Canada's emissions dropped slightly last year, with climate wins offset by oil and gas

Canada's greenhouse gas emissions dropped slightly last year, even as the economy and population grew, suggesting climate policies had their intended effect, a new analysis found.

In its annual emissions report, made public this morning, the Canadian Climate Institute said the country's emissions were cut by 0.8 per cent in 2023, to a total of 702 megatonnes of carbon dioxide equivalent.

Dave Sawyer, principal environmental economist with the policy research organization, said the findings show there has been "modest progress" toward reducing greenhouse gas emissions and that "we see policy starting to work."

The most notable reductions were from the electricity sector which shifted from emissions-intensive coal to other fuels, such as natural gas and the building sector.

Those gains, however, were offset by increases in emissions from oil and gas and an increase in air travel after the pandemic, the analysis found.

Oil and gas continued a long-standing trend of steadily rising emissions up one per cent or 2.2 megatonnes from 2022 and now makes up 31 per cent of Canada's national total.

"We have this sort of yin-and-yang effect where we're trying to keep emissions down, but oil and gas keeps pulling us up," Sawyer said in an interview.

Sawyer said the strides made in the electricity sector have been remarkable. Emissions from that sector continued to drop and now sit 62 per cent lower than they were in 2005.

"You're seeing the fuel switching from coal to gas," he said, something that's driven by policy at the federal, provincial and territorial levels.

"Now, battery storage is absolutely taking off, which allows us to basically put more wind and solar into the grid."

When it comes to buildings, the reduction in emissions stems from upgrades such as heat pumps, along with an unusually warm winter. And federal and provincial grants for retrofitting have seen significant uptake.

"People are naturally upgrading their houses and the new buildings are way more efficient than the old 50-year-old buildings," he said.

Sawyer said the report didn't offer insight on whether the carbon tax, a source of ongoing debate in Canadian politics, had proven to be an effective driver in reducing emissions.

An analysis earlier this year by the Canadian Climate Institute found that carbon pricing both the consumer and industrial versions was projected to reduce emissions by as much as 50 per cent by 2030, but it noted that the industrial carbon price was the main reason for that.

'Suite of solutions'

Overall, the reductions among some sectors of the Canadian economy have been offset by the boom in the oil patch, said Janetta McKenzie, a specialist in oil and gas at the Calgary-based Pembina Institute.

Production in the oil and gas industry hit record highs in 2023, and forecasters have predicted that trend is likely to continue.

McKenzie said there is a "suite of solutions available" to the oil and gas industry such as further reducing methane emissions and the targeted use of carbon capture and storage technology. But she said the improvements companies have made in terms of emissions intensity have been offset by increases in production.

"This continues to be a tricky thing to solve," she said in an interview.

She suggested that climate policy can work effectively "when it leverages opportunities to work on both an emissions reduction kind of side of things, but also on the economic policy side of things."