The CER has issued an errata to correct several errors in the report
Appendix 1: Domestic Climate Policy Assumptions
This appendix reviews the domestic climate policy assumptions included in the Evolving Policies Scenario and the Current Policies Scenario. The Current Policies Scenario includes only domestic policies currently in place. The Evolving Policies Scenario assumes greater policy action over time, at roughly the same pace as recent historical policy implementation. It does this by assuming a hypothetical suite of domestic policy initiatives that build upon current policies. Some Evolving Policies Scenario policies increase the stringency or coverage of Current Policies Scenario policies. In these cases, the Evolving Policies Scenario policy in question takes over from the Current Policies Scenario policy. For example, in the Evolving Policies Scenario Canada’s carbon pricing increases from the Current Policies Scenario schedule of $170/t by 2030 to $470/t by 2050.
In addition to extending Current Policies Scenario policies, the Evolving Policies Scenario also includes support for technologies that currently have limited commercial application. This means that these technologies see greater adoption through our Evolving Policies Scenario projection compared to the Current Policies Scenario, without adoption necessarily being explicitly driven by a particular policy. Examples include high-efficiency natural gas heat pumps for buildings, hydrogen fuel cells for heavy trucking and industry, utility scale battery storage, electrification and efficiency improvements in the industrial sector, and reduced emission intensity of oil and gas production.
Policy inclusion criteria for the Current Policies Scenario
The Current Policies Scenario includes energy and climate policies that were expected to be implemented in Canada at the time of analysis. To determine whether a policy was included in the analysis we applied the following criteria:
- the policy was publicly announced by 1 August 2021;
- there was sufficient information available to model the policy; and
- the policy was expected to significantly change our energy system projections.
Policy inclusion criteria for the Evolving Policies Scenario
The Evolving Policies Scenario includes all Current Policies Scenario policies. It adds to these a hypothetical suite of future policy developments, which aim to approximate “greater policy action over time, at roughly the same pace as recent historical policy implementation.” Hypothetical Evolving Policies Scenario policies are designed based on the following premises:
- Announced policies that are being developed are included to the extent possible. Simplifying assumptions are made as required by a lack of regulatory detail.
- The types of hypothetical future policies that are modelled have historical precedent in those implemented by federal, provincial, or municipal governments.
- Policies gradually strengthen over time, as opposed to a concentration of policy development at a given time.
Table A1.1 provides an overview of the major policies included in the Current Policies and Evolving Policies Scenarios. All dollar values are given in nominal terms, unless otherwise stated.
Table A1.1: Overview of Domestic Climate Policies and EF2021 AssumptionsFootnote 47
| Region | Policy or Strategy | Description | Assumption in EF2021 Evolving and Current Policies scenarios unless otherwise noted |
|---|---|---|---|
| Federal | Backstop Carbon Pricing | Applies a regulatory charge on fossil fuels at the end-use level. Industrial sectors that qualify for the Output Based Carbon Pricing System are exempt from fuel charge. |
The fuel charge rises from $30/t in 2020 to $50/t CO2e by 2022, then to 170$/t by 2030. Current Policies: The fuel charge is constant from 2030 to 2050. Evolving Policies: The fuel charge increases $15/t annually from 2030 to 2050, rising to 470$/t by 2050. |
| Federal | Output Based Carbon Pricing System | A performance-based carbon pricing system for industrial facilities. Applies a regulatory charge to industrial sectors based on their emissions intensity of output. |
Current Policies: Most industrial sectors are required to reduce their emissions intensity of output by 20% relative to their 2014 to 2016 average from 2020 to 2050. The backstop carbon price is applied to residual emissions. Evolving Policies: Most industrial sectors are required to reduce their emissions intensity of output by 20% relative to their 2014 to 2016 average from 2020 to 2050, which then declines by 2% annually until 2050. The backstop carbon price is applied to residual emissions. |
