Estimating Canada’s 2030 Emissions Gap

Summary

This report provides estimates of the gap between Canada’s projected greenhouse gas (GHG) emissions in 2030 and the Government’s legislated target under the Canadian Net-Zero Emissions Accountability Act (the Act). This Act enshrined in legislation Canada’s emissions targets of 40‑45 per cent below 2005 levels by 2030 (the first milestone year) and net-zero GHG emissions by 2050.

The Government’s 2030 Emissions Reduction Plan, launched in March 2022, presented an “evergreen roadmap” for Canada to reach its emissions targets. Earlier this year, a series of federal policy revisions—removal of the consumer carbon price; delaying implementation of the Electric Vehicle Availability Standard; and reconsideration of the oil and gas emissions cap—introduced significant changes to measures under the 2030 Emissions Reduction Plan.

We use the most recent emissions projection from Environment and Climate Change Canada (ECCC), updated using current emissions data, along with ECCC-based estimates of the impacts of recent policy developments, to calculate the gap in 2030 between projected emissions and the legislated target. We also calculate the cumulative gap over 2025 to 2030 between projected emissions and the Government’s Pathway to 2030. Our analysis does not incorporate new measures under consideration in the Government’s recently announced Climate Competitiveness Strategy from Budget 2025.

Key findings

• Under our updated projection that accounts for federal policy revisions earlier this year, we estimate that Canada’s emissions in 2030 could range from 49 megatonnes (Mt) to 102 Mt above the legislated target of 40‑45 per cent below 2005 levels. This would leave Canada’s 2030 emissions at 33.5 per cent and 31.5 per cent, respectively, below 2005 levels.

• While the 2030 target puts the focus on emissions in a milestone year, it is also informative to consider the shortfall in performance over time. Based on the Government’s Pathway to 2030 (40 per cent below 2005 levels), our updated projections (accounting for federal policy revisions) indicate that cumulative emissions over 2025 to 2030 could exceed Pathway levels by between 221 Mt (6.7 per cent) and 289 Mt (8.8 per cent).

Given the construction of our updated projection (that is, applying previously estimated impacts of various emissions reduction policies to an existing baseline that encompasses these policies, as well as other policies), our estimates of the emissions gap in 2030 should be seen as approximate.

Our analysis does not attempt to account for potential interactions between the policy revisions or for differences in underlying baseline scenarios on which their impacts are estimated. Further, our analysis does not consider any policy revisions made by provincial and territorial governments earlier this year.

That said, on balance, our estimate of the emissions gap in 2030, ranging from 49 Mt to 102 Mt, is lower than recent external estimates from the C.D. Howe Institute (82 to 120 Mt) and the Canadian Climate Institute (based on 2030 emissions that are 20 to 25 per cent below 2005 levels).

Background

The Canadian Net-Zero Emissions Accountability Act (the Act) received royal assent in June 2021 and created emissions targets of 40‑45 per cent below 2005 levels by 2030 (the first milestone year) and net-zero GHG emissions by 2050.[^1] The Government’s 2030 Emissions Reduction Plan, launched in March 2022, presented an “evergreen roadmap” for Canada to reach its emissions targets.

Earlier this year, a series of federal policy revisions introduced significant changes to measures under the 2030 Emissions Reduction Plan. In March, the Government eliminated the federal fuel charge, setting rates to zero as of April 1 while keeping industrial carbon pricing in place.[^2] In September, the Government removed the 2026 annual sales requirement under the Electric Vehicle Availability Standard (EVAS) and launched a broader review of the regulation, while maintaining the 2035 (and beyond) target of 100 per cent zero-emission vehicle sales.[^3] Shortly thereafter, reports indicated that the proposed federal emissions cap for the oil and gas sector was under review, with the Government signaling a shift toward a more flexible “climate competitiveness strategy”.[^4]

Budget 2025 outlined the Government’s Climate Competitiveness Strategy, highlighting improvements to industrial carbon pricing, clarity on GHG regulations and various measures (for example, changes to investment tax credits and support for critical mineral projects). Budget 2025 indicated that the oil and gas emissions cap would not be required with effective carbon markets, enhanced regulations, and technologies (such as carbon capture and storage) “deployed at scale”.

Given federal policy revisions earlier this year and uncertainty surrounding the oil and gas emissions cap, we provide an updated emissions projection to estimate the gap between Canada’s projected emissions and the Government’s 2030 target under the Canadian Net-Zero Emissions Accountability Act. Our analysis does not incorporate new measures under consideration in the Government’s recently announced Climate Competitiveness Strategy from Budget 2025. Further, our analysis does not consider any policy revisions made by provincial and territorial governments earlier this year. Our projection to 2030 serves as an interim update that will be superseded by ECCC’s annual GHG emissions projections, which are expected to be released later this year.

Updating Emissions Projections

The starting point for our updated projection is ECCC’s December 2024 “With Additional Measures” (WAM) scenario from Canada’s 2024 Biennial Transparency Report (BTR1) under the Paris Agreement. This scenario includes all policies in place as well as “those that have been announced but have not yet been fully implemented” (as of August 2024). For example, this includes announced policies such as enhanced methane regulations and the oil and gas emissions cap.

Moreover, this scenario includes economic sectoral emissions plus the Land Use, Land-Use Change and Forestry (LULUCF) accounting contribution, as well as the impacts of nature-based climate solutions and agriculture measures.[^5],[^6]

Using the most recent historical emissions data published in March 2025, we then update ECCC’s WAM scenario for the period 2024 to 2030 by applying projected emissions growth rates (at the economic sector aggregation) to their corresponding historical levels in 2023. Next, to reflect federal policy revisions earlier this year before Budget 2025, we adjusted the updated WAM scenario by removing ECCC-based estimates of the emissions impacts of the consumer[^7] carbon price; the 2026 annual sales requirement under the Electric Vehicle Availability Standard; and the oil and gas emissions cap. Our analysis does not attempt to account for potential interactions between the policy revisions or for differences in underlying baseline scenarios on which their impacts are estimated.

