Domestic climate policies include laws, regulations, and programs put in place by governments with the goal of reducing GHG emissions. Around 80% of Canada’s GHG emissions are energy-related, so climate policies aimed at reducing emissions will affect Canada’s energy system. We make assumptions about the climate policies we model in each scenario in this report. This appendix includes additional details about the climate policy assumptions to complement the overview in the Scenarios and Assumptions chapter.
Federal, provincial, and territorial climate policies that are currently in place are the basis of all four scenarios. A policy is “in place” if it was enacted prior to the end of November 2025. Table A1.1 provides an overview of all major federal policies included in all four scenarios. Table A2.2 provides an overview of key policies in provinces and territories.
In Canada Net-zero, to reach the predetermined goal of net-zero emissions by 2050, we assume that climate action increases beyond the policies that are currently in place. We do this on a sector-by-sector level, and the assumptions are informed by extending current policies and/or reflecting announced policies. Table A2.3 provides an overview of these assumptions. It is important to remember that these are assumptions for modeling purposes only and are not intended to be policy recommendations.
For an exhaustive review of climate measures in Canada, see Environment and Climate Change Canada’s 2025 Progress Report on the 2030 Emissions Reduction Plan.
All dollar values are given in current Canadian dollars (C$2025), unless otherwise stated.
Table A1.1: Overview of major federal policies included in all scenarios
| Policy | Description | Key assumptions used for modeling |
|---|---|---|
| Carbon pricing |
All provinces and territories have an industrial carbon pricing system which provides an incentive to reduce emissions. The federal government sets minimum national standards for industrial carbon pricing systems. Most provinces and territories have their own system, while some use the federal output-based-pricing system. A similar framework for consumer carbon pricing was eliminated in early 2025. |
We assume all systems increase their industrial carbon price in line with the federal benchmark by 2030 ($170 per tonne, nominal). This remains at this level in nominal terms for the remainder of the projection. Due to inflation the price trends to around $100 per tonne in 2025 Canadian dollars by 2050. For output based pricing systems, we assume tightening rates for emissions benchmarks in line with current federal legislation to 2030: 2% per year for most industries and 1% for high risk trade-exposed industries. |
| Methane regulations for the upstream oil and gas sector | Oil and natural gas facilities are required to reduce their methane emissions either through adoption of new methane control technologies or process changes. | Facilities must reduce their methane emissions by 40-45% from 2012 levels by 2025. |
| Clean economy investment tax credits | Various investment tax credits that reduce clean technology costs. Includes CCUS, clean technology, clean hydrogen, clean electricity, and clean technology manufacturing. | We include these investment tax credits. At the time of modeling, the clean electricity ITC was not legislated but was committed to in Budget 2025. Our assumptions on the clean electricity ITC are based on draft legislation. In addition, the CCUS ITC extension in Budget 2025 is included. |
| Clean Electricity Regulations | The Clean Electricity Regulations set an annual emissions limit (AEL) (measured as tCO2/year) for electric power generating units that burn any amount of fossil fuels. The AEL is technology neutral and determined based on the capacity of a given power-generating unit and an emissions performance standard set by the regulation. The operators of electricity generating units can choose a variety of compliance pathways for the regulations. | The Clean Electricity Regulations are included for all regions. |
| National energy code for buildings | Minimum energy efficiency standards for energy-using technologies in the residential, commercial, and industrial sectors (e.g. space air conditioning equipment, water heaters, household appliances, lighting). | Includes Amendment 17 to the Energy Efficiency Regulations. Energy efficiency gains end in 2030 and are carried through to 2050. |
