8.2 Emissions by sector


The main emissions remaining in net-zero scenarios come from transport, agriculture, industrial processes, energy (oil and gas) production and the fugitive emissions associated with it, and waste. However, beyond the end point of the modelling period, it is relevant to examine the evolution of the various sectors according to the scenarios considered. 

8.2.1 Residential and commercial buildings

As discussed in Chapter 6, with heat pumps becoming more cost competitive, the residential sector (6% of current GHG emissions) is the only one to see its emissions decrease in all scenarios and in all time

periods. While both REF and CP30 lead to a 25% reduction by 2030, the two trajectories then diverge, with a decrease of 45% for REF and 75% for CP30 by 2050. As expected, the decarbonization of this sector is accelerated in NZ scenarios, reaching between 33% and 50% by 2030. However, by 2040, all three NZ scenarios are much more aligned, with reductions of between 70% and 75%, before plateauing at 95% starting in 2050. This shows that the technology exists and is already largely competitive, although some planning is required to handle the increased electricity grid capacity. It also indicates that some efforts will be needed to obtain the final 5% reduction. 

The transformation of the commercial sector, which currently represents 4% of GHG emissions, is much slower than for residential buildings. Both REF and CP30 project an almost flat curve in GHG emissions over the next 30 years (increase of 4% for REF and decrease of 9% for CP30), followed by a slight increase between 2050 and 2060 as energy efficiency measures are overtaken by economic and population growth. In contrast, models for NZ scenarios project rather a slower take on decarbonizing, with reductions of 8% (NZ60), 21% (NZ50) and 27% (NZ45) by 2030. This is followed by a rapid acceleration in GHG reductions. By 2040, the commercial sector should see its emissions reduced by 46%-74% in NZ scenarios, to reach 98% by 2050 in the two strictest scenarios (NZ50 and NZ45) and 94% in NZ60.

8.2.2 Transport

The sharp contrast between REF and net-zero scenarios in 2050 and 2060 illustrates the magnitude of the transformation needed in some sectors. This difference between scenarios is most notable in transport, which represents 28% of GHG emissions today. Unabated, emissions from this sector rise by 39% percent in 2050 and 55% by 2060. The introduction of a carbon price (CP30) barely manages to keep emissions at 2016 levels by 2050, bringing an 9% decrease over the following decade. 

Even in NZ scenarios, this sector shows the highest emissions, representing 40% of total remaining emissions in NZ50 even though they are only 18% of what they would be in REF for 2050. Most of this reduction can be achieved in the largest source of transport emissions, that is, road transport, which in NZ50 drop to 11% of their value in the reference scenario (Figure 8.2). This is accomplished primarily through technological switching, mainly through electrification, as discussed in Chapter 6. Rail and off-road are also reduced significantly, while air transport is much more difficult to decarbonize and accounts for 23% of the total in NZ50.

Even for the most aggressive scenarios, decarbonization of the transport sector is slow. NZ50 and NZ45 project a reduction of only 6% and 8% by 2030, while NZ60 is in line with a 5% increase in GHG emissions. The slow transformation for NZ60 persists over the following decade, which sees a net reduction of only 14% with respect to 2016, while even with their aggressive targets, NZ50 and NZ45 are projected to achieve only 33% and 55% reductions in this sector. 

These results underline the current lack of available commercial low-carbon solutions in most of the transport sector, with the exception  of public transport and private cars, not including the popular SUVs. 

Figure 8.2 – Emissions in the transport sector #

8.2.3 Agriculture

Although agriculture represents only 8.5% of current GHG emissions, it is projected to become the second largest source of remaining emissions (Figure 8.3), with around 41 MtCO2e, close to a third of remaining emissions, in both 2050 and 2060 once net-zero is reached. These emissions are separate from those associated with energy consumption in the sector and which are almost all eliminated through electrification (see Chapter 6). In other words, agriculture remains the second most important source of emissions because of non-energy emissions, which are much more costly to eliminate without drastic reductions or the transformation of production practices. Net-zero scenarios still manage to eliminate some 40% of these emissions, compared with REF or CP30, which are identical for the whole period in large part because of reductions in enteric fermentation emissions (50% reduction in net-zero scenarios compared with current levels).

While approaches targeting the production strategies supported by changes in consumption will likely be needed, they do not fall within the scope of this report.

Figure 8.3 – Non-energy emissions in the agriculture sector #

8.2.4 Industry – processes and combustion

Industry (outside of energy production), which currently emits slightly over 16% of Canada’s GHG, is projected to rapidly decrease its process emissions in all scenarios, starting with a reduction in the production and consumption of cooling fluid (Figure 8.4). This leads to an 18% reduction in process emissions for REF in 2030, which reaches 30% by 2050 with the production of low-carbon aluminum. CP30 engenders a more significant transformation, with reductions of 33% by 2030, which peak at 47% in 2040 before GHG emissions increase again (REF) or stabilize (CP30) in the last 20 years of the model. 

NZ scenarios bring further and faster reductions—34%, 41% and 45% by 2030. This last percentage climbs to around 60% in 2040, with a slower transformation afterward, to reach 67%-74% reduction in 2060, including some 5 MtCO2e of carbon captured in 2050. At present, further reduction is limited by a lack of alternatives that tend to be very process specific, but that could emerge over the coming decades. We explore these issues in further detail in Chapter 13.

