. Isl TO A SUBJECT OBJBT 3 -. Uri inntorfrdephone umber Auturr?klume'radeielephone Pa mar. Dunsmu?l 2 Rochon Eana?g Fiscal Foray: Bruno ROY Businesses? 3? (359-3652) I I Our ?le Noll: rtl'?renee 201 SFIN422996 Your ?le Vorre reference Department of Finance Ministers des Finances Canada Canada Clu?frenliondescalril?- I I. I I I Home to a:qu Minister {14) DMD rum new .433! DIR rc?nard II June inn Existing Suite of Federal Climate Policy Measures Fer information. This note provides an overview of the existing suite of federal measures to address greenhouse gas emissions in Canada. Issue Since 2006, the Government of Canada has adopted a regulatory approach to reducing greenhouse gas emissions, complemented with programming in economic sectors that were not being regulated. Under the 2009 Copenhagen Accord, Canada aligned with the United States (U.S.) to adopt a_ target of a 17 per cent reduction in greenhouse gas emissions below 2005 ?Todate,federalregulationshave been implemented for two of Canada's largest sources of emissions: trans ortation and electricitx-generation. This note provides an overview of the exisu'ng suite of federal climate policy measures. A list of federal mitigation actions and their estimated greenhouse gas . emissions reduction in megatonnes is presented in Annex 1. I I I Bac ound Since 2006, the Government has implemented or proposed several measures to reduce greenhouse gas emissions in the transportatiOn, electricity and emissions-intensive and trade- exposed sectors. These measures are expecting to reduce greenhouse gas emissions by about 40 megatonnes per year in 202?0. The following provides a brief description of the measures that have been introduced or are under development by the federal government that are expected to result in reductions to domestic greenhouse gas emissions. Transportation Sector Measures Li ght-Drnv Vehicle Greenhouse Gas Regulations Phase 1): The regulations, implemented in 2011, apply increasingly stringent annual greenhouse gas emission standards to new passenger automobiles and light trucks manufactured in or imported into Canada for the model years Soren Halverson (613) 369?3628 Canada re: (0) 000001 ?1 A r? lr-t 43'- v?fi?LJ. a 254air aligns-5 cm are? in -2- 2011~2016. Environment Canada estimates that these actions will reduce carbon dioxide equivalent emissions by 10 megatonnes per year of in 2020. Light-BM Vehicle Greenhouse Gas Regulations Phase 2): Environment Canada amended the Phase 1 Light-Duty Greenhouse Gas Regulations to introduce more stringent standards for the model years 2017-2025. These amendments will enter into force in 2017. Environment Canada estimates that Phase 2 will reduce emissions by 3 megatonnes per year in 2020. Heavy-Duty Vehicle Greenhouse Gas Regulations: These regulations, implemented in 2014, apply increasingly more stringent annual greenhouse gas emissions standards to new on-road heavy-duty vehicles and engines imported or manufactured in Canada for the model years 2014- 2018. Environment Canada estimates that these regulations will reduce emissions by 3 megatonnes per year in 2020. Carbon Dioxide Standards for Aviation: Under this initiative, Canada is participating in the development of a new international carbon dioxide standard for new airplanes at the lntemational Civil Aviation Organization. Canada plans to adopt the standard once it has been ?nalized and approved by the International Civil Aviation Organization. The mitigation impact of this initiative has not yet been estimated. - Rail Sector Regglatory Initiative: Canada is Working with the US. and the American rail sector to develop an Action Plan to reduce greenhouse gas emissions from the rail sector under the Canada-US. Regulatory Cooperation Council. This work builds upon a voluntary agreement between the Government of Canada and the Canadian rail sector, which was renewed in 2013, to reduce greenhouse gas emissions and contaminates produced by locomotives during rail operations. The mitigation impact of this initiative has not yet been estimated. Energy Ef? cieng? Requirements for Marine Vessels: In 2013, Canada enacted national regulations to implement new energy ef?ciency requirements that were negotiated under Annex VI of the International Maritime Organization?s Convention for the Prevention of Pollution from Ships. The regulations require all vessels of 400 gross tonnages and above to have a Ship Energy Ef?ciency Management Plan on board, stating how each vessel will increase energy ef?ciency and reduce