| Hydrofluorocarbon (HFC) Regulation | A phase down of HFC consumption from a baseline. | An 85% reduction in consumption of HFCs by 2050 from 2019 levels. |
| Electric Vehicle Availability Standard | A regulated sales target for ZEVs that auto manufacturers and importers must meet. | We include the original legislated sales targets (including 60% by 2030 and 100% by 2035), except without the 2026 target given the pause announced in September 2025. In early February 2026, the Government of Canada announced that it would repeal the Electric Vehicle Availability Standard, in favour of other policies to encourage EV adoption. Our modeling is based on policies that were in-place November 2025, so it does not reflect these changes. |
| Light-duty vehicle GHG emissions standards | New light-duty vehicles sold in Canada must meet progressively more stringent GHG emissions standards. | Incorporates LDV-1 (2011-2016) and LDV-2 (2017-2026) Light-duty vehicle GHG emission standards. New light-duty vehicle fuel economy improves approximately 5% per year from 2023 to 2026. |
| Heavy-duty vehicle GHG emission standards | New heavy-duty vehicles sold in Canada must meet progressively more stringent GHG emission standards. | Incorporates HDV-1 (2014-2018) and HDV-2 (2021-2027) heavy-duty vehicle GHG emission standards. New heavy-duty vehicle fuel economy improves approximately 2-3% per year from 2023 to 2027. |
| Clean Fuel Regulations |
Reduction in carbon intensity of gasoline and diesel over time, through several mechanisms, including:
|
Carbon intensity decrease of 12g CO2e/MJ below 2016 levels by 2030. |
| Renewable Fuel Regulations | Minimum renewable fuel content for all regions except for Newfoundland and Labrador and the Territories. | Specifies a minimum renewable fuel content of 5% in gasoline and 2% in diesel fuel sold in Canada by volume. |
| Northern Responsible Energy Approach for Community Heat and Electricity (REACHE) program | Northern REACHE is a part of Wah-ila-toos. | We include Northern REACHE funds projects related to capacity building, renewable energy and energy efficiency projects. The program objective is to reduce Northern communities’ reliance on diesel. |
Table A1.2: Overview of the major provincial and territorial policies included in all scenarios
| Region | Policy | Description |
|---|---|---|
| British Columbia | Zero Emissions Vehicle Act | Requires automakers to sell a minimum share of zero- or low-emission vehicles via a credit market, targeting 100% by 2035. This regulation is currently under review, and the BC government has said they will align to new federal standards (see Electric Vehicle Availability Standard in Table A1.1). Our modeling is based on policies that were in-place November 2025, so it does not reflect any pending changes. |
| CleanBC Industry Fund | Government investment into low-emission technologies using a portion of carbon pricing revenue above $30/tCO2e to support competitiveness in industry. | |
| BC Energy Step Code | New homes will need to be built with more energy efficiency than current homes: compared to the 2018 BC Building Code requirements, 20 per cent more energy efficient by 2022, 40 per cent more energy efficient by 2027, 80 per cent more energy efficient by 2032 which is net-zero energy ready. | |
| Energy Efficiency Act | Sets energy efficiency performance standards for energy-using technologies. | |
| Low Carbon Fuel Standard | Requires a decrease in the average carbon intensity of 30% by 2030 from 2020 for transport fuels through several compliance pathways. | |
| Renewable Natural Gas Regulation | Requires that 15% of natural gas consumption be provided by renewable natural gas by 2030. | |
| Alberta | Renewable Fuels Standard (RFS) | Requires a minimum blending 5% renewable alcohol in gasoline and 2% renewable diesel in diesel fuel. |
| CCUS investments | Investments in CCUS projects, including the Alberta Carbon Trunk Line and Quest projects. | |
| Alberta Carbon Capture Incentive Program | Provides a grant of 12% for new eligible CCUS capital costs | |
| Methane emissions reduction regulation | Requires the reduction of methane emissions from oil and natural gas operations by 45% by 2025 relative to 2014 levels. | |
| Saskatchewan | Ethanol Fuel Regulations and Renewable Diesel Act | Requires a minimum of 7.5% of ethanol content in gasoline and 2% biodiesel content in diesel. |
