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FCCC/IDR.1/CAN

21 February 1996

ENGLISH ONLY

CANADA

Report on the in-depth review of the national communication of Canada

Review team:

Julia Martinez, Mexico

Jan Pretel, Czech Republic

Naoki Matsuo, Japan

Laurie Michaelis, OECD secretariat

Peer Stiansen, UNFCCC secretariat, Coordinator

GE.96-

Under Articles 4 and 12 of the Convention. Parties are requested to prepare national communications on their implementation of the Convention. Guidelines for the preparation of national communications and the process for the review were agreed on by the Intergovernmental Negotiating Committee for a Framework Convention on Climate Change, by its decisions 9/2 and 10/1, and 3/CP.1 (see FCCC/CP/1995/7/Add.1) In accordance with these decisions, a compilation and synthesis of the 15 national communications from Annex I Parties was prepared (A/AC.237/81).

When reviewing the implementation of the Convention of the Parties, the subsidiary bodies and the Conference of the Parties will have this report available to them in English as well as the summary of the report in the six official languages of the United Nations. (These bodies will also have before them the executive summary of the first national communication of Canada and country-specific information drawn from a compilation and synthesis report covering all countries that have submitted national communications.)

I. Summary⁽¹⁾

^{1. The in-depth review was carried out during the
period April to August 1995 and included a visit by the team from 29
May to 2 June 1995. The team included experts from Mexico, the Czech
Republic, Japan and the Organisation for Economic Co-operation and
Development (OECD). Canada submitted its National Report on Climate
Change in February 1994, and the National Action Program on Climate
Change (NAPCC) in}

^{March 1995, and additional background material was
made available to the team.}

^{2. The team recognized Canada's important role
internationally in exploring formats and contents of such reports
prior to the adoption of guidelines. It found that the communication
and updates/supplements in general respected the guidelines. The
measures described in the national report provide examples of
activities under way in Canada, including federal, provincial,
municipal and private sector initiatives, rather than a fully
comprehensive description. During the visit specific information was
given on emissions of non-CO₂ gases and sinks. Limited
information was communicated on the effects of measures.}

^{3. Important factors influencing Canada's high
intensity of energy use per capita}

^{(8 tons of oil equivalent in 1990 compared to an
average of 4.8 in OECD member countries) and high emissions of
CO₂ (17 tons CO₂ per person in 1990 compared to
an OECD average of 12) are its size, settlement patterns and cold
climate, major indigenous energy reserves, major and growing
energy-intensive industry, relatively low energy prices and an}

^{export-oriented economy. Furthermore, the population
growth rate of up to 1.5 per cent per annum is the highest among OECD
member countries and is an important factor behind historical and
expected growth in the economy and of emissions. Emissions vary
considerably among the provinces and territories due to differences
in the use of hydro, thermal and nuclear power, settlement patterns,
industrial and resource bases. Canada is heavily dependent on
energy-intensive exports. Its economy is based on an integrated North
American market. Some policies and measures, such as energy
efficiency, are aimed at North American
harmonization.}

^{4. Jurisdiction over policies and measures is shared
at federal, provincial and municipal levels, and practices vary
amongst provinces. Consequently, federal policy is developed through
consultations between the various levels of government, and other
stakeholders (business and environmental non-governmental
organizations) are also closely involved. Canada provided information
on both federal programmes and actions at the provincial level, but
the information was not meant to be exhaustive for the latter.
Canada's mitigation measures include regulatory and information
programmes and other new initiatives, but also have a large voluntary
component. The federal Government is taking a consensus-building
approach. Efforts to bring all stakeholders on board are beginning to
bear fruit, and the NAPCC of 1995 established a common platform from
which Canada's response to climate change can be developed further.
The team found that this highly consultative process appeared
essential for identifying responsibilities and options for detailed
action.}

^{5. The 1995 NAPCC included a new initiative called
the Climate Change Voluntary Challenge and Registry Program (VCR).
This was at the signatory stage at the time of the team's visit, and
can be seen as an outreach programme establishing a common platform
for the voluntary approach. Activities under existing programmes
could be reported under the VCR. The team also noted that the
Canadian federal Government is no longer financially supporting new
"megaprojects" in the energy sector.}