greenhouse gas emissions. Additionally, under the regulations may vessels of 400 gross tonnages and above must meet Energy Ef?ciency Design Index requirements that will increase energy ef?ciency by 30 per cent by 2025. TranSport Canada estimates that the regulations will reduce emissions by 0.4 megatonnes per year in 2020. Transport Canada is also planning to implement adjusted domestic energy ef?ciency design standards for new Canadian ships operating on Canadian waters only domestic trade). Shore Power Technology for Ports Program: This program provides cost-shared funding for the deployment of marine shore power technology at Canadian ports. This technology allows ships to plug into the local electrical grid to power the vessel instead of using their auxiliary diesel engines when docked. Transport Canada estimates that this initiative will have a small mitigation impact in 2020. for Vehicles Proggagn: Transport Canada implerri?ht?d this complementary program in 2011, which tests, evaluates, and provides expert technical information on the environmental and safety performance of advanced light-duty vehicle and heavy-duty vehicle technologies. The program shares technical ?ndings to inform the development of vehicle emissions regulations; guide the proactive development of new or revised safety regulations, 000002 -3- standards, codes and guidelines; and support the development of non-regulatory industry codes and standards to help integrate new vehicle technologies into Canada. This program is not expected to directly result in emission reductions. Truck Reservation System Proaram: This program provides funding to projects at Canada?s major container ports for the deployment of technologies and practices that improve port- trucking ef?ciency and environmental performance reducing truck idling, wait times at port terminals, and congestion on access roads). The Program is currently working with project proponents Canadian Port Authorities) to gather more complete data on truck movements within port areas to better measure greenhouse gas emissions on an ongoing basis and also in certain regions to set a baseline. Transport Canada has not yet estimated the mitigation impact of this initiative. - - - Energy Sector Measures Coal-Fired Electricity Generation Regulations: These regulations, under the Canadian Environmental Protection Act, 1999, apply a performance standard to new coal-?red electricity generation units and to existing units that have reached the end of their useful life. The regulations were ?nalized in 2012, and the performance standard oft-12010131168. prmbon dioxide per gigawatt hour enters into force on July 1, 2015. Environment Canada estimates that the regulations will reduce emissions by 3 megatonnes per year in 2020. for Renewable Power Program: Natural Resources Canada implemented this program in 2007. The program offers a producer subsidy of one cent per kilowatt-hour of electricity produced over a period of 10 years from a qualifying low-impact renewable energy project built before March 31, 201 1. Environment Canada projects that this program will reduce emissions by 6 megatonnes per year in 2020. i Carbon Capture and Storage investment: Budget 2008 provided a one-time allocation of $240 million to a full-scale commercial demonstration of carbon'capture and storage in the coal~ ?red electricity sector in Saskatchewan. The $1.4 billion SaskPower Boundary Darn proj eet captures carbon, which is primarily transported by pipeline to nearby oil fields where it is used for enhanced oil recovery. Environment Canada projects that this initiative will capture and store up to 1 megatonne of carbon dioxide equivalent per year starting in 2014 and over the lifetime of the plant, which is estimated to be 30 years. I Clean Enemy Fund: This fund promoted the demonstration of technologies, including large- scale carbon capture and storage projects, and small-scale renewable energy and clean energy systems projects. While the largest carbon capture and storage project was subsequently cancelled due to weak carbon pricing, two smaller ones were funded. Investments under the Fund are expected to result in emissions reductions of up to 2.8 megatonnes per year from 2015 to2025. -. .-- - .. 