| Federal | Phase out of coal-fired generation of electricity | A carbon intensity performance standard for coal-fired power plants. |
Limits emissions intensity of existing coal-fired electricity generation to 370 CO2e/GWh by 2030. No new coal-fired power plants are built. |
| Federal | Methane Regulations for the Upstream Oil and Gas Sector | Oil and gas facilities are required to adopt minimum standards for methane control technologies. |
A minimum methane control technology is required to take market share from 2020 to 2030. |
| Federal | Zero-emission passenger vehicle incentives | Market shares are adjusted to account for zero-emission passenger vehicles for federal policies. |
Major policies include the iZev subsidy program, funding for charging network initiatives and tax write-offs for businesses. Quebec and B.C.’s zero-emission vehicle mandates are modelled separately (described below). Evolving Policies: Zero-emissions passenger vehicle new sales reach 100% by 2035. Remote communities and the territories are assumed to be exempt. Given that a federal mandate or regulation to reach 100% ZEV sales does not currently exist, we make several simplifying assumptions: ZEVs are available to meet Canadian demands, Canadian demands for vehicle types (such as car vs trucks/SUVs) are similar to current levels, ZEV adoption accelerates as we approach 2035, and increased deployment of electric vehicle infrastructure underlies ZEV adoption. |
| Federal | Northern REACHE Program | Program to reduce diesel use for electricity and heat in remote communities. |
Increased market share for alternative technologies. |
| Federal | Energy Efficiency Regulations | Minimum energy efficiency standards for energy using technologies in the residential, commercial, and industrial sectors (e.g. space conditioning equipment, water heaters, household appliances, lighting). |
Includes Amendment 16 to the Energy Efficiency Regulations. Major standards include minimum fuel utilization efficiencies for natural gas furnaces, a minimum energy factor for gas water heaters and ban of incandescent light bulbs. Evolving Policies: Includes Amendment 17 to the Energy Efficiency Regulations. Major standards include increasing the energy efficiency performance of home appliances, in addition to commercial space conditioners. |
| Federal | Light-duty vehicle GHG emissions standards | New passenger vehicles and light-commercial vehicles/light trucks sold in Canada must meet progressively more stringent GHG emission standards. |
Current Policies: We assume the fuel economy of new passenger cars and light trucks improves by 5% annually from 2022 to 2030, driven by increasing standards which will be aligned with the U.S. Environmental Protection Agency and currently under development. From 2031 to 2050 fuel economy improves by 2% per year for both passenger cars and light trucks. Evolving Policies: The fuel economy of new passenger cars and light trucks improves by 5% annually from 2020 to 2050. The fuel economy of new light trucks improves by 5% per year from 2022 to 2030, and 3.5% from 2031 to 2050. |
| Federal | Heavy-duty vehicle GHG emissions standards | New heavy duty vehicles sold in Canada must meet progressively more stringent GHG emissions standards. |
Current Policies: We assume the fuel economy of new heavy duty vehicles improves by 2.25% per year from 2020 to 2030, driven by more stringent standards that require improvement covering up to model year 2027. Improvement slows over the later decades to 0.5% from 2031 to 2050. Evolving Policies: The fuel economy of new heavy duty vehicles improves by 2.25% per year from 2020 to 2050. |
| Federal | Clean Fuel Standard | Reduction in carbon intensity of gasoline and diesel over time, through several mechanisms, including: supplying low-carbon fuels (e.g. ethanol), end-use fuel switching in transportation fuels (e.g. electric and hydrogen vehicles), and upstream projects (e.g. CCS). |
Current Policies: Carbon intensity decrease of 12g CO2e/MJ below 2016 levels by 2030. Evolving Policies: Continues same rate of decrease (about 1.2g CO2e/MJ) from 2031 to 2050. Increased renewable natural gas blending, incentivized by credit creation mechanism. |
