Canada's Mid-Century long-term low-greenhouse gas Development Strategy

1.1 Most Canadians recognise the need to mitigate climate change and limit the increase in the global average temperature, but the magnitude of the challenge is less well understood, with a requirement for very deep emissions cuts from every sector by mid-century. Canada played a leadership role in advancing the adoption of the Paris Agreement and supporting the global temperature goal of holding the increase in the global average temperature to well below 2°C and pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels. Ensuring that the global temperature remains well below 2°C will require global greenhouse gas emissions to peak as soon as possible with a rapid decline in emissions thereafter. It will also require fast concurrent actions on short-lived climate pollutants (SLCPs) (see chapter 5). The latest assessment report from the Intergovernmental Panel on Climate Change (IPCC) relied on a range of models to examine feasible scenarios for global emissions trajectories consistent with limiting global warming to less than 2°C. Building from this analysis, a recent study from the United Nations Environment Programme (2015)1 found that scenarios consistent with limiting warming to 2°C, with a >66% chance, reach net zero global anthropogenic carbon dioxide emissions by about 2070, while those consistent with limiting warming to 1.5°C with a > 50% chance reach net zero carbon dioxide emissions by about 2050. 1 United Nations Environment Programme, Emissions Gap Report 2015. 8 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY Net “negative” carbon dioxide emissions (i.e., more increases of 4°C or more above preindustrial levels, emissions are sequestered through anthropogenic consistent with expected levels by 2100 under a means than released to the atmosphere) would business-as-usual scenario. These risks include then be required later in the century to meet substantial species extinction, large risks to global the temperature goal. Negative carbon dioxide and regional food security, and compromised emissions may be achieved, for example, with large- normal human activities such as growing food or scale afforestation or bioenergy with carbon capture working outdoors due to the combination of high and storage. Negative CO2 emissions are required in temperature and humidity. These risks are reduced these scenarios to offset hard-to-mitigate non-CO2 substantially under scenarios which limit global emissions (e.g., methane and nitrous oxide emissions warming to 2°C or lower.3 associated with food production), in order to achieve net zero global anthropogenic GHG emissions. Several studies have shown that the cost to address climate change decreases if early action is taken. In terms of total greenhouse gas emissions, according For example, in 2014, the White House’s Council of to the IPCC’s Fifth Assessment Report, a limited Economic Advisers published a report stating that number of studies provide scenarios that are more for the same level of temperature stabilisation, each likely than not to limit warming to 1.5°C by 2100; these decade of delayed mitigation effort leads to a scenarios are characterized by GHG concentrations 40% increase in net mitigation costs.4 A 2012 Navius below 430 ppm CO2-eq by 2100 and 2050 emission Research report, which considered the implications reduction between 70% and 95% below 2010.2 of policy delay in the context of an aggressive 2050 target, suggested that a delay in domestic GHG In this context, the United States noted that its policy action from 2012 to 2020 could cost Canada Intended Nationally Determined Contribution target an additional $87 billion over the 2020 to 2050 period, is consistent with a straight line emission reduction which represents an increase of about 27% in the cost pathway from 2020 to deep, economy-wide emission of abatement. 5 reductions of 80% or more by 2050. Other jurisdictions such as Japan and the EU have adopted similar In addition, several studies suggest that the benefits goals. For the purpose of the Mid-Century Strategy, of mitigation action can often outweigh the cost Canada examines an emissions abatement pathway over the long run in terms of energy and fuel savings consistent with net emissions falling by 80% from though resource efficiency gains. For example, a 2005 levels. recent New Climate Economy Report shows that cities globally could save $16.6 trillion over the 2015- 2050 period through investments in projects such as

1.2 Mitigating greenhouse gas emissions is mass transit and energy efficient buildings.6 Although necessary to avoid the increasing threat there is inherent uncertainty around predicting presented by climate change. Benefits of far into the future, the agreement in the literature action to reduce climate risk will outweigh reinforces the point that early action on climate costs and the international community change is crucial to reducing the overall cost of is moving towards low-greenhouse gas climate change over time. economies. A particular focus on short- lived climate pollutants is also required if we are to stay below the 1.5°C - 2°C 1.3 Canada has worked closely temperature goal. with the United States and Mexico in the development of this report. The consequences of inaction to reach the Our continental partners have also temperature goals are severe, and will have an described ambitious mitigation action impact on the global environment, health, and quality by 2050 in their respective strategies. of life. The global average temperature is projected to continue to increase well beyond 2°C over the 21st As described in the Leaders’ Statement on a North century if no further action is taken. With some regions American Climate, Clean Energy, and Environment of the world experiencing severe effects earlier than 3 Intergovernmental Panel on Climate Change, Climate Change others, including in some of the most vulnerable areas. 2014; Impacts Adaptation and Vulnerability. 4 Executive Office of the President of the United States, The Cost of The IPCC concluded that global climate change risks Delaying Action to Stem Climate Change. 5 Navius Research Inc., Investment and Lock-In Analysis for are high to very high with global mean temperature Canada: Low Carbon Scenarios to 2050. 6 Global Commission on the Economy and Climate, The 2 IPCC, Climate Change 2014: Synthesis Report. Sustainable Infrastructure Imperative: Financing for Better Growth Summary for Policymaker and Development. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 9 Partnership, North America has the capacity, resources, and the moral imperative to show strong leadership building on the Paris Agreement, which entered into force on November 4, 2016. We recognize that our highly integrated economies and energy systems afford a tremendous opportunity to harness growth in our continuing transition to a clean energy economy. Our actions to align climate and energy policies will protect human health and help level the playing field for our businesses, households, and workers. In recognition of our close ties and shared vision, Canada has worked closely with the U.S. and Mexico in the development of this report, including sharing analyses and key insights. Our partners’ respective Mid-Century Low-GHG Emissions Development Strategies outline ambitious mitigation action by 2050.

1.4 Encouraging international efforts, including reducing emissions in other countries will be key to the global response. The Paris Agreement recognises that addressing climate change through adaptation, technology, and capacity building will require significant international cooperation and finance, especially in the context of sustainable development. International collaboration is also fundamental to building an innovation and knowledge based economy. Collaboration on technology innovation will underpin successful global efforts. The Carbon Trust, a global leading think tank on GHG emissions and energy technologies, was commissioned by the United Kingdom to analyse the benefits of energy technology innovation. Their paper United Innovations concludes that through collaborative energy technology innovation, “the world could save US$550 billion on the cost of deploying clean energy technologies over the next decade”. International cooperation to mitigate greenhouse gas emissions will be fundamental to limiting temperature rise. This is because GHG abatement costs differ substantially from sector to sector and jurisdiction to jurisdiction, but the environmental benefits of reducing a given amount of emissions are always the same. Cooperating to mitigate emissions in the most cost effective areas will ensure that financial resources are used in the most efficient way, resulting in larger reductions in emissions per unit of capital investment. 10 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY Article 6 of the Paris Agreement recognises that 1.5 Working collaboratively with Indigenous countries may choose to use internationally peoples by supporting their on-going transferred mitigation outcomes, including emissions implementation of climate change trading, to help access more cost effective initiatives will be key. Consultations with abatement opportunities, as well as to help Indigenous communities must respect other countries mitigate emissions and promote the constitutional, legal, and international sustainable development. International market- obligations that Canada has for its based approaches to reduce emissions (e.g., linked Indigenous peoples. cap-and-trade programs; bilateral cooperative approaches; etc.) can stimulate cost effective and There are a number of statements and agreements7 economically efficient greenhouse gas mitigation. that highlight Canada’s commitment to consult, Some regions of the world, including subnational collaborate, and engage Indigenous peoples. Work to governments, are already working cooperatively, address climate change and related interactions with or link carbon markets. These “bottom-up” type Indigenous peoples, must be consistent with Canada’s approaches could continue to develop and grow approach to implementing the United Nations moving forward. For example, the province of Declaration on the Rights of Indigenous peoples, in Quebec has linked its emission trading system to accordance with Canada’s constitution. California’s through the Western Climate Initiative, This is especially relevant given the disproportionate with other subnational regions planning or challenges that First Nations, Inuit, and Métis considering doing the same. By 2050, it is hoped that communities face because of climate change. Despite there will be an international emissions trading system the changes that are facing both traditional resources in place that would ensure robust environmental and the land, indigenous citizens and communities integrity and transparency at a global level. alike are taking tangible steps to become active In Canada, there are challenges to reducing drivers of change. For them, building resilience in the greenhouse gas emissions from emissions-intensive face of climate change is fundamentally about food, heavy industry, primary extraction, and certain water, and energy independence, where Indigenous applications in the transportation sector. In the short- communities are self-sufficient. to-medium term, there may be more cost effective Indigenous peoples, communities, and organisations GHG reduction opportunities in other sectors or across Canada are implementing a range of climate regions, where abatement technologies are more change initiatives.8 Above and beyond renewable effective or lower-GHG alternatives exist. Emissions energy projects, Indigenous peoples are implementing trading, or accessing internationally transferred ground-breaking initiatives on sustainable land use mitigation outcomes, can provide a lower cost management, food security, and education informed method of reducing GHG emissions, allowing more by traditional values. Advancing cross-cultural learning time for GHG intensive capital stock to turn over on climate change mitigation and adaptation is one and allow low-carbon alternatives to be introduced step in the journey towards reconciliation in Canada. without stranding assets. Canada recognises that sustainable development is a key principle pertinent In order to move forward, Canada will encourage the to this type of cooperation. Canada will consider development of green infrastructure in northern and internationally transferred mitigation outcomes as remote Indigenous communities. It is also important a short-to-medium term complement to reducing for municipalities, provinces and territories to promote emissions at home. Likewise, Canada intends to take energy security for Indigenous peoples. For example, into account internationally transferred mitigation through its Feed-in Tariff program, Ontario has been outcomes arising from cross-border subnational able to set aside 10% for community and Indigenous emission trading as part of its international engagement in renewable energy projects, with many contribution to addressing climate change. Indigenous communities as partners or owners in renewable energy systems as a result.9 7 For example: the United Nations Framework Convention on Climate Change’s Paris Agreement; the Vancouver Declaration; the Leader’s Statement on a North American Climate, Clean Energy, and Environment Partnership. 8 Scurr, C., and Beaudry, J., Gap Analysis First Nations Climate Change Adaptation South of 60 Degrees Latitude. 9 Indigenous Economic Development Indigenous Affairs Working Group, Ontario Aboriginal Energy Partnerships Program. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 11

1.6 The Mid-Century Strategy will help inform develop and implement strong, complementary the pan-Canadian framework (PCF) for adaptation policies and action on climate resilience clean growth and climate change. to address climate risks facing our populations, infrastructure, economies and ecosystems, and On March 3, 2016, Canada’s First Ministers and Canada’s northern regions in particular. Indigenous Leaders met in Vancouver and committed to developing a concrete plan to achieve Canada’s Mid-Century Strategy will help inform Canada’s international greenhouse gas reduction the pan-Canadian framework for Clean Growth commitments through a pan-Canadian framework and Climate Change, but does not outline any for clean growth and climate change. Canada’s further specific policies. Instead, Canada’s Mid- First Ministers released the Vancouver Declaration Century Strategy outlines potential GHG abatement in which they agreed to build on commitments and opportunities, emerging key technologies, and actions already taken by provinces and territories in identifies areas where emissions reductions will be order to meet or exceed Canada’s GHG emissions more challenging and require policy focus – in target for 2030. They highlighted the need to foster the context of achieving very low greenhouse gas investment to promote clean economic growth objectives by 2050. The strategy also outlines the and create jobs that support the transition to a importance of addressing other pollutants, such as low-carbon economy, while benefitting individual black carbon, that are significant climate warmers. Canadians and addressing competitiveness impacts on businesses. They committed to deliver mitigation actions by adopting a broad range of domestic measures, including carbon pricing mechanisms, adapted to each jurisdiction’s specific circumstances. Commitments were also made to 12 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 2 Existing Analyses on Decarbonisation The study and analysis of what low-carbon futures might look like and the pathways for how we might achieve them is relatively recent. There is, however, a rapidly growing body of international research on low-carbon futures, including a few analyses that have focused on Canada. From this work, a number of common themes and conclusions have emerged that inform the development of this report. This work involves examining various pathways that Canada can take to achieve a low-carbon economy in 2050 and identifying associated opportunities and challenges. The studies also highlight Canada’s achievements in decreasing GHG emissions to-date, provide wide- ranging insights on potential transformational low-emitting GHG technologies, and point to policies and measures that could be implemented to achieve deep reductions in GHG emissions and the necessary innovation required to ease this transition. This literature review aims to highlight the principle themes and key messages from relevant research in order to inform the development of Canada’s Mid-Century Low GHG Strategy. The review focuses on Canada-wide approaches and does not consider provincial-level pathway assessments. KEY MESSAGES: • Substantial decarbonisation by mid-century is possible with current technologies. • Decarbonisation presents opportunities to improve social welfare and economic productivity. • Challenging areas for abatement require increased policy focus, research and development, and investment. • Decarbonisation objectives should underlie long-term, coordinated planning in key areas such as investments towards new infrastructure and clean technologies.

2.1 Substantial decarbonisation by mid-century is possible with current technologies. Canada has already started to decarbonise and can do even more with currently available technologies. In its Canada 2015 review, the International Energy Agency (IEA) mentions that Canada has achieved important reductions to date through federal and provincial/territorial initiatives. The report underlines that in 2013, more than 75% of Canada’s current electricity generation mix is non-emitting due to significant production from hydro and nuclear and that, over the past decade, Canada has decreased its energy intensity by 20%. It also mentions the progress made in the industrial sector with four carbon and capture storage projects, including the Boundary Dam CCS project, which is the world’s first commercial application of CCS to a coal-fired power plant.10 An assessment from the Council of Canadian Academies published in 2015 suggests that Canada can significantly reduce GHG emissions by using commercially available technologies in key sectors of the economy.11 The assessment identifies many existing 10 International Energy Agency, Energy Policies of IEA Countries: Canada 2015 Review, p. 10. 11 Council of Canadian Academies, Technology and Policy Options for a Low-Emission Energy System in Canada. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 13 technologies that are able to achieve further energy improvements and cost reductions”.13 These include efficiency improvements and increase production expanding the use of non-emitting electricity across of non-emitting electricity. These technologies are end-use sectors, increasing the use of biofuels in commercially available, can deepen current energy the transportation sector, and improving energy efficiency improvements, and further decarbonise conservation and efficiency. The report also noted the electricity generation sector. The report also that further research is needed on ways to achieve highlights the opportunity to stimulate the low carbon net-negative GHG emissions, including through transition at the time of infrastructure renewal. bioenergy with carbon capture and storage (BECCS), increased use of wood products for carbon retention The Deep Decarbonization Pathways Project12 is in buildings, and carbon sequestration through a global initiative of 16 countries covering 74% of afforestation and reforestation. energy emissions that aims at providing country specific pathways to meet a mitigation goal The Canadian study Acting on Climate Change: consistent with limiting global temperatures to 2°C Solutions from Canadian Scholars also provides above pre-industrial levels. The project suggests an insight into how current technologies and that current and developing technologies can appropriate policy options are sufficient to achieve decarbonisation if sufficiently broad, decarbonise the Canadian economy. A concerted wide, and nationally appropriate climate policy effort of sixty Canadian scholars, the report suggests is imposed. The Canadian study published in 2015 that Canada can rely 100% on low-carbon electricity provides six decarbonisation pathways, several production by 2035, due to the availability of of which rely on pushing deployment of currently renewable energy sources in the country, making available technologies. The results suggest that it possible to achieve an 80% reduction in GHG Canada can make significant progress through the emissions by 2050. In addition, an evolving smart decarbonisation of the electricity grid using mainly urban design, drastic changes in the transportation renewable energy sources (e.g., hydro, wind, solar), sector and a broader sustainability agenda are all some fossil fuels with CCS, and replacement of fundamental factors that will help change energy combustion-based energy sources with electricity in consumption in Canada. To this end the authors many sectors (including the transportation, buildings, suggest numerous policies, such as east-west manufacturing, and heavy industry sectors). The interprovincial electricity trade, and emphasise the study employed a highly detailed, behaviourally benefit of a carbon pricing policy. realistic technology stock turnover model (CIMS) to capture changes in energy, process an fugitive

2.2 Decarbonisation presents opportunities emissions, linked to regionally and sectorally to improve social welfare and economic disaggregated macroeconomic model (RGEEM) productivity. to capture changes in GDP, economic structure, employment and trade. Emissions reductions in The Smart Prosperity roadmap, New thinking, both models were driven by a policy package of provides a vision of Canada’s potential low-carbon performance based technology regulations and future with healthy, vibrant, and green communities. hybrid (i.e., general tax and cap and trade) The Canadian think tank proposes a future Canadian carbon pricing. society in which smart cities and towns provide sustainable means of living in communities with The Trottier Energy Futures Project looks at 11 different hyper-efficient insulated buildings with roof tiles scenarios for Canada to achieve different levels made of solar panels, plenty of public parks and of GHG reductions by 2050 using one optimisation community gardens, and streets and sidewalks filled model and one simulation model that integrate with electric plug-in stations for next-generation energy and economic systems with different sets electric cars. In this green economy, clean innovation of strategies to achieve reductions at a minimum would provide many job opportunities using human cost. The projections presented in the report provide ingenuity to efficiently produce goods and services detailed information on Canada’s sectoral energy while continuously seeking new ways to reduce consumption and production for each scenario and greenhouse gas emissions. Smart grid systems take into account specific regional circumstances. endowed with advanced technologies would The report states that “for most scenarios, the allow home appliances, such as water heaters, to approach was based on currently deployed act as electric batteries and transportation modes technologies with plausible extrapolations for future 13 Trottier Energy Futures Project, Canada’s Challenge & 12 Bataille, C. et al., Pathways to Deep Decarbonization in Canada. Opportunity, p. 6. 14 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY to recharge and start their duties at inexpensive, by 45% while decreasing levels of air pollution which low-peak load times. Under this vision, connected result in improvements in human health. Vehicle users communities could become more efficient by also incur fuel savings.17 sharing resources and knowledge. The roadmap states that Canada’s future prosperity depends on Data analysed in the 2016 Canadian Clean the investment choices we make today and that Technology Industry Report, published by Analytica the development of clean infrastructures will “offer Advisors, suggests that the Canadian clean substantial economic opportunities for Canadian technology sector has grown considerably over companies, many of which are already among the the last decade and that a pathway toward leaders in energy technology, water infrastructure, decarbonisation would further stimulate the sector by and transportation innovation”.14 increasing domestic demand for clean technologies, thereby developing domestic knowledge and A transition to a low-carbon economy could present innovation. The report mentions that the Canadian significant benefits beyond GHG abatement that clean technology sector delivers “high-skill, high- could improve Canadian’s well-being by producing wage, knowledge-based jobs”18 and that it continues jobs in the clean technology industry and improving to out-perform other industries on that aspect. Clean productivity in other sectors. The International Energy technologies can also increase the productivity Agency (IEA) report Energy Technology Perspectives and efficiency of other sectors of the economy, (ETP) 2016 underscores Canadian success stories.15 including traditional industries, and make them more For example, in Alberta, the Drake Landing Solar competitive. Nevertheless, the report also highlights Community (DLSC) integrates solar thermal energy to that these same Canadian companies are losing its district system to store significant amount energy market share world-wide, and that moving swiftly underground during the summer so it can be used towards decarbonisation could provide significant in the winter for space heating. According to the opportunities to the sector. DLSC, each of the single family homes reduces about 5 tonnes of GHG per year and is 30% more efficient The Trottier Energy Futures Project also points to than conventionally built homes.16 Another success other kind of economic opportunities, such as story relates to the use of applications for traffic taking advantage of potential mutual benefits from signals (e.g., communications systems, adaptive a greater integration of the electricity network control systems, traffic-responsible, real-time data and trade between the U.S. and Canada. More collection and analysis, maintenance management specifically, Quebec could increase exports of systems) in British Columbia to allow motorists to turn zero-emitting electricity to the U.S. North East off their engines while they wait at the Peace Arch region, and Manitoba could do the same with the Border Crossing. The system reduces GHG emissions U.S. Mid-West region. The benefits include higher electricity sale revenues for Quebec and Manitoba 14 Smart Prosperity, New Thinking-Canada’s Roadmap to Smart and lower cost electricity supply for American States, Prosperity, p. 50. opportunities for optimal integrated system dispatch 15 International Energy Agency, Energy Technology Perspectives, p. 199, p. 231 & p. 326. 17 Government of British Colombia, Greening the Border. 16 Drake Landing Solar Community, Welcome to Drake Landing 18 International Energy Agency, Energy Technology Perspectives Solar Community. 2016, p. XXII. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 15 which could generate revenue through trading predictability to attract new durable investments of energy, minimised overall cost of system supply in clean technology and innovation. The report (complementing Canadian hydro production with proposed to establish an economy wide price signal, U.S. low cost nuclear and thermal baseload), the through a market-based policy. The NRTEE also sharing of emergency reserve, and a more stable highlights the need to create a level playing field system. The report also mentions that there may be for energy investments with the goal of enhancing further opportunities for reducing overall electricity Canadian firms’ access to fast-growing low-carbon costs since the peak demands in Canada and the markets and mobilising investments in low-carbon U.S. occur at different periods of the year (most of infrastructure and technology. Canadian provinces’ peak periods are in the winter, while U.S. peak period is in the summer), and for Mark Jacobson from Stanford University and other complementing the baseload with more researchers have also looked at energy roadmaps to intermittent renewables.19 convert 139 countries to 100% clean and renewable energy use. The roadmaps represent pathways for converting the energy systems of these countries to

2.3 Challenging areas for abatement require ones powered by wind, water, and sunlight (WWS). increased policy focus, research and The roadmaps are based on IEA energy consumption development, and investment. data projected to a 2050 BAU scenario. They rely on existing WWS electricity generation technologies and Decarbonisation pathways also present challenges exclude nuclear, CCS, biofuels or natural gas, and do which require effective and flexible policies that not include the construction of new encourage innovation. The academic literature hydropower dams. stresses the need for Canada to capitalise on its vast knowledge and expertise to spur innovation In the wake of the COP21 Conference, the Royal and develop clean technologies to cost-effectively Dutch Shell company published the report A Healthy reduce emissions in some areas, particularly industrial Planet: Pathways to Net-Zero Emissions: A New Lens process emissions and freight transportation. In order Scenarios Supplement. The report highlights current to succeed in making major scientific breakthroughs societal challenges in achieving a net zero GHG and ensuring clean reliable energy systems, the world. The report recognises the important role of literature emphasises the need for private and public renewable energy in decarbonising the energy actors to strengthen research, development and system but points out other challenges that many deployment (RD&D) in all sectors of the economy, industrial sectors are facing (e.g., iron and steel, and continuously engage with the international cement manufacturing, heavy freight and air community. In their 2015 report, the Council of transportation, chemical and fertilizers). To make Canadian Academies provides an overview of progress on reducing these emission sources, the the key challenges faced by industries. These are report suggests mass deployment of carbon capture mainly associated with the lack of cost-effective, and storage technologies combined with sustainable low emission-intensive ways to produce high levels biomass use. The report also recommends policies of heat, and that energy-related emissions are to accelerate the world’s transition to a low- scattered across many different processes and carbon economy including economy-wide carbon applications. The report points to R&D, technological pricing and financial investment for research and development, and flexible policies as key solutions to development in low-carbon technologies. reduce the costs and encourage commercialisation of low-emitting technologies. The National Round Table on the Environment and the Economy (NRTEE) provided their recommendations in a report titled Getting to 2050: Canada’s Transition to a Low-emission Future. The report established many “enabling conditions” which would guide Canada in formulating a long- term strategy to achieve its long-term GHG emission and air pollution targets. The report pointed out that long term policy certainty is central to provide 19 Trottier Energy Futures Project, Canada’s Challenge & Opportunity, pp. 217-224. 16 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY

