for in the expected reductions for Regulating Renewable Fuels Content.

In addition, the Government has made significant investments in developing beneficial management practices that will encourage the Canadian agricultural sector to reduce greenhouse gas emissions. Since decisions on the specifics of inclusion of emission reduction credits from non-regulated sources in the Regulatory Framework for Industrial Air Emissions have not been concluded, the Government is not in a position to provide any emission reduction estimates at this time.

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