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Canada's 2016 greenhouse gas emissions Reference Case

Canada's greenhouse gas emissions projections 2016

This report provides a reference case of Canada’s greenhouse gas (GHG) emissions through 2030. This Reference Case presents the future impacts of policies and measures taken by federal, provincial and territorial governments as of November 1st, 2016. It is aligned with Canada’s historical emissions from 1990 to 2014 as presented in National Inventory Report 1990-2014: Greenhouse Gas Sources and Sinks in Canada (NIR). The Reference Case does not take into account the impact of broader strategies or future measures within existing plans where significant details are still under development. Policies still under development will be included in subsequent reference cases as their details become finalized. Table 30 gives a full description of measures included into 2016 Reference Case.

Given the uncertainty regarding the key drivers of GHG emissions, alternate scenarios (high and low emissions projections) are also included.

The projections in this report use the same modelling framework as those presented by Environment and Climate Change Canada’s Biennial Reports to the United Nations Framework Convention on Climate Change (UNFCCC) in 2014 and 2016.

As shown in Table 1, absent additional actions, total Canadian GHG emissions projections in the Reference Case would be 731 megatonnes of carbon dioxide equivalent (Mt CO2 eq) in 2020 and 742 Mt in 2030.

Table 1 Reference Case Emissions Projections by Economic Sector (Mt CO2 eq)
SectorHistoricalProjectedChange
2005 to 2030
2005201420202030
Oil and Gas15919220123374
Electricity118786434-84
Transportation171171168157-14
Heavy Industry887685979
Buildings858789949
Agriculture707372744
Waste & Others56545153-3
Total747732731742-5

Note: Numbers may not sum to the total due to rounding.

Comparison of 2016 and 2015 Reference Case Emissions ProjectionsFootnote 1

In 2030, the Reference Case GHG emissions in Canada are projected to reach 742 Mt, 73 Mt below last year’s forecast of 815 Mt presented in Canada’s Second Biennial Report (see Figure 1 and Table 2)Footnote 2. This reflects the expected impacts of a number of federal and provincial policies that were put in place over the last year, namely:

  • Alberta’s Carbon levy, 2030 phase-out of coal-fired electricity, and 100 Mt cap on oil sand emissions;
  • Domestic reductions from Ontario joining Quebec and California in the Western Climate Initiative (WCI) cap-and-trade regime in 2017;
  • Quebec’s regulation for new commercial, institutional and residential high-rise buildings; and,
  • Government of Canada measures (announced in Federal Budget 2016) to increase efficiency of residential and commercial equipment and appliances.

In addition to the new policies, the lower Reference Case emissions projections are also driven by a lower GDP growth forecast and lower light oil, oil sands, and natural gas production estimates (see Annex 1 for details). These changes in macroeconomic and energy assumptions, along with modelling improvements and revisions in historical data, result in emissions reductions of approximately 30 Mt in 2030 from last year’s projection.

Figure 1 Canada’s 2016 and 2015 Reference Case Emissions Projections Footnote 3

Figure 1. See description below

Text Description

Figure 1 presents two lines on a graph spanning the years 2005-2030. The vertical axis is Megatonnes of CO2e and spans the values 500 to 850 in 50 megatonne increments. The two lines start out as one in the period between 2005 and 2012, at which point they start to diverge. The top line shows the projections from 2015 Reference Case, which by 2030 reach 815 Mt. The line on the bottom represents the Reference case from December 2016, which by 2030 reaches 742 Mt. Below the lines is a dot at 523 Mt, which represents Canadian target level of emissions in 2030 (30% below 2005 levels).

Table 2 Comparison of 2016 and 2015 Reference Case Emissions Projections by Economic Sector (Mt CO2 eq)
SectorHistorical2015 Projection2016 ProjectionChange
200520202030202020302030
Oil and Gas159210242201233-9
Electricity11874586434-24
Transportation171169164168157-7
Heavy Industry88901078597-10
Buildings85961098994-15
Agriculture7074767274-2
Waste & Others5654595153-6
Total747768815731742-73

Note: Numbers may not sum to the total due to rounding.