| Federal | Small Modular Reactor (SMR) Action Plan | Plan for the development, demonstration, and deployment of SMRs for multiple applications |
Evolving Policies: Assumes SMR development in Ontario and New Brunswick. |
| Federal | National energy code for buildings | Sets out technical requirements for the energy efficient design and construction of new buildings. |
Assumes that the 2017 building code applies throughout the projection period, with marginal efficiency improvements to building shells and space conditioning. Evolving Policies: Assumes that new buildings are “net-zero energy ready” by 2030 across provinces and territories by substantially increasing the efficiency of building shells and space conditioning technologies. |
| Federal | Renewable Fuels Regulations | Minimum renewable fuel content for all regions except for Newfoundland and Labrador, and the Territories. |
Specifies a minimum renewable fuel content of 5% for gasoline and 2% for diesel fuel sold in Canada by volume. |
| B.C. | Zero-emissions vehicle mandate and incentives | Requires automakers to sell a minimum share of zero or low-emission vehicles in addition to government-funded purchase subsidies and charging network incentives. | Follows the zero-emission vehicles act; Achieves 10% light duty zero-emission vehicles sales by 2025, 30% by 2030, and 100% by 2040. |
| CleanBC Better Homes and Better Buildings programs | Incentives for residential and commercial building efficiency improvements. | Rebates for switching to high-efficiency space and heating equipment, and building shells. Includes $3 000 rebate for types of residential heat pumps if switching from fossil fuel heating. | |
| CleanBC industrial electrification |
Electrification of planned natural gas production in the Peace region. Evolving Policies: Increased electrification of other industrial sectors. |
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| CleanBC Industry Fund |
Government investment in greenhouse gas-reducing projects and clean technologies. Gradual market adoption of near-commercial clean industrial technologies. |
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| Clean Energy Amendment Act | Sets a minimum percentage of electricity generation that must be provided by non fossil fuels. | 100% of provincial electricity generation must be provided by renewable or “clean” sources by 2025. | |
| Energy Efficiency Act | Sets energy efficiency performance standards for energy using technologies | Minimum energy efficiencies for household appliances, heating and cooling systems, lighting, industrial equipment. | |
| Renewable Fuel Regulation | A minimum renewable fuel content for gasoline and diesel fuel. | 5% ethanol content in gasoline, 4% biodiesel content in diesel | |
| Low Carbon Fuel Standard | Requires a decrease in average carbon intensity of transport fossil through several compliance pathways. | Decrease in average carbon intensity of transport fossil fuels by 20% in 2030 relative to 2010. | |
| Renewable Natural Gas Regulation | Requires that a portion of natural gas consumption be renewable natural gas by 2030. |
Requires that 15% of natural gas consumption be provided by renewable natural gas by 2030. Evolving Policies: Renewable natural gas consumption increases to 20% by 2050. |
|
| Alberta | Technology Innovation and Emissions Reduction (TIER) Regulation | Carbon pricing system for large industrial emitters. Emitters pay a carbon price if they fail to meet the required emissions intensity reductions, and can earn credits if they surpass their required reductions. |
Oil sands producer’s emissions intensity benchmarks are the maximum of facility specific benchmarks (these decline 1% annually), or TIER “high performance” benchmarks from 2020 to 2030. Benchmarks remain at 2030 levels from 2031 to 2050. Evolving Policies: Emissions intensity benchmarks decline at 2% relative to 2020 levels from 2031 to 2050. |
| Renewable Fuels Standard | Requires renewable fuels to be blended into gasoline and diesel fuel. | 5% ethanol content of gasoline, 2% biodiesel content of diesel. | |
| Methane Emissions Reduction Regulation | Requires the reduction of methane emissions from oil and gas operations by 45% by 2025 relative to 2014 levels. | A minimum methane control technology is required to take market share from 2020 to 2030. | |