2.4 Decarbonisation objectives should underlie long-term, coordinated planning in key areas such as investments towards new infrastructure and clean technologies. Smart Prosperity’s roadmap stresses the importance of building smart infrastructure to facilitate the penetration of clean transportation modes and non- emitting energy. The roadmap also points to municipal governments having a key role in planning zoning and permitting in order to favour clean development of cities. This vision will require strong coordination from federal and provincial governments, National Indigenous Organisations across the country, municipalities, and the public. As cities are becoming the heart of economic development and strategic centres for innovation in clean technologies, they offer significant opportunities to contribute to reducing GHG emissions. IEA’s Energy Technology Perspectives (ETP) 2016 presents an extensive modelling exercise including projections of three pathways using four interlinked models of the energy supply, and the buildings, industry, and transport sectors. The results present the structural changes required to shift the world toward clean energy and transform cities into innovation powerhouses. The report also highlights the role cities play in driving energy demand and the solutions they may offer to lower the carbon content of the world’s energy systems. According to the report, increasing energy demand from urban economic and population growth will need to go hand in hand with innovation and massive deployment of clean technologies and significant behavioral changes. It also emphasises the role of cities in supporting higher efficiency transport and buildings, with dense urban development being a structural prerequisite. Increased demands in space heating and cooling could be decoupled by connecting households to district energy networks. Sustainable land-use planning, the implementation and electrification of transportation modes, and the installation of rooftop solar photovoltaics present attractive solutions to propel cities toward a low- carbon pathway. All of these solutions will require careful planning of today’s investments in infrastructure by all levels of government. The report from the Council of Canadian Academies also mentions that many investment decisions such as transmission and distribution systems and strategic planning of urban, land-use and infrastructure developments will allow for a better integration of low- emitting electricity use. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 17 3 Decarbonisation and Expansion of Canada’s Electricity System KEY MESSAGES: • Canada’s electricity generating portfolio is already more than 80% non-GHG emitting, with the trend towards cleaner generation expected to continue. This provides Canada with an international comparative advantage relative to countries seeking to decarbonise their fossil fuel dominated portfolios. • A low carbon electricity system will allow for GHG emissions reductions in other sectors (e.g., transportation, buildings, industrial processes) through electrification. The anticipation of significant growth in electricity demand should underpin long term investment and planning. • Further decarbonisation of the electricity sector will facilitate the transition to a low-GHG future. Non-emitting sources will need to be considered for all new and existing needs, but generating portfolios will differ from one jurisdiction to another. Regional differences will need to be a key consideration for electricity climate change policies. • Interprovincial, interjurisidictional, and intercontinental cooperation will enhance integration of clean electricity generation to satisfy growing demand. Canada’s contribution towards global GHG abatement could include providing clean power to our continental neighbours, as well as clean power services to the international community. • Energy conservation and energy efficiency measures should increase and be implemented alongside efforts to reduce emissions from electricity generation. Electricity savings should underlie decarbonisation pathways: demand side management and reducing equipment and transmission losses makes electrification far more effective and feasible

3.1 Canada’s electricity generating portfolio is already more than 80% non- GHG emitting, with the trend towards cleaner generation expected to continue. This provides Canada with an international comparative advantage relative to countries seeking to decarbonise their fossil fuel based portfolios Canada already has one of the cleanest electricity systems in the world, with more than 80% of electricity generated from sources that do not produce greenhouse gas emissions such as hydro, wind, solar, and nuclear power. Canadian rivers provide immense hydroelectric generating capability, and Canada is second largest producer of hydroelectricity globally. In 2014, Canada produced 379 terawatt hours (TWh) of hydroelectricity, representing 9.8% of global production20 with further capacity remaining untapped. There is also significant potential for the development of other renewable energy sources across Canada. 20 National Energy Board, Canada’s Energy Future 2016: Energy Supply and Demand Projections to 2040. 18 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY Figure 1: Canadian Utility by Source (2014) As the global community moves to reduce greenhouse gas emissions, many countries will face challenges with regard to the decarbonisation of their electricity generating sectors. In this respect, Canada is already ahead of many of its peers. Currently, Canada is the second largest producer of hydropower after China, fourth globally for generation from a combination of hydro, wind, solar and biomass,21 and sixth for generation from nuclear energy.22 Given this comparative advantage, Canada has the opportunity to increase its clean electricity exports, as well as leverage its expertise in current and emerging technologies (e.g., electrification technologies; smart grids for intermittent sources) that could help other countries reduce their emissions.

3.2 A low-carbon electricity system will allow for GHG emissions reductions in other sectors (e.g., transportation, buildings, and industrial processes) through electrification. The anticipation of In 2014, nuclear power provided 18% of Canada’s significant growth in electricity demand electricity generation from electric utilities (63% of should underpin long term investment Ontario’s generation and 34% of New Brunswick’s and planning generation). Canada is the world’s second-largest Although electricity generation only accounted producer and exporter of uranium—representing for 11% of Canada’s emissions in 2014, continuing to over 20% of world production—and ranks fourth move towards a non-emitting electricity generating globally in identified resources of uranium. There are sector would help decarbonise other sectors, such as, 4 operating nuclear power stations in Canada—3 in transportation and buildings. Increasing the share of Ontario and 1 in New Brunswick, with a combined non-emitting electricity generation is fundamental to total of 19 reactors. In Ontario, planned investments Canada’s low-carbon future. of $25 billion over the next 15 years will extend the life of 10 nuclear reactors for another 25 to 30 years. A near decarbonisation of the electricity sector is underscored in most of the deep-decarbonisation Electricity-related emissions have been declining literature, both nationally and internationally. For in Canada due to a return to service of a number example, in the IEA Energy Technology Perspective of nuclear units, fuel switching from coal to natural 2016, the global electricity power sector is almost gas, and government policies to phase out coal- completely decarbonised by 2050 under a scenario fired electricity. This trend is expected to continue as consistent with the global 2°C temperature goal. hydropower generation and electricity generation Domestically, virtually all of the academic and expert from renewables, such as wind and solar, are analysis on deep decarbonisation in Canada point expected to increase throughout Canada. to non-emitting electricity and the electrification of Although electricity generation is already moving in buildings and passenger vehicles as fundamental a positive direction with respect to a low-GHG future, aspects to a low-carbon future given current government policy and long-term planning can help technologies. For example, the Trottier Energy Futures accelerate this trend. For example, as Canadian Project shows that one of the lowest cost options provinces continue to move away from coal-fired to decarbonise Canada is to move the electricity electricity, they will face decisions regarding what generation sector toward a zero-emitting transition type of fuel should replace and augment generating by expanding renewables, especially hydro, and capacity. Natural gas might provide a lower-GHG other non-emitting sources. option than coal in the short run, but its place in a decarbonised system is less clear over a 21 International Energy Association, IEA’s Electricity longer-term horizon. Information Report. 22 Nuclear Energy Institute, Top 10 Nuclear Generating Countries. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 19 The near term focus on mitigation in this sector also Table 1: Average Levelised Costs of Electricity (2015 reflects the technological availability of abatement $/MWh) for Plants Entering Service in 2022 & 2040; options including the ability to tackle large point United States26 sources of emissions over a shorter time period. From an investment perspective, Canada is at a point Energy Source 2022 2040 in time where its traditional coal-fired generating Wind 64.5 58.8 sources are facing closures or refurbishments Wind Offshore 158.1 133.7 with carbon capture and storage, primarily due to government policies; therefore, there is an Natural 58.1 57.6 opportunity to transition to a decarbonised system at Gas-fired more limited incremental cost. Conventional Combined Meanwhile, the price of renewable electricity such Cycle as wind and solar continues to decline dramatically, Hydroelectric 67.8 65.3 making these options increasingly economically Advanced 102.8 93 attractive. Recent Bloomberg New Energy Finance Nuclear analysis projects the levelised cost of electricity for onshore wind and photovoltaics solar to decrease Biomass 96.1 78.7 by 41% and 59%, respectively, from 2016 to 2040.23 The Geothermal 45.0 57.0 levelised cost of electricity (LCOE) is an economic Solar 84.7 71.2 assessment of the average total cost to build and Photovoltaics operate a power-generating asset over its lifetime Coal with CCS 139.5 125.8 divided by the total energy output of the asset over that lifetime. It can also be regarded as the minimum cost at which electricity must be sold in order to 3.3 Further decarbonisation of the electricity break-even over the lifetime of the project. sector will facilitate the transition to a low GHG future. Non-emitting sources will The U.S. Energy Information Agency (EIA) describes need to be considered for all new and the average levelised costs for plants entering service existing needs, but generating portfolios in 2022 and 2040 in the U.S. (see Table 1). The EIA will differ from one jurisdiction to another. notes that some renewables such as wind power are Regional differences will need to be a expected to be cheaper than fossil-fuel based forms of key consideration for electricity climate generation within the U.S by 2022. These costs take into change policies. account building and operating a plant over its lifetime, fuel costs (where appropriate) and the federal tax Modeling analyses that examine deep aggregate burden, but do not include regional factors or utilisation cuts to GHG emissions in Canada by mid-century rates. Government subsidies are not included in the indicate that Canada’s future non-emitting estimates but would decrease the costs even further.24 It electricity portfolio could take various forms, should be emphasized that these are future costs in the and different non-emitting options exist for each United States and cannot be directly compared Canadian jurisdiction. The following section outlines to Canada. the various scenarios developed around non- emitting electricity generation scenarios for Canada In Canada, the Canadian Council on Renewable and explains the modelling results of each scenario. Electricity (CanCORE)25 states that hydropower and wind are already cost-competitive. Solar energy is quickly catching up and is on track to be the least-cost generation technology in most countries around the world by 2030. 23 Bloomberg New Energy Finance, Coal and Gas to Stay Cheap, but Renewables Still Win Race on Costs. 24 U.S. Energy Information Administration, Levelized Cost and Levelized Avoided Cost of New Generation Ressources in the Annual Energy Outlook 2016. 26 U.S. Energy Information Administration, Levelized Cost and 25 Canadian Council on Renewable Electricity, Powering Prosperity Levelized Avoided Cost of New Generation Ressources in the Climate Report. Annual Energy Outlook 2016. 20 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY MODEL AND SCENARIO DESCRIPTION Deep Decarbonisation Pathways Project – High Ambition (DDPP): Ambition: The DDPP modelled its scenarios in line with achieving 89% GHG emission reductions from overall emission levels projected for 2050, excluding agriculture, which corresponds to an emissions reduction of 88% from 2015 levels by 2050 (78Mt CO2e). Model Description: The DDPP uses an energy and economic model to forecast demand for GHG-intensive goods and services, energy balances, technology and ultimately emissions (CIMS model). CIMS is a bottom- up technology-focused model that competes and selects technology market shares based on firm and household responses to the DDPP policy package, including carbon pricing and technology regulations. To forecast GDP, employment, economic structure and trade, a macroeconomic regionally and sectorally disaggregated Computable General Equilibrium (CGE) model called GEEM, is used. Scenario Description: • This modelling work assumes GDP growth ranging from 2% to 2.2% per year from 2015 to 2050. • The scenario discussed here is based on oil prices of $80 ($US2014) per barrel in 2050. Trottier Energy Futures Project: Ambition: The Trottier Energy Futures Project modelled its scenarios based on achieving a 60% GHG emission reduction target from the 1990 levels in combustion emissions. This corresponds to a 65% reduction from 2015 combustion emission levels. This analysis excludes process emissions. Scenarios 3 (Current Tech Trottier) and 8 (New Tech Trottier) of the report are shown in this section. Model Description: The Trottier Energy Futures Project uses two models to develop its scenarios, the North American TIMES Energy Model (NATEM) and CanESS models. Both models include separate representations of the sectors in Canada’s economy, split for all provinces and territories. Scenario Description: • Scenarios 3 (Current Tech Trottier) and 8 (New Tech Trottier) of the report are shown, both of which aim to achieve a 60% GHG emission reduction target from the 1990 levels in the energy sector. • This work relies on the National Energy Board’s GDP per capita growth rate from 2010 to 2035, which is 1.9%, with somewhat slower growth after 2035. • This modelling exercise assumes an oil price of about $135 ($2011) per barrel in 2050. Environment and Climate Change Canada: Global Change Assessment Model (GCAM) – High Non-Emitting: CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 21 Ambition: This modelling work was based on a net 80% GHG emission reduction from 2005 levels. This is modelled as a combination of full reductions achieved in the combustion and non-combustion sectors, as well as the addition of scenarios representing a 65% reduction in Canadian economy emissions, with a 15% achievement through Internationally Transferable Mitigation Outcomes and Land sector credits. Model Description: GCAM is a dynamic-recursive model with technology-rich representations of the economy, energy sector, land use and water linked to a climate model. GCAM is a Representative Concentration Pathway class model that can be used to simulate scenarios, policies, and emission targets from various sources. Scenario Description: The first scenario (High Nuclear) is heavily dependent on nuclear electricity production, while the second scenario (High Hydro) relies on a mix of hydro and wind to produce a majority of its electricity generation. • This modelling work was based on a 65% and net 80% GHG emission reduction from 2005 levels. Environment and Climate Change Canada: Computable General Equilibrium Model (CGE) – High Demand Response: Ambition: • This modelling work was based on a net 80% GHG emission reduction from 2005 levels. This is modelled as a combination of full reductions achieved in the combustion and non-combustion sectors, as well as the addition of scenarios representing a 65% reduction in Canadian economy emissions, with a 15% achievement through with the addition of scenarios including Internationally Transferable Mitigation Outcomes and Land sector credits. Model Description: • This is a multi-sector, multi-regional open-economy recursive-dynamic computable general equilibrium model of the global economy. The model captures characteristics of country- specific or regional production and consumption patterns through a detailed input-output table and links countries/regions via bilateral trade. The model incorporates rich detail in energy use and greenhouse gas emissions related to the combustion of fossil fuels and tracks non-energy related greenhouse gas emissions. Economic activities in regions involve 28 industrial sectors, final consumption by the household, the governments and investment. 22 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY In the figure below, results from these scenarios are Depending on the modelling scenario, there is presented with respect to electricity generation. a huge variation in potential electricity demand Comparing results across models, or across modelled growth. This is dependent on the level of energy scenarios, provides us with overarching high- efficiency/consumption changes emerging from level messages and key takeaways for Canada’s the modelling results. However, in all of the low GHG decarbonised electricity sector. The graph depicts economy modelling analyses, non-emitting sources various electricity generating portfolios in the year such as hydro, nuclear, wind, and solar replace fossil 2050 from the four different models, and compares fuel generation well before mid-century. these to the current generating mix (2014), labelled as “Historical” in the graph. All scenarios demonstrate growth in hydropower electricity generation between 2013 and 2050. The In all of the scenarios, Canadian electricity ECCC High Hydro scenario illustrates a 172% increase generation will increase substantially to fulfill end-use in hydropower generation. In the DDPP analyses, electrification requirements. Essentially, additional hydro increases by 120%, whereas in the Trottier electricity is required to power cars, light trucks, analyses it increases by 134% in both scenarios. buildings, and industrial production processes that are switching away from fossil fuel generation to electricity to power their needs. In the ECCC analyses, total electricity generation increases by 113 to 189% between 2013 and 2050, whereas it increases by 184 to 295% in the Trottier analyses and by 160% in the DDPP analyses. Figure 2: Scenarios of Canada’s Non-Emitting Electricity Generating Supply CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 23 Figure 3: Canada’s installed hydro power capacity against theoretical technical potential (MW), and installed wind power: by province and territory in 2014; Source: International Energy Agency28 The different scenarios correspond to different hydro power capacity, indicating that this type of levels of additional hydro capacity that needs generation could be possible. The DDPP modelling to be built by 2050 to reach the greenhouse gas exercise is 29% below technical potential, whereas mitigation objectives. The DDPP scenario requires both Trottier scenarios are 25% under this threshold. about 101,500 MW of additional capacity, while The High Nuclear scenario is 52% under technical the Trottier scenarios require about 111,000 MW of potential, while the High Hydro scenario is closer, at additional capacity. ECCC’s High Nuclear scenario 13%. Finally, ECCC’s high Demand Response scenario would require 36,000 MW of capacity to be built, is 22% below the technical potential of hydro power. while the High Hydro scenario would require 130,000 MW to be built. Finally, ECCC’s High Demand Hydro power also provides a good “coupling” to Response modelling run indicates that 108,000 MW of intermittent sources generated by renewables additional capacity would need to be built. such as wind and solar power. Since renewable electricity is generated at intervals when the wind Although this is a significant increase in hydropower is blowing or the sun is shining, a high degree of capacity, a study conducted for the Canadian coverage of electricity demand by wind or solar is Hydropower Association shows that in 2006 Canada possible only with access to energy storage or an had 160 GW of hydro potential, a large portion adequate complementary form of electricity that of which is economically viable. Canadian rivers can be ramped-up during periods of low generation. provide close to 7% of the world’s renewable water Fortunately, hydroelectric plants are well suited for supply and this resource provides tremendous this in Canada, and can store water in hydroelectric hydroelectric generating capability.27 Currently, reservoirs that could be used when solar or wind over 10 GW of hydro capacity have been proposed generation is not available. or planned in Canada, tapping the Churchill, Nelson, Slave, Athabasca, and Peace river systems. Hydro power may have negative implications, Over 3500 MW of this capacity is already under mainly based on the impact of dams on fisheries construction in Canada. 28 and water flows since dam reservoirs have an impact on flows, temperatures, and silt loads of rivers and Figure 3 depicts the theoretical technical potential streams. There have been examples of large dams for hydro power generation by province. The above blocking migrating fish from reaching their spawning scenarios are all below the technical potential of grounds. For these reasons, the construction of future large hydro projects will require careful 27 National Energy Board, Canada’s Energy Future 2016: Energy consultation processes. Supply and Demand Projections to 2040 28 International Energy Agency, Energy Policies of IEA Countries: 2015 Canadian Review. 24 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY Generally, further innovation will be required if significant increase in nuclear power between now hydro power is to increase substantially in Canada.29 and 2050. Scenarios from the Trottier analyses show However, much of this increase in hydropower nuclear growing to about the same level as ECCC’s generation can be accomplished without building High Nuclear scenario, although it grows slightly less new dams. Many technologies allow for an increase in for the New Technologies scenario, which assumes electricity generation from existing hydro dams, such less electricity generation needs based on energy as through increased efficiency turbines, at a relatively efficiency technologies. low cost. The amount of nuclear capacity from the ECCC High While hydro power increases in all scenarios, Nuclear scenario, as well as the Current Tech Trottier nuclear energy varies depending on the modelling scenario, corresponds to 797 TWh of generation assumptions. The ECCC High Hydro scenario, assumes per year in 2050, which is much higher than the that nuclear power generation is maintained current share of nuclear in the electricity mix, which at today’s levels, with the addition of expected corresponds to about 98 TWh of generation. There refurbishments. The DDPP assumes that existing are significant challenges to building sizeable nuclear power is maintained, but no new capacity infrastructure projects like these, mainly because of is added out to 2050. In comparison, under the high capital costs, delays in construction, and other Trottier analyses as well as the second ECCC GCAM potential issues. However, benefits to nuclear power analyses (High Nuclear) the model chooses a include emissions free generations, reliable baseload capabilities, and a lower levelised cost of electricity. 29 Potvin, C. et al., Acting on Climate Change: Extending the As such, new and emerging nuclear technologies Dialogue Among Canadians: Some reflections on Climate could become an increasingly attractive option for a Change Response Policy. POTENTIAL INNOVATIVE NUCLEAR TECHNOLOGIES In the short term, Canadian Deuterium-Uranium (CANDU) reactors enable the use of alternative fuels in current nuclear generation. Canadian industry is currently working with China to run CANDU reactors on depleted uranium by-products and spent fuel recycled from other reactors. Canadian and international developers are working on Small Modular Reactors (SMRs), which are compact nuclear reactors that can be scaled to generate power to communities ranging from several hundred people up to 300,000 homes. Compared with conventional nuclear power plants, SMRs require lower capital investment and offer scalability, siting flexibility, and enhanced safety features—including passive features that could prevent meltdowns even in the absence of power. SMRs are seen as a potential replacement for coal-fired power plants, or as a complement to intermittent renewables in transitioning remote communities off of diesel generation. A transition from uranium to thorium-based fuels is possible over the longer term. Thorium is three to four times as abundant as uranium, and thorium-based fuels could reduce the amount of nuclear waste produced by reactors. Advanced nuclear reactors, including those using thorium-based fuels, could also achieve higher efficiencies than existing nuclear plants. China is investing heavily into thorium technologies, including the potential for CANDU reactors—which can support thorium fuel cycles more readily than other currently-available reactor types—and development of an advanced thorium reactor it hopes to demonstrate within the next decade. Nuclear fusion represents a potentially game-changing technology for clean energy. Fusion differs widely from fission, the process used in conventional nuclear power generation. A Canadian company is developing a novel fusion reactor that could unlock large amounts of energy from hydrogen, a near- infinitely abundant resource on earth, in a process that would not generate any long-lived radioactive waste and entails no risk of a meltdown. For these reasons, nuclear fusion is a potentially transformative technology. While it still has hurdles to pass before making it to market, if it were to succeed, it would alter the landscape of clean energy permanently. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 25 GHG-constrained energy system by 2050 (see feature options, which could provide a boost to the solar box on Potential Innovative Nuclear Technologies). industry in Canada (see box on energy storage). Both ECCC High Non-Emitting scenarios point to a In the Deep Decarbonisation Pathways Project higher penetration of wind energy. Wind energy analyses, natural gas and coal with carbon capture generation in 2050 represents 154 TWh, 9% of total and storage (CCS) technology is apparent throughout generation, in Scenario 1, and 228 TWh, 14% of total the projection period. In Saskatchewan, CCS was generation, in Scenario 2. In comparison, wind energy retrofitted to the Boundary Dam coal-fired electricity- increases to 17% of the generating mix in the DDPP generation plant in 2014 and is expected to generate analysis, whereas it increases to 24% in the Current reductions of up to 1 megatonne CO2 per year. The Tech Trottier scenario and 8% in the New Tech Trottier project, implemented by SaskPower, shows that scenario. Although these scenarios represent sizeable generating reliable, low-emitting electricity using coal figures, a Pan-Canadian Wind Integration study30 has is feasible. The project is key to better understanding demonstrated that Canada can reliably and cost- the technical, economic, and environmental effectively integrate enough wind energy to meet 35% performance of CCS technology and could produce of Canada’s electricity demand. worldwide spillover effects if other countries choose to implement similar projects. The DDPP analysis In both High Non-Emitting scenarios, solar power also features natural gas generation with CCS as a generation increases significantly reaching levels of significant proportion of electricity generation in 2050. 18 TWh, 1% of total generation, and 99 TWh, 6% of Although no large scale demonstration projects have total generation in 2050. In comparison, solar energy gone forward with this technology, it has the benefit increases to 5% of the generating mix in the DDPP of allowing CCS technology developed for coal analysis, and is only part of the solution for Alberta electricity generation plants to extend to natural gas and Saskatchewan in select Trottier scenarios. The generation, which provides more flexibility to utilities in Trottier project notes that when deriving minimum cost reducing emissions from their generation. Furthermore solutions for electricity generation in Canada, solar did natural gas with CCS is estimated to be generally not compete well with wind. cheaper than using coal with CCS because of the lower capital cost of natural gas plants and their lower However, the National Energy Board notes that GHG intensity.32 Canada has a strong solar photovoltaic (PV) potential that is largely unexploited and that certain prairie Current Tech Trottier (in figure 2) models Canada’s cities including Regina, Calgary and Winnipeg have electricity generation with current technologies, well above-average solar potential. Furthermore, a better interconnection between provinces, and it noted that in much of Canada, solar potential is allows the use of lowest cost electricity technologies higher than in Germany, the country with the most available anywhere in Canada. In comparison, New installed solar PV capacity in the world Tech Trottier models the same GHG reduction target in 2014.31 with a set of new technologies reaching market, including CCS and energy efficiency technologies. In order to fully exploit Canada’s solar potential, solar This technology application results in energy efficiency PV generation must reach competitive delivery costs measures in end-use applications, reducing required to stimulate the large scale investments needed for electricity demand from 2,257 to 1,622 TWh between significant deployment. Incentive programs such as the two scenarios. Ontario’s Feed-in-Tariff and microFIT programs may determine the pace of growth of solar generation Other renewable energies offer potential in the mid- across Canada in the near term. Household to-long term. For example, generating zero-emitting production of solar electricity through rooftop solar electricity with geothermal power is possible using hot panels can also be beneficial and could provide subsurface water or steam coming from underneath more electricity than the household uses, providing the earth’s surface. Standard well drilling technology an opportunity to sell electricity back to the grid. can provide access to high temperature sources and Fully realising the potential of distributed PV will power to turbines that offer likely require utility investments to upgrade existing reliable electricity. distribution networks to handle two-way power flow. The NEB also highlights potential technological Tidal energy is a type of renewable energy produced breakthroughs, such as utility-scale electricity storage from ocean currents. Since tides are predictable, the generation potential of tidal energy is more 30 GE Consulting Group, Pan-Canadian Wind Integration Study. 31 National Energy Board, Canada’s Energy Futures 2016: Energy 32 Bataille, C. et. al., Policy Uncertainty and Diffusion of Carbon Supply and Demand Projections to 2040. Capture and Storage in an Optimal Region. 26 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY INDIGENOUS RENEWABLE ENERGY INITIATIVES Indigenous peoples, communities and organisations across Canada are implementing a range of climate change initiatives. 33 A database compiling Indigenous climate change initiatives has so far identified 79 renewable energy initiatives with a web-based presence, 16 of which are presented on the Nations’ or communities’ websites.34 Renewable energy initiatives can yield multiple benefits, such as protection of the land, air and water, while creating much-needed employment. The T’Sou-ke Nation of Vancouver Island in British Columbia, dubbed Canada’s first Aboriginal Solar Community, developed three community-owned solar demonstration projects. These include a stand- alone system with battery storage on a community office building, a grid-connected solar PV system that can be used as a backup power source, which that can sell surplus power back to the grid for communities that wish to have net-zero energy use, and a kilowatt grid-connected, net-metered solar PV system on the community canoe shed, which powers its administration buildings. Surplus energy created in summer is sold to the grid and bought back in winter. Additionally, the T’Sou-ke have installed solar hot water on 42 of the 86 private residences in the community, begun a comprehensive energy conservation program for all houses, and installed two solar-powered electric car charging points. The Government of Canada has just announced funding for a partnership between T’Sou-ke Nation and Schneider Electric to develop energy storage for a worldwide market. In Quebec, the First Nation’s political and administrative organisations of Mashteuiatsh, Pekuakamiulnuatsh Takuhikan, and the Regional County Municipalities of Maria- Chapdelaine and Domaine-du-Roy in Saguenay-Lac-Saint-Jean have formed a non-profit 100% regional partnership to identify and develop renewable energy projects using a sustainable development approach. Since its creation, the partnership has contributed to the development of two mini hydro projects. Company profits are transferred to the communities. Many power project developments occur in the traditional territories of Indigenous Peoples and many in remote areas. By proactively partnering in power developments, Indigenous Peoples can create long-term sustainable value for their members through investment, employment, infrastructure and new business opportunities. By working with the power developers at the earliest stages of project planning, indigenous communities have input into the design to meet local needs which include reducing environmental impacts. For example, “First Nations Power Authority” was mandated to facilitate the development of First Nations-led power projects and promote indigenous participation in procurement opportunities with the crown utility in Saskatchewan, SaskPower.35 predictable than that of wind and solar sources. energy. While trees and other plants grow, they absorb These water flows can turn underwater turbines carbon from the atmosphere. Over time, the carbon without the use of dams or reservoirs. Similarly, wave dioxide sequestration from growing trees and plants energy is generated by harnessing the motion of will offset the short-term carbon dioxide emission waves. Canada has significant tidal and wave from bioenergy, and could deliver substantial carbon energy resources, which can, in the future, contribute savings when compared to fossil fuel use over time to emission free electricity generation. These (see more on biomass in Chapter 6). technologies are currently at the demonstration stage and it is therefore too early to consider modelling their potential contribution to Canada’s energy mix. Additionally, as an alternative to fossil fuels, biomass can be used to generate renewable and sustainable 33 Assembly of First Nations, Gap Analysis First Nations Climate Change Adaptation South of 60 Degrees Latitude. 34 Sustainable Canadian Dialogues, Acting on Climate Change: Indigenous Innovation. 35 First Nations Power Authority; About First Nations Power Authority. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 27 As mentioned, wind, solar, and run of river (or 3.4 Interprovincial, interjurisidictional, and low-head hydro) only produce electricity when intercontinental cooperation will enhance their resource is available (e.g., when the wind is integration of clean electricity generation blowing). For this reason, it is necessary to pair these to satisfy growing demand. Canada’s technologies with hydro or other firm power sources, contribution towards global GHG or with grid interties or management operations abatement could include providing clean (see box on energy storage). Energy storage, grid power to our continental neighbours, interconnects, and smart grids could improve grid- as well as clean power services to the stabilisation and buffer peak electricity demands, international community. which could in-turn, support a larger share of renewables in the electricity grid.36 Canada, and North America’s, electricity future will be shaped by interprovincial, interjurisdictional, Storage technologies and smart grids may also and intracontinental cooperation. Since Canadian be particularly useful in incorporating renewable provinces and territories have purview over energy technologies in remote and off-grid communities, decisions within their jurisdictions, they have since they have the potential to reduce or eliminate traditionally designed electricity infrastructure with transmission costs. Between today and 2050, it is likely consideration towards meeting their own energy that significant developments will occur in storage demands. However, interprovincial electricity trade technology with the potential to transform the is becoming an important component of many energy system. provinces’ supply and demand considerations. This type of cooperation becomes more important when considering climate change objectives, including maximising use of non-emitting sources (e.g., hydro), as well as when increasing the amount of intermittent electricity sources in the grid (e.g., solar, wind, tidal, 36 National Energy Board, Canada’s Energy Future 2016: Energy wave). The recent Ontario-Quebec Trade and Supply and Demand Projections to 2040. Cooperation Agreement provides a good example of 37 International Energy Agency, Energy Policies of IEA Countries, 2015 Canada Review. interprovincial electricity trade. Figure 4: Electricity exports and imports between Canada and the U.S., by province, 2014 38 28 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY Expansion of electricity grid interties could allow This is expected to create a significant new market more areas with surplus hydropower, or other forms opportunity for Canadian electricity exports and of non-emitting generation, to sell electricity to other increase the profitability of various clean electricity provinces or U.S. States that rely on fossil fuels. The projects, such as large hydroelectric facilities. integration of electricity markets between Canada and the U.S. includes 35 physical interconnections It will be important to maximise the benefits from crossing the border and over $2.3 billion in Canada- this trade from both an economic as well as a U.S. electricity trade revenue.38 In August 2015, the U.S. global greenhouse gas standpoint. Under the North Environmental Protection Agency released the final American Leaders’ Statement on Climate, Clean version of the Clean Power Plan which could reduce Energy, and Environment Partnership, leaders GHG emissions from the U.S. power sector by 32% from announced a goal for North America to strive to 2005 levels. Under certain conditions, U.S. states can achieve 50% clean power generation by 2025, which help meet their emissions reductions targets through will require further cross-border transmission projects, imported clean electricity from Canada. including for renewable energy. REDUCING CANADIAN NORTHERN, REMOTE AND INDIGENOUS COMMUNITIES’ RELIANCE ON FOSSIL-FUEL GENERATED ENERGY According to the Remote Communities Energy Database, there are 288 remote and off-grid communities in Canada, 190 of which rely on diesel fuel for their electricity needs, either completely or partially. 39 Most of these communities also rely on diesel fuel for home heating.40 In addition to remote communities, a number of governmental and private buildings also rely on diesel fuel for electricity and heating. Sixty percent of Canada’s remote and off-grid communities are First Nations, Inuit, or Métis communities. In many cases the diesel must be flown in at great expense. There are various environmental and human health concerns associated with the transportation, storage and combustion of diesel fuel. Further, high fuel costs associated with diesel generation and power plants already operating at capacity represent barriers to improving living conditions and facilitating economic development. The cost of producing off-grid electricity from diesel generators in Canada’s northern and remote communities can be up to 10 times higher than electricity generated on the main grid, and can significantly add to the cost of living for northern and remote communities.41 Circumstances of specific communities will affect the costs and viability of options to increase the share of non-emitting electricity generation. While connecting small and distant communities to existing grid infrastructure is not economically feasible, in some cases, hybrid wind/solar-diesel generation systems could be deployed in communities to decrease reliance on diesel fuel. Other potential non-emitting energy alternatives to diesel generation include hydro, tidal, geothermal, small modular nuclear reactors, and biomass. Diesel is also used to provide home heating in northern and remote communities. There may be opportunities to further displace diesel with lower emitting technologies. A number of renewable energy projects have already been deployed to displace diesel in northern and remote communities. In many circumstances, diesel infrastructure is reaching the end of its life providing an opportunity to shift to cleaner technologies. Although the upfront capital costs to building non- emitting supply are high, these may be partially offset by lower operating/fuel costs. Long-term planning and investment is pertinent to the success of this transition. 39 Natural Resources Canada, Remote Communities Database. 40 Carleton School of Public Policy and Administration, Report of the State of Alternative Energy in the Arctic. 41 Government of Canada, Status of Remote/Off-Grid 38 National Energy Board, Electricity Exports and Imports Summary. Communities in Canada. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 29 Moreover, non-emitting electricity infrastructure provides substantial monetary savings for residential investments can help address issues of energy consumers and businesses through lower electricity security for Indigenous communities and help set the bills, as well as other benefits such as reduced conditions required for stable, and favorable policy maintenance and improved durability. In addition, climates for establishing mini and micro grids for rural several commercialisation opportunities exist; for and remote electrification, including those that are example the International Energy Agency (IEA) First Nation community or family owned. estimates the global energy efficiency market at $221 billion in 2015. The IEA also notes that efficiency Currently, the electricity sector requires major investments helped drive a global energy intensity investments in new infrastructure, as many facilities improvement of 1.8% in 2015 however “the intensity are about to be retired or refurbished. The majority improvement needs to immediately step up to of investments in the sector will be in electricity 2.6% per year from now until 2030 to get on a 2°C generation; however, transmission and distribution pathway”.44 will also see significant investments. There are estimated investment requirements of as much as The IEA argues that energy efficiency is key to $350 billion in electricity infrastructure in Canada reaching global emissions levels consistent with the between now and 2030.42 The Deep Decarbonisation 2°C temperature goals. They estimate that electricity Pathways Project estimates that $16 billion in savings, through efficiency measures, could avoid additional annual investments will be necessary to 5,100 GW of new capacity by 2050. Likewise, Torrie achieve Canada’s low-carbon future, of which 87% Smith Associates notes that low-carbon future ($13.5B) will be required in the electricity sector.43 As analysis typically include per capita levels of fuel conventional new sources of low-carbon electricity and electricity use that are about half the current become less viable, or available (e.g., hydro), new Canadian average, and energy productivity (GDP/ investments in emerging technologies will become energy) four times higher than current Canadian increasingly targeted. levels.45 Energy efficiency trends are already positive in Canada as energy efficiency improved from 1990 Given the long-term nature of electricity related to 2013 by 24%.46 The National Energy Board projects infrastructure, planning and investment decisions that total end-use energy demand will increase at will need to be made in the near term to have the an average annual rate of 0.7% from 2014 to 2040, desired effect on the 2050 time horizon. For example, almost half the rate of increase from 1990 to 2013. infrastructure spending, loan guarantees, and low- interest loans could potentially help fund new hydro Higher electricity efficiency can be achieved with projects and transmission lines to facilitate clean targeted demand-side management measures and electricity projects. technological improvements. Changes in behaviours such as consuming electricity during low-demand periods could reduce peak power demand which