Sensitivity Analysis

GHG emissions projections depend on a number of economic and energy assumptions and are subject to significant uncertainty, especially in the longer term (see Table 3).  In general, GDP growth has a direct and significant impact on GHG emissions. In Canada, oil and natural gas production is also strongly correlated with oil and gas prices which are highly volatile and largely determined by external commodity markets.

Table 3 GDP Growth, Oil and Gas Price Assumptions
AssumptionsLowReferenceHigh
Average Annual GDP Growth (2014-2030)1.0%1.7%2.3%
2030 West Texas Intermediate Oil Price (2014 US$/bbl)4281111
2030 Henry Hub Natural Gas Price (2014 US$/GJ)2.893.724.62
2030 GHG Emissions (Mt CO2 eq.)697742790

To address these uncertainties, alternate scenarios that reflect different assumptions about oil and natural gas prices and production as well as different rates of economic growth have been developed.   As shown in Figure 2 below, these scenarios suggest that the expected emission range of the Reference Case in 2030 could be from 697 Mt in the lowest emissions scenario to 790 Mt in the highest emissions scenario. This 93 Mt range will continue to change over time with further government actions, technological change, economic conditions and developments in energy markets.  Furthermore, these estimates do not include contributions for Land Use, Land-Use Change and Forestry (LULUCF).

Figure 2 Canada’s Domestic Emissions Projections in 2020 and 2030 (Mt CO2 eq)

Figure 2. See description below

Text Description

Figure 2 presents three lines on a graph spanning the years 2005-2030. The vertical axis is in Megatonnes of CO2e and spans the values 500 to 850 in fifty megatonne increments. The three lines start out as one in the period between 2005 and 2014 and represent historical emissions, but in 2015 they start to diverge. From 2015 the top line, representing the highest emissions scenario, reaches 747 Mt in 2020, peaks in 2029 and then declines slightly to reach 790 Mt in 2030. The middle line, representing the reference scenario, reaches 731 Mt in 2020, is slowly increasing to reach the peak in 2025, and then declines to 742 in 2030. The lowest line represents the lowest emissions scenario and reaches 720 Mt in 2020, stays relatively stable till 2029, and then declines to 697 Mt in 2030. Below the lines is a dot at 523 Mt, which represents Canadian target level of emissions in 2030 (30% below 2005 levels).

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Annex 1: Supplementary information for projections

Table A1: Detailed Emissions Projections by IPCC Sector (Mt CO2 eq)

Table A2: Detailed Emissions by Type of Gas (Mt CO2 eq)

Table A3: Comparison of 2016 and 2015 Emissions by Intergovernmental Panel on Climate Change (IPCC) Sector (Mt CO2 eq)

Table A4: Comparison of 2016 and 2015 Emissions by Type of Gas (Mt CO2 eq)

Table A5: Change in GHG Emissions by Economic Sector (Mt CO2eq)

Table A6: Oil and Gas Sector: Emissions by Production Type (Mt CO2eq)

Table A7: Selected Upstream Oil and Natural Gas Subsectors: Emissions and Drivers

Table A8: Petroleum Refining: Emissions and Drivers

Table A9: Electricity Generation: Emissions by Fuel Type (Mt CO2eq)

Table A10: Electricity Sector: Emissions and Drivers

Table A11: Transportation: Emissions (Mt CO2 eq)

Table A12: Heavy Industry: Emissions by Subsector (Mt CO2 eq)

Table A13: Buildings: Emissions (Mt CO2 eq)

Table A14: Buildings: Drivers (million households and million m2 floor space)

Table A15: Agriculture Sector: Emissions (Mt CO2 eq)

Table A16: Waste and Others: Emissions (Mt CO2 eq)

Table A17: Carbon Dioxide Emissions Projections by Economic Sector (Mt CO2 eq)

Table A18: Methane Emissions Projections by Economic Sector (Mt CO2 eq)

Table A19: Nitrogen Dioxide Emissions Projections by Economic Sector (Mt CO2 eq)

Table A20: Hydrofluorocarbon Emissions Projections by Economic Sector (Mt CO2 eq)