| Methane Action Plan | Requires the reduction of methane emissions from oil and natural gas operations by 45% by 2025 relative to 2015 levels. | |
| Manitoba | Biofuels Mandate amendment | Requires a minimum of 10% ethanol content in gasoline and 2% biodiesel content in diesel. |
| Efficiency Manitoba Act | Rebates and other incentives on lighting, air conditioning, and building shell across residential, commercial, and some industrial sectors. | |
| Green Energy Equipment tax credit | A 15% tax credit on geothermal heat pumps in residential and commercial sectors. | |
| Ontario | Cleaner Transportation Fuels: Renewable content requirements for gasoline and diesel fuels | A regulation requiring 15% ethanol content in gasoline and 4% biodiesel content in diesel by 2030. |
| Quebec | Western Climate Initiative cap-and-trade regime | A cap-and-trade system for industrial and electricity sectors, as well as fossil fuel distributors. Declining annual caps are set out to 2030 and the revenue generated by the policy is invested in low-carbon technologies. As caps are not set after 2030, the federal pricing systems (fuel charge and output-based pricing system) apply in our scenarios. |
| Chauffez Vert Program | Rebates for residential renewable energy space or water heating systems, if replacing fossil fuel system. Financial assistance will end as of March 2026. | |
| Roulez Vert Program | Incentives for electric vehicles and charging station installations. There was a pause on this program from February 1st to March 31st 2025, with rebate amounts decreasing in 2025 and 2026, with an end date of 2027. | |
| Zero Emissions vehicle standard | Requires automakers to sell a minimum share of zero- or low-emission vehicles via a credit market. The credit target is 100% by 2040. | |
| Quebec Green Hydrogen and Bioenergy Strategy | Increase bioenergy production by 50% by 2030, 5% RNG in the grid by 2023 and a minimum of 10% by 2030. | |
| New Brunswick | Energy efficiency programs | Provides purchase incentives for energy efficient appliances in residential, commercial, and industrial sectors. |
| Nova Scotia | EfficiencyNS Programs | Incentives for residential, commercial, transportation and some industrial sectors. Incentives include the transition from oil heating to electric, heat pumps, and charging stations. |
| Newfoundland and Labrador | Energy efficiency programs | Incentives for residential, commercial, and some industrial sectors. These programs include a home energy savings program, heat pump rebates, and commercial sector rebates for select appliances. |
| Oil to Electric Incentive Program | Rebates for switching home heating from oil to electric | |
| Prince Edward Island | EfficiencyPEI rebates | Incentives for residential, commercial, and some industrial sectors. Various rebates on energy-efficient appliances, like heat pumps, solar systems, biomass heating, and fuel-efficient furnaces. |
| Rebates for electric vehicles | Rebates for BEVs up to $4000 and up to $2000 for PHEVs | |
| Rebates for commercial charging infrastructure | Charging infrastructure rebates for level 2 and fast chargers. | |
| Northwest Territories | 2030 Energy Strategy | Measures that aim to support low-carbon energy for transportation and space heating. Includes promoting the use of wood as an alternative source of energy to fossil fuels, supporting the development and implementation of community energy plans, incentives for energy efficiency and alternative energy projects, support for alternatives to diesel electricity generators, and rebates for zero- and low-emission vehicles. |
| Yukon | Our Clean Future | Measures including 10% ZEV new sales by 2025 and 30% by 2030, ZEV rebates, blending of renewable fuels into diesel and gasoline, energy efficiency incentives and regulations, and renewable energy projects for remote communities. |
| Nunavut | Renewable Energy Homeowner Grant | Rebate on renewable systems installed on homes |
Table A1.3: Assumptions on increases to policies to reach net-zero by 2050 in Canada Net-zero
| Policy | Description | Key assumptions used for modeling |
|---|---|---|
| Extended clean fuels regulations | The Clean Fuel Regulations are currently defined to incrementally reduce emission intensity to 2030 (see Table A1.1). In Canada Net-zero, we assume regulations are tightened to further reduce emission intensity after 2030. | The carbon intensity of gasoline and diesel decreases an additional 1.5gCO2e/MJ per year from 2030 to 2050. |