3.5 Energy conservation and energy could contribute to reduce GHG emissions from efficiency measures should increase load generation.47 Energy efficiency can also defer and be implemented alongside efforts transportation and distribution investments, reduce to reduce emissions from electricity line losses and avoid capacity reserve requirements. generation. Electricity savings should As technology develops, further electricity underlie decarbonisation pathways: productivity gains should be realised with devices like demand side management and reducing smart meters helping to reduce and optimise end- equipment and transmission losses makes use. electrification far more effective and feasible. Improvements in energy efficiency and demand side management are core elements of a long- 44 International Energy Agency, Energy Efficiency Market Report. term low-GHG strategy and present economic 45 Torrie, R., Acting on Climate Change: Extending the Dialogue opportunities. In many cases, energy efficiency is Among Canadians; Some Reflections On Climate Change Response Policy. a cost-effective way to reduce GHG emissions as it 46 Natural Resources Canada, Improving energy efficiency in Canada. 42 Conference Board of Canada, Canada’s Electricity 47 Energy efficiency can also defer transport and distribution (T&D) Infrastructure: Building a Case for Investment. investments, reduce line losses and avoid capacity reserve 43 Bataille C., Pathways to Deep Decarbonization in Canada. requirements (IEA 2016) 30 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY Modernizing the electricity grid could also contribute significant between generation and end-use sources. to improved electricity efficiency by reducing losses However, by 2050, it is highly probable that distributed when electricity is generated and transmitted. Grids generation will play a bigger role, reducing the generally follow north-south orientations since most of requirement for electricity to travel long distances from Canada’s population live in southern jurisdictions along point of generation to end use. the international border with the United States, while the largest hydroelectric projects are located in scarcely inhabited areas to the north. Since the Canadian transmission networks extend over 160,000 km, losses are ENERGY STORAGE The principal challenge with variable renewable energy such as wind or solar is that they are intermittent, meaning that power is not available when the wind is not blowing or the sun is not shining. As such, improvements in energy storage would make these intermittent sources much more attractive to grid operators, ensuring that power is available to meet demand cycles. Additionally, increase in energy density and charging rates for battery energy storage technologies can provide the improvements in the transport sector that will be required for a widespread adoption of electric means of transportation. Incorporating intermittent power flows to existing grids requires added flexibility elsewhere on the grid, which can increase system costs. However, such costs could be offset by the adoption of technologies that can store excess power for weather conditions that are unfavorable to power generation and support the grid during peak demand time. Storage technologies could also allow households to rely on their own energy production, thus increasing the growth of local energy production, potential of smart grid systems, and energy availability for remote communities. Figure 5 : Technology Roadmap : Energy Storage Source: International Energy Agency, 2014. Technology Roadmap: Energy Storage CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 31 The private sector has been a major leader in energy storage research. Specifically, battery storage technologies for cellphones, computers and electric vehicles, have seen tremendous growth in recent years. Already, the costs of lithium ion batteries are being significantly reduced by the production of electric transportation companies, such as Tesla Motors. Moreover, other cheaper and more efficient options are being developed, with possibilities for the entire energy sector. For example, sulfur-based and graphene-based battery technologies offer tremendous potential for cheaper and more powerful battery storage. Other energy storage options are available, with some of them already adopted by Canadian electricity providers. Recently, the Toronto Hydro Company’s compressed air energy storage pilot project was deployed in Lake Ontario and now provides 1 MW of storage capacity that can be sent to the city grid during peak demand times. Thermal energy storage is also being used in the community of Okotoks, Alberta. Nevertheless, the most promising option for some Canadian provinces is likely to be pumped storage hydropower (PSH). The technology is readily available, has low operation and maintenance costs, and is not limited by cycling degradation. Although recent improvements achieved by the private sector are encouraging, much more innovation is needed to allow for widespread renewable energy production by 2050. Consequently, due to the essential role of energy storage technologies in the electrification of numerous processes, including transportation, it is fundamental that energy storage technologies continue to improve over time. In order to accomplish this, governments and private actors have a shared responsibility to scale up investments throughout the innovation chain in order to allow breakthrough technologies as well as incremental improvements to be brought to market. 32 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 4 Energy Consumption in End Use Applications Under a low-carbon future, Canada’s electricity demand is expected to increase substantially by 2050, partly as a result of traditional pressures such as population and industrial growth, but also because of the electrification of end use applications that currently use other forms of energy. Many applications (e.g., cars, trucks, boilers, heaters) can use clean electricity to fulfil their power requirements, reducing emissions by switching away from refined petroleum products, natural gas, and other fossil fuels. This greater use of electric power is often accompanied by important efficiency gains, especially in the transportation sector, leading to an expected reduction in overall energy demand under low GHG scenarios. Maximising the abatement potential from electrification requires the simultaneous near decarbonisation of existing electricity generation and the large expansion of new zero or low emissions electricity sources, as discussed in the previous chapter. All academic and expert analyses that pertain to low-GHG pathways show an increase in electricity supply and greater proportion of electricity in total energy demand. For example, the Deep Decarbonization Pathways Project shows electricity rising to 43% of total energy by 2050 compared to 25% currently, more than doubling the current supply between now and 2050. Moreover, the Trottier Energy Futures Project shows electricity generation more than tripling between now and 2050. Given Canada’s relatively cheap and clean electricity generating portfolio, implicit carbon costs for electric power are lower than in many other countries. This means that clean electricity is a comparative advantage for Canada. It will be important to examine any change or rise in electricity costs associated with the new demand requirements, and ensure that Canada continues to have access to affordable and reliable electricity going forward. Apart from electrification technologies, renewable and low carbon fuels are low or non-emitting options to fulfil many of Canada’s energy requirements. These fuels will be particularly important in areas where electrification is not currently possible or too costly, such as aviation and marine transport, some heavy freight transportation, and many industrial activities. Likewise, renewable or low carbon fuels can often be used in existing cars and trucks or building furnaces in higher blends, without affecting equipment performance, safety or warranties. Share of Total Energy Figure 6: Electricity as a share of National energy consumption All other fuel Electricity DDPP 2050 57% 43% Reference 2050 75% 25% Source: Bataille, C. et al. Pathways to deep decarbonization in Canada. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 33 It is important to recognize that all energy related predicted to reach between 40 to 72% of total energy emissions reduction activities work best when paired consumption, up from 16% in 2014. with increasing energy efficiency. For example, increasing the number of homes heated by clean Renewable fuels provide the last alternative in most electricity will be much more viable when building scenarios to decarbonise the intensive GHG sectors envelopes are designed to minimise heat loss. of the economy. In key sectors, notably in heavy Importantly, a reduction in demand through energy industry and freight transport, renewable fuels replace efficiency, conservation, and demand side savings conventional petroleum and natural gas usage. will partially offset the increased Canadian Those alternative fuels are essential to attain deep electricity requirements from the electrification of GHG emissions reductions, since it is not likely that end use applications. technological advances will allow electrification of all sectors of the economy by 2050. Figure 7 presents several analyses of total energy use in Canada by 2050 under low-GHG scenarios. Specifically, ECCC presents two scenarios where The current energy use (2014) is presented, as well as electricity generates either 33% (High Demand DDPP and Trottier Institute 2050 results. While there Response) or 57% (High Non-Emitting) and renewable is population and economic growth during the fuels supply either 45% (High Demand Response) or period, even stronger energy efficiency gains allow 6% (High Non-Emitting) of total energy consumption for decreases in total energy consumption in most in Canada by 2050. ECCC’s High Non-Emitting analyses. For example, total energy consumption projection estimate refined petroleum products will still decreases from 10 950 PJ in 2014 to 7971 PJ on 2050 account for around 20% of total energy consumption (ECCC GCAM scenario, labelled “High Non-Emitting”) by 2050, with natural gas generating 13%. ECCC’s High or even 7 251 PJ in 2050 (New Tech Trottier). The central Demand Response scenario projects a use of natural role of energy efficiency gains in the projections gas falling to 21% of total energy consumption by is consistent with Chapter 2 that depicted energy 2050, and no future use of refined petroleum products. conservation as the “first fuel”, the foremost criteria to In contrast, the DDPP estimates that electricity meet the 2050 GHG emissions reduction levels. will generate 48% of total energy consumption in Canada by 2050, with 17% supplied by renewable Apart from a reduction in total energy consumption, fuels, 17% by natural gas (with Carbon Capture the switch from fossil fuels use to electricity and Storage Technologies [CCS]), 2% by coal (with CCS) renewable fuels alternatives is another cross cutting and 13% by refined petroleum products. Trottier theme of all scenarios presented. Clean electricity estimates electricity to take between 59-66% of total production across the country, achieved before energy consumption in Canada, with renewable 2050 in all scenarios, allows for deep GHG emission fuels supplying either 9 and 17%, refined petroleum reductions from the electrification of end uses products supplying between 14-16%, natural gas 6-7%, and industrial processes. Electricity use in 2050 is coal 2-3% (retrofitted with CCS). Figure 7: 2050 Projections of Total Energy Consumption by End Use Fuel (PJ) 12000 10000 Natural Gas with CCS Coal With CCS 8000 Others Renewable Fuels Electricity 6000 Refined Petroleum Products Coal Natural Gas 4000 2000 0 Historical 2014 High Non-Emitting High Demand Response High Ambition (DDPP) Current Tech (Trottier) New Tech (Trottier) 34 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY

