Backgrounder

Project Green's First Phase - Moving Forward on Climate Change: A Plan For Honouring Our Kyoto Commitment

Taken together, the following measures allow Canada to close its greenhouse gas emissions gap by 270 megatonnes by 2012.

CLIMATE FUND

75-115 megatonnes

Announced in Budget 2005, the new Climate Fund is a market-based institution for the purchase of emission reductions and removals on behalf of the Government of Canada. It will:

• purchase domestic greenhouse gas reductions from farmers, businesses, communities, Canadians, and other innovators; and
• secure qualifying international emissions reductions that will assist Canada in complying with its Kyoto target.

The Government of Canada will consult with Canadians on the implementation of the Climate Fund.

PARTNERSHIP FUND

55-85 megatonnes

As announced in Budget 2005, the Government of Canada will work with provinces and territories to:

• strike new agreements and improve existing ones with provinces and territories;
• determine strategic investments on the basis of mutual priorities; and
• finance, on a cost-sharing basis, major technology and infrastructure investments identified in collaboration with provinces and territories, for example, clean coal, phasing out coal-fired power plants, carbon dioxide capture and storage pipeline, and extending the east-west electricity power grid.

The Government of Canada will engage provinces and territories on the mandate of the Partnership Fund in the near future.

LARGE FINAL EMITTERS (LFEs)

45 megatonnes (36 + 9)

The overall reduction target for the large final emitters - the oil and gas, thermal electricity, mining and manufacturing sectors - is 45 megatonnes. Many compliance options are available to LFEs such as:

• adopting upgrades to achieve in-house reductions;
• purchasing emission reductions from other LFEs;
• investing in domestic offset credits; and
• purchasing international credits provided that these represent verified emission reductions.

Taken together, these options will allow the 700 plus large final emitters across Canada to achieve reductions in the order of 36 megatonnes. In addition, LFEs will be able to invest in the Greenhouse Gas Technology Investment Fund, and count those investments for purposes of compliance for up to nine megatonnes. The Fund will direct its spending to technology projects that will facilitate Canada's transition towards a low-carbon economy. Since investments in the Fund are not expected to generate emission reductions within the Kyoto 2008-2012 timeframe, these nine megatonnes have not been included in the Plan accounting.

The Government of Canada will put in place regulations to allow for compliance monitoring and emissions trading. The preferred regulatory tool is the Canadian Environmental Protection Act (CEPA) and its approach to efficient and effective regulation. Further, CEPA allows for federal-provincial-territorial equivalency agreements. Provinces, territories and industry stakeholders will be engaged in the development of the proposed system in spring 2005.

GHG REDUCTION PROGRAMS

up to 40 megatonnes

The Government of Canada has a number of programs already in place that are proving their effectiveness. For example, the EnerGuide for Houses Home Retrofit Incentive program has proven so effective that Budget 2005 increased investment by $225 million over five years to encourage up to half-a-million homeowners to increase the energy efficiency of their homes. Similarly, incentives have encouraged the retrofit of almost 5,000 commercial and institutional buildings, resulting in an average energy savings of 20%.

Other programs are helping Canadians reduce emissions in areas such as the transportation sector, and the use and availability of cleaner, alternative fuels. The new Plan recognizes that to remain effective our efforts need to evolve over time and build on what works, reallocate from initiatives deemed less effective and take advantage of new possibilities and technologies.

To ensure climate change investments get maximum results, all programming will be reviewed prior to the release of any new funds in 2007. Any resulting savings will go to new measures or to strengthen existing successful programs.

CARBON SINKS

up to 30 megatonnes

Business-as-Usual sinks are those stores of carbon in the soil and forests that Canada will have simply by continuing existing practices. It is projected up to 30 megatonnes of greenhouse gas emissions can be reduced by 2012 through existing farming and forestry practices. The Climate Fund can contribute additional tonnes by purchasing carbon sequestered through farming and forestry management projects.

RENEWABLE ENERGY

15 megatonnes

Budget 2005 announced over $1.8 billion for the next 15 years to:

• quadruple the Wind Power Production Incentive to 4,000 megawatts – enough energy to power one million Canadian homes; and
• create the Renewable Power Production Incentive to develop other renewable sources including solar, small hydro and biomass.

The Budget also introduced significant and innovative tax measures to promote energy efficiency and renewable energy.

CONSUMER ACTION

5 megatonnes

To increase information and incentives to support Canadian's greener purchasing decisions, the Government of Canada will:

• increase technical advice and services to individuals, businesses and communities; and
• continue raising awareness through the One-Tonne Challenge, of simple, cost-effective, energy efficient actions Canadians can take.

In addition, the National Roundtable on the Environment and Economy will consult Canadians on the viability and effectiveness of further green consumer initiatives.

AUTOMOTIVE INDUSTRY

5.3 megatonnes

The reductions in greenhouse gases from the automotive sector will be achieved through a Memorandum of Understanding between the Government of Canada and the Canadian automotive industry. That agreement, to reduce the emissions of greenhouse gases produced by light duty motor vehicles operating in Canada, sets out commitments by the auto sector to achieve emissions reductions through the deployment of more fuel-efficient and less greenhouse gas intensive technologies and vehicles. Examples include improved fuel efficiency, advanced emission and diesel technologies, and alternative fuel and hybrid vehicles. Rigorous monitoring and reporting requirements will be put in place to ensure targets are reached. The Government of Canada remains ready with legislative and regulatory action as needed.

Budget 2005 noted the need to study incentives for purchasing fuel efficient vehicles. Suggestions will be provided to the Finance Minister ahead of Budget 2006.

GREENING GOVERNMENT

1 megatonne

Through primarily reallocating existing funds, the Government of Canada will reduce its own emissions of greenhouse gases by approximately one third. To achieve this, it will:

• put in place a Green Procurement Policy to govern all purchases, including power, by 2006 and make its central heating and cooling plants more energy efficient;
• ensure new office buildings meet the Leadership in Energy and Environmental Design (LEED) Gold Standard – and thus, use approximately half the energy needed per building on average today; and
• replace its vehicles over time with more efficient alternatives including hybrids.

The approaches and the investments outlined in Moving Forward on Climate Change allow for all Canadians to play their fair part in helping Canada honour its Kyoto target and reach the 270 megatonne reduction target. The various mechanisms, outlined in the Plan for example, the Climate Fund, the Partnership Fund, new and existing tax incentives and the existing greenhouse gas emission reduction programs, are all interdependent. For that reason, the megatonne targets are in some cases specific, as in the case of the automotive industry, and expressed in ranges for other elements all with the goal of reaching and where possible exceeding the 270 megatonne figure.

The implementation of some elements will be determined through consultations with provinces, territories and other stakeholders. In particular, discussions on the mandates of both the Climate Fund and Partnership Fund, along with the LFE system and offset system rules will begin this spring.