Last March, Ottawa announced its target for greenhouse gas (GHG) emissions in 2030. It wants to reduce them from 740 million tonnes (MT) of CO2-equivalent in 2019 to 442 MT in 2030, a reduction of 298 MT, or 40 per cent. Unfortunately, setting targets is a lot easier than hitting them. Ottawa’s Emissions Reduction Plan is long on policies and programs but short on what will actually need to happen in order to reach these targets.
My own analysis, available on the C. D. Howe Institute website, suggests the 2030 reduction will be, at best, only 158 MT — only a little over halfway to Ottawa’s target.
I get this result with fact-based, bottom-up calculations. Consider transportation, for example. Ottawa plans for a reduction from 186 MT to 143 MT, or 23 per cent. It assumes that 60 per cent of the 1.8 million cars and light trucks sold in 2030 will be electric — i.e., about 1.1 million of them. Given that sales of electric vehicles in 2022 were about 80,000 cars and light trucks, the assumption means electric vehicle sales will increase by 14 times, with an implied annual growth rate of about 40 per cent.
Ottawa also assumes 2030 sales of 100,000 heavy freight trucks will be 40 per cent electric, representing about 40,000 vehicles. At the moment, almost no electric freight trucks are in service. Achieving Ottawa’s target would therefore require an annual growth rate of 30 per cent in electric freight truck sales.
But Ottawa does not say where these electric vehicles will come from. It appears to assume that cash incentives, financial assistance to vehicle manufacturers and mandates requiring the sale of electric vehicles and banning the sale of internal-combustion engine (ICE) vehicles will somehow achieve these targets. Recent media reports cast doubt on whether the auto industry can comply with EV mandates.
My bottom-up approach instead takes a company-by-company view of the problem to see if there will be enough capacity to actually make and sell these vehicles. It forecasts that sales of cars and light trucks in 2030 will only be 310,000 electric vehicles (about 95,000 from Tesla, 150,000 from GM, Ford and Stellantis and 65,000 from over ten other companies). Assuming Canada gets its historical two per cent share of global vehicle sales, the figure for Tesla sales in Canada is two per cent of the assumed global Tesla 2030 sales of five million EVs. The lower EV sales cause a slower turnover of vehicles in the existing fleets, resulting in EVs forming only nine per cent of the entire car and light truck fleet of 24 million vehicles in 2030.
The result for freight trucks is similar, with sales of electric freight trucks hitting only 22 per cent of sales in 2030 and accounting for only 10 per cent of the freight truck fleet. Bottom line? Lower-than-hoped EV sales result in forecast transportation emissions of 176 MT, much higher than Ottawa’s target of 143 MT.
There’s a similar problem with buildings. Ottawa is pinning its hopes on the installation of about 600,000 heat pumps per year between now and 2030 to heat residential, commercial and industrial buildings. It bases this on a program now giving a $5,000 grant to homeowners to retrofit their current house with a heat pump, plus investment tax credits to encourage heat pumps for commercial and industrial buildings. But it does not explain how this huge increase in heat pump installations will occur.
Only 20,000 heat pumps were installed per year in the period from 2000 to 2016 so 600,000 per year seems optimistic, to say the least. I assume a more modest 25 per cent annual growth rate, which causes heat pump installations to rise to 230,000 per year in 2030. Overall, these lower-than-hoped installations result in forecast building emissions of 86 MT, much higher than Ottawa’s target of 53 MT.
Using a similar “specific facts” approach for the other six sectors — oil and gas, heavy industry, electricity, waste and other, agriculture and land use — I get 2030 emissions from these sectors of 319 MT emissions, much higher than the official target of 246 MT.
Adding all these numbers together gives a forecast reduction of only 158 MT, some 47 per cent short of Ottawa’s target of 298 MT. For just an eight-year forecast, that’s not very good, not even for government work.
Brian Livingston is an executive fellow at the School of Public Policy at the University of Calgary.
Published in the Financial Post