4.1 Transportation 4.1.1 Electrification of the transportation sector presents the potential for significant emission reductions; for personal vehicles, electric vehicle technology is KEY MESSAGES: commercially available and continues to improve. • Electrification of the transportation sector presents the potential for significant The transportation sector plays a vital role in the emission reductions; for personal vehicles, lives of Canadians and in the Canadian economy. electric vehicle technology is commercially Almost 82% of Canadians live in urban areas available and continues to improve. and 80% of commuters drive to work in their own vehicles. Canada’s transportation system moved • Greater uptake and broad use of electric over $1 trillion worth of goods to international vehicles will require more widespread markets and employed 896,000 Canadians (5% acceptance of the technology supported of total employment) in 2014. Compared to other by information and understanding around: countries, Canada depends heavily on cars for cost of ownership and performance, urban mobility, and has a relatively high share of charging availability and times, and range large cars. Canada has large distances between its expectations. All of which are expected to cities, increasing intercity travel emissions. improved significantly over the coming years. Currently, the transportation sector is a major contributor to Canadian GHG emissions. Roughly • Low-carbon and renewable fuels are one quarter (28%) of Canada’s GHG emissions consistent with low-GHG scenarios, come from the transportation sector, such as from particularly in areas that face challenges cars, buses, trucks, motorcycles and recreational with electrification. vehicles.48 About 57% of these emissions come from passenger transport, while heavier freight • Freight transport is a challenging transport accounts for 37% of transport emissions.49 sector, but there are a number of solutions However, given increasing efficiency improvements that show potential towards deeper in passenger vehicles (mainly driven by federal emissions reductions. regulations) and challenges in achieving efficiency • Emerging technologies such as energy improvements in freight, the share (and net amount) storage or advanced lightweight of GHG emissions from freight transportation is materials will increase energy efficiency expected to increase into the future. and decrease emissions; innovative Road transportation activity can be broken down approaches to moving people and freight into two components: how people and freight are likely to become more widely adopted travel (mode choice) and how far they travel by mid-century. (activity level). 50 Emissions reductions could result • Modal shifts, such as moving passengers from a greater market penetration of alternative and freight to less GHG intensive modes, vehicle technologies and modal shifts (e.g., away could offer notable emissions reductions, from single-occupancy vehicles). Activity level which would be further strengthened changes could be achieved through consumption through clean technology deployment, patterns shifting with technological advances (e.g., such as electrified passenger rail. teleworking) or urban densification. Canada will continue to encourage cities to improve public • 62% of Canada’s black carbon emissions transit and bike lanes, and design urban spaces arise from the Transportation sector. that reduce the need for vehicle transportation. In addition to being linked to climate warming, black carbon emissions are Battery electric vehicles provide the opportunity also a public health concern. Canada to emit zero GHG emissions when renewable or continues to take complementary action to reduce black carbon emissions. 48 Environment and Climate Change Canada, National Inventory Report 1990-2014: Greenhouse Gas Sources and Sinks in Canada. 49 Based on Canada’s Emission Trends Report 2014. 50 Conference Board of Canada, A Long, Hard Road: Reducing GHG Emissions in Canada’s Road Transportation Sector by 2050. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 35 clean electricity is used. In addition, electric vehicles In spite of Canada’s ambitious mitigation objectives reduce local air pollutant emissions. Electric vehicle and clean electricity portfolio, we lag behind many technology is well known, proven, and available of our peer countries with respect to electric vehicle for purchase in Canada with increasing variation penetration. For example, Norway reached annual and choice: in total, there are 22 different plug-in sales of almost 40,000 fully electric vehicles in 2015, models on the road in Canada, made by 12 different reaching a market share of 23% of passenger vehicles manufacturers. 51 Alternatively, plug-in hybrid vehicles sold. China has grown its electric vehicle fleet by offer increased driving range by switching to fossil 207,000 passenger vehicles in 2015, with an additional fuels when the electric battery charge diminishes. 123,700 electric buses and commercial trucks on the While these vehicles still use fuel, most of them are road. 53 Meanwhile, there are now more than 40,000 used in a way that relies solely on electricity about electric vehicle charging stations in Japan, including 90% of the time. 52 in personal homes and commercial buildings. Charging stations are now more common than the roughly 35,000 gas stations in the country. 54

4.1.2 Greater uptake and broad use of electric vehicles will require more widespread Although only about 24,000 plug-in vehicles have acceptance of the technology supported been sold in Canada thus far, sales increased by by information and understanding around: 32% between 2014 and 2015, and are projected to cost of ownership and performance, continue to increase as prices converge with those of charging availability and times, and range conventional vehicles, charging infrastructure is built expectations. All of which are expected out, and more vehicle selection becomes available. 55 to improved significantly over the coming For example, out of the roughly 400,000 reservations years. 53 International Energy Agency, Energy Technology Perspectives 2016. 54 Coulter, T., Japan Has More Car Chargers Than Gas Stations. 51 CAA, Electric Vehicles: What You Need to Know. 55 Fleet Carma, Electric Vehicle Sales in Canada: 2015 Final 52 EVObsession, Best Electric Car for the Average American. Numbers. Figure 8: 2050 Transportation Sector Energy Use Projections (PJ) (PJ) 3000 2500 2000 Natural gas Hydrogen Refined petroleum products 1500 Renewable Fuels Electricity 1000 500 0 Historical 2014 High Non- High Demand High Ambition Current Tech New Tech Emitting Response (DDPP) (Trottier) (Trottier) 36 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY of the upcoming Tesla Model 3 electric vehicle, an than natural gas. Biogas, generated from biomass estimated 36,000 have been made in Canada. 56 from landfill sites, agriculture, wastewater, or other sources is upgraded to natural gas quality. It can While the production costs of electric vehicles then be directed to the grid for use in buildings remain higher than traditional gasoline vehicles, a or transportation applications in the form of more significant challenge limiting electric vehicle compressed natural gas (CNG) or liquefied adoption is consumer concerns regarding the natural gas (LNG). range of the battery charge. Charging speeds and battery range currently do not allow for comparable Natural gas vehicles are used in several fleets refueling times when benchmarked against around the world. Up to a 25% reduction in carbon traditional gasoline vehicles. In some circumstances, dioxide equivalent emissions can be achieved cold weather can also reduce electric vehicle on a well-to-wheel basis when replacing gasoline driving range. However, studies have found that the with compressed natural gas in light-duty vehicles. current battery range for electric vehicles is sufficient Natural gas can be an effective solution for to satisfy close to 90% of personal vehicle use. For transportation that is harder to electrify such as example, a study from the Massachusetts Institute of on-road freight, marine shipping and rail, featuring Technology used GPS data to estimate the energy relatively quick refueling times and long ranges. requirements of personal vehicles across the United As such, it has been a key area for research and States, determining that 87% of requirements could development for these modes. Natural gas also has be met with current electric vehicles. 57 the advantage of significantly improving air quality and reducing noise when compared to diesel. In addition, there are significant efforts put in place to increase fast charging infrastructure in some Hydrogen fuel cell technology can also help Canadian jurisdictions, which can allow the average decarbonise the transportation sector. The process electric car to charge 80% of its battery capacity of producing electricity with a fuel cell involves in 30 minutes. Although needs for infrastructure hydrogen and oxygen as inputs, and produces water investments will be important in the coming years, it vapor and heat at the tailpipe, therefore emitting is important to note that chargers will not need to be no GHG emissions. However, hydrogen production as abundant as fuel dispensers are today, as more currently either requires significant amounts of than 95% of charging is done at home, and public electricity to be produced through electrolysis, or charging stations generally only need to be used can be produced with methane reforming, which is when motorists travel long distances. an emitting process. Hydrogen fuel cell vehicles provide the benefit of

4.1.3 Low-carbon and renewable fuels are having similar refueling times when compared with consistent with low-GHG scenarios, internal combustion engine vehicles, but they also particularly in areas that face challenges face important barriers such as the cost of fuel cells, with electrification. cost and energy intensity of hydrogen production, Low-carbon, renewable fuels, and hydrogen are and the need for new infrastructure for hydrogen of particular importance for areas that are hard to refueling stations. Nonetheless, hydrogen is a key electrify. A number of renewable fuels are already component of several modelling exercises including commercially available such as ethanol, biodiesel the IEA and Deep Decarbonization Pathways or biofuels. Fuel blends contain varying renewable Project. For example, the IEA has modelled different content, and environmental benefits expand when levels of Fuel Cell Electric Vehicle adoption. So far, second-generation biofuels are used. Unlike other Toyota and Hyundai have commercialised fuel cell modes of transportation, the aviation industry has electric vehicles in Europe, South Korea, California, few options available for reducing GHG emissions. Vancouver and Japan and further investments could Improved technological and operational measures help to accelerate infrastructure deployment. For will have their role, but only low-carbon alternative example, there are already several hydrogen stations fuels (biojet) have the potential to offer significant and buses in Whistler, British Columbia. Hydrogen is life-cycle GHG emission reductions. used widely in industry for ammonia production and refining, and can be used for storing the energy in Renewable natural gas offers the potential to excess renewable electricity. Canada is well placed achieve considerably greater emissions reductions in the development of hydrogen and alternative fuels with companies such as Westport innovations and 56 Model 3 Tracker, Known Sport of Model 3 Vehicles by Status. Ballard, developing and exporting these low carbon 57 Needell, Z., Potential for Widespread Electrification of Personal Vehicle for Travel in the United States. technologies. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 37 Modelling results from very low greenhouse gas the transportation requirements in 2050. Electricity scenarios for 2050 point to various avenues to power powers 18-21% and hydrogen powers 3-32%. Refined Canada’s transportation sector (see description of petroleum products continue to power 36-43% of the models and scenarios in Modelling and Scenario Box sectors energy requirements. in Chapter 2). Currently, refined petroleum products (e.g., gasoline, diesel) power over 90% of Canada’s

4.1.4 Freight transport is a challenging sector, transportation energy requirements. Under scenarios but there are a number of solutions that where aggregate Canadian emissions decline show potential towards deeper emissions dramatically in 2050, the energy portfolio of the reductions. transportation sector shifts considerably (see Figure 8). Freight transportation, such as heavy duty on road Under ECCC’s first High Non-Emitting scenario, vehicles, aviation and marine is a challenging area electricity powers 41% of transportation energy for GHG mitigation. Improving the fuel efficiency requirements in 2050, whereas renewable low-carbon of freight transportation is essential to reducing fuels account for 8%. The remaining requirements greenhouse gas emissions from this subsector. are met with hydrogen (16%) and natural gas (1%), Moreover, alternatives to conventional internal although refined petroleum products continue to combustion engines exist including vehicles that run power 33% of the vehicle fleets including air and on fuels such as biofuel blends, liquefied petroleum marine transportation. In comparison, ECCC’s High gases, or natural gas. The use of these fuels can Demand Response model points to renewable and reduce the GHG intensity of road transportation, low-carbon fuels dominating the transportation sometimes significantly. energy portfolio (78%). In this modelling scenario, electric vehicles do not penetrate the market. Electrification of freight transport is currently limited due to technological constraints such as insufficient The Deep Decarbonization Pathway Project also range for long-haul shipping, long charging times points to a high penetration of renewable and for delivery requirements, as well as the significant low-carbon fuel powered vehicles (55%). Electricity energy requirements and engine sizes required to makes up 26% of the power requirements from the transport heavy loads. However, some companies transportation sector, whereas hydrogen accounts have revealed plans to develop electric freight for 14%. Under the Trottier analyses scenarios, transport in the coming years. For example, last July renewable or alternative fuels power 10-18% of CANADIAN BUSINESSES ADOPTING LIGHT FREIGHT ELECTRIFICATION A number of Canadian companies, and companies operating in Canada, have opted to green their fleet through the use of hybrid-electric vehicles or fully electric vehicles. For couriers and other shipping companies, fleet management and fuel use has a major impact on operating costs, and is constantly being reviewed to minimise costs and increase performance. Some companies have opted for electric vehicle technology for both economic and environmental benefits. As a few examples, Canada Post, Purolator, the United Postal Service, Fedex, and Novex have moved towards more sustainable transportation solutions for shipping. Other initiatives, such as a fully electrified taxi company, have been developed, for example in Montréal by Téo Taxi. Although information gaps appear to be an important barrier to adoption of electric vehicles by small and medium enterprises, several companies are providing support services to demonstrate the business case for greening vehicle fleets. This involves procedures such as calculating expenditure impacts, renting out vehicles to allow for trials, and providing technical support for charging infrastructure management. Another company, Communauto, North America’s oldest and largest car-sharing company, has recently announced its purchase of 600 hybrid-electric or fully electric vehicles. Among these vehicles, 515 are destined to the Québec market, while the remainder will be distributed to Communauto’s European market. Ride-sharing services also displace a significant amount of personal vehicle requirements, thereby reducing GHG emissions further. 38 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY Mercedes-Benz unveiled its latest electric prototype, and GHG performance through new technologies, the Urban eTruck, conceived for dense urban areas. designs and system efficiencies, and are exploring The fully electric vehicle has two electric motors, can a shift to low-carbon fuels. For marine shipping, hold 3 batteries, and will be able to support up to 26 mandatory technical and operational emissions tons. Conceived for short distances (200 kilometers) reduction measures established by the International and use in heavy traffic, Mercedes-Benz expects to Maritime Organization (IMO) are also driving commercialise the vehicle by 2020. 58 efficiency improvements. However, significant emissions reductions will take time as the existing Despite continuous progress, there are some stock of ships and locomotives turn over. Electric challenges associated with reducing emissions from and alternative fuel solutions can also achieve freight transportation. Finding economical means meaningful reductions from port and cargo handling of producing biofuels and alternative means of equipment at transportation hubs. transporting merchandise will be key. Figure 9: An Urban eTruck 59 4.1.5 Emerging technologies such as energy storage or advanced lightweight materials will increase energy efficiency and decrease emissions; innovative approaches to moving people and freight are likely to become more widely adopted by mid-century. Looking forward, improvements in energy storage technology will facilitate the adoption of electric vehicles. The most anticipated technological development related to battery storage is the use of graphene in batteries, which would allow for a significantly higher energy density (battery capacity per unit of weight), significantly faster recharging times, and lower costs. Graphene is abundantly A large deployment of heavy electric trucks may available and the emergence of graphene batteries take longer than cars since the turnover rate of could be a tipping point where electric vehicles heavy trucks is significantly lower than for cars (30 will become more affordable and convenient, years for trucks compared to 20 years for cars). broadening adoption. Emissions from aviation, marine, and rail transport are also challenging to reduce due to the high energy Connected and automated vehicles, combined density of fuel required with these modes. Despite with smart infrastructure, are expected to be these challenges, the energy intensity of the freight increasingly deployed by automakers, and have the transportation sector decreased from 1.38 MJ/Tkm in potential to not only make driving more convenient, 2011 to 1.30 MJ/Tkm in 2013. A recent report from the but considerably safer, and more efficient, which Conference Board of Canada suggests that much can lead to improved environmental outcomes. greater performance and efficiency improvements While not as significant as the impact of electrifying will be needed to help bring Canada to deep transportation, efficiency improvements from decarbonisation in the transportation sector.60 autonomous driving could be important. With quicker reaction times than humans, connected and In 2013, new federal regulations imposing GHG autonomous vehicles can circulate with less distance emission standards for new on-road heavy-duty between cars, allowing for much more efficient vehicles and engines were implemented to align traffic movement (e.g., reduced idling, smoother with U.S. national standards and move the Canadian acceleration), and perfectly safe slipstreaming (i.e., heavy truck fleet toward more fuel efficient vehicles. cars avoiding wind resistance by following others In the marine and rail sectors, where fuel represents closely), resulting in less energy wasted. The expected a significant share of overall costs, operators are safety improvements and reduced congestion could actively seeking improvements in fuel efficiency add up to large fuel savings, with significant co- benefits for the economy and the environment. 58 Mercedes-Benz, Electric Truck for the City. 59 Mercedes-Benz, Urban eTruck. Finally, advanced lightweight materials and 60 Conference Board of Canada, A Long Hard Road: Drastically Reducing GHG Emissions in Canada’s Road Transportation Sector manufacturing methods will need to be integrated by 2050. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 39 ELECTRIFIED PUBLIC TRANSPORT AND SMART URBAN PLANNING In the transition to a low-carbon economy, public transportation provides significant GHG emission reductions as compared with personal vehicles, but diesel buses still emit a sizeable amount. More recently, advances in the development of batteries for electric vehicles have spilled over to city buses. For example, the city of Gothenburg has been using three electric buses on one line of its public transport service, and has been using seven hybrid electric buses. Although the buses are significantly more expensive than diesel buses upon purchase, the fuel savings rapidly compensate this difference. The buses are charged for six minutes between trips, allowing for more than enough range for the route they serve, while providing outlets to charge phones and providing Wi-Fi to users inside the buses.61 Similar projects are under way in Montreal, starting with hybrid-electric buses.62 Another important consideration in transitioning to a low carbon economy is how to plan and design cities in order to support low-emission technologies and lifestyles, and correct for the traffic congestion levels that are seen in large Canadian cities. Congestion is an important cost to the economy, evaluated in 2008 as costing the regional economy of the Greater Toronto and Hamilton Area, directly and indirectly, $6 billion annually.63 This kind of structural change will take time to realise, but governments can start building momentum in the short-term by deciding to take a holistic approach to development through integrating land use, transportation, energy production and community planning. More and more, cities are looking into innovative solutions to reduce congestion on their roadways. For example, the city of Edmonton is one of two Canadian cities taking part in a North American program aimed at developing Connected Vehicle Technology.64 This technology can improve many elements of transportation in cities, by preventing collisions between cars, by guiding drivers through detours when there is a slowdown or an accident on the road, and even adjusting traffic lights along the detour routes to minimise congestion. Other technological advances are leading to autonomous vehicles and greater use of vehicle sharing, which stand to have important impacts of the future movement of people within cities. Technological advances also help pave the way for new management approach by cities and governments, such as the use of efficient pricing of tolling mechanisms. For example, High Occupancy Tolls Lanes allow for both vehicles with enough passengers and permit holders to drive in these lanes, allowing for reduced congestion and revenues that can be invested into public transit. across all modes of transportation to increase 4.1.6 Modal shifts, such as moving passengers efficiency, from on-road electric vehicles to aviation. and freight to less GHG intensive modes, Other considerations to reduce transportation could offer notable emissions reductions, emissions include: retrofit of heavy-duty vehicles which would be further strengthened including tractors with GHG-reducing technologies through clean technology deployment, (aerodynamics, auxiliary power units) and the such as electrified passenger rail. scrappage of less efficient vehicles. Given the emissions profile and current limitations in electrifying freight transportation, a shift towards rail transit for a majority of freight could reduce the amount of energy needed to move goods around the country. Although rail transportation entails issues such as longer shipping times, and less flexibility in terms of routing of goods, it has the potential to 61 Electricity, The electric bus – quiet, exhaust emission-free and passenger-friendly. reduce emissions per unit of goods moved by about 62 Canadian Press, Electric bus pilot project to hit Montreal 75% compared with on-road vehicles for the same streets in 2015. distance travelled.65 As for passenger transportation, 63 Urban Transportation Task Force, The High Cost of Congestion in Canadian Cities. 64 City of Edmonton, On the Front Edge of Smart Vehicle 65 Association of American Railroads, Freight Railroads Help Reduce Technology. Greenhouse Gas Emissions. 40 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY rail offers another potential avenue for intercity travel, In addition to being linked to climate warming, black which could reduce emissions compared to personal carbon emissions are also a public health concern. vehicles or bus transportation. Other benefits to shifts As a component of PM2.5, black carbon particles toward rail transportation include reduced wear and are small enough to be inhaled and absorbed into tear on roads and reduced road congestion. the lungs and bloodstream. Reductions in black carbon emissions from the transportation sector have In addition to being less GHG-intensive than on- important co-benefits for the health of Canadians. road modes of transportation, there may be an opportunity to reduce emissions even further through electrification of Canada’s passenger rail systems 4.2 Buildings moving on dedicated tracks. Heavily populated corridors, such as the Windsor-Quebec axis, represent prime areas for such a system. Although this type KEY MESSAGES: of project requires significant capital expenditures, important savings can be realised through reduced • Over one third of Canadian homes energy costs, increased performance allowing better are already heated and cooled optimisation (e.g., allowing more units to be attached with clean electricity; emerging to the same locomotive), and reduced maintenance technologies will make this option costs.66 Electrification of trains also provides other increasingly economically attractive. benefits in the form of smoother rides, reduced power load at higher altitudes compared with diesel, • Natural gas continues to play an and service to underground locations (which is not important role in heating and power possible for diesel given emissions of pollutants). requirements. Renewable Natural Gas is a small but growing part of Electric light-rail trains represent an interesting mode the supply mix meeting those of transportation for public transit, as it is up to 10 energy needs. times cheaper than underground metro systems for the same distance covered.67 At this cheaper cost • The electrification of the per kilometer, light-rail trains become particularly building sector should be appealing for bringing commuters from suburban matched with a scale-up of areas into cities faster, while reducing the amount of energy efficiency measures. vehicles in downtown areas. Light-rail trains are also easier to electrify than buses, which makes it a less • District heating for residential and GHG-intensive transit option than buses, while also commercial buildings could help reducing the cost of electrification. lower GHG emissions since heat is generated in a centralised location with non-emitting fuel options. 4.1.7 62% of Canada’s black carbon emissions arise from the Transportation sector. • Life cycle assessment quantifies In addition to being linked to climate holistic environmental impacts of warming, black carbon emissions are buildings, enabling optimal decisions also a public health concern. Canada in sustainable design. continues to take complementary action to reduce black carbon emissions. • Retrofitting existing buildings will be necessary to address the inefficient The transportation sector emits significant amounts building stock that could otherwise of black carbon mostly through diesel engines and stand well beyond mid-century. vehicles. Canada continues to take regulatory action to address air pollutant emissions from • Smarter, more sustainable cities are transportation, which also reduces black carbon, key to a prosperous future. including regulations for on- and off-road diesel vehicles and engines manufactured or imported for sale in Canada. Regulations to implement the North American Emissions Control Area to reduce emissions from shipping also reduce black carbon emissions. 66 Professional Engineers Ontario, Towards a clean train policy: diesel versus electric. 67 Condon P., Don’t Waste Billions on Bad Transit Projects. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 41 Figure 10: 2050 Building Sector Energy Use Projections (PJ) 3500 3000 2500 Others 2000 Renewable Fuels Coal 1500 Electricity Refined Petroleum Products 1000 Natural Gas 500 0 Historical 2014 High Non-Emitting High Demand High Ambition Current Tech New Tech (Trottier) Response (DDPP) (Trottier)

4.2.1 Over one third of Canadian homes Newfoundland and Labrador (56%) and are already heated and cooled with New Brunswick (48%). 68 clean electricity; emerging technologies will make this option increasingly Current technologies that may become more cost economically attractive. effective in the future include electrically driven geothermal and air source heat pumps, and Emissions from the buildings sector arise from increased use of ambient solar heating. Air-source residential, commercial, and institutional buildings, as heat pumps can draw heat from the air and transfer well as the equipment in them. The building sector is warm air inside during the winter or outside during currently one of the most GHG-intensive in Canada the summer.69 Ground-source heat pumps, also and is the third largest emitting sector representing called earth-energy systems, can use energy from 12% of Canada’s emissions - with emissions currently the ground to produce heating and cooling and are projected to grow through 2030. However, a number being increasingly used across Canada. Due to their of measures can help to achieve reductions in the high efficiency, ground-source heat pumps can yield sector including fuel-switching and energy efficiency. energy savings of up to 40% higher than an air-source pump but require higher up-front installation costs. Some Canadian homes and commercial buildings already rely on clean electricity to power their Solar energy for homes also offers many advantages heating, cooling, lighting and appliances. Current and helps lower grid-related energy requirements. technology such as electric boilers, electric New technologies are emerging to better generate baseboards, space heaters, and heat pumps photovoltaic energy for homes such as: solar can be used instead of fossil fuels, resulting in zero roadways, solar shingles, solar panels installed on greenhouse gas emissions when combined with the sides of buildings, and thin solar films that can be a non-emitting electricity portfolio. In 2011, 39% applied to any metal roofing. of Canadians households used electricity for their heating equipment. Electricity was the predominant energy sources for heating in Quebec (66%), 68 Statistics Canada, Households and the Environment: Energy Use (11-526-S) 69 Natural Resources Canada, Coming to Terms with Heat Pumps 42 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY Figure 10 illustrates the current use of energy in the 4.2.3 The electrification of the building sector building sector as comprising of natural gas (45%), should be matched with a scale-up of electricity (36%), renewable fuels (10%) and refined energy efficiency measures. petroleum products (6%). Modelling projections for a low GHG economy in 2050 take into account a Increasing energy efficiency is particularly important variety of factors such as potential provincial energy in the Canadian building sector, as Canadian codes amendments, regulations on new buildings households consume an average of 11,000 KWh of requirements and technological costs. Note that electricity per year (2010). By comparison, this is just the projections do not take into account a potential under the U.S. average (12,960 KWh), and well above increase in the use of clean district heating systems Australia (7,350 KWh) and EU countries’ average such in Canada. as France (5,760 KWh), the United Kingdom (4,510 KWh) or Germany (3,515 KWh).70 This is generally In all of the low-GHG analyses, the share of energy attributable to Canada’s cold climate and relatively met through clean electricity increases from today’s large sizing in residential housing. levels. The first ECCC low-GHG analyses (High Non- Emitting) illustrates electricity at 70% of the energy Energy efficiency improvements can be realised use of the building sector by 2050, while the second either through the design of a building’s system, projection (High Demand Response) estimates including air sealing, better construction materials, electricity to be 50% of energy use in the sector passive heating, insulation, white roofs, triple pane (renewable fuels represent 22%). windows; or more energy efficient equipment and appliances including heat pumps, condensing The DDPP scenario demonstrates that electricity boilers, high efficiency cooling, energy-efficient increases to fulfill 99% of the building sector’s energy lighting and appliances, and energy management requirements in 2050 (with 1% remaining for natural control systems. Development of highly efficient gas). The Trottier Institute, demonstrates two scenarios heating and cooling technologies, such as energy where the share of electricity increases to 86-89% management systems and smart thermostats, can of total energy use in the sector by 2050, where the reduce costs and improve performance of heating, remaining requirement is fulfilled through natural gas ventilation, and air conditioning. (4-5%), renewable fuels (4-5%) and refined petroleum products (2-5%). In Canada, provincial and municipal building energy codes and federal energy-efficiency standards are important tools for driving energy productivity