Table A21: Perfluorocarbon Emissions Projections by Economic Sector (Mt CO2 eq)

Table A22: Sulpher Hexafluoride Emissions Projections by Economic Sector (Mt CO2 eq)

Table A23: Total GHGs from Foreign Passenger and Freight, Aviation and Marine (Mt CO2 eq)

Table A24:  Provincial and Territorial Reference Case Emissions: 2005 to 2030 (Mt CO2 eq)

Table A25: Macroeconomic Assumptions, 2005-2030 Average Annual Growth Rates

Table A26: Crude Oil Production in Thousands of Barrels per Day

Table A27: Oil Sands Disposition in Thousands of Barrels per Day

Table A28: Natural Gas Production and Supply in Billion Cubic Feet

Table A29: Utility Electricity Generation by Fuel, Terawatt-hours

Table A30: GHG Measures Reflected in Projections (in place as of November 2016)

Table A31: Economic Growth and Population from 2014 to 2030

Table A32: Oil and Gas Price and Production in 2020 and 2030

Table A33: Sensitivity of GHG Emissions to Changes in GDP and Price (excluding LULUCF) in Mt CO2 eq

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Emissions projections by sector

This section describes projected emissions by sectors defined by the Intergovernmental Panel on Climate Change (IPCC), by type of greenhouse gas, economic sector and subsector.

Table A1 Detailed Emissions Projections by IPCC Sector (Mt CO2 eq)
SectorHistoricalProjected
20052010201420202030
Stationary Combustion and Fugitive Sources403371391389392
Transport195199203201192
Industrial Processes5850515974
Agriculture6157595960
Waste3129292323
Total747706732731742

Note: Numbers may not sum to the total due to rounding.

Table A2 Detailed Emissions by Type of Gas (Mt CO2 eq)
SectorHistoricalProjected
20052010201420202030
Carbon dioxide (CO2)579555574577577
Methane (CH4)116104108100103
Nitrous oxide (N2O)4138393940
Hydrofluorocarbons (HFC)6791419
Perfluorocarbons (PFC)42112
Sulfur hexafluoride (SF6)10000
Total747706732731742

Note: Numbers may not sum to the total due to rounding.

Table A3 Comparison of 2016 and 2015 Emissions by Intergovernmental Panel on Climate Change (IPCC) Sector (Mt CO2 eq)
SectorHistorical2015 Projection2016 ProjectionChange
2005202020302020203020202030
Stationary Combustion and Fugitive Sources403417450389392-28-58
Transport195204198201192-3-6
Industrial Processes5866845974-7-10
Agriculture6160615960-1-1
Waste312122232321
Total747768815731742-37-73

Note: Numbers may not sum to the total due to rounding.

Table A4 Comparison of 2016 and 2015 Emissions by Type of Gas (Mt CO2 eq)
SectorHistorical2015 Projection2016 ProjectionChange
2005202020302020203020202030
CO2579608643577577-31-66
CH4116103104100103-3-1
N2O4140423940-1-2
HFC6142214190-3
PFC42212-10
SF61000000
Total747768815731742-37-73

Note: Numbers may not sum to the total due to rounding.

Table A5 Change in GHG Emissions by Economic Sector (Mt Co2eq)
Sector2005201420202030Change
2005 to 2020
Change
2005 to 2030
Electricity118786434-53-84
Transportation171171168157-3-14
Oil and Gas1591922012334273
Heavy Industry88768597-49
Buildings8587899449
Agriculture7073727424
Waste & Others56545153-5-3
Total747732731742-16-6

Note: Numbers may not sum to the total due to rounding.

Detailed Economic Sector Tables

Table A6 Oil and Gas Sector: Emissions by Production Type (Mt Co2 eq)Footnote 4
 2005201420202030Change
2005 to 2020
Change
2005 to 2030
Natural Gas Production and Processing58575056-9-3
Conventional Oil Production3136313201
Light Oil Production
1217141624
Heavy Oil Production
17171615-2-2
Frontier Oil Production
22210-1
Oil SandsFootnote 43468871085374
Bitumen In Situ
83038573049
Bitumen Mining
101826271717
Bitumen Upgrading
1620232568
Oil and Natural Gas Transmission1210910-3-3
Downstream Oil and Gas2323232300
Petroleum Products
2221222200
Natural Gas Distribution
111100
Liquid Natural Gas Production000303
Total1591922012334273

Note: Numbers may not sum to the total due to rounding.