000003 -4- Ef?ciency Initiative: Natural Resources Canada launched this initiative in 2011. This program is maintaining federal capacity to improve energy ef?ciency in Canada to make the housing, building and equipment stock more energy-ef?cient, energy performance more visible, and industry and vehicle operations more ef?cient. Environment Canada projects that this initiative will reduce emissions by 6.5 megatonnes per year in 2020. This program features the following components: - Ef?ciency fer Buildings provides inforrnatibn and benchmarking tools to improve building energy performance of new and existing buildings. Ef?ciency for Housing encourages the construction and retro?t of low-rise residential housing, making the stock more energy-ef?cient through ENERGY STAR and certi?cation and home evaluations. Ef?ciency for Equipment Standards and labelling introduces or raises energy ef?ciency standards for a wide range of products and promotes energy-ef?cient products through the ENERGY initiative in Canada.? Ef?ciency for Industry aids the adeption of an emergency management standard and accelerates energy-saving investments and the exchange of best practices information within Canada's industrial sector. Innovation Initiative: Natural ResourCes Canada launched this initiative in 2011. The program?s objective is to support energy technology innovation to produce and use energy in a cleaner and more ef?cient way through support for research, development and demonstration: projects. The program also helps in the search for long?term solutions to reducing and eliminating air pollutants from energy production and use. Activities are funded in the following ?ve areas: energy ef?ciency, clean electricity and renewables, bioenergy, electri?cation of tranSportation, and unconventional oil and gas. As this initiative primarily involves research projects, only minor direct greenhouse gas emissions reductions are expected. Technology Initiative: This program, a precursor to the above Innovation Initiative, was implemented in 2007. The program funded research, deveIOpment and demonstrations to support next generation technologies that supported zero emissions fossil fuel production and use, as well as clean sources such as renewable and bio?energy The program contributed $7.2 million to the lntemational Energy Agency Greenhouse Gas Research and Development Programme Weyhurn-Midale C02 Monitoring and Veri?cation Project, which studied geoldgical storage in depleted oil?elds. It was conducted in conjunction with two commercial COrenhanced oil recovery operations near Weyburn, Saskatchewan. Natural Resources Canada projects that this program will reduce emissions by 0.2 megatonnes per year in 2020. Sustainable Development Technology}: Canada SD eeh Fund: This fund was launched in 2001 and a total of $91 5 million has been allocated by the Government. To date, the SD Tech Fund has allocated $592 million to support 245 projects across Canada, leveraging an additional $1.5 billion mostly from industry. Greenhouse gas emissions reductions are an indirect and long-term objective of the Fund. These efforts are expected to result in a total cumulative emission reduction of 135.8 megatonnes by 2020. Environment Canada has not yet estimated the annual mitigation impact of this initiative starting in 2020. 000004 -5- for Aboriginal and Northern Communities: Aboriginal Affairs and Northern Deve10pment Canada launched this program in 2011 to support the development and implementation of renewable energy projects that reduce greenhouse gas emissions arising from electricity and heat generation renewable energy projects in Aboriginal and northern communities. The program supports projects that use proven and commercialized technologies that are to the local conditions, with priority given to projects in northern communities and off- grid communities. Aboriginal Affairs and Northern DeveIOpment Canada estimates that this initiative will have a small mitigation impact in 2020. Other Measures While the following measures are not part of the Government?s climate change strategy, they are expected to reduce greenhouse gas emissions as a co?bene?t. Federal Renewable Fuels Regulations: As part of the Government's Renewable Fuels Strategy regulations were implemented in 2010 requiring that gasoline contain an average 5 per cent renewable fuel content and that most diesel fuel contain an average 2 per cent content. Environment Canada projects that these regulations will reduce emissions by 2 megatonnes in 2020. Pulp and Paper Green Transformation Operating from June 2009 to March 2012, the $1 -billion Pulp and Paper Green Transformation Program provided funding to Canada pulp and paper companies for capital projects with environmental bene?ts. Though not speci?cally designed as a