4.2.2 Natural gas continues to play an improvements. Future policies will need to ensure that important role in heating and power energy efficiency programs and energy supply fuel- requirements. Renewable Natural Gas is switching both correspond to low-GHG objectives. a small but growing part of the supply mix meeting those energy needs. Energy efficiency in the buildings sector has numerous co-benefits such as infrastructure resilience Across most scenarios, natural gas, a relatively lower and lower operating and maintenance costs, as emitting fossil fuel, continues to power some heating well as positive effects on national income and and other requirements in the building sector. employment. Moreover, several studies have pointed Natural gas can also be substituted for Renewable to increased health benefits from better designed Natural Gas where desirable, without replacing buildings in terms of lower risks of respiratory and capital or infrastructure, such as natural gas home cardiovascular conditions, rheumatism, arthritis or furnaces. Generally, Renewable Natural Gas is fully allergies. Lastly, energy efficiency savings can be interchangeable with conventional natural gas. beneficial for lower income Canadians. Methane that is released from sources such as landfills, agricultural residues, livestock production, 4.2.4 District heating for residential and sewage treatment plants, and forestry waste can be commercial buildings could help lower recovered, cleaned, and can be directly substituted GHG emissions since heat is generated in for conventional natural gas. a centralised location with non-emitting fuel options. District heating (also known as heat networks or teleheating) is a system for distributing heat 70 World Energy Council Indicators, Average electricity consumption per electrified household, CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 43 generated in a centralised location for residential would double in Canada in approximately 50 years and commercial heating requirements such as from today, well past mid-century. New construction space heating and water heating. These systems has been addressed in the previous sections, but the have the potential to help reduce GHG emissions, dominating remaining building stock could mostly by utilising low-carbon fuel options such as waste remain standing in 2050. According to the IEA, close heat or biofuel. to 75% of the OECD countries building stock from 2010 will still be standing in 2050. District heating is the dominant heating system in Nordic countries (except for Norway). In those Therefore, new building energy code regulations on countries, biomass, natural gas, and municipal solid their own will not be enough to achieve significant waste biogas are commonly used as energy sources GHG emissions reductions from by 2050 and for district heating. Specifically, biomass is used as additional efforts will be needed to address existing fuel for 60% of district heating system in the Swedish buildings. The same is true in the industrial and building sector, 40% in Denmark, and 70% in Finland. commercial building subsectors. Canada has similar geographical and climatic conditions and has thus a vast and untapped Making existing buildings more energy-efficient potential for extensive district heating systems.71 through retrofitting is an important step towards reducing GHG emissions reductions in Canada. Retrofitting requires investments, especially in the

4.2.5 Life cycle assessment quantifies holistic case of deep retrofits where significant parts of the environmental impacts of buildings, building must be refurbished. Different retrofit rates enabling optimal decisions in are found around the world depending on type sustainable design. of buildings, climate and costs. For example, EU Life cycle assessment (LCA) is a scientific method member countries have an energy savings retrofit for measuring the environmental footprint of target rate of 3%/year for government owned materials, products and services over their entire buildings.74 Similarly, Germany has a target of thermal lifetime. Applied to a building, LCA measures retrofitting 2% of total residential buildings per year.75 environmental impacts like energy consumption Energy management practices, including energy and greenhouse gas emissions at every stage of a benchmarking, audits, and on-going building building’s life. It includes raw resource extraction, optimisation can help generate better understanding product manufacturing and transportation, building of buildings energy usage and costs, identify areas construction, operation and repair, and demolition. of opportunities, and make improvements where LCA helps building designers consider the total and when necessary. They can also provide green environmental impact of material choices and other solutions for systems that are embedded in the design decisions. Designers use LCA to examine building and may be harder or more costly trade-offs and alternatives, for the lowest possible to replace.76 lifetime environmental footprint of the building. This data-driven process allows building designers to test 4.2.7 Smarter, more sustainable cities are key to and validate their sustainability decisions.72 a prosperous future Urban planning and design will be key to making

4.2.6 Retrofitting existing buildings will be building sites and designs work together to enable necessary to address the inefficient lower GHG solutions. In a low-GHG economy, for building stock that could otherwise stand example, communities should be making effective well beyond mid-century. use of local energy sources ranging from on-site According to the Canadian Housing and Mortgage renewable energy to waste heat and organic waste, Corporation, Canadian residential construction has allowing optimal use of clean energy grids. District grown at an average rate of 1.5% in the past five energy networks will distribute thermal energy for years.73 At this rate, the built residential environment 74 Official Journal of the European Union, Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on Energy Efficiency Amending Directives 2009/125/EC and 71 International Energy Association, Canada Review 2015. 2010/30/EU and Repealing Directives 2004/8/EC and 2006/32/EC. 72 O’Connor, J., and Bowick, M., Advancing Sustainable Design 75 Germany Federal Ministry of Economics and Technology, with Life Cycle Assessment. Germany’s New Energy Policy Heading Towards 2050 with 73 Statistics Canada, 2011 Census of Canada. Canadian Mortgage Secure, Affordable and Environmentally Sound Energy. and Housing Corporation, Total Housing Starts, Canada, 76 Natural Resources Canada. Commissioning Guide for Provinces and Metropolitan Areas, 1990–2015 (units). New Buildings. 44 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY LOW EMISSIONS OPERATIONS AND GOVERNMENT PROCUREMENT Governments have an important leadership role to play in the transition to a low-carbon economy given the size of their operations. By implementing ambitious policies, federal, provincial and territorial governments can lead by example on many aspects of the low-carbon transition. Canada’s Federal Sustainable Development Strategy has developed objectives for greening government operations.77 The federal government has adopted a target to reduce emissions by 40% from 2005 levels by 2030, with the aspiration to achieve it earlier, potentially by 2025. Furthermore, the government has committed for all operations run by Public Services and Procurement Canada to use 100% of their electricity purchased from clean power, and to significantly increase the energy efficiency of federal buildings, with the goal of cutting emissions almost in half. Several provinces, such as British Columbia, Quebec, and Ontario, have also adopted targets to reduce emissions or to achieve carbon neutral operations. Governments can lead the way in many areas, such as green procurement, green buildings, energy efficiency measures, and other green investments. New government buildings could require a certain type of environmental certification, as green buildings are generally recognised to have a positive effect on the asset value.78 For older buildings, the use of deep retrofits would help to substantially reduce energy costs and GHG emissions. The use of energy performance measurement could help to better understand and improve energy use. Governments could also encourage the use of public and active transportation as well as flexible working arrangements such as telework. Green procurement is one way in which the government can reduce its environmental footprint and increase domestic demand for clean technologies and other environmentally preferable goods and services. For example, the federal government’s Policy on Green Procurement targets specific environmental outcomes where procurement can effectively be used to mitigate the impact of environmental issues, such as climate change. Allowing climate considerations to be streamlined into the procurement process, such as the disclosure of climate performance, could more accurately benchmark and compare different product and services. The purchasing power of governments could also be used to support the development of green technologies. Governments could also help to accelerate the adoption of certain green products such as electric vehicles with charging stations at work locations. In some sectors, there are opportunities to take a more important role in greening their operations. The defense sector is increasingly recognising the strategic importance of having alternative sources of power and the potential cost savings. The Pentagon has become the second largest purchaser of long-term renewable electricity contracts in the U.S., according to Bloomberg data.79 Low-carbon opportunities exist for Department of National Defense and other government departments that have large fleets. It is important that governments explore best practices on greening government operations by learning from other jurisdictions. This is important for developing knowledge and raising ambition over time in order to be innovative and creative in finding solutions. heating and cooling, while smart electrical grids waste heat, use renewable fuels, and capitalise on manage local energy supply and demand. Energy opportunities as energy producers.777879 storage systems could help to balance variations in supply and demand for heating, cooling and power while local industrial, commercial, and agricultural enterprises approach energy in an integrated 77 Government of Canada, Shrinking the Environmental Footprint – way. Finally, businesses could take advantage of Beginning With Government. 78 The Royal Institution of Chartered Surveyors, Green Value. 79 Financial Post, How the Pentagon is Waging America’s Wars Using Renewable Energy. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 45 AN ELECTRIFICATION SUCCESS STORY Mining vehicles typically require energy-dense fuels to move and lift heavy loads. However, in 2008, SBC Case Industries, PapaBravo’s parent company, initiated an R&D project to develop electric vehicles for use in potash mines. Later, PapaBravo developed a business plan based on R&D technology with the support of the National Research Council’s Industrial Research Assistance Program. The company was able to develop many vehicles such as the Marmot-EV and a second- generation truck able to function in environments other than potash mines. The vehicles have a range of about 120 kilometres and can recharge in less than an hour. The Saskatoon firm PM&P which acquired PapaBravo in 2015 is now a global competitor in electric mining vehicles and is doing business in Canada, South Africa, Australia, and New Zealand. 80

4.3 Industry 4.3.1 National circumstances challenge the decarbonisation of Canadian industrial sectors KEY MESSAGES: Historically, Canada has benefited from an internationally competitive economy based on low- • National circumstances represent cost natural resources and accompanying industrial challenges for the decarbonisation of activities. These activities face significant challenges Canadian industrial sectors. to decarbonisation: • Electrification of industrial operations • Canada’s energy sector is an important driver offers emissions reduction potential. of the Canadian economy. Canada’s exports of energy, extracted resources, and agricultural • Cogeneration reduces waste heat and commodities are significant contributors to the generates thermal and electric energy, gross domestic product. Also, Canada is a net thereby producing environmental and energy exporter. It is the world’s fourth largest economic benefits. exporter of crude oil and fifth largest exporter of natural gas. • Other improvements in energy efficiency through innovative ways • Canada’s oil and gas sector is GHG intensive due of optimising energy production and to the energy required in the primary extraction consumption will be essential. of fossil fuel and other natural resources. • Carbon capture and storage, • Industries are concentrated in particular fuel switching to non-emitting fuels, areas of the country, making distributional and recycling can also reduce impacts of abatement policies a particular emissions. These technologies continue concern. Regional cooperation and progressive to improve. mitigation policies will be key to ensure that decarbonisation efforts do not disproportionally • Nevertheless, there remain challenges affect certain regions. in reducing emissions from some sectors, for which innovation and research and • Over 75% of Canada’s total industrial energy development will be necessary. use is consumed in the mining, pulp and paper, iron and steel, cement, smelting and refining, 80 National Research Council Canada, Revolutionizing Canada’s Mining Industry with Electric Vehicles. 46 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY chemicals, and petroleum refining sectors. The electric resistance elements to produce steam and greatest portion of energy (about 70%) is used heat, and the conversion of electricity into thermal for heating purposes such as thermal treatment energy is very efficient. It is technically possible for (mainly in heaters and furnaces), drying, and the separation of bitumen, hydrogen production for steam generation. These emissions are more upgrading, and refining and pipelining operations to challenging to reduce than in other sectors use electricity instead of natural gas. due to the high heat requirements of certain processes. Technology solutions exist, often with A study by the Canadian Energy Research Institute deep GHG reduction potential, however market has looked at scenarios for the electrification of oil barriers to adoption are such that significant sands production using hydropower and increased investments may be required to achieve large- electricity transmission capacity. Overall, the study scale commercial uptake. finds that the use of hydropower could potentially reduce the GHG emissions of oil sands operations by 13-16%. Reductions are possible from a range of

4.3.2 Electrification of industrial operations offers technologies that could require significant investment emissions reduction potential in infrastructure as well as the application of new Many Canadian industries are already electrifying technologies. The potential for reductions could their operations or discovering other innovative ways be even higher with the development of in-situ to lower GHG emissions. For example, motor systems extraction using electricity for heating purposes, such as pumps, fans, conveyers, and compressors but many of these technologies are still under are almost entirely powered by electricity in development. some sectors. Electrified operations can be set for In general, several options exist to decarbonise production during off-peak electricity periods to heavy industry, but significant R&D, piloting, and benefit from lower electricity prices. Specific sub- commercialisation support are required to allow sectors, such as the aluminium industry, where their penetration. smelting processes are highly energy intensive, are already relying on non-emitting electricity to fulfil their power demands. The energy intensity of 4.3.3 Cogeneration reduces waste heat and aluminium plants has also decreased over time, generates thermal and electric energy, leading to reduced electricity demand per unit thereby producing environmental and of output. economic benefits. In the iron and steel sector, some Canadian plants Cogeneration, also called combined heat and operate with electric arc furnaces that produce steel power (CHP), produces electrical and thermal from recycled metal and require significantly less energy simultaneously by using a single fuel for energy compared to conventional processes using heating or cooling applications. Cogeneration ore. In the glass industry, electric glass melting tanks allows for gains in energy efficiency as it can use can be used, while in the pulp and paper industry, waste from one process as an energy input into electricity can be used for mechanical pulping. In another. The main types of cogeneration systems the mining sector, hybrid diesel-electric equipment include steam turbines, gas turbines, reciprocating could be used in underground mines and fully engines, microturbines, combined cycle gas turbines electric vehicles could further reduce emissions and and organic rankine cycles. Cogeneration requires diminish needs for ventilation. maximizing electricity production, while matching thermal load requirements to the extent possible in In Canada’s oil sands, extracting and upgrading terms of quantity and energy quality. 81 The energy bitumen is an energy-intensive process where large savings from cogeneration relative to standalone amounts of thermal energy and electricity are used. generation range from 5% to 35%. Further electrification of processes, including the electrification of heat (for example electro-thermal or In Canada, about 7% of electricity generation radio frequency electromagnetic heating), provides is produced from cogeneration. Most energy an avenue to decarbonisation, but requires a clean generated from cogeneration (both electric and electricity source. thermal) is from the utility, paper and wood products, and oil and gas extraction sectors. Growth in The adoption of electric steam generators to replace cogeneration occurred during two periods. In the natural-gas fired steam generators could reduce 81 Canadian Industrial Energy End-Use Data and Analysis Centre, direct emissions. Electric steam generators use Cogeneration Facilities in Canada 2014, p. 7. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 47 1970s cogeneration capacity increased in response improving energy efficiency through programs and to a significant increase in energy prices. The standards could help drive significant reductions second period of growth occurred in the 1990s as a in the demand for energy. Although electrification response to many socio-economic factors including is key, the recovery and use of waste heat should increasing cost-effectiveness and full retail access be pursued across subsectors concurrently. Other to the electricity grid in Alberta. Cogeneration has innovative ideas that could support energy use the potential to achieve significant energy savings, optimisation include the development of industrial particularly in the oil sands sector, as the extraction eco-parks which facilitate the exchange of excess and upgrading processes require large amounts of energy and industrial by-products, and minimise heat and steam. transportation requirements between facilities. In order to fully maximise the potential of In oil sands operations, the adoption of innovative cogeneration to reduce GHG emissions, the low-carbon extraction processes offers potential adoption of certain technologies may be necessary, GHG emission reductions. Advanced technologies, including those that optimise load matching, improve such as solvent and electrothermal-based extraction operations in harsh environments, and allow for methods for in situ, or direct contact steam biomass gasification, advanced power cycles, and generation, are at a stage of development whereby high-penetration of renewables into fossil thermal they offer a substantial opportunity to reduce cycles (e.g., solar thermal pre-heating of the inlet air emissions. These innovations could offer up to 50% to gas turbines). GHG emissions reductions per barrel produced and could prove pivotal in delivering economically and environmentally competitive fossil fuel supplies to

4.3.4 Other improvements in energy efficiency a decarbonising global market. Vacuum-insulated through innovative ways of optimising tubes can also be used to save heat in the process energy production and consumption will of moving the steam down the well and could be essential accelerate the pre-heating process of the well Energy efficiency measures that improve processes significantly. 83 Further, some of these innovative and reduce heat loss can be implemented across extraction techniques leave the heavier contents sectors using current best available technologies. of the bitumen in the reservoir, meaning less diluent Heat management practices can improve heat is needed in pipelines. Not having to store these production and heat transfer to and within process heavier contents, for which there are fewer markets, users. Innovative waste heat recovery technologies also reduces operating costs and GHG emissions. can help reduce energy consumption, production costs, and emissions in industrial facilities. In the mining industry, ventilation-on-demand can be adopted to reduce the energy consumption required Energy efficiency measures include process to ventilate underground metal mines. For example, optimisation; operation and control improvement; a medium-size nickel mine with diesel equipment waste heat recovery and upgrading for heat, and 10 operating levels emits about 10,000 tonnes of cold, or power production; and new technology CO2 annually. Estimated energy cost savings from the and process development. Examples of process adoption of ventilation on demand technology can optimisation include adopting proper motor sizes reach 50% depending on the size of the mine. to optimise power use, and using adjustable-speed drives. Frequent and proper maintenance and repair

4.3.5 Carbon capture and storage, fuel can also improve energy efficiency of equipment. In switching to non-emitting fuels, and some industries, there are potential solutions which recycling can also reduce emissions. involve entirely changing production processes to These technologies continue to improve reduce energy requirements. For example, the pulp and paper industry can use chemical additives to Beyond the electricity sector, carbon capture and reduce the heat required to dry paper. 82 storage (CCS) also has potential in the oil and gas, iron and steel, pulp and paper, chemical, For the oil and gas sector, energy efficiency and cement sectors. CCS is currently being and energy use optimisation can amplify the used to capture emissions from steam methane emissions abatement potential of electrification reformers. The Shell Quest Project, which has been and other options. For example, deploying energy in operation since November 2015, captures and management systems to oil and gas facilities and 82 Energy Economics, Optimizing the Energy Efficiency of 83 Council of Canadian Academies, Technology and Policy Conventional Multi-Cylinder Dryers in the Paper Industry, p.35. Options for a Low-Emission Energy System in Canada, p. 92. 48 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY THE USE OF BIOMASS FOR CEMENT MANUFACTURING Bioenergy as a replacement for fossil fuels in cement making is currently at the commercial demonstration phase in Canada. For example, the Lafarge plant in Bath, Ontario, was funded under the ecoENERGY Innovation Initiative to demonstrate a 10% coal-to-biomass fuel switching project. This includes processing the raw materials into a useful form, developing and installing an injection system, running fuel trials, and compiling the results of the carbon savings resulting from this process. The results of these trials will inform the permanent use of low-carbon fuels at the Bath plant and could be used by other companies in the cement industry. 84 sequesters 1 million tonnes of CO2 per year from more technological advances would be required the Shell Scotford steam methane reformers. to make CCS economic. With the knowledge and The Alberta Carbon Trunk Line (ACTL), a project technological advancements spurred from under development, is a 240 km pipeline that will projects currently underway, the cost of CCS could capture and use CO2 emissions for enhanced oil go down in the future and be applied in other recovery from the facilities in the Alberta Industrial industrial sectors. Heartland. The initial industrial facilities that will capture and supply CO2 are Agrium Inc. and the Fuel-switching options are also available to Sturgeon Refinery. The ACTL will have the capacity to industrial sectors. As mentioned previously, the oil permanently store about 14.6 million tonnes of CO2 and gas sector can use solvents instead of natural annually as of 2017. gas in SAGD applications, despite being relatively expensive at the moment. Using electricity instead Some barriers for deployment of CCS technology of fossil fuels is also a possibility. Finally, biomass waste in these sectors remain, such as lack of economic can be used by many sectors, including oil and gas capture technology and infrastructure to connect and cement, to replace more carbon carbon source with sequestration formations. This intensive energies. will require significant investments and pipeline network construction. In the upstream oil and gas The recycling of materials in many industrial sectors is sector, relevant carbon capture technology for another option to reduce GHG emissions as it reduces in-situ boilers and cogeneration units could be needs for energy, raw materials, and landfill space. available within a 10 to 15 year timeframe. However, For example, in the pulp and paper sector, recovered paper can be recycled through chemical pulping 84 Natural Resources Canada, Low Carbon Fuel Demonstration instead of producing paper from new feedstocks. Pilot Plant. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 49 Another example is the reuse of recycled plastic in the low profit margins. Bargaining power of suppliers and chemical and petrochemical sector as a substitute to buyers, the threat of substitutes and new entrants, and polymer based inputs. Plastic waste that cannot be the level of rivalry between competitors are some of recycled can be used as an energy input - In the iron the factors that determine how competitive industries and steel sector it can be burned as a replacement are in global markets. Many companies face global for coal or coke – or as a feedstock in other sectors. prices for their outputs, meaning that they must contain The use of recycled scrap metal materials to produce their production costs in order to remain competitive. iron and steel can also lead to emission reductions as Canadian oil producers operate in a global market producing iron and steel from iron ore requires more and they are essentially price takers for their outputs, energy than from scrap. 85 which requires them to look at ways of reducing their production and transportation costs in order to remain Figure 11 (below) illustrates the world GHG competitive. Moreover, these companies may face reduction potential estimated by the IEA from additional challenges associated with decreasing four types of industrial GHG emissions reductions global demand for their goods in the future as technologies for IEA’s low-demand and high-demand governments act to mitigate GHG emissions. Canadian scenarios. According to the IEA, energy efficiency natural gas producers are currently competing in improvements, switching to low-carbon fuels, a continental market. In the future, with additional increased recycling, and new innovative processes liquefied natural gas plants expected to come online, such as CCS will all be needed to decarbonise large the global natural gas market is expected to be industrial emitters. increasingly integrated. Innovation in these sectors is likely to yield significant

4.3.6 Nevertheless, there remain challenges benefits to companies that can improve processes in reducing emissions from some sectors, and technologies to reduce emissions. Government for which innovation and research and and private sector funding will be required for further development will be necessary research and development to promote technology Emissions-intensive industrial sectors often face innovations in many strategic areas pertaining to challenges in reducing GHG emissions as many of industrial emissions. These include CCS technologies their emission sources are difficult to address through to reduce costs and improve efficiency, industrial cost-effective electrification, energy efficiency, or fuel- efficiency improvements, fuel switching to bioenergy switching. These challenges are compounded as many and the conversion of biomass into bio-based products industries also face competitive pressures due to their and bioenergy, technologies to address process exposure to international trade competition, and their emissions, and enhanced recycling capabilities. 85 International Energy Agency, Energy Technology Transitions for Industry. Figure 11: World reduction potential from existing technologies for large industrial emitters Source: International Energy Agency, Energy Technology Perspectives 2015 50 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 5 Non-Carbon Dioxide Emissions KEY MESSAGES: • Non-carbon dioxide climate warming emissions include short-lived climate pollutants (SLCPs) and nitrous oxide, a long-lived GHG. Non- carbon dioxide emissions have significantly greater warming effects per tonne than carbon dioxide. • The only way to meet the 1.5 to 2°C temperature goal encompassed in the Paris Agreement is to take early global action on carbon dioxide and short-lived non-carbon dioxide emissions together. • Reducing short lived climate pollutants has considerable benefits beyond those that are climate related, such as improving air quality, human health, and environmental and ecosystem outcomes. • Current technology and know-how has the potential to significantly reduce non-carbon dioxide emissions, often helping to slow the rate of near-term warming.