Table A7 Selected Upstream Oil and Natural Gas Subsectors: Emissions and Drivers
 2005201420202030
Conventional Oil Production    
Emissions (Mt CO2 eq)
31363132
Production (1,000 barrels/day)
1,3611,4011,3091,247
Natural Gas Production and Processing    
Emissions (Mt CO2 eq)
58575056
Gross Production (billion cubic feet)
7,7536,8296,3197,366
Oil SandsFootnote 4    
Emissions (Mt CO2 eq)
346887108
Production (1,000 barrels/day)
1,0662,3063,2203,967

Note: Numbers do not include C5 and condensates.

Table A8 Petroleum Refining: Emissions and Drivers
Traditional Refineries2005201420202030
Emissions (Mt CO2 eq)22212222
Refined Petroleum Processed (1,000 barrels/day)2,0951,9522,0332,033
Table A9 Electricity Generation: Emissions by Fuel Type (Mt CO2 eq)
 2005201420202030Change
2005 to 2020
Change
2005 to 2030
Coal  9762 52 8 -45 -90
Refined Petroleum Products  115 3 2 -9 -9
Natural Gas  912 9 24 0 15
Biomass  <1 <1 <1 <1 0 0
 Total 118 78 64 34 -53 -84

Note: Numbers may not sum to the total due to rounding.

Table A10 Electricity Sector: Emissions and Drivers
 2005201420202030
Emissions (Mt CO2 eq)118786434
Generation (Terawatt Hours)550580595607
Table A11 Transportation: Emissions (Mt CO2 eq)
 2005201420202030Change
2005 to 2020
Change
2005 to 2030
Passenger Transport97958973-8-24
Cars, Trucks and Motorcycles
88868064-8-25
Bus, Rail and Domestic Aviation
999901
Freight Transport62687073711
Heavy Duty Trucks, Rail
55626366811
Domestic Aviation and Marine
8677-10
Other: Recreational, Commercial and Residential119911-2-1
Total171171168157-3-14

Note: Numbers may not sum to the total due to rounding.

Table A12 Heavy Industry: Emissions by Subsector (Mt CO2 eq)
 2005201420202030Change
2005 to 2020
Change
2005 to 2030
Mining6891034
Smelting and Refining (Non-ferrous metals)14101215-21
Pulp and Paper9787-1-2
Iron and Steel19161721-21
Cement13101011-3-2
Lime and Gypsum3323-1-1
Chemicals and Fertilizers2324273137
Total88768597-49

Note: Numbers may not sum to the total due to rounding.

Table A13 Buildings: Emissions (Mt CO2 eq)
 2005201420202030Change
2005 to 2020
Change
2005 to 2030
Residential46464546-10
Commercial4041444959
Total8587899449

Note: Numbers may not sum to the total due to rounding.

Table A14 Buildings: Building Stock (million households and million m2 floor space)
 2005201420202030Change
2005 to 2020
Change
2005 to 2030
Residential: households (millions)1214151634
Commercial: floorspace (millions m2)654750804920150266
Table A15 Agriculture Sector: Emissions (Mt CO2 eq)
 2005201420202030Change
2005 to 2020
Change
2005 to 2030
On-Farm Fuel Use914131455
Crop Production1722212155
Animal Production45373739-8-6
Total7073727424

Note: Numbers may not sum to the total due to rounding.

Table A16 Waste and Others: Emissions (Mt CO2 eq)
 2005201420202030Change
2005 to 2020
Change
2005 to 2030
Waste31292323-7-8
Coal Production344311
Light Manufacturing, Construction and Forest Resources2322242724
Total56545153-5-3

Note: Numbers may not sum to the total due to rounding.