| Aggregate cost of carbon | A hypothetical suite of policies, regulations, and programs in the 2030 to 2050 period represented by a carbon price that applies to industrial sectors with existing carbon pricing systems. |
Starting at $0/t CO2e (carbon dioxide equivalent) in 2030 and rising to $450 in 2050. In total, the effective carbon price for sectors that face is $550/t in 2050 when added to the industrial carbon price as described in Table A1.1. For output-based pricing systems, we assume gradual tightening rates for emissions post-2030 at the same rate as current legislation: 2% per year for most industries and 1% for trade-exposed industries. |
| Freight ZEV standard | A regulated sales target for medium and heavy-duty trucks. While there is no current legislation in this area, the concept of a zero-emission vehicle standard for freight vehicles is discussed in Canada’s Action Plan for Clean On-Road Transportation. | Medium- and heavy-duty sales targets are 35% by 2030 and 100% by 2040, where feasible. At the time of analysis, these regulations were still under development. We made the simplifying assumption that 80% of sales met the threshold of “feasible” by 2040, and 95% by 2050. |
| Marine and aviation | We assume an increasing requirement for low and non-emitting fuels for marine and aviation. Since regulations for these sectors are often linked to international standards, our assumptions are informed by international modeling on emission-reduction scenarios, such as the IEA World Energy Outlook, as well as Canadian strategies such as Canada’s Aviation Climate Action Plan. | Marine transportation and aviation are supplied by 40-45% clean fuels (a mix of biofuels, hydrogen, and electricity) by 2050. |
| Net-zero buildings | We assume that new buildings reduce emissions by both improving energy efficiency performance and a rising requirement to adopt zero-emission technologies for their primary heating requirements (while still allowing for fossil fuel back-up when desired). |
The building shell efficiency of the total residential sector stock improves 50% from 2021 to 2050, where the commercial sector improves 43%. Oil as a primary heating source in new residential and commercial buildings ends in 2030 and natural gas as a primary heating source ends in 2035. Oil and natural gas can be used as back up heat source in new buildings out to 2050. Renewable natural gas and hydrogen can be blended into the natural gas streams if economic conditions are favourable. |
| Enhanced Methane Regulations | We assume all provinces meet the methane reduction goal of the regulations. | Oil and natural gas sector methane emissions are reduced by 75% by 2030 relative to 2012 levels. |
| Agriculture | Based on a review of the literature, net-zero / sustainable agricultural practices are adopted to reduce emissions from enteric fermentation, manure management, and agricultural soils. | By 2050, non-energy agriculture emissions are 27% lower in Canada net-zero relative to Current Measures. About 90% of the decline in emissions is attributed to the adoption of net-zero/sustainable agriculture practices, rather than due to lower sector output. |
| Landfill methane regulations | Objective is to reduce methane emissions from landfills to 50% below 2019’s levels by 2050. | MSW landfill methane emissions are reduced by 50% below 2019 levels by 2030 (as per federal government projections), with reductions starting in 2027. |
| Offsets for remaining emissions | In Canada Net-zero, we assume that a robust system exists to allow providers of negative emissions (including direct air capture, bioenergy with CCS, various nature-based solutions and other carbon dioxide removal technologies) to be compensated for their removals at a rate equivalent to the aggregate cost of carbon. | Our negative emission values from the electricity and hydrogen producing sectors, as well as direct air capture, are driven by their techno-economic parameters in contrast to the aggregate cost of carbon assumption. We assume negative emission contributions from land-use change, nature-based solutions, and other emerging carbon dioxide removal technologies are equivalent to -166 MT by 2050 in Canada Net-zero. |