5.1 Non-carbon dioxide climate warming emissions include emissions of short-lived climate pollutants (SLCPs) and nitrous oxide, a long-lived GHG. Non-carbon dioxide emissions have significantly greater warming effects per tonne than carbon dioxide. Short-lived climate pollutants (SLCPs) are potent greenhouse gases (GHGs) and air pollutants. They have relatively short atmospheric lifetimes compared to longer-lived GHGs such as carbon dioxide (CO2), and have a warming impact on the climate. SLCPs include methane, hydrofluorocarbons (HFCs), and ground-level ozone, as well as black carbon, a component of particulate matter. Black carbon is also an air pollutant, resulting from the incomplete combustion of fossil fuels and biomass. Ground-level ozone is also an air pollutant and key contributor to smog, which is associated with adverse impacts on human and ecosystem health. Nitrous oxide is a long-lived GHG. Figure 12 below illustrates Canada’s greenhouse gas emissions in terms of CO2 equivalency where non- CO2 emissions account for around 21% of total emissions. Methane and nitrous oxide are the two main non-CO2 GHGs emitted and originate mostly from fossil fuel related activities, livestock farming, and industrial processes. Although HFC emissions are not currently a significant contributor to total GHG emissions in Canada, in the absence of the recent phase-down amendment to the Montreal Protocol, they were projected to more than triple between 2013 and 2030. Methane emissions, which account for 15% of total GHG emissions in Canada,86 are significant contributors to climate impacts. In addition, methane contributes to the formation of ground-level ozone. The oil and gas sector accounted for 44% of Canada’s methane emissions in 2014, largely from oil and natural gas fugitive sources, including venting . The remainder of Canada’s methane emissions arises largely from agriculture and solid waste disposal. 86 The GHG estimate of 108 Mt for methane (15% of total Canadian GHG emissions) uses a global warming potential of 25 consistent with the IPCC fourth assessment report. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 51 Figure 12: Canada’s Emissions Breakdown by Greenhouse Gas (2014) Source: National Inventory Report 1990-2014: Greenhouse Gas Sources and Sinks in Canada – Executive Summary, Environment and Climate Change Canada, 2016. Nitrous oxide emissions account for 5% of total Amendment and will continue to play a leadership Canadian GHG emissions. The burning of fossil fuels role in implementing the Montreal Protocol, including results in the oxidization of the nitrogen contained in the HFC amendment, notably by hosting the 29th the fuel and the air creates nitrous oxide emissions. Meeting of the Parties in 2017, which marks the These emissions come mainly from coal-fired power Montreal Protocol’s 30th anniversary. plants as well as cars and trucks. Industrial processes, particularly those involved in the production of nitric The potency of HFCs varies by species and ranges and adipic acid, also cause nitrous oxide emissions from <1 to 10,800 times that of CO2 over a 20- through the oxidization of nitrogen compounds. year period, and <1 to 12,400 that of CO2 over Over 70% of total nitrous oxide emissions emitted in a 100-year period. 87 HFCs are used in the same Canada are from the agricultural sector, mainly from applications which ozone-depleting substances crop and animal production. In crop production, have been used. In Canada, HFC use is mainly nitrous oxide emissions arise mostly from the use of confined to the following sectors: insulating foam synthetic fertilizers where the addition of nitrogen products (50%), refrigeration and air-conditioning to soils helps the nutrient absorption of plants and equipment in buildings and industrial operations allows bacteria contained in the soil to produce extra (30%), air-conditioning in vehicles (13%), and aerosols energy to grow. Microbial processes involved in these (7%). Since HFCs are being used as replacements activities then produce releases of nitrous for ozone depleting substances, including oxide emissions. hydrochlorofluorocarbons (HCFCs) that are still in the process of being eliminated, their use and emissions HFCs are synthesized chemicals used as are increasing as HCFCs are being phased out. In replacements for ozone-depleting substances. addition, in the absence of the recent phase-down Internationally, atmospheric observations show that amendment to the Montreal Protocol, HFC emissions the volume of HFCs in the atmosphere is increasing would be expected to increase because of greater rapidly, about 10 to 15% per year. To address demand for refrigeration and air conditioning concerns regarding an estimated increase in HFC throughout the economy. emissions to 10% or more of total CO2 equivalent emissions by 2050, the 197 Parties to the Montreal According to Canada’s black carbon emissions Protocol agreed to an amendment to phase-down inventory, 43 kt of black carbon were emitted = the use and production of HFCs on October 15th, in 2014. Black carbon emissions are estimated to 2016. The “Kigali Amendment” could help to avoid be the third largest contributor to current global almost 0.5oC of global warming by the end of the warming, after CO2 and methane. Black carbon century. Canada was a strong supporter of the HFC 87 Myrhe et al., Anthropogenic and Natural Radiative Forcing. 52 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY Figure 13: Global Temperature Projections Relative to 1890-1910 averages Source: UNEP Integrated Assessment of Black Carbon and Tropospheric Ozone, Summary for Policy Makers Note: Bars on the right show estimated ranges for 2070. influences the climate in multiple ways: by directly deleterious effects on human health, damages heating surrounding air when suspended in the plants, and affects agricultural crop production. In atmosphere; by reducing the reflectivity of the earth’s Canada, the transportation and oil and gas sectors surface when deposited, an effect particularly are key sources of ozone precursors. Residential wood strong over snow and ice; and through additional combustion is also a significant source of indirect effects related to interaction with clouds. CO emissions. Black carbon is estimated to be 3,200 (270 to 6,200) times more potent a warming agent than CO2

5.2 The only way to meet the 1.5 to 2°C over a 20-year period. 88 Reducing uncertainties temperature goal encompassed in the related to quantifying the overall warming effects Paris Agreement is to take early global of black carbon represents an active area of action on carbon dioxide and non-carbon scientific research internationally. Black carbon dioxide emissions together. also has significant effects on human health, including respiratory and cardiovascular effects, Recent scientific studies indicate that the only way as well as premature death. The transportation to meet temperature commitments in the Paris sector accounts for 62% of Canada’s black carbon Agreement is to take early global action on CO2 and emissions, followed by residential wood-burning, SLCPs, together. The United Nations Environmental accounting for about 27% of national emissions. Program’s (UNEP) Integrated Assessment of Black Carbon and Tropospheric Ozone concludes that Ozone is not directly emitted, but forms in the reducing black carbon and tropospheric ozone now atmosphere as a product of precursor gases will slow the rate of climate change within the first including nitrogen oxides (NOX), volatile organic half of this century. compounds (VOCs) - including methane - and carbon monoxide (CO). Ground-level ozone is a The UNEP assessment notes that deep and powerful GHG, a significant contributor to current immediate CO2 reductions are required to limit warming, and a key component of smog. It has long-term warming, and this cannot be achieved 88 GWP20 from Bond et al. (2013). Bounding the role of black by addressing short-lived climate forcers alone. carbon in the climate system: A scientific assessment. The use of However, it goes on to note that implementation of the GWP here is to help communicate the potential contribution measures on black carbon and methane globally by of black carbon mitigation to reducing near-term warming. Given the very different ways black carbon and CO2 influence 2030 could reduce future global warming by 0.5˚C by climate and their vastly different lifetimes in the atmosphere, 2050 and by as much as 0.7˚C in the Arctic by 2040, there is not yet scientific consensus on a metric to quantify black carbon relative to CO2. Further research to reduce uncertainties and together with early action on CO2, this is the only and develop more appropriate metrics is needed. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 53 way to limit the global average temperature rise to Health Organization (WHO) noted that black carbon well below 2˚C (Figure 13). is a “carrier” of other pollutants, delivering them deep into the respiratory system, and further that The expected climate benefits of such an approach a reduction in exposure to PM2.5 containing black are particularly relevant for Canada as an Arctic carbon should lead to a reduction in the health nation. In Canada, the Arctic warmed by 2.2°C effects associated with PM2.5. between 1948 and 2013 resulting in significant impacts to local populations and sensitive ecosystems. Black carbon is of particular significance 5.4 Current technology and know-how has in the Arctic due to its additional warming effect the potential to significantly reduce non- when deposited onto snow or ice, which carbon dioxide emissions, often helping to accelerates melting. slow the rate of near-term warming. Many solutions exist to reduce important sources

5.3 Reducing short lived climate pollutants has of non-CO2 emissions. In general, measures that considerable benefits beyond those that help promote the transition towards cleaner energy are climate related, improving air quality sources will reduce both CO2 and SLCP emissions and human and ecosystem health. over the long term by reducing the use of fossil fuels. However, slowing the rate of near-term warming Given that many SLCPs are also air pollutants, requires more targeted SLCP emissions reductions reducing emissions also provides a key opportunity strategies, as many are emitted from a large number to also improve air quality, generating local health of small sources. Canada has made a number benefits for Canadians and reducing impacts to of recent significant commitments to advance ecosystems and agricultural productivity. SLCP mitigation priorities together with continental partners, under the Leaders’ Statement on a North Ground-level ozone, a potent GHG, has several American Climate, Clean Energy and Environment other deleterious environmental effects. As a key Partnership (NALS Statement), including the component of smog, ozone leads to significant commitment to develop and implement a national human health impacts such as respiratory and methane strategy that will consider how to address cardiac problems. These health problems result in methane from key sources. significant losses to Canada’s economy through hospital visits and lost productivity. Most methane emissions from the oil and gas sector come from venting and fugitive emissions. These Ground-level ozone also influences crop yield include venting from wells and batteries, fugitive by interfering with the ability of sensitive plants to equipment leaks, storage tanks, pneumatic devices, produce and store food, subsequently increasing their well completions, and compressors. Cost-effective vulnerability to certain diseases, insects, harsh weather, technologies are readily available and tackling and other pollutants. These negative impacts may methane emissions from the oil and gas sector is translate into reduced crop yields and, consequently, one of the lowest cost reduction opportunities to lower sales revenue for crop producers. In addition, achieve significant GHG reductions. Canada has ground-level ozone may increase the risk of illness or committed to reducing methane emissions from the premature death within sensitive wildlife or livestock oil and gas sector by 40 to 45% below 2012 levels populations, potentially resulting in significant treatment by 2025. To implement this commitment, Canada costs or economic losses for the agri-food industry. intends to publish proposed regulations to reduce Thus, reducing emissions of ozone precursors, namely venting and fugitive methane emissions from oil methane, VOCs, CO and NOX, can reduce mortality and gas sources by early 2017. Canada has also and morbidity rates in the Canadian population, endorsed the World Bank’s Zero Routine Flaring by improve quality of life, as well as increase 2030 initiative, which will support reductions in black economic productivity. carbon emissions resulting from routine flaring at oil Short-term and long-term exposure to PM2.5, of which production facilities. Canada has been consulting black carbon is a component, is also associated with provinces, territories, industry, non-governmental with a broad range of human health impacts, organizations and Indigenous peoples on the including respiratory and cardiovascular effects development of the federal regulatory approach. as well as premature death. In its 2012 assessment of the health effects of black carbon, the World 54 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY Accurately quantifying non-CO2 emissions is Further reducing emissions from Canada’s largest challenging, particularly fugitive emissions. This can sources of black carbon emissions, existing diesel be explained by the fact that methane leaks are vehicles and engines, and wood-burning appliances, often only detected and repaired sometime after will require targeted actions to address barriers they start. Another source of uncertainty relates to related to long vehicle, engine and appliance fugitives arising from the hydraulic fracturing process lifetimes, and influencing the consumers that own required to extract shale gas, a growing source of many of these small, distributed sources to retrofit or natural gas supply in Canada. As a result, current replace them with cleaner technologies. inventory techniques are likely underestimating fugitive emissions. In response to this issue, many Measures to address ozone precursors are often scientific initiatives have been initiated to better part of air quality policies, driven primarily by human estimate these sources including research and health concerns. Measures to reduce development to estimate emissions such as ozone precursors in the transportation sector also undertaking atmospheric measurement campaigns, often reduce black carbon as a co-benefit. and new measurement technology such as infrared Ozone precursors from industrial sources should imagery. 89 The use of both top-down and bottom- also be addressed. up estimates will support improved understanding Adjusting fertilizer rates with plant needs, placing of methane from oil and gas sources. Canada has fertilizer near plant roots, applying fertilizer more committed to working with continental partners to frequently instead of only once, and using slow- enhance the effectiveness of emission inventories for release forms can limit nitrogen in soils and reduce methane emissions from the oil and gas sector. nitrous oxide emission. In the same fashion, using The March 10, 2016, Canada-U.S. Joint Statement manure more efficiently can also reduce nitrous recognizes the importance of improving the oxide emissions. Other practices such as increased quantification of emissions. Canada is committed use of legumes as a nitrogen source, use of cover to working with continental partners to improve crops to remove excess available nitrogen, less use emission inventories of methane emissions from the oil of summer fallow, and adjusting tillage intensity and gas sector. can also contribute to reducing emissions in the agriculture sector.90 These options can yield co- In the waste sector, technology for landfill gas benefits such as reducing the cost of production (as recovery and utilization is well established and less fertilizer is used), saving on the use of fossil fuels readily available for both new and existing needed to produce fertilizers, and reducing the landfills. Depending on landfill age and access to pollution resulting from nitrates, ammonia, and other infrastructure, landfill gas recovery and utilization nitrogen substances released in the environment. can also be highly cost-effective. Under the NALS Statement, Canada has committed to take action In the industrial sector, adipic acid plants can use to reduce emissions from landfills, and to implement proven and commercially available technology voluntary measures to reduce and recover using catalytic and thermal destruction techniques food waste. with reduction efficiencies ranging between 90% and 99%. In nitric acid plants, the use of non-selective Technologies to reduce black carbon emissions from catalytic reduction and selective catalytic reduction the transportation sector are also proven. Canada’s is possible to reduce nitrous oxide emissions by as low sulphur content in fuel regulations enable the much as 90%.91 use and effective operation of vehicle and engine exhaust after-treatment systems, such as diesel particulate filters, which can nearly eliminate black carbon emissions. Transportation sector air pollutant regulations for on- and off-road vehicles and engines are helping to drive down black carbon emissions from this sector. 89 Glancy, R., Quantifying Fugitive Emission Factors from 90 Agriculture and Agri-Food Canada. Nitrous Oxide. Unconventional Natural Gas Production Using IPCC 91 International Energy Agency. Abatement of other Greenhouse Methodologies. Gases – Nitrous Oxide. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 55 Several Canadian companies and end users Meanwhile, major automobile manufacturers have developed and implemented innovative operating in Canada have started to manufacture technologies to transition from current HFC new models with air conditioners using climate- technologies, and have an opportunity to take a friendly alternatives instead of HFCs. Those actions lead role in the transition to non-HFC technologies. are also helping to increase energy efficiency. For For instance, some Canadian supermarkets are example, for some applications, replacing HFCs converting their refrigeration systems to enable the with climate-friendly refrigerants and technologies use of refrigerants with very low global warming can improve energy efficiency by up to 50%. The potentials, that are more energy efficient, and yield Government of Canada plans to publish proposed significant cost savings. For example, Sobeys has regulatory measures to phase down HFCs in Canada, converted over 70 of its stores to climate-friendly, including prohibitions on the manufacture and home-grown innovative technologies and plans to import of products and equipment containing or extend such conversions to its 1,300 stores across designing to contain HFCs by the end of 2016. the country. 56 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 6 Forests KEY MESSAGES: • The Paris Agreement highlights the critical role that forests play in achieving the global net-zero emissions objective in the second half of the century. With its vast managed forest land, Canada has significant potential for long-term forest-based GHG mitigation. • Choices about mitigation strategies will be influenced by the slow-growing nature and high rate of natural disturbances in Canada’s forests. • Forest-related mitigation can involve either reducing or avoiding emissions, or enhancing carbon sequestration. The potential becomes even clearer when impacts are assessed on a life-cycle basis. • A substantial reduction in emissions and increase in removals by 2050 is possible through measures such as changes in how forests are managed, greater domestic use of long-lived wood products, greater use of bioenergy from waste wood, and afforestation. • There are a number of emerging opportunities in which the forestry sector could contribute to mitigation outcomes that require further consideration.

6.1 The Paris Agreement highlights the critical role that forests play in achieving the global net-zero emissions objective in the second half of the century. With its vast forest land, Canada has significant potential for long-term forest-based GHG mitigation. Forests play an important role in the carbon cycle by sequestering a significant amount of carbon, thereby reducing net CO2 emissions to the atmosphere. It is estimated that globally, forests offset the equivalent of about 24% of anthropogenic emissions from the atmosphere.92 As noted in the Paris Agreement, a balance between emissions and removals of greenhouse gases in the second half of the century is needed to ensure that global warming is limited to well below two degrees Celsius.93 It is therefore important to recognise that without actions to protect, conserve, and sustainably manage forests globally, it will not be possible to achieve the net-zero emissions required to reach this objective. Considering the vast size and economic impact of its forest, Canada has a responsibility to carefully consider the mitigation potential of its forest sector. Canada’s forest is the third largest in the world, at 347.6 million hectares,94 and Canada’s forest industry contributes significantly to the economy as a major employer nationwide, with nominal GDP of $22.1 billion in 2015.95 By value, Canada is the world’s leading exporter of softwood lumber, newsprint and chemical wood pulp.96 Canada’s forward-looking forest-related mitigation actions can thus have a significant impact. Given their traditional relationship with forests, Indigenous peoples have an important role to play in planning and managing forest resources. In 2011, 70% of Indigenous 92 Smyth et al., Quantifying the biophysical climate change mitigation potential of Canada’s forest sector. 93 United Nations Framework Convention on Climate Change, Paris Agreement, Art. 4. 94 Canada’s National Forest Inventory Resources, Statistical Summaries for Canada: Forest Area. 95 Natural Resources Canada’s calculations based on Statistics Canada’s CANSIM table 379-0031. 96 Natural resources Canada, The State of Canada’s Forests 2015. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 57 communities were located in forested areas.97 northern conditions. Mitigation strategies that rely on Indigenous peoples account for 4.8% of the total forest growth to sequester carbon must therefore be forest sector workforce in Canada, compared implemented soon in order for significant mitigation to 3% of the total workforce.98 The participation benefits to be realised by 2050. of Indigenous people in land-use decisions and sustainable forest management will be a key The factors described above, as well as component of the long-term contribution of considerations related to natural disturbances such Canada’s forests to climate change mitigation. as forest fires and the impact of climate change on the forest, will influence the development of forest- related mitigation. Sustainable forest management

6.2 Choices about mitigation strategies will already balances multiple objectives but now be influenced by the slow-growing nature must also increasingly tackle the twin challenges and high rate of natural disturbances in of mitigation and adaptation. This underscores the Canada’s forests. importance of developing a long-term strategy that will build on actions planned in the short- to medium- A large proportion of Canada’s forests are old and term and ensure that forest-related mitigation can slow-growing. When harvested, much of the biomass make a substantial contribution to the is converted to wood products that can store the mid-century target. carbon for a long period of time, depending on the product. Harvest residues left in the forest decompose over time or may be burned to reduce 6.3 Forest-related mitigation can involve the risk of wildfire. All forests harvested on public either reducing or avoiding emissions, land must be regenerated according to policies or enhancing carbon sequestration. and legislation on sustainable forest management,99 The potential for forest-based mitigation but it takes time for trees to grow in Canada’s cold, becomes even clearer when impacts are assessed on a life-cycle basis. 97 Government of Canada, Indigenous Peoples and Forestry in Canada. As noted in the IPCC Fourth Assessment Report, it is 98 Natural Resources Canada, Aboriginal Participation in the Forest important to examine total mitigation effects across Sector. 99 Ibid, p.26. All areas of provincial Crown land that are harvested the forest and forest products system on a life-cycle for timber are required to be regenerated using natural or basis, taking into account emissions and removals artificial means (i.e., planting and seeding), or a mix of the two. Standards and regulations for achieving successful regeneration in the forest, storage of carbon in harvested wood vary by province. 58 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY products (HWP), land-use changes, and avoided forest management that produces harvested wood emissions in other sectors from the substitution of products annually while maintaining or increasing HWP or bioenergy for other more emissions-intensive forest carbon stocks will generate the largest products and fossil fuels.100 sustained mitigation benefit in the long run.102 Assessment of mitigation strategies must take into consideration biophysical, technical and 6.4.1 Change in Forest Management Practices economic factors. The biophysical mitigation Given that close to 90% of forests in Canada potential sets the boundaries around what is are owned by provinces and territories,103 these physically possible to achieve in the forest, while jurisdictions will need to identify and implement the technical and economic costs determine changes in forest management practices most what is feasible to accomplish.101 relevant to their region. Mitigation actions must be balanced with other sustainable forest management

6.4 Analyses show that a substantial reduction priorities, but could include higher utilisation of in emissions and increase in removals by residual and harvested wood, reduced burning of 2050 is possible through measures such harvest residues in the forests, increased planting to as changes in how we manage forests, rehabilitate forests after natural disturbances, and greater domestic use of long-lived wood increased planting intensity to improve forest growth products, greater use of bioenergy from after harvest. waste wood, and afforestation. In addition to their substantial long-term mitigation Realising forest-related GHG mitigation potential potential, changes in forest management practices will require a focus on actions that help reduce could create co-benefits, including increased emissions and increase the carbon stored in trees, employment in the forest sector, reductions in black soils, and forest products. In general, in the short- to carbon emissions (where there is a reduction in medium-term, options that avoid emissions and slash burning), and increased adaptation efforts to maintain forest and HWP stocks may offer the largest improve the resilience of forests. mitigation results. In the longer-term, significant mitigation can result from options that increase

6.4.2 Afforestation harvesting over time and substitute forest biomass for more emissions-intensive products and energy A future vision for Canada could include an expanded sources. In order to achieve longer-term mitigation, forest area, however this would need to be achieved however, action is required in the near-term, even without negatively affecting food production. There if mitigation benefits are not immediately visible. has historically been relatively little afforestation in Moreover, in some cases, options that provide the Canada,104 but this could provide substantial carbon greatest short-term results may not always provide sequestration in the long-term. Various levels of the greatest mitigation in the long term. Therefore, afforestation using mixes of fast-growing species and when assessing forest-related mitigation options, it is slower-growing species could be used. Because of important to consider the potential for a longer-term the time it takes for trees to grow in Canada it would contribution to a low-carbon economy and not just take time for afforestation activities to begin to show the potential in the short and medium term. substantial carbon reductions. Analyses show that the mitigation actions with Investments in afforestation could lead to co-benefits the greatest potential for medium and long-term such as the diversification of rural economies, emissions reductions by mid-century in Canada reduced forest fragmentation and enhanced include an integrated approach to changes in forest forest habitat for wildlife, improved soil quality and management practices, increased afforestation, watershed protection. Plantations generate revenue increased use of harvested wood for long-lived over the long term through harvesting and re-growth products, and increased use of waste wood for which act as an incentive to long-term management bioenergy in place of fossil fuels. These findings are by landowners. Challenges in achieving large-scale in line with the findings of the Fourth Assessment afforestation include the need to ensure a sufficient Report of the IPCC that indicate that sustainable 102 Nabuurs et al., Forestry: Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on 100 Nabuurs et al., Forestry: Contribution of Working Group III to the Climate Change. Fourth Assessment Report of the Intergovernmental Panel on 103 Natural Resources Canada, The State of Canada’s Forests 2015, Climate Change. p. 50. 101 Smyth et al., Quantifying the Biophysical Climate Change 104 Natural Resources Canada, The State of Canada’s Forests 2015, Mitigation Potential of Canada’s Forest Sector. p. 23. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 59 supply of seedlings and to engage the interest of a Canadian forest sector. In addition, there are sufficient number of landowners, as well as concerns direct and indirect benefits for rural forest-based about the resilience of some tree species to changes communities including energy autonomy, regional in climate and natural disturbances. investment, and employment opportunities. Technology to support this option includes modern wood heating systems such as biomass-fueled

6.4.3 Increased use of residual and harvested boilers and stoves and furnaces that use sustainable wood products for long-lived products wood-based feedstock. While this technology Life cycle research demonstrates that increased use is commercially available, a bioenergy heating of sustainably produced wood products could lead to initiative would depend on securing additional avoided GHG emissions in other sectors. In particular, energy infrastructure investments as up-front costs the substitution of wood-based materials for more would be high, particularly where the infrastructure in emissions-intensive materials (such as concrete and not in place. steel) for construction and for fossil fuel in heating and energy applications provides some of the highest Bio-based materials and chemicals are likely to gain mitigation opportunities. Canada can further invest importance over the long term. There is a general in projects and activities that increase the use of consensus that the mid-century will bring a larger, harvested wood products in domestic construction more urban population and along with this comes such as tall and mid-rise residential buildings, the need for primary resources to sustain urban commercial and industrial buildings, and bridges. growth. This, in turn, highlights the potential of forest- based cellulosic material to replace not only a vast The expansion of wood end-uses could also array of other materials used in building and energy, contribute to increasing the competitiveness of as noted above, but also to replace materials and the Canadian forest sector by diversifying market chemicals used in the manufacturing sector at large. opportunities and helping to maintain or create jobs. The mitigation potential of cellulose-based products, While the technologies to implement this option are their renewable nature, and their potential to already demonstrated, commercialised, and widely further be recycled or to biodegrade is likely to spur used in other countries, Canada will need to analyse increasing demand for these high value products. its National Building Code to ensure that it promotes For example, natural fibers have already become the use of wood products in building design. crucial in technical composite applications due to the demand for recyclable and biodegradable raw materials. The mitigation potential of cellulose-based

6.4.4 Increased use of harvested wood products is highly dependent on their life cycle and products for bioenergy, advanced bio- end uses as well as the uptake of bio-based material material, and bio-chemicals as substitutes for traditional alternative feedstock and There are potential mitigation benefits from adopting cannot be clearly ascertained yet. waste wood biomass as a fuel source for electricity As a country advantaged with significant biomass or commercial, residential, and industrial heating resources and forest and agriculture sectors poised in place of fossil fuels or as a feedstock in the for transformation, the bioeconomy represents a manufacturing of advanced bio-material and bio- substantial opportunity to generate wealth and jobs chemicals. Mitigation benefits come from using local for Canadians. sustainably-sourced wood for bioenergy, with priority given to harvest residues and waste wood, which have lower emissions on a life-cycle basis compared 6.5 There are a number of emerging to the use of fossil fuels.105 Positive mitigation benefits opportunities in which the forestry sector from bioenergy-related harvesting could occur could contribute to mitigation outcomes in remote communities where local electricity is that require further consideration. produced from fossil fuels (e.g., diesel) that have been transported over long distances.