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Detailed emissions by gas and by economic sector

Table A17 Carbon Dioxide Emissions Projections by Economic Sector (Mt CO2 eq)
SectorHistoricalProjected
19901995200020052010201420202030
Oil and Gas7083103112119143156184
Electricity949712811794776433
Transportation124131147161165165162152
Heavy Industry7278817870738091
Buildings6873787872777574
Agriculture810111012151515
Waste & Others2725252323232627
Total463497572579555574577577

Note: Numbers may not sum to the total due to rounding.

Table A18 Methane Emissions Projections by Economic Sector (Mt CO2 eq)
SectorHistoricalProjected
19901995200020052010201420202030
Oil and Gas3649554742484447
Electricity00000000
Transportation10000000
Heavy Industry00000000
Buildings44433333
Agriculture2731333630292930
Waste & Others2728293029282322
Total95113121116104108100103

Note: Numbers may not sum to the total due to rounding.

Table A19 Nitrous Oxide (Mt CO2 eq)
SectorHistoricalProjected
19901995200020052010201420202030
Oil and Gas01111122
Electricity11111000
Transportation56775444
Heavy Industry1212342222
Building11111111
Agriculture2224252526292828
Waste & Others22222222
Total4246404138393940

Note: Numbers may not sum to the total due to rounding.

Table A20 Hydrofluorocarbon Emissions Projections by Economic Sector (Mt CO2 eq)
SectorHistoricalProjected
19901995200020052010201420202030
Oil and Gas00000000
Electricity00000000
Transportation00122320
Heavy Industry10000011
Buildings0023461017
Agriculture00000000
Waste & Others00000011
Total1136791419

Note: Numbers may not sum to the total due to rounding.

Table A21 Perfluorocarbon Emissions Projections by Economic Sector (Mt CO2 eq)
SectorHistoricalProjected
19901995200020052010201420202030
Oil and Gas00000000
Electricity00000000
Transportation00000000
Heavy Industry86542112
Buildings00000000
Agriculture00000000
Waste & Others00000000
Total86542112

Note: Numbers may not sum to the total due to rounding.

Table A22 Sulphur Hexafluoride Emissions Projections by Economic Sector (Mt CO2 eq)
SectorHistoricalProjected
19901995200020052010201420202030
Oil and Gas00000000
Electricity00000000
Transportation00000000
Heavy Industry32310000
Buildings00000000
Agriculture00000000
Waste & Others00000000
Total32310000

Note: Numbers may not sum to the total due to rounding.

The Table below presents the historical and projected emissions from foreign passenger and foreign freight (both aviation and marine). These emissions are not included in the reference scenario.

Table A23 Total GHGs from Foreign Passenger and Freight, Aviation and Marine (Mt CO2 eq)
SectorHistoricalProjected
19901995200020052010201420202030
Foreign Freight45554333
Foreign Passenger55888101011
Table A24: Provincial and Territorial Reference Case Emissions: 2005 to 2030 (Mt CO2 eq)
Provinces2005201420202030Change
2005 to 2020
Change
2005 to 2030
Newfoundland10111080-2
Prince Edward Island222200
Nova Scotia23171412-10-11
New Brunswick20151514-6-7
Quebec*90838586-5-3
Ontario*211170168170-43-40
Manitoba2121222323
Saskatchewan7076736930
Alberta2332742762794346
British Columbia65636575010
Territories2222-10
Canada747732731742-16-6

Note: Numbers may not sum to the total due to rounding.

* These estimates represent domestic emissions. As such, they do not include potential allowances purchased internationally under the Western Climate Initiative cap-and-trade program. Ontario and Quebec have legislated GHG emissions targets for 2020 and 2030. Both provinces have regulated emissions caps to achieve their 2020 targets, Ontario's target being 15% below 1990 and Quebec being 20% (representing, as of the 2014 Canadian inventory, the equivalent of 155 Mt and 71 Mt, respectively). The provinces will use a combination of new domestic policies and international allowances to meet their legislated targets. The impact of Ontario and Quebec’s acquisition of international allowances will be additional to reductions shown in Table A24, and have been included in the measures described on page 45 of the Pan-Canadian Framework on Clean Growth and Climate Change.

