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Canada’s NDC Targets and Climate Action: Challenges and Opportunities
Context:
Canada has recently announced its Nationally Determined Contribution (NDC) target to reduce greenhouse gas (GHG) emissions by 45-50% by 2035 compared to 2005 levels. While this is a step towards climate mitigation, Canada’s continued reliance on fossil fuel production raises concerns about achieving this target.
Canada’s NDC Target
- New Target: Canada aims to reduce its GHG emissions by 45-50% by 2035 from 2005 levels.
- Projected Emissions: By 2035, Canada’s emissions are expected to be in the range of 380.5-418.5 megatonnes of CO2-equivalent (MtCO2eq).
- Plan Development: Like the United Kingdom, Canada has provided a headline target but will release a detailed plan before February 2025.
Global and Historical Context
- Global Share: Canada was responsible for 1.5% of total global GHG emissions in 2023.
- Historical Polluter: Since 1870, Canada has contributed 1.96% of the total global CO2 emissions.
- Per Capita Emissions: Canada consistently ranks among the highest per capita GHG emitters, with emissions three times the global average.
- Equity and CBDR: Canada’s NDC must be viewed through the lens of equity and common but differentiated responsibilities (CBDR), as outlined in Article 2 of the Paris Agreement.
- Insufficient Targets: According to the Climate Action Tracker, Canada’s 2030 NDC is insufficient to limit global warming to 1.5°C.
Transportation Sector
- Major Contributor: The transportation sector is one of the largest sources of CO2 emissions, contributing 31% of Canada’s total energy-related emissions in 2022.
- Zero-Emission Vehicles (ZEVs): Canada announced timebound sales targets:
- 20% ZEV sales by 2026
- 60% ZEV sales by 2030
- 100% ZEV sales by 2035
- Challenge: Despite positive developments in ZEV adoption, Canada’s heavy reliance on fossil fuels remains a significant barrier.
Canada’s Fossil Fuel Dependence
- Energy Mix: In 2023, fossil fuels accounted for 76% of Canada’s total energy supply.
- Oil and Gas Production:
- Global Ranking: Canada ranked 4th in oil production and 5th in natural gas production in 2023.
- Crude Oil Growth: Production increased by 129% between 2000 and 2023.
- Energy Contribution: Crude oil made up 51% of Canada’s energy mix in 2023.
- Key Projects:
- Transmountain Pipeline: A major expansion project expected to triple crude oil production capacity, with costs reaching $30 billion.
- Bay du Nord: A $12 billion offshore oil extraction project approved by the government.
- LNG Canada: A massive $40 billion natural gas pipeline project spanning 670 kilometers.
Role of Financial Institutions
- Banking Support:
- Royal Bank of Canada (RBC): Ranked as the seventh-largest fossil fuel funder globally since the Paris Agreement.
- Top 20 Banks: Four other Canadian banks are also among the world’s top 20 fossil fuel financiers.
- Climate Contradictions: Financial institutions play a key role in funding oil and gas projects, further contradicting Canada’s climate commitments.
Canada’s Fair Share Analysis
- Emission Reduction Needs: Canada must reduce its GHG emissions by 80% by 2035 to meet its fair share, as per Climate Action Network Canada.
- Climate Finance Contribution: Canada should contribute $43 billion annually during 2025-2035 for international climate mitigation efforts.
- Future Projections: Canada is on track to become the second-largest oil and gas producer globally between 2023 and 2050, according to Oil Change International.
Use of Carbon Markets in NDCs
- Plan Exploration: Canada has indicated an interest in using Internationally Transferred Mitigation Outcomes (ITMOs) or emission offsets to support international mitigation actions.
- Global Precedents: Countries such as Switzerland, Singapore, South Korea, Japan, and Sweden have signed over 100 bilateral agreements to acquire mitigation credits for meeting NDC targets.
- Emerging Demand: Although demand for carbon credits in the first NDC period remained low (200 million tonnes CO2e), future reliance on market mechanisms is expected to grow.
- Risks of Carbon Markets:
- The Article 6-based carbon market framework lacks robust accountability mechanisms.
- Deviations from commitments carry minimal consequences, raising questions about the framework’s effectiveness.