6.5.1 Reducing deforestation The co-benefits of using biofuels include Unlike tropical countries where deforestation is a diversification of market opportunities, leading major driver of emissions, deforestation (permanent to increased growth and competitiveness of the forest loss) in Canada is relatively low. Of the approximately 0.01% of Canada’s forest land that is 105 Nabuurs et al., Forestry: Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on lost annually, most is driven by agriculture and the Climate Change. 60 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY expansion of the oil and gas industry.106 Given that the main drivers of deforestation vary across the country – and that the drivers of deforestation are usually outside of the forest sector – there has been limited ability within the forest sector to influence these emissions to date. Nonetheless, reducing deforestation and its associated emissions is an area that Canada can explore, especially considering the role Canada plays in supporting reducing emissions from deforestation and forest degradation in developing countries, and that Canada is a signatory to the New York Declaration on Forests, which aims to end global net deforestation by 2030. Collaboration with provinces and territories is required given the need to consider how to address deforestation across jurisdictions and diverse sectors.

6.5.2 Research and Development in Advanced Bio-materials, Bio-chemicals, Bioenergy and Biofuels The mitigation potential of using harvested wood products for bioenergy and biofuels can be further explored. Bioenergy with carbon capture and storage (BECCS) has received considerable global attention because it can generate negative emissions. A longer-term option for bioenergy could focus on reducing costs along the supply chain and increasing investments in research and development of second-generation biofuel production, advanced materials, and new platform chemicals, for example, converting cellulosic biomass into bio-crude and refining it into other biofuel products (e.g., biodiesel, bio-kerosene and bio-chemicals), as well as gasifying or liquefying biomass for power production. Further investment in research, development and deployment of such technologies could identify new areas with mitigation potential.

6.5.3 Urban Forestry Urban forests provide a number of co-benefits in addition to sequestering GHG emissions, such as energy conservation through cooling and shade, provision of wildlife habitat, noise buffering and improved aesthetics and increased property values. Future research and analysis in improved monitoring and research to capture mitigation potential and enhance resiliency of urban forests is an option for Canada to explore. 106 Natural Resources Canada, The State of Canada’s Forests 2015, p. 23. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 61 7 Agriculture KEY MESSAGES: • The potential for greenhouse gas mitigation exists across the entire food system. There are opportunities and for consumers, farmers, food processors and municipalities to reduce and recycle energy and nutrients. • Agricultural emissions result mostly from biological processes rather than from energy use. • Technological innovations and sustainable land management practices will ensure that agricultural soils remain a net carbon sink in Canada over the long-term. • Promoting the adoption of existing and emerging technologies and management practices could increase efficiency and reduce emissions from crop and livestock systems. • The Agriculture sector has the potential to provide renewable energy solutions and bio-products to help reduce emissions in other sectors. In evaluating these options, consideration should be given to the full life- cycle environmental costs and benefits.

7.1 The potential for greenhouse gas mitigation exists across the entire food system. There are opportunities for consumers, farmers, food processors and municipalities to reduce and recycle energy and nutrients. Addressing GHG emissions from agriculture requires the examination of the entire food system’s life cycle from fertilizer manufacturing through to on-farm activities, food processing, distribution, and consumption. Moreover, the ultimate fate of food products, either as food waste, compost, or wastewater, needs to be taken into account. This holistic approach seeks to improve the efficiency of the overall food system from “cradle to grave to cradle”, and can often draw out synergies between the environmental and health impacts of food choices. In this respect, more can be done to foster positive societal engagement and cooperation to help lower GHG emissions. There are increasingly higher expectations for transparency and product environmental attributes, including the relative amount of GHGs embodied in different food choices. In the context of a global and growing demand for food products, alternative approaches like local food movements, organic and/or urban agriculture or family farmers networks can play an important role in shaping the future of agriculture.107 Any approach that helps to minimise waste (see Chapter 8) and helps to conserve energy and water will decrease emissions in other sectors indirectly related to agriculture, for example, during fertilizer manufacturing, or by removing nitrogen and phosphorus from wastewater. 107 Equiterre, Family Farmers Network. 62 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY

7.2 Agricultural emissions result mostly from Total emissions from agriculture have been relatively biological processes rather than from stable since the year 2000 and are not projected to energy use. significantly increase toward 2030.110 In 2014, non- energy emissions accounted for 59 megatonnes Primary agriculture is at the heart of a complex and of carbon dioxide equivalent (Mt CO2 eq) – integrated agri-food system which provides one in approximately 8% of Canada’s total GHG emissions – eight jobs and accounted for more than 6% of GDP in while GHG emissions from on-farm fuel use 2014.108 The agriculture sector contributes to making generated 14 Mt CO2 eq.111 The two main sources of Canada one of very few countries currently in a non-combustion agricultural emissions are enteric position to produce more food than it consumes, and fermentation and fertilizer application. Canada is the fifth largest exporter of agriculture and agri-food products internationally.109 Efficiency gains,

7.3 Technological innovations and sustainable sustainable land management, and innovation will land management practices will ensure enable Canadian agriculture to reduce emissions, that agricultural soils remain a net carbon store carbon, and meet a growing global sink in Canada over the long-term. food demand. For over twenty years, Canadian farmers in the Prairie Most agricultural greenhouse gas emissions are not provinces have been able to increasingly substitute driven by energy use but rather take the form of conventional tillage with no-till or conservation methane and nitrous oxide resulting predominantly tillage seeding techniques due to innovations from biological processes inherent to animal and such as improved seeds, fertilizers and pesticides, crop production. Nitrous oxide emissions can and changes in machinery and farm equipment, originate from field-applied fertilizers, crop residue including the evolution of technologies such as decomposition, cultivation of organic soils, and from global positioning systems. Increased crop rotation the storage of manure. Methane emissions are mainly a result of enteric fermentation in ruminant animals and decomposition of stored manure. 110 Environment and Climate Change Canada, Canada’s Second 108 Agriculture and Agri-food Canada, An Overview of the Biennial Report on Climate Change. Canadian Agriculture and Agri-Food System 2016. 111 Environment and Climate Change Canada, National Inventory 109 Ibid. Report 1990-2014: Greenhouse Gas Sources and Sinks in Canada. REDUCING METHANE EMISSIONS FROM ENTERIC FERMENTATION Enteric fermentation is a natural process that occurs in the digestion of feed by livestock. The digestion process is not 100% efficient and releases methane as a by-product. In Canada, GHG emissions from enteric fermentation were 25 Mt CO2e in 2014 down from 31 Mt in 2005. Dairy and beef cattle produce around 95% of these emissions while others ruminants such as buffalo, goats, horses, sheep and swine, make up the rest of the emissions. There are a number of options to reduce methane emissions from enteric fermentation but many of these are still in the research phase. Since the demand for meat and milk is expected to increase in the future, decreasing methane output per unit or animal is important. For example, it is possible to select lower-methane producing animals through consideration of genetic characteristics. In addition, research into methane vaccines and inhibitors is ongoing in some jurisdictions. High quality feed could lead to more efficient digestion and reduce emissions. For example, research has shown that mixing seaweed in cattle feed could reduce methane emissions. In this respect, a company from Prince Edward Island, North Atlantic Organics Ltd., is proposing organic seaweed products that can be used by dairy cattle.112 The use of seaweed for animal feed is in fact a traditional method that has been used by coastal farmers in the past. 112 NAO organics. http://www.naorganics.com/index.asp CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 63 options have also allowed reduced reliance on Mitigation options aimed at enhancing fertilizer use summer fallow (the practice of allowing land to lie efficiency and reducing methane emissions from idle during the growing season). livestock are promising as innovative technologies such as methane inhibitor feeding additives, livestock As a result, agricultural soils in Canada have been a genetics, smart-fertilizers, and precision agriculture net sink of carbon since 2000 and will remain so over approaches are being developed. the long-term, although the rate at which carbon will be sequestered is projected to slowly diminish. Encouraging the continued adoption of nutrient Greater use of cover crops, biochar application and management practices, such as soil nutrient testing, the use of precision agriculture to avoid disturbance optimisation of the timing of fertilizer application, of more fragile soils, among other sustainable land incorporation of solid and liquid manure and fertilizer, management practices, will help maintain the and increased manure storage capacity, will agricultural carbon sink in the future. continue to increase performance while minimising emissions in the sector.113 For example, in the beef cattle sector, Canadian farmers have made

7.4 Promoting the adoption of existing and significant improvements in feeding and breeding emerging technologies and management practices, and as a result, cattle reach slaughter practices could increase efficiency and weight sooner, and spend fewer days eating, reduce emissions from crop and livestock ruminating, producing methane, and systems. generating manure.114 On-farm GHG emissions are closely tied to In the livestock sector, upcoming methods to reduce management practices and technologies such as methane emissions are showing significant potential. fertilizer types and application methods, manure storage and spreading methods, land management 113 Agriculture and Agri-Food Canada, Farm Environmental and tillage regimes, feeding and nutrition, as well as Management Survey 2011. 114 Agriculture and Agri-Food Canada, Environmental Sustainability crop and animal genetics. of Canadian Agriculture: Agri-Environmental Indicator Report Series – Report #4. Figure 14: Agricultural GHG emissions in Canada in 2011 The arrow length is proportional to the magnitude of the emissions; arrow direction upwards indicates a source and downwards indicates a sink. Source: Environmental Sustainability of Canadian Agriculture: Agri-Environmental Indicator Report Series – Report #4 64 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY These include switching to lower-methane producing significantly lower the rate in which the agriculture ruminants, methane inhibitors and feed supplements, sector emits GHG emissions. The province notes or even vaccines to reduce methane production in that the role of innovation and increased research the rumen. in mitigation options for the agriculture sector is critical due to the challenge represented by a global Technology will also continue to make a profound population growth and the subsequent pressure on impact on agricultural production. Bioengineering, global food demand and production. precision agriculture, sensors, robotics, and automated data capture and transfer, all hold promise for further agriculture GHG emission 7.5 The Agriculture sector has the potential to reductions. Although additional scientific validation provide renewable energy solutions and work is still needed, preliminary, partial results point bio-products to help reduce emissions in to substantial reductions in nitrous oxide emissions other sectors. In evaluating these options, when an optimised nutrient management approach consideration should be given to the full is adopted. life-cycle environmental costs and benefits. Continuing to seek improvements in efficiencies can yield further emission reductions but this will From a life cycle perspective, the agriculture depend on the development and deployment of sector could also contribute to long-term mitigation transformative technologies (e.g., methane inhibitors by helping to reduce emissions in other sectors and smart-fertilizers), some expected to be ready for through displacement of more emission-intensive commercial deployment over the short-term (i.e., 5 materials and fossil fuels with biomass-based energy years) while others could possibly be made available and products. over the medium-term (i.e., 10-15 years). There is an opportunity to convert growing On the farm inputs side, deeper penetration of agricultural waste, as well as agricultural by- and co- precision agriculture practices, technologies and products into eco-efficient, bio-based products with equipment should translate into lower consumption direct benefits for the environment, the economy, of production factors such as fertilizers and fuels, and consumers, for example, sustainable bio-energy, with a corresponding decrease in the GHG emissions bio-fertilizers and bio-chemicals. Both feedstock and associated with the use of these inputs. More efficient technology exists to convert more wastes, agriculture and precise production decisions should also lessen and forest biomass into high quality, low GHG- the pressure on natural resources like land and water. emitting biofuels, for use in road transportation to air travel. As a more specific example, the province of Saskatchewan highlights the underdeveloped use of In evaluating these options, consideration should pulse crops to mitigate the use of fertilizers, as well as be given to net GHG savings along the full life the potential associated with seeding marginal land cycle, as well as to other environmental impacts, for carbon sequestration, through permanent covers that could result from the intensification of like legumes, or by converting them into forest stands. agricultural production. The province is also hopeful that advances in beef genetic selection, genomics and food additives will CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 65 8 Waste KEY MESSAGES: • The waste sector directly accounts for 3% of Canada’s GHG emissions; however from a life cycle perspective, waste related activities are responsible for significant indirect GHG emissions from various sectors of the economy not typically associate with waste. • Currently, the relatively low cost of waste disposal at landfills in many parts of Canada provides a disincentive for waste prevention and diversion activities. • Effective management strategies, focusing on waste prevention and diversion, can bring deep cuts in direct and indirect waste-related GHG emissions. • New policies could instigate behavioral change away from wasteful consumption patterns, as well as shift the responsibility for end-of-life management of products from consumers to producers. • Co-benefits of waste prevention, diversion, and landfill gas capture include: greater food security, increased supply of renewable natural gas and electricity, creation of a soil amendment (i.e., compost); and a reduction in volatile organic compounds emissions, smog formation and unpleasant odours. • In the future, progress in landfill gas capture and flaring technologies could further reduce any remaining direct landfill emissions. Canada has performed poorly in terms of quantity of waste generated per capita compared to its OECD peers. At 777 kg of municipal waste generated per capita in 2008, the average Canadian city generated more waste than any other OECD country, twice as much as an average Japanese city, and slightly more waste than an average American city (722 kg).115 While substantial efforts have been taken by municipalities and provinces/territories across the country, for example Nova Scotia has reduced waste generation to 386 kg per capita as of 2012, much more needs to be done.116

8.1 The waste sector directly accounts for 3% of Canada’s GHG emissions, however from a life cycle perspective; waste related activities are responsible for significant indirect GHG emissions from various sectors of the economy not typically associate with waste. The waste sector officially accounts for 3% of total GHG emissions and 22% of Canada’s total methane emissions. This includes emissions from municipal solid waste landfills, wood waste landfills, wastewater treatment, as well as waste discharge, incineration, and open burning. 115 Conference Board of Canada, Municipal Waste Generation. Note: For comparison purposes, construction, renovation and demolition waste were not included in the OECD definition. 116 Conference Board of Canada, Waste Generation: Provincial and Territorial Ranking. Readers should note that municipal waste generation per capita and waste generation per capita differs slightly, the latter being slightly more important. 66 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY As the IPCC’s fourth assessment report indicates, Facility, the first industrial scale waste to biofuels a life cycle approach is required to evaluate the facility of its kind, that will help the city divert up emissions reductions potential for waste prevention to 90% of residential waste from landfills, as well as and diversion. As such, waste management activities produce up to 38 million litres of ethanol each year.119 will affect GHG emissions accounted for under sectors such as transportation, forestry, energy

8.3 Effective management strategies, focusing and industrial processes. For example, the U.S. on waste prevention and diversion, can Environmental Protection Agency (EPA) estimated bring deep cuts in direct and indirect that approximately 42% of total U.S. greenhouse waste-related GHG emissions. gas emissions are associated with the energy used to produce, process, transport, and dispose of The greatest untapped potential for GHG emissions commodities and food.117 Waste prevention and reductions rests with waste prevention and diversion diversion strategies would therefore reduce emissions activities (e.g., composting or anaerobic digestion). in other sectors. Reducing avoidable food waste and increasing diversion of other organic material and recyclable

8.2 Currently, the relatively low cost of waste materials from landfills could procure most significant disposal at landfills in many parts of emissions reductions for the sector. Canada provides a disincentive for waste In Canada, avoidable food waste is valued at $31 prevention and diversion activities. billion per year. Moreover, the national organics Waste disposal is relatively inexpensive in Canada diversion rate stands as a low 7% of the total waste compared to many peer countries. Available land stream, with the recyclable materials diversion for waste disposal is not in short supply in Canada, rates standing at 16%. In total, Canada’s overall relative to many European countries. Canadian diversion rate stand at 25%, lower than other peers jurisdictions are using a variety of policy approaches countries such as Germany or the US.120 Nevertheless, to counter the low cost of landfill disposal. For it is important to remember that some Canadian example, Nova Scotia, Quebec, and Prince Edward municipalities are leading the way for diversion Island have implemented material disposal bans strategies, with Halifax, Hamilton, and Sherbrooke from landfills (e.g., organic waste and in some achieving total diversion rates between 40 and instances recyclables). Quebec and Manitoba have 60%.121 An enforced target, such as the EU’s 50% also instituted landfill levies to provide an incentive diversion rate by 2020, could prove useful to engage for greater waste diversion and to support municipal the different Canadian authorities in a concerted recycling programs.118 In 2014, the City of Edmonton waste management effort. 122 opened its new Waste-to-Biofuels and Chemicals 119 City of Edmonton, Waste to Biofuels and Chemicals Facility. 120 Statistic Canada, Waste Management Industry Survey: Business 117 United States Environmental Protection Agency, Opportunities to and Government Sectors. Reduce Greenhouse Gas Emissions through Materials and Land 121 Federation of Canadian Municipalities, Waste Diversion Success Management Practices. Stories from Canadian Municipalities. 118 Giroux Environmental Consulting, State of Waste Management 122 Ontario Waste Management Association, Rethink Waste: in Canada. Evolution Towards a Circular Economy. Figure 15 - Location of Waste Prevention and Reduction in the Waste Management Hierarchy. Source: Giroux Environment Consulting. 2014. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 67 WASTE DIVERSION IN NOVA SCOTIA The province of Nova Scotia is a North American leader in waste diversion, creating significant environmental benefit and economic advantage. Its disposal rate is 50% lower than the Canadian average and continues to decrease. Starting in 1996 the Province implemented a strategy that included disposal bans on food and yard waste, some paper, plastic, metal and electronic items. Some other highlights of Nova Scotia’s successful and ongoing ‘circular economy approach’ to solid waste include: • Financial incentives to municipalities based upon diversion performance • A strong partnership with municipalities through a regional (solid waste) chairs committee • Effective and sustained education, enforcement, and innovation programs • Stewardship programs for beverage containers, tires, mercury containing products, and dairy containers • Extended producer responsibility programs for electronics, paint, and cell phones • Municipal commitments to implementing clear bag programs for garbage that decrease waste disposal by 15 to 30% As a result, tonnes of materials that used to be wasted now contribute to Nova Scotia’s economy, creating jobs and reducing GHG emissions.

8.4 New policies could instigate behavioral differential tipping fees for unsorted waste. Practices change away from wasteful consumption such as keeping products for longer, reusing products, patterns, as well as shift the responsibility or repairing items and spare parts that can be re-used, for end-of-life management of products are amongst the many ways that need to be promoted from consumers to producers. and rewarded by municipalities and provinces/ territories. There are innovative solutions to reducing Effective policies can help increase waste diversion food waste by connecting consumers and producers through source reduction, reuse, recycling, in the food industry, such as industry and non- composting, and anaerobic digestion. For example, governmental organisation-led initiatives to encourage information and incentive programs can help shift the sale and purchase of imperfect produce. public behavior to less wasteful practices by helping to close information gaps (e.g., public education A significant step towards increasing diversion, and programs), or providing financial incentives in turn reducing emissions associated with waste, is such as advance disposal fees policies. Another to shift the responsibility for end-of-life management example can be found in the Swedish initiative to of products from consumers and municipalities introduce a tax break for repairing activities, such to producers. Over the past 20 years, significant as repairs of bicycles or appliances. Such policies progress on extended producer responsibility are instrumental in shifting consumption behaviors programs has been made in Canada on a wide towards waste prevention. variety of products and materials. The next phase will be to implement diversion programs for complex The true cost of landfill disposal also needs to be product categories such as construction, renovation, adequately reflected in tipping fees to account for demolition materials, furniture, textiles and carpets.123 loss of arable land and the creation of environmental liabilities. Regulatory or market-based policies could 123 Canadian Council of Ministers of the Environment, Progress include disposal bans, higher landfill tipping fees, and Report on the Canada-wide Action Plan for Extended Producer Responsibility. 68 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY Regulations and support for producers to minimise if not mitigated. Currently, only 36% of total methane material inputs, optimise reuse and recovery of gases generated by landfills are captured, partly due products, and develop markets for recycled materials to current stringency and performance standards will be essential.124 Extended producer responsibility on gas capture regulations across the country. programs and performance-based regulations Nevertheless, landfill gas capture technologies are are two policies put forward to pursue that shift.125 widely available and expected development in Improved systems for generators to manage flaring, gas capture and gas utilisation technologies certain materials on-site instead of relying on costly could easily increase the ongoing reduction in centralised infrastructure could also be further landfill GHG emissions and produce more heat and explored (e.g., plastic to oil conversion, renewable electricity. In the future, thermal treatment facilities natural gas recovery from organics). with energy recovery, small-landfill gas capture technologies or even waste mining, could become proven and commercially viable options in Canada.

8.5 Co-benefits of waste prevention, diversion, and landfill gas capture include: Greater food security, increased supply of renewable natural gas and electricity, creation of a soil amendment (i.e., compost); and a reduction in volatile organic compounds emissions, smog formation and unpleasant odours. There are many co-benefits to improve waste management strategies apart from reducing greenhouse gas emissions, in particular methane. Waste prevention increases food security and organic waste diversion can produce renewable biogas and/or a soil amendment. Recycling can save resources and energy, while limiting the amount of plastic discharged in the oceans. Landfill gas capture can also provide energy and electricity to municipalities and industries. In addition, cement manufacturers across the country have shown interest in using a variety of waste products (solid waste, carpets, wood waste, asphalt, non-recyclable plastics) as an alternative energy source.126 Finally, the reduction of volatile emissions, smog formation, and unpleasant odours, will provide health and lifestyle benefits to landfill-adjacent neighborhoods and communities.