climate change mitigation mechanism, through projects that improved energy ef?ciency, enabled fuel switching and added capacity to generate renewable electricity, Environment Canada expects that this program will reduce emissions by 1.4 megatonnes per year in 2020. Considerations Canada was the source of 1.6 per cent of global emissions in 2012 and is the 9th largest greenhouse gas emitter in the world. In 2009, Canada aligned with the U.S. to adopt a target of 17 per cent below 2005 levels by 2020. Historical data show that along with positive economic growth from 2006 to 2012, Canada?s overall greenhouse gas emissions were below 2005 levels during this period (with the exception of 2007). While Canada?s most recent report to the United Nations of historical data, submitted in April 2015, shows an increase in emissions ?om 2009 to 2013, the new ?gures remain below 2005 levels. Since 201 1, Canada?s climate change strategy has focused on implementing a sector-by-sector regulatory approach, aligned with the U.S. where possible given the high degree of economic integration. . . . . 000005 Document released under the Access 1?0 information Act Document divuigue en venu de - 5 - Lor' 5w I'acce?ss ifr'nformarfon On May 15, 2015, Canada committed to reduce ts greenhouse gas emissions by 30 per cent. i . :i . Jul?u?l If 000006 -7. Annex I Table 1: Federal Mitigation Actions and Their Effects - Policies and Measures . . Estimate of Mitigation i Name :fc?gga ?on Sector Affected Im pact in 2020 (Mt reduction) Light-Duty Vehicle GHG Regulations Transportation 201 I 10 (Phase 1) Li ght-Duty Vehicle GHG Regulations Transportation 2017 3 gPhase 2) Tramportation 2014 3 Transportation To be determined Not estimated Carbon Dioxide Standarer Aviation Transportation To be determined Not estimated Rail Sector regulatory i requirements for Marine 1 Vessels I . . . TranSportation To be determined Not estimated nitrative I: Energy Ef?ciency Transportation 2013 0.4 i? Energy Ef?ciency Requirements for Canadian Marine i Vessels that Serve Domestic Trade Transportation To be determined Not estimated Shore Power Technology for Ports ngram Transportation 2011 =0 for Vehicles Program Tramportation 2011 Not estimated Truck Reservation System Program Transportation 2013 Not estimated Reduction of Emissions from Coal- Fired Generation of Electricity Regulations Electricity 2015 for Renewable Power Program Electricity 2007 6.2 Carbon capture and storage investment in Canada?s Federal Budget 2008 Energy 2014 Source; Environment Canada, Canada ?5 Sith National Report an Cir?maie Change 2014 000007 -3- Table 1: Federal Mitigation Actions and Their Effects Policies and Measures (continued) . . . i Estimate of Mitigation Name gii?ggamn Sector Affected Impact in @020 Mt Coge red action) Clean Energy Fund Energy 2009 2.8 Ef?ciency Initiative Energy 201 6'5 . Innovation Initiative Energy 201 1 Not estimated Technology Initiative Energy 2007 0'2 Sustainable Expected to result in a Development total cumulative Technology Canada global emissions SD Tech Fund Energy 200] reduction of 135.8 megatonnes by 2020. for Aboriginal and Energy 2011 20 Northern Communities Federal Renewable . Fuels Regulations TranSportation 2010 2 Pulp and Paper Green . . . Transformation and 2009 1.4 Trade-Exposed rogram Source: Environment Canada, CanadaZrSixth National Report on Climate Change 2014 000008 (FOLD HERE) (PLIER ICI) - rr - . I (?ash?Wain'Iq" Ml ?vl I. I \n-f I 2AA i Departth of Finance Minist?fa 583 anus Canada Canada for Signamrc by Information of A signer par I Pour dc Deputy Minister Prepared by Prepare par (non-ah '31 vision} Bruno Rely- . Microeconomic Policy Analysis In ounSuliation with En conSultation avec Chief Chef Suzanne White Approved by Approuv?par .Z, Soren Halvers Hv? [63:33:3an I Leah Anderson ma Richard Botham ff, Clifford Clark v. Economist: invite Clifford Clark Associatc Deputy Minister at Deputy for Canada - Sous-ministre d?i?gue cl rcprescmam TlmOthy Sargent du Canada au 61 i? . . . Assooratc Deputy Munster Marta or gan Sous-ministrc d?l?gg?e Deputy Minister Sous?minim: iRemarks Remarques: Paul Rochon File no No (it: dossier 20 5FIN422 996 PM JUN 3 0 1015 i 1 Associate Deputy Minister 8: G7 Deputy for Canada Sous-ministre d?i?gu? et repr?santant (Sign on behalf of DM) du Canada au G7 Associate Deputy Minister Sous?ministre d?l?gu?e D?ug (Signer an nom du (Sign on behalf of DM (Signer au nam du SM Assistant Deputy Minister Sous-ministre adjoint(e} (Sign on behalf of DM) (Signer Liniau.? _i . . I 000009