Table A25 Macroeconomic Assumptions, 2005-2030 Average Annual Growth Rates
Assumption2005-20142014-20202020-2030
Average Annual GDP Growth Rate1.6%1.7%1.6%
Average Annual Population Growth Rate1.1%1.0%0.9%
Average Annual Labour Force Growth Rate1.1%0.7%0.6%

Oil and natural gas production assumptions for the Reference case are noted in the tables below. Oil and natural gas price and production forecasts are from the National Energy Board’s most recent forecast presented in its Energy Futures 2016: Update – Energy Supply and Demand Projections to 2040, October 2016.

Table A26 Crude Oil Production in Thousands of Barrels per Day
Crude Oil Production2005201420202030
Crude and Condensates1,5331,5881,5471,513
Conventional Light
511712578652
Conventional Heavy
526462442438
C5 and Condensates
173186239266
Frontier Light (Offshore and Northern)
324227289157
Oil Sands1,0662,3063,2203,967
Oil Sands: Primary
151285329394
Steam Assisted Gravity Drainage
837371,0001,566
Cyclic Steam Simulation
205244309405
Oil Sands Mining
6271,0391,5821,602
Total Production (Gross)2,5993,8934,7675,479

Note: Numbers may not sum to the total due to rounding.

Table A27 Oil Sands Disposition in Thousands of Barrels per Day
Oil Sands Disposition2005201420202030
Oil Sands (gross)1,0662,3063,2203,967
Oil Sands (net)
9802,1913,0843,824
Synthetic
6111,0271,2621,381
Non-upgraded Bitumen
3691,1641,8222,443
Own Use
86115136143

Note: Numbers may not sum to the total due to rounding.

Table A28 Natural Gas Production and Supply in Billion Cubic Feet
Natural Gas Production2005201420202030
Natural Gas Supply6,5956,1156,4907,641
Marketable Gas
6,2635,3425,4066,371
Gross Production
7,7536,8296,3197,366
Own Use Consumption
1,4901,486913995
Imports
3327731,0831,270
Liquid Natural Gas Production000912

Note: Numbers may not sum to the total due to rounding.

Table A29 Utility Electricity Generation by Fuel, Terawatt-hours
Fuel2005201420202030
Coal and Petroleum Coke98675711
Hydro327348374392
Natural Gas21292360
Nuclear871028674
Other Renewables4305369
Refined Petroleum Products14521
Total Generation550580595607

Note: Numbers may not sum to the total due to rounding.

Table A30 GHG Measures Reflected in Projections (in place as of November 2016)
Provincial/Territorial Measures
Alberta
  • Climate Leadership Plan:
    • Carbon levy
    • Coal Phase-Out
    • Emission performance standards and limits for oil sands
    • Renewable Electricity Program
  • Renewable fuels standard
  • Microgeneration regulation
  • Bioproducer and public transit programs
  • Quest carbon capture and storage project
  • Carbon Trunk Line Project – CO2 capture and use for enhanced oil recovery
British Columbia
  • Carbon tax
  • Renewable and low carbon fuel requirements regulation
  • Emissions offsets regulation
  • Landfill gas management regulation
  • British Columbia Clean Energy Act: Clean or renewable electricity requirement – 93% of electricity from clean or renewable sources
Manitoba
  • Ethanol sales mandate
  • Biodiesel mandate
  • Emissions tax on coal
New Brunswick
  • Renewable portfolio standard
Newfoundland and Labrador
  • Muskrat Falls hydro project
Nova Scotia
  • Renewable portfolio standard for electricity generation
  • Electricity demand-side management policies
  • Solid Waste-Resource Management Regulations
  • Cap on GHG emissions from the electricity sector
Ontario
  • Western Climate Initiative cap-and-trade regime
  • Residential electricity peak savings (time-of-use pricing)
  • Feed-in tariff program
  • Landfill gas regulation (O. Reg. 216/08 and 217/08)
  • Coal phase-out
  • Independent Electricity System Operator contracted electricity supply
  • Ethanol in gasoline rules
  • Nuclear refurbishment
Quebec
  • Western Climate Initiative cap-and-trade regime
  • 5% ethanol objective in gasoline distributors fuel sales
  • Drive electric program
  • Landfill gas regulation
  • Eco-performance program for industry
Saskatchewan
  • Ethanol fuel program
  • Renewable diesel program
  • Boundary Dam 3 Carbon Capture Project
Federal Measures
  • Reduction of carbon dioxide emissions from coal-fired generation of electricity regulations announced in 2012
  • Residential building code changes to incorporate energy efficiency for adoption by provinces across Canada
  • Commercial building code changes to incorporate energy efficiency for adoption by provinces across Canada
  • Renewable Fuels Regulations
  • Federal Budget 2016: Supporting Energy Efficiency and Renewable Energy Development.  Increase efficiency of residential and commercial devices (including refrigeration, freezers, ranges, dryers) through regulations and ENERGY STAR certification
  • Light-duty vehicles 1 (LDV-1) GHG emissions standards for the light-duty vehicle model years 2011 to 2016
  • Light-duty vehicles 2 (LDV-2) GHG emissions standards increases stringency for model years 2017 to 2025
  • Heavy-duty vehicles (HDV) GHG emissions standards for heavy-duty vehicle model years 2014 to 2018
  • The pulp and paper green transformation program, to improve environmental performance of mills including GHG emissions reductions; the program ended in 2012 but will result in ongoing emission reductions
  • Incandescent lighting phase-out
  • Voluntary emission reductions for planes and trains