Eliminating the consumer carbon price

The elimination of the consumer carbon price is expected to increase emissions, as consumers and small businesses will no longer pay a carbon levy on fuels like gasoline and natural gas—weakening the price signal that encourages lower fossil fuel use. In the March 2025 Regulatory Impact Assessment Statement (RIAS) under the amended fuel charge regulations, ECCC estimated that eliminating the fuel charge would add 3 Mt to projected emissions in 2030.[^8]

This estimate is much lower than the 13 Mt impact previously provided to the PBO by ECCC in July 2024 under Information Request IR0790. ECCC attributes this revision to methodological differences and interaction effects.[^9] Given the uncertainty surrounding the interaction of the consumer carbon price and other policies, we include both ECCC estimates in our analysis to provide a range of projected emissions levels through 2030.

Delaying the 2026 EVAS sales target

Delaying the 2026 interim target under the Electric Vehicle Availability Standard is expected to slow the transition to zero-emission vehicles in the light-duty sector. Based on ECCC analysis in the December 2023 Regulatory Impact Analysis Statement for the Regulations Amending the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations, we estimate that delaying the 2026 EVAS sales target by 1 year would reduce the rate of fleet renewal, resulting in higher average emissions per kilometre, adding 1 Mt of emissions in 2030.

Eliminating the oil and gas emissions cap

We acknowledge that the proposed regulations to cap oil and gas emissions remain under consideration and that the cap has not been eliminated. That said, given the uncertainty surrounding the oil and gas emissions cap, we include the impact of its elimination in our estimate of the emissions gap to provide an upper bound.

In the November 2024 Regulatory Impact Assessment Statement for the proposed oil and gas sector emissions cap regulations, ECCC estimated that the cap would reduce economy-wide emissions by a total of 5 Mt in 2030. Based on these results, if the proposed oil and gas cap were eliminated, emissions (particularly from upstream oil production and natural gas processing) would rise, adding 5 Mt to projected emissions in 2030.

Results

The starting point for our updated projection, ECCC’s 2024 With Additional Measures scenario revised for historical data, shows Canada’s emissions declining from 650 Mt in 2023 to 500 Mt in 2030 (Table 1).[^10] Despite this projected decline, emissions in 2030 are 45 Mt above the 40 per cent target threshold and 83 Mt above the 45 per cent target threshold. The starting point projection in 2030 is 34.1 per cent below 2005 levels.

The starting point projection illustrates the emissions trajectory under policies implemented and announced (but not yet fully implemented) that existed prior to the federal policy revisions earlier this year. Based on ECCC estimates, we project that the elimination of the (federal) consumer carbon price would increase emissions by 3‑13 Mt and the delay in the 2026 interim target for the Electric Vehicle Availability Standard would increase emissions by 1 Mt in 2030. With these policy revisions, emissions in 2030 are projected to range from 504 Mt to 514 Mt (updated WAM scenario A), which are 33.5 per cent and 32.2 per cent, respectively, below 2005 levels. This translates into a gap of 49-59 Mt above the 40 per cent target threshold and 87-97 Mt above the 45 per cent target threshold.

Although the proposed regulations to cap oil and gas emissions remain under consideration, given the uncertainty surrounding their implementation, we consider the projected impact of their removal on emissions in 2030. Based on ECCC estimates, we project that eliminating the oil and gas emissions cap would increase emissions by 5 Mt in 2030. With this additional policy change, emissions in 2030 are projected to range from 510 Mt to 520 Mt (updated WAM scenario B), which are 32.8 per cent and 31.5 per cent, respectively, below 2005 levels. This translates into a gap of 55-65 Mt above the 40 per cent target threshold and 93‑102 Mt above the 45 per cent target threshold.

Given the construction of our updated projection (that is, applying previously estimated impacts of various emission reduction policies to an existing baseline that encompasses these policies, as well as other policies), our estimates of the emissions gap in 2030 should be seen as approximate. Our analysis does not attempt to account for potential interactions between policy revisions or for differences in underlying baseline scenarios on which their impacts are estimated. Further, our analysis does not consider any policy revisions made by provincial and territorial governments earlier this year.

That said, our estimate of the emissions gap in 2030, ranging from 49 Mt (40 per cent target threshold and updated WAM scenario A) to 102 Mt (45 per cent target threshold and updated WAM scenario B), is lower than recent estimates from C.D. Howe Institute (82 to 120 Mt) and the Canadian Climate Institute (based on 2030 emissions that are 20 to 25 per cent below 2005 levels).[^11]

Assessing cumulative emissions between 2025 and 2030 provides a broader perspective on Canada’s short-term progress toward its climate goals. While annual emissions levels reflect year-to-year performance, cumulative totals better capture the overall impact of Canada’s emissions trajectory. Since global warming depends on the stock of global emissions, higher cumulative totals reduce Canada’s remaining “carbon budget” and require larger reductions at later stages to stay aligned with net-zero emissions by 2050.[^12]

While the Canadian Net-Zero Emissions Accountability Act does not legislate the annual emissions trajectory to 2030, we use ECCC’s Pathway to 2030[^13] (40 per cent below 2005 levels) projection of emissions over 2025 to 2030 as benchmark for comparison to our updated WAM scenarios. Relative to the Pathway benchmark, under our updated WAM scenarios, cumulative emissions over 2025 to 2030 are projected to be 221 Mt (6.7 per cent) to 289 Mt (8.8 per cent) higher (Table 2).