8.6 In the future, progress in landfill gas capture and flaring technologies could further reduce any remaining direct landfill emissions. Even with waste prevention and diversion efforts, it is likely that landfill disposal will still be a practice in some parts of Canada in 2050 and that not all sources of GHGs will be diverted. In addition, there is a lag in the decomposition of organic waste in a landfill such that the organic waste disposed today, will be the source of emissions for decades to come 124 Giroux Environmental Consulting, State of Waste Management in Canada. 125 Ibid. 126 Ibid. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 69 9 Clean Technology Sector As our society moves to address its environmental challenges, the clean technology sector has seen an increase in demand for its products and processes. Clean technologies are products or processes that significantly reduce environmental impacts of a given economic activity. This subset of the economy makes a compelling case for itself as it provides economic development while improving the environmental performance of the economy. As the world moves to deep decarbonisation, the clean technology sector is faced with a tremendous opportunity to produce further economic and social co-benefits for all Canadians. KEY MESSAGES: • The clean technology sector is growing very quickly both domestically and globally. • Utilities, equipment suppliers, and policymakers should work together to identify strategies for reducing deployment costs of critical clean technologies and barriers to adoption. • Further investments in RD&D and innovation in clean technology, combined with market pull mechanisms such as carbon pricing, will support Canada’s competitiveness, creating high paying jobs and increased exports. • Innovation will result in economic and environmental spill-over effects, thereby increasing resource efficiency and productivity in other sectors and reducing other types of pollution. • Providing a clear and predictable signal for long-term investments and disclosing climate-related information will allow the market to better anticipate the transition to a low-carbon future. • Canada has confirmed its commitment to clean energy innovation by joining the Mission Innovation international commitment, which aims to accelerate innovation by doubling investments in clean energy RD&D across the world.

9.1 The clean technology sector is growing very quickly, both domestically and globally. Recent historical performance of the clean technology sector in Canada has been very strong, despite a leveling off between 2013 and 2014. The sector grew at a pace of 8% annually between 2011 and 2013, which represents more than three times the overall economic growth in Canada.127 Over the same time period, global clean technology revenues increased by 10% annually. Employment in the clean technology sector in Canada has increased from 41,000 in 2012 to 55,600 in 2014, an increase of more than 16% per year. Solutions from clean technology producers can help address challenges in high- emitting sectors, providing positive economic and environmental outcomes. Investment opportunities in clean technology are increasing at a rapid pace. For example, the 127 Analytica Advisors, Canadian Clean Technology Industry Report. 70 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY IEA estimates that around $1 trillion per year of developers to most effectively advance their goals. incremental investment are required in renewable Finally, sufficient investment is paramount to allowing energy and energy efficiency investments to keep good technology solutions to reach the market. the global average temperature to well below 2°C in 2050.128 This represents a significant opportunity for

9.3 Further investments in RD&D and innovation Canadian clean technology companies to tap into in clean technology, combined with this growing market. Exports accounted for 50% of the market pull mechanisms such as clean technology sector’s revenues in 2014, meaning carbon pricing, will support Canada’s Canadian firms are positioned to benefit from competitiveness, creating high paying jobs comprehensive efforts to export unique technologies and increased exports. and expertise to new and growing markets. Clean technology is a sector that defines itself

9.2 Utilities, equipment suppliers and in the improvement of environmental outcomes policymakers should work together to related to economic activities in a broad sense. identify strategies for reducing deployment As such, it is a sector where innovation is of utmost costs of critical clean technologies and importance, and therefore is very RD&D-intensive. barriers to adoption. RD&D can help solve environmental problems with current technologies, but it can also contribute to To advance the deployment of clean technologies developing new clean technologies that will make in Canada, it will be critical to coordinate between it easier to reduce emissions in the future. However, actors, in order to reduce the cost of achieving for technologies to actually make a difference, emission reductions and mitigate barriers to successful commercialisation has to take place. adoption. Important actors in the economy, such For this to happen, market demand has to be there. as Governments and utilities can play a key role in accelerating the development and adoption of The right policies and frameworks can work to clean technologies. Given their financial capacity, promote a low-carbon economy by helping to these actors can use their purchasing power to address the double market failure traditionally faced demonstrate clean technologies and provide a by the clean technology sector. As with innovation visibility that will encourage broader adoption. spending more broadly, there is a tendency for the private sector to underinvest in RD&D given that the Canada has a strong financial sector, which it benefits may not be fully captured by the investing can use as a powerful lever to encourage further firms. As well, there is the issue of businesses not low-carbon development both domestically and accounting for environmental externalities in their abroad. Although there are many significant low- decision-making. Existing and potential government cost GHG reduction opportunities in developing policies can help address these market failures. For countries, barriers to investment such as higher example, carbon pricing allows for the consideration perceived risk and imperfect information prevent of GHG emissions in the final price of a product, which these opportunities from being realised by Canadian provides a market value to the environmental benefits companies. Through its $2.65 billion climate finance of clean technologies. commitment, Canada will contribute to making these investments more accessible to Canadian Other types of approaches, such as government companies, allowing for Canadian low-carbon procurement of clean technologies and regulations, technologies to help reduce emissions at a lower cost, could also increase demand for Canadian clean while leading to significant export opportunities. technologies. Governments will have to display leadership in providing broad support for clean Private sector participation is of utmost importance technologies, coordinating innovation efforts and at all stages of technology development. Technology catalyzing private-sector involvement, particularly for developers and users are best positioned to bring early-stage R&D. forward new technologies that will ultimately succeed. Governments also need to play a role These initiatives would address an important in providing the appropriate incentive framework barrier for Canada, which has historically struggled for this to happen, as the private sector typically with demonstration and commercialisation of its underinvests in R&D. For this to happen, there must be clean technologies, increasing the challenge for a good alignment of policies to allow for technology companies to export untested products. Given the important growth of clean technology globally, this would position Canada favorably in terms 128 Hamilton T., The $36-Trillion Question. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 71 of competitiveness in this market. Canada’s competitiveness in the clean technology market would bring significant benefits to Canada, such as “Green investment represents a major high paying jobs and significant increases in exports. opportunity for both long-term investors and macroeconomic policymakers seeking to jump-start growth.”

9.4 Innovation will result in economic and environmental spill-over effects, thereby - Mark Carney, Governor of the Bank increasing resource efficiency and of England and Chairman of the productivity in other sectors and reducing G20’s Financial Stability Board other types of pollution. Innovation in clean technologies, whether it is a breakthrough technology or one that drastically The financing of climate-related initiatives is a crucial improves the efficiency of an existing process, can dimension of the climate change challenge with bring significant benefits to the economy as well both a domestic and international component. as spill-over effects. Economic benefits of clean Significant investments, most notably in adaptation technologies can take different forms, depending measures, need to be made in order to deal with on the nature of the technology. If a technology the costs of climate change, some of which may provides an efficiency improvement, benefits will materialise over a long-term horizon. There are risks be seen as reduced input costs, while they can and opportunities associated with these investments take different forms in the case of a breakthrough that many businesses and political actors are taking technology. The internalisation of environmental steps to address. For example, the insurance sector externalities with the help of tools such as carbon has already been significantly exposed to climate pricing will ensure that technologies that reduce change risks.130 Those risks could be physical risks, emissions have tangible economic benefits. where investments can be affected by major events like floods or disruption of global supply chains and Another dimension where spill-over effects are could have important impacts for insurers and re- tangible is the potential to reduce production costs insurers. Liability risks could also arise as investors may and pollution through industrial ecology. Industrial be subject to lawsuits for carbon damages. Finally, ecology is a concept that could potentially transform transition risks may occur as structural change in the the industrial sector into a highly efficient integrated economy drive re-pricing of assets and values ecosystem. Industrial ecology “seeks to emulate of companies. mature ecological systems in order to reduce environmental impacts through maximised efficiency Another key aspect of tackling climate change of energy resource inputs and the minimisation of risks and opportunities is to provide investors unutilized waste”.129 This concept promotes more with reliable and detailed information of climate interconnections between industrial sectors to change activities. Many companies, including 822 optimise the flows of inputs and outputs from each investors with US $95 trillion in assets, have chosen industry such that all industrial processes together to disclose information on their action on climate minimise energy use and disposal of waste products change through the Carbon Disclosure Project or to improve resource efficiency and economic the Montréal Carbon Pledge. The Financial Stability competitiveness. In other words, industrial ecology Board’s Task Force on Climate-related Financial allows for output perceived as non-valuable (waste Disclosures is working to develop voluntary, consistent heat, wood residues, etc.) to be used as inputs by climate-related financial risk disclosures for use by other companies within an industrial park, companies in providing information to investors, allowing for improved competitiveness and lenders, insurers, and other stakeholders. Such environmental outcomes. initiatives will allow a better understanding of the link between decarbonisation and the financial

9.5 Providing a clear and predictable signal performance of firms. Further development of similar for long-term investments and disclosing initiatives could create a virtuous circle where action climate-related information will allow the is encouraged and best practices are shared. This market to better anticipate the transition to would, in turn, provide a clear and predictable a low-carbon future. 129 McKinley A., Industrial Ecology: A Review with Examples from the Canadian Mining Industry, Canadian Journal of 130 Bank of England, Breaking the Tragedy of The Horizon - Climate Regional Science. Change and Financial Stability - Speech by Mark Carney. 72 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY signal for investments, allowing the market to better investments from governments over the next five anticipate the transition. 131 years, while encouraging greater levels of private- sector investment. This commitment also entails Finally, pricing carbon will give Canadian businesses, working with the Breakthrough Energy Coalition, an investors, and consumers a clear, predictable basis independent initiative that features 28 influential for decision making. Confidence that carbon pricing investors from 10 countries that commit to providing in Canada will continue to increase over time will patient, early-stage capital (as opposed to venture encourage businesses and consumers to invest in capital, which seeks returns on investment on a cleaner appliances, vehicles, and technology. It much shorter time horizon) to advance clean energy will also encourage firms to invest in research into technology innovation. low-carbon technology, which will better position Canadian firms to compete in the rapidly-growing, As part of this initiative, it is recognised that clean low-carbon economy. technology innovation often faces a so-called “valley of death”, which typically appears at the pre-commercialisation stage, where the conversion

9.6 Canada has confirmed its commitment of a proven concept into a compelling product will to clean energy innovation by joining determine whether a company will survive or not. This the Mission Innovation international commitment aims to bridge that gap with increased commitment, which aims to accelerate government funding to enable more basic research, innovation by doubling investments in as well as more patient private capital, which will clean energy across the world. allow good concepts the time required to make On November 30, 2015, Canada announced its it to market commercialisation. Given Canada’s participation in the Mission Innovation international particular challenges in commercialisation, this commitment, along with 20 other countries. This initiative could fill an important need for Canadian commitment is to double clean energy innovation companies to succeed in clean energy innovation that can significantly reduce GHG emissions. 131 “[R]isks to financial stability will be minimised if the transition begins early and follows a predictable path, thereby helping the market anticipate the transition to a 2 degree world”. (Bank of England, Breaking the Tragedy of the Horizon - Climate Change and Financial Stability - Speech by Mark Carney.) CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 73 10 Achieving a Low-Carbon Future through Infrastructure Investments Infrastructure investments are key to supporting Canada’s deep decarbonisation efforts over the longer term and will help reshape the economy consistent with low-carbon pathways. Investing in infrastructure today will provide Canadians with increased employment opportunities, and cleaner, more modern communities, while also addressing climate change and air pollution. Investing in public transit, green infrastructure, social infrastructure, Canada’s trade and transportation corridors, as well as rural and northern communities, will provide a strong foundation for more inclusive and sustainable cities, and can also help to both address greenhouse gas emissions and enhance resilience to the impacts of climate change. For instance, Canadian communities building new urban transit networks and service extensions will transform the way that Canadians live, move and work. In addition to committing significant resources (over $186 billion through to 2027-28), Canada is also establishing a new Infrastructure Bank, an arm’s-length organization dedicated to increasing investment in growth-oriented infrastructure, transforming the way infrastructure is planned, funded and delivered across the country. Considering the magnitude of investments required to develop key infrastructure projects, key linkages between infrastructure decision-making and long-term decarbonisation include: • Investments are influential in setting long-term greenhouse gas pathways as the lifespan of infrastructure assets are long-lived, often ranging from 25 to 60 years. • Once infrastructure investments are made, the behaviours and carbon emissions associated with infrastructure investments are more or less ‘locked-in’ and the shift to a new pathway can become very costly. • Deploying infrastructure investments strategically can attract low-carbon infrastructure investments, creating a critical mass of funding for low-carbon solutions or the ability to ‘anchor’ future low-carbon investments. For example, making strategic investments in alternative fuel or electric vehicle infrastructure would underpin further investments in low-carbon vehicles. • The transformative nature of infrastructure projects plays a complementary and enabling role to support the transition to a low-carbon economy. For instance, infrastructure that is designed to withstand the projected impacts of climate change can lead to cost savings over the longer term by avoiding maintenance and rehabilitation costs. Canada is committed to working closely with all stakeholders, including provinces, territories and Indigenous peoples, to develop and implement an infrastructure plan that delivers investments across the country. As part of this plan, investments in green infrastructure and other streams, such as social and transportation, will reduce GHG emissions and support the resilience of infrastructure assets. Examples may include supporting further electrification of sectors currently reliant on fossil fuels, improving electricity transmission systems through inter-provincial transmission lines and the expansion of smart grids. Investments in sustainable infrastructure will enable greater climate change adaptation and resilience; ensure that more communities can provide clean air and safe drinking water for their citizens; and support the transition toward more sustainable economic growth. Canada will ensure that our mid-century climate change objectives inform our infrastructure development going forward. 74 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY Conclusion Dealing with climate change will ultimately require net-zero anthropogenic greenhouse gas emissions over the course of this century. Canada will need to fundamentally transform all economic sectors, especially patterns of energy production and consumption. Over time, this requires major structural changes to the economy and the way people live, work, and consume. A low-greenhouse gas future also represents a massive opportunity to increase prosperity and the well-being of Canadians, to improve the livability of the built environment, modernise transportation, and enhance the natural environment. The benefits include: reducing air pollution and congestion, modernising infrastructure to provide more inclusive and sustainable cities, creating cleaner and more modern communities, growing Canada’s clean technology sector, increasing economic productivity and efficiency, saving energy and reducing energy costs, and enhancing resilience to the impacts of climate change. Much of the transformation can be achieved with existing technology, but innovation, such as through the Mission Innovation initiative, and significant investments in research, development, demonstration & deployment, and related infrastructure, will be fundamental to the transition. Additional collaboration across industry leaders to identify common innovation priorities will be needed to seize opportunities to integrate innovation into business strategies. Funding environments, intellectual property regimes, research agendas, and communication strategies will need to be shaped to stimulate innovation investments. Decarbonisation will require a sustained societal effort that will take many years to accomplish. This will require a technological ramp up of low greenhouse gas alternatives, and also societal engagement and action by all Canadians. Working collaboratively with Indigenous peoples by supporting their on-going implementation of climate change initiatives will be key. 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Annex 1: Detailed Modelling Results from 2050 Scenarios This annex provides modelling results for the aggregate energy economy or total economy of Canada under the described low greenhouse gas modelling analyses (see model and scenario descriptions in Chapter 3). The tables are provided for illustrative purposes only and should not be interpreted as optimal pathways. Moreover, the sectoral aggregation may differ from one model to another. The table below illustrates results from ECCC’s modelling, where a 2050 target of 80% below 2005 levels is achieved by reductions in emissions from the energy sector, industrial processes, agriculture and waste. The reductions are influenced by a common price on greenhouse gas emissions. As illustrated by the table, the greatest emissions reductions are projected to come from energy-related emissions (89% below the 2005 level), followed by emissions from waste (55% below the 2005 level), industrial process emission (50% below the 2005 level) and agriculture (36% below the 2005 level). As there are currently relatively few moderate cost reduction opportunities for industrial process sector, a project reduction in output drives the decline in emissions. Table A1: Environment and Climate Change Canada - Gross Emissions (2050) Canada’s 1990−2050 GHG Emissions by Sector (Mt CO2e) Greenhouse Gas Categories 1990 2005 2050 % Change Relative to 2005 TOTAL: EXCLUDING LULUCF 613 748 149 -80% ENERGY 482 597 67 -89% Stationary Combustion Sources 285 342 46 Transport 148 195 38 Fugitive Sources 49 61 6 CO2 Capture, Transport and Storage - 0 -23 INDUSTRIAL PROCESSES AND PRODUCT USE 56 58 29 -50% Mineral Products 8 10 2 Chemical Industry 17 10 19 Metal Production 24 20 5 Production and Consumption of Halocarbons, 1 6 1 SF6 and NF3 Non-Energy Products from Fuels and Solvent Use 5 12 2 Other Product Manufacture and Use 0 1 0 AGRICULTURE 49 61 39 -36% Enteric Fermentation 23 31 20 Manure Management 8 10 6 Agriculture Soils 17 19 12 Field Burning of Agricultural Residues 0 0 0 Liming, Urea Application and Other 1 1 0 Carbon-containing Fertilizers WASTE 26 31 14 -55% Solid Waste Disposal 24 28 13 Biological Treatment of Solid Waste 1 1 1 Wastewater Treatment and Discharge 1 1 0 Incineration and Open Burning of Waste 1 1 0 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 83 The table below illustrates results from ECCC’s modelling of a scenario in which a 2050 target of 80% below 2005 levels is achieved by a 65% reduction in the combined emissions of the energy sector, industrial processes, agriculture, and waste, plus an assumed contribution from credits due to improved land sector sequestration and internationally transferred mitigation outcomes. As depicted in the table, the greatest reductions are projected to come from energy-related emissions (74% below the 2005 level), followed by emissions from waste (55% below the 2005 level), industrial process emission (28% below the 2005 level) and agriculture (15% below the 2005 level). Table A2: Environment and Climate Change Canada-Net Emissions (2050) Canada’s 1990−2050 GHG Emissions by Sector (Mt CO2e) Greenhouse Gas Categories 1990 2005 2050 % Change Relative to 2005 TOTAL: EXCLUDING LULUCF 613 748 262 -65% ENERGY 482 597 155 -74% Stationary Combustion Sources 285 342 86 Transport 148 195 77 Fugitive Sources 49 61 8 CO2 Capture, Transport and Storage - 0 -17 INDUSTRIAL PROCESSES AND PRODUCT USE 56 58 50 -15% Mineral Products 8 10 4 Chemical Industry 17 10 28 Metal Production 24 20 12 Production and Consumption of Halocarbons, 1 6 2 SF6 and NF3 Non-Energy Products from Fuels and Solvent Use 5 12 4 Other Product Manufacture and Use 0 1 0 AGRICULTURE 49 61 44 -28% Enteric Fermentation 23 31 23 Manure Management 8 10 7 Agriculture Soils 17 19 14 Field Burning of Agricultural Residues 0 0 0 Liming, Urea Application and Other Carbon- 1 1 1 containing Fertilizers WASTE 26 31 14 -55% Solid Waste Disposal 24 28 13 Biological Treatment of Solid Waste 1 1 1 Wastewater Treatment and Discharge 1 1 0 Incineration and Open Burning of Waste 1 1 0 84 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY The table below illustrates modelling results from Trottier Energy Futures Project, where a 2050 target of 60% below the 1990 levels is achieved by reductions in emissions from the energy sector, industrial processes, agriculture and wastes. The table below illustrated the reductions when current technologies are available, with the addition of interprovincial interconnections to the electricity grid. As illustrated by the table, the greatest reductions are projected to come from electricity emissions (99% below the 2015 level), followed by emissions from the residential sector (87% below the 2015 level), commercial emissions (76% below the 2015 level), transportation (71% below the 2015 level) and agriculture (64% below the 2005 level). Table A3: Trottier Energy Futures Project (Current Technology Scenario) Canada’s 1990−2050 GHG Emissions by Sector (Trottier) Mt CO2e Greenhouse Gas Categories 2015 2050 % Change Relative to 2015 CURRENT TECHNOLOGY SCENARIO: TOTAL (EXCLUDING PROCESS EMISSIONS) 488 171 -65% TOTAL (INCLUDING PROCESS EMISSIONS) 560 282 -50% AGRICULTURE 16 6 -64% COMMERCIAL 36 9 -76% INDUSTRIAL PROCESSES AND PRODUCT USE 53 35 -34% RESIDENTIAL 43 6 -87% TRANSPORTATION 169 49 -71% ELECTRICITY 60 0 -99% SUPPLY - COMBUSTION 112 66 -41% SUPPLY – PROCESS 71 112 56% CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 85 The table below is also from the Trottier Energy Futures Project. It illustrates the reductions when other new technologies are available to reduce GHG emission reduction costs. The contribution of new technologies increases the reduction from agriculture, commercial, residential and supply-combustion. As illustrated by the table, the greatest reductions are projected to come from electricity emissions (99% below the 2015 level), followed by emissions from the residential sector (89% below the 2015 level), commercial emissions (88% below the 2015 level), agriculture (66% below the 2015 level) and supply process emissions (56% below the 2005 level). Table A4: Trottier Energy Futures Project (New Technology Scenario) Canada’s 1990−2050 GHG Emissions by Sector (Trottier) Mt CO2e Greenhouse Gas Categories 2015 2050 % Change Relative to 2015 NEW TECHNOLOGY SCENARIO: TOTAL (EXCLUDING PROCESS EMISSIONS) 488 171 -65% TOTAL (INCLUDING PROCESS EMISSIONS) 560 282 -50% AGRICULTURE 16 5 -66% COMMERCIAL 36 4 -88% INDUSTRIAL PROCESSES AND PRODUCT USE 51 35 -32% RESIDENTIAL 43 5 -89% TRANSPORTATION 166 76 -54% ELECTRICITY 64 0 -99% SUPPLY - COMBUSTION 113 45 -60% SUPPLY - PROCESS 71 112 56% 86 CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY The table below illustrates modelling results from DDPP Study, where a 2050 target of 88% below the 2015 levels is achieved by reductions in emissions from all sectors of the economy except for agriculture, which was not included as part of this modelling work. As illustrated by the table, the greatest reductions are projected to come from residential and commercial buildings emissions (99% below the 2015 level), followed by emissions from the personal transportation sector (97% below the 2015 level), freight transportation emissions (95% below the 2015 level), industrial minerals (93% below the 2015 level) and chemical products (75% below the 2005 level). Table A5: Deep Decarbonization Pathways Project Canada’s 1990−2050 GHG Emissions by Sector (DDPP) Mt CO2e Greenhouse Gas Categories 2015 2050 % Change Relative to 2015 TOTAL 651 78 -88% Residential Buildings 37 0 -99% Commercial Buildings 38 1 -99% Transportation Personal 88 3 -97% Transportation Freight 112 5 -95% Chemical Products 13 3 -75% Industrial Minerals (Cement & Lime) 16 1 -93% Iron and Steel 12 4 -66% Metal Smelting 11 3 -73% Mineral Mining 5 3 -52% Paper Manufacturing 6 1 -84% Other Manufacturing 21 5 -77% Waste 8 5 -44% Electricity 86 6 -93% Petroleum Refining 21 1 -96% Petroleum Crude Extraction 134 19 -86% Natural Gas Extraction 37 14 -62% Coal Mining 2 2 -27% Ethanol Production 2 0 -85% Biodiesel Production 0 3 677% CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY 87