 

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Alternate emissions scenarios

Given the uncertainty regarding the key drivers of greenhouse gas (GHG) emissions, the Reference Case presented in the previous section should be seen as one estimate within a set of possible emissions outcomes in the projection period, as events that will shape emissions and energy markets cannot be fully anticipated. In addition, future developments in technologies, demographics and resources cannot be foreseen with certainty. The variation in these complex economic and energy variables implies that modelling results are most appropriately viewed as a range of plausible outcomes. Environment and Climate Change Canada addresses this uncertainty via modelling and analysis of alternate cases that focus on variability in two key factors: future economic growth projections and the evolution of oil and natural gas prices and production as per the National Energy Board’s high and low forecast scenarios. These assumptions are presented in Tables A31 and A32, and the overall range of emissions is presented in Table A33.

Table A31 Economic Growth and Population from 2014 to 2030
Assumption2014 to 20202020 to 2030
LowReferenceHighLowReferenceHigh
Average Annual GDP Growth Rate1.4%1.6%2.1%0.8%1.7%2.4%
Average Annual Population Growth Rate0.7%1.0%1.2%0.5%0.9%1.2%
Table A32 Oil and Gas Price and Production in 2020 and 2030
Assumption20202030
LowReferenceHighLowReferenceHigh
Crude Oil Price: WTI (2014 US$/bbl)3664854281111
Crude Oil Price: WCS (2014 US$/bbl)174260286289
Crude Oil Production (1000 bbl/day)447045294705466252145986
Natural Gas Price: Henry Hub (2014 US$/GJ)2.433.093.922.893.724.62
Natural Gas Production (Billion cubic feet)570663197183600873669758

*Numbers do not include C5 and condensates

Table A33 Sensitivity of GHG Emissions to Changes in GDP and Price (excluding LULUCF) in Mt CO2 eq
Scenario202020302020 Projection -
2005 Emission
2030 Projection -
2005 Emission
Slow GDP, Low World Oil and Gas Prices720697-27-51
Fast GDP, High World Oil and Gas Prices747790043
Reference Scenario731742-16-6
Sensitivity Range720 to 747697 to 790-27 to 0-51 to 43

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Methodology and modelling assumptions

The approach to developing Canada’s greenhouse gas (GHG) emissions projections is in line with generally recognized best practices and involves two main features:

  1. Using the most up-to-date statistics on GHG emissions and energy use, and sourcing key assumptions from the best available public and private expert sources; and
  2. Developing scenarios of emission projections using a detailed, Energy, Emissions and Economy Model for Canada (E3MC). E3MC has two components: Energy 2020, which incorporates Canada’s energy supply and demand structure, and the in-house macroeconomic model of the Canadian economy. For more information on the models and methodology, please see Canada’s Emissions Trends 2014.

