A Climate Change Plan for the Purposes of the Kyoto Protocol Implementation Act – 2007

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Canada's National Circumstances and Greenhouse Gas Emission Trends

Canada's National Circumstances

Canada faces unique geographic and economic circumstances that must be considered in the development of a realistic plan to reduce Canada's greenhouse gas emissions.

Canada is the second largest country in the world. Average and seasonal temperatures vary widely, depending on the region -- most of the country experiences short, hot summers and long, very cold winters. As such, heating, cooling and transportation needs associated with the Canadian geographic context contribute to high energy demand and higher per capita greenhouse gas emissions. Along with these factors, Canada also has one of the highest rates of population and economic growth in the OECD, and is expected to maintain this trend in the future.

The Canadian economy is export-oriented and resource-based. More than 40% of Canada's economic output is exported, and 40% of those exports are energy-intensive, resource-based commodities. Canada is an energy superpower and one of only a few industrialized countries that is a net exporter of coal, oil, and natural gas, and has large reserves of each. This gives Canada a major role in the long term energy security of North American and world energy supplies. According to the International Energy Agency, fossil fuels will remain the dominant source of world energy, accounting for 83% of the overall increase in energy demand between 2004 and 20304. In this context, Canada is seen as one of the few secure places in the world to invest in energy development, and as one of a very few energy exporting nations that has reserves sufficiently large to provide a secure long term supply of fossil-fuels.

Since Canada exports a significant amount of energy, its emissions levels are partly the result of energy consumed in other countries. In fact, more than half of the oil and natural gas produced in Canada is exported for US consumption. Between 1990 and 2005, oil exports grew by 140% while natural gas exports grew by 170%. Other G7 countries, with the exception of the UK, increased their imports of oil and gas over the same period, thereby effectively exporting that portion of the emissions associated with the production of the fossil fuels they consume.

Canada's national circumstances are not expected to shift dramatically in the near term. Population growth is expected to continue, while the Canadian economy is forecast to grow at 2.4% annually.

Canada's National Greenhouse Gas Emissions

Total greenhouse gas emissions in Canada in 2005 were about 747 Megatonnes (Mt) CO2 eq, which represents a slight increase from 2003 levels. Overall the long term trend indicates emissions in 2005 were 32.7% above Canada's Kyoto Protocol target of an average of 563 Mt CO2 eq per year for the period 2008 to 2012.

Over 85% of Canada's greenhouse gas emissions result from the production and use of energy, largely in the areas of stationary fossil fuel combustion (46%) and transportation (26%). Industrial process emissions and emissions from agricultural activities each account for approximately 7% of Canada's total greenhouse gas emissions.

While there have been relatively minor and short-lived dips in Canada's historical emissions (for example, in 1991 due to an economic recession, and in 2001 due to the impacts of the terrorist attacks of September 11, 2001), in general, emissions have grown steadily since 1990.

Most recently, the growth in emissions has been slowed by the re-starting of significant nuclear capacity in electricity generation in Ontario, following refurbishment of a number of units at the Bruce and Pickering Generating Stations, as well as increases in hydro-electricity generation. There has also been somewhat reduced demand for heating fuels due to warmer winters during 2004 and 2005 and a reduced rate of increase in fossil fuel production.

Despite this recent slowdown, the most recent forecasts of economic growth and energy demand indicate that under a business-as-usual scenario Canada's greenhouse gas emissions will continue to grow5. With no new actions from governments or industry to control emissions growth, Canada's greenhouse gas emissions would average some 825 Mt per year between 2008 and 2012. This means that an emission reduction of one third below business as usual levels, on average, for each year from 2008 to 2012 would be required to achieve Canada's Kyoto Protocol target of 6% below 1990 levels, equivalent to 262 Mt per year. As will be explained in more detail in the following section, this level of reductions could not be achieved without imposing significant costs on the Canadian economy.

4 International Energy Agency, "World Energy Outlook 2006".

5 Business as usual levels refer to the expected levels of economic growth and energy demand that would exist if no new action were to be taken to reduce greenhouse gas emissions.

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