| Saskatchewan | Boundary Dam Carbon Capture Project | This project stores and captures CO2 emissions from a 115 MW coal plant | CCS projections account for the project. |
| Ethanol Fuel Act and Renewable Diesel Act | Requires renewable fuels to be blended into gasoline and diesel fuel. | 7.5% ethanol content of gasoline, 2% biodiesel content of diesel. | |
| Methane Action Plan | Requires a reduction in methane emissions from oil and gas extraction by 40 to 45% of 2015 levels. | A minimum methane control technology is required to take market share from 2020 to 2030. | |
| Manitoba | Strengthened Biofuels Act | Requires renewable fuels to be blended into gasoline and diesel. | Minimum of 10% ethanol in gasoline, and 5% biodiesel in diesel. |
| Efficiency Manitoba Act | Provides consumers with rebates and other incentives. | Includes lighting, space conditioning, and building shell rebates across residential, commercial, and some industrial sectors. | |
| Green Energy Equipment tax credit | Tax credit for residential and commercial geothermal heat pumps | 15% tax credit | |
| Ontario | Strengthened Greener Gasoline Regulation and Greener Diesel Regulation (O Reg 97/14) | Requires renewable fuels to be blended into gasoline and diesel. | Requires 15% ethanol blending in gasoline by 2030and 4% biodiesel blending in diesel by 2020. |
| Quebec | Roulez vert program | Incentives for electric vehicles and charging station installations. | Rebates include $8 000 for new vehicles and $600 for home charging stations. |
| Zero-emissions vehicle standard | Requires automakers to sell a minimum share of zero or low-emission passenger vehicles via a credit market. |
Credit target increases gradually to reach 22% by 2025. Evolving Policies: Credit target increases to 100% zero-emissions vehicle new sales by 2035. |
|
| Renewable Natural Gas Mandate | Requires that a portion of natural gas consumption be renewable natural gas. |
1% of total by 2020 and 5% of total by 2025. Evolving Policies: Increases gradually to 20% by 2050. |
|
| Chauffez Vert program | Rebates for residential renewable energy space or water heating systems, if replacing fossil fuel system. | $1 275 for light fuel oil system replacements, $850 for propane system replacements. | |
| New Brunswick | Renewable Portfolio Standard | Requires a minimum share of in-province electricity sales to be generated by renewable sources by 2020. | Minimum share is set to 40%. Imports from other jurisdictions and energy efficiency improvements qualify for compliance. |
| Energy Efficiency Programs | Provides purchase incentives for energy efficient appliances in residential, commercial, and industrial sectors. | Various rebates for approved technologies | |
| Nova Scotia | Electricity Generation GHG emissions cap. | Requires declining GHG emissions from in-province electricity generators. | Requires emissions from the electricity sector to decline to 4.5 MT by 2030. |
| Renewable Electricity Regulations | Requires a minimum percentage of electricity consumption be provided by renewable resources. | Set at 40% by 2020. | |
| Maritime Link | High-voltage transmissions line that will connect Nova Scotia to the Muskrat Falls hydroelectric project in Newfoundland. | Included. | |
| EfficiencyNS Programs | Incentives for residential, commercial, and some industrial sectors. | Included. | |
| Newfoundland | 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. |
| Prince Edward Island | EfficiencyPEI Rebates | Incentives for residential, commercial, and some industrial sectors. | Various rebates on energy efficient appliances, such as heat pumps, solar systems, biomass heating, and fuel efficient furnaces. |
| Northwest Territories | 2030 Energy Strategy | Measures that aim to support low-carbon energy for transportation and space heating. Incentives for energy efficiency and conservation. | Key measures include: 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, rebates for zero and low-emissions vehicles. |
| Yukon | Our Clean Future | Various measures that aim to reduce greenhouse gas emissions. | Key measures include: 10% zero-emissions vehicles new sales by 2025 and 30% by 2030, zero-emission vehicles rebates, blending of renewable fuels into diesel and gasoline, energy efficiency incentives and regulations, and renewable energy projects for remote communities. |
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