Modelling estimates are subject to consultations with various stakeholders, including provincial and territorial governments, to review modelling assumptions, implemented policies and measures and emission estimates. Modelling assumptions also undergo a periodic external review process.

In addition to annual data updates, improvements to the E3MC modelling methodology are periodically undertaken to provide better estimates of energy and emissions. Some key improvements since Canada’s Second Biennial Report are the following:

  • Emissions factors associated with LNG production, heavy duty vehicles (HDV) and residential wood waste combustion were revised;
  • The natural gas pipeline economic driver was changed from national natural gas production to provincial natural gas demand or provincial natural gas production depending on the region of the country;
  • Forecasted British Columbia natural gas processing CO2 emissions from venting were reduced to account for lower CO2 content in provincial gas deposits;
  • Some additional utility-owned cogeneration emissions were allocated to the economic sectors in which they occur;
  • Fuel consumption used in cogeneration was split between heat and electricity production for sectors previously lacking a split;
  • Cogeneration from manufacturing sectors was adjusted to grow at the same rate as electricity demand in these sectors;
  • Off-grid electricity generation and demand were added to Alberta oil sands and Newfoundland frontier oil production;
  • A new 100 MW electric transmission intertie between Saskatchewan and Manitoba was added in 2020;
  • Historical data for electricity generation from solar, wind, landfill gas and industrial hydroelectricity was revised upward;
  • Projections of Quebec electric vehicle sales out to 2030 were utilized in modeling;
  • Phase-outs of hydrofluorocarbons (HFCs) in vehicle air conditioning and electric vehicle uptake were incorporated as compliance mechanisms by vehicle manufacturers in the light duty vehicle regulations;
  • Projected HFC growth rates were differentiated between buildings and transportation sectors;
  • Endogenous technology change was added to the building sector;
  • Historical building device efficiencies were revised;
  • Biological treatment of solid waste was added as a new emission source.

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Oil price assumptions

Although oil prices have declined recently, there is significant uncertainty around how these changes will affect longer-term oil production. The emissions projections for the Reference Case in this report incorporate the National Energy Board’s integrated forecasts of oil and other energy prices and production from its report, National Energy Board’s most recent forecast presented in Canada’s Energy Future 2016: Update – Energy Supply and Demand Projections to 2040, October 2016. The National Energy Board’s expectation of medium-term recovery of oil prices is consistent with other major price forecasts.

Greenhouse gas (GHG) emissions are driven by oil production rather than price. While an expectation of lower oil prices for the foreseeable future does have the effect of reducing oil production forecasts, increases in the productivity of oil production have reduced this impact in the National Energy Board’s projections. Furthermore, existing oil sands production will likely continue due to substantial existing investments and the long time horizon of projects.

Finally, lower oil prices will lead to higher emissions as a result of an increase in energy demand from other sectors. Thus, any drop in GHG emissions in the oil-producing sector would be partially offset by a rise in emissions from other sectors.

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Key assumptions

Greenhouse gas (GHG) emissions projections depend on a number of economic and energy variables and are subject to significant uncertainty, especially in the longer term. The emissions projections reference case is designed to incorporate the best available information about economic growth as well as energy demand and supply into the future. The projections capture the impacts on GHG emissions of future production of goods and services in Canada.

Historical data on key macroeconomic variables, such as gross domestic product (GDP), population, and consumer price indices are obtained from Statistics Canada. Statistics Canada also produces the historical energy data used in the model in the Report on Energy Supply and Demand. The latest historical GHG emissions are obtained from the 2016 National Inventory Report (NIR).

In the forecast, key macroeconomic variables in the model such as GDP, the exchange rate, and inflation are aligned to Finance Canada’s projections. The economic projections to the year 2021 are calibrated to Finance Canada’s Fall Economic Statement 2016. The outer years (2022-2030) are based on Finance Canada’s 2014 Update of Long-Term Economic and Fiscal Projections. Population growth projections are obtained from Statistics Canada. Forecasts of oil and natural gas price and production are taken from the National Energy Board (NEB)’s Canada’s Energy Future.

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