Over the 2050 and 2060 horizon, emissions linked to industry combustion continue to increase in REF and CP30, after a small 13% reduction by 2030 in the latter case. However, this sector plays a central role in NZ scenarios. By 2030, emissions from industry combustion fall by 20% (NZ60), 42% (NZ50) and 62% (NZ45), but become net negative in the latter two scenarios by 2040, with 121% and 156% reduction respectively, reaching almost 200% in all NZ scenarios by 2060. This is largely accomplished by capturing and sequestering emissions from biomass combustion used for heat or electricity production. 

The important contribution of this sector early on in NZ pathways underlines not only the role that the private sector plays in producing emissions but also the role, which in Canada is much larger than that of citizens, it could play in contributing to the solution. 

Figure 8.4 – Emissions from industrial processes #

8.2.5 Energy production, including electricity

The energy production sector also requires a profound transformation. The transformation of electricity generation has previously been discussed in Chapter 7. After a 10% decline in emissions in 2030, REF projects a growth in emissions, based on the addition of thermal electricity production, starting in 2040 and rising to almost 70% by 2060 compared with today. CP30 shows a significant reduction by 2030 (60%), reaching 94% by 2050, before thermal production starts picking up to support the increased demand arising from economic and population growth. The significant difference between REF and CP30 supports the general observation that decarbonizing electricity is among the low-hanging fruit of any decarbonization pathway. 

This is confirmed by NZ scenarios. By 2030, NZ60 and NZ50 project a 70% and a 90% reduction in total emissions, while NZ45 begins to include negative emissions (2 MtCO2e). By 2040, all NZ scenarios project negative emissions for the electricity sector (respectively 122%, 130% and 140% lower than today), which are achieved by closing all fossil fuel thermal plants and strongly growing biomass electricity associated with CCS. As limits on biomass for energy use are reached, this saturates, resulting in floor levels of about 160% to 170% of today’s emissions in 2050-2060.

As indicated in Chapter 7, from an optimal cost perspective, the oil and gas sector is also a low-hanging fruit for decarbonizing Canada’s economy. While emissions in this sector are higher than in 2016 for REF and CP30 for all decades but 2060 (where they fall by 1% and 17% respectively), they are projected to shrink by 55%-66% for NZ scenarios by 2030, reaching a floor of 89%-94% reductions in 2050. A substantial reduction from fugitive sources associated with the oil and gas sector also results, in part due to announced regulation and an overall reduction of activity in this sector (Figure 8.5). In 2050, this latter source also decreases by more than 95% in NZ scenarios, contributing a 72 MtCO2e reduction in NZ50 compared to REF in 2050.

Figure 8.5 – Fugitive sources of emissions #

8.2.6 CCS and DAC: compensating remaining emissions

Figure 8.1 hints at the magnitude of GHG capture required by net-zero scenarios, but a closer look is required to understand the real extent of the capture required (Figure 8.6)

Figure 8.6 – Captured emissions #

As discussed in the previous section, all net-zero scenarios show a rapid increase in capture from industrial applications as well as bioenergy with carbon capture (BECCS) power production, which is split more or less evenly between hydrogen production and electricity generation.

As a given scenario approaches net-zero, these applications are not sufficient to compensate fully for remaining emissions. As a result, direct-air capture is required (15 MtCO2e for NZ50 in 2050, and up to 33 MtCO2e in 2060 for NZ45). This brings the total emissions captured within a range of 155 to 167 MtCO2e once net-zero is reached in any scenario. To be clear: this is the capture necessary every year, which underscores the difficulty of maintaining net-zero emissions if no further reductions occur.

However, reference scenarios present almost no capture, with virtually none in REF and less than 5 MtCO2e in CP30, a result of the high cost of the different technologies and their applications. The role and challenge of CCS and DAC technologies is addressed in more detail in Chapter 9 and additional technical perspectives are presented in Chapter 12.

As mentioned above, agriculture and industrial process emissions highlight the importance of non-energy emissions, which are less than 20% of total emissions today but will grow in importance once we move closer to net-zero, becoming more than half of remaining emissions. This means that, aside from eliminating these activities altogether, negative emission technologies must be used to compensate (as discussed above). Although waste is the other source of non-energy emissions, a smaller quantity remains (around 5 MtCO2e) once net-zero is reached, representing a 70% reduction compared with today.

As discussed in the previous paragraphs, the energy consumptions in industry and electricity production both become net negative sources with the help of carbon capture and negative emission technologies like BECCS. For instance, once net-zero is reached in NZ50, these two sectors amount to 88% of the negative emissions (with a slightly higher share for industry combustion) needed to compensate and reach net-zero, the rest being supplied by direct air capture. As a result, these activities are key in compensating for remaining emissions and helping reach net-zero without resorting to larger quantities of DAC. 

General observations:

  • The carbon pricing increase in CP30 does not have a major impact outside of energy and power production and is not sufficient to result in emission reductions.
  • Reaching and maintaining net-zero requires an annual capture of between 155 and 167 MtCO2e.
  • Non-energy emissions become the majority of what remains once carbon neutrality is reached, a different challenge than reducing emissions from energy consumption since it necessitates disruptive technological innovation, which is difficult to predict.
  • Most emissions in Canada are associated with industrial and commercial activities, which include natural resources extraction, production of goods and freight transport, contributing to 64% of Canada’s emissions (72% when agriculture is also included). Transformation of these sectors is projected to be very cost competitive and can be considered as low-hanging fruit.