^{6. Canada has committed itself to stabilizing net
greenhouse gas (GHG) emissions at 1990 levels by 2000. However, the
revised outlook referred to in the NAPCC, which includes existing
measures, projects a 13 per cent growth in GHG emissions from 1990 to
2000 unless there are new initiatives including those in the NAPCC
such as the Voluntary Challenge and Registry Program. The team found
the assumptions underlying the projections reasonable, although the
assumed growth of emissions of gases other than CO₂ may be
high compared to international trends for these gases. There is now a
broad consensus among governments that in order to close the
stabilization gap further options need to be developed. A
multi-stakeholder group has been analysing further measures. Canada
is investigating the economic, social and environmental effects of
measures undertaken to mitigate GHG emissions, and also how
performance indicators could be used to assess progress in this
field. Progress in achieving the target will be reviewed domestically
in December 1996. The team concluded that, if the Government at that
time finds that Canada is unlikely to reach its target without more
aggressive action, there will be limited time to implement and see
the full effects of new initiatives by 2000, even if the NAPCC is
seen as a flexible instrument allowing for prompt
action.}

^{7. Forty-five per cent of Canada is covered by
forest. While the contribution of this sector, especially with regard
to anthropogenic influence, is still highly uncertain, it seems that
it shifted from being a large net sink to becoming a lesser net
source of emissions around 1990. Pests and forest fires are
contributors to loss of carbon from this reservoir. Recognizing that
most of the forest area is believed to be unaffected by human
interference, the team still concluded that development of net
anthropogenic emissions or sequestration from this sector could be
significant inside a net approach. Thus, Canada's ongoing efforts to
build an adequate inventory will be crucial to develop and monitor
relevant mitigation and adaptation strategies.}

^{8. Canada is contributing its full share to the
1994-1996 replenishment of the Global Environment Facility (GEF), and
was also a contributor in the pilot phase. The official development
assistance (ODA) level in 1993 was 0.45 per cent of the gross
national product (GNP), according to OECD statistics. Approximately
80 per cent of ODA is managed by the Canadian International
Development Agency and mostly disbursed through bilateral development
projects. All Canadian ODA projects are subject to the Canadian
Environmental Assessment Act, requiring assessment, and, where
appropriate, mitigation of the environmental
impacts.}

^{9. The team found that Canada is making a
considerable contribution to the scientific understanding of climate
change. Given the variety of climatic conditions within its
frontiers, research on vulnerability and effects is particularly
important in an international context. Canada has not implemented
specific adaptation measures as such, although some areas are
considered sensitive to shifts in extreme events, sealevel rise,
precipitation patterns and temperature changes.}

^{10. The wide involvement of stakeholders in
developing Canada's response to climate change is crucial to public
awareness of the issue. There are also examples of information
materials and education programmes that are noteworthy, although it
was recognized that education and public awareness efforts need to be
coordinated. Activities in that respect will be achieved through the
efforts of the education work group of the Canadian Council of
Ministers of Environment and the communications/public education work
group of the National Air Issues Coordinating
Committees.}

^{I. INTRODUCTION AND NATIONAL
CIRCUMSTANCES}

^{11. Canada ratified the Convention on 4 December
1992. The original national communication was received on 7 February
1994, and additional background information by 21 September the same
year when guidelines had been more fully developed. The National
Action Program on Climate Change (NAPCC) was received on 28 March
1995. The}

^{in-depth review of these national communications was
carried out during the period May to August 1995, including a country
visit from 29 May to 2 June 1995. The members of the review team were
Ms. Julia Martinez (Mexico), Mr. Jan Pretel (Czech Republic),}

^{Mr. Naoki Matsuo (Japan), Mr. Laurie Michaelis (OECD
secretariat) and Mr. Peer Stiansen (UNFCCC secretariat,
Coordinator).}

^{12. The team recognized that Canada had played a
leading international role in the development of guidelines for
reporting by volunteering to produce an early report (February 1994),
which was submitted before the INC/FCCC guidelines were agreed upon.
The development affecting climate change policies since receipt of
the original communication was the NAPCC.}

^{13. Canada's territory is the second largest in the
world and is mainly located in climatic zones with high heating
requirements. It has a large amount of forest (45 per cent of total
land area), wetland and permafrost area. Canada has a high population
growth rate (recently as high as 1.5 per cent per year, largely due
to immigration) compared with OECD countries outside North America
and a low population density. It also has low-density urban
settlement patterns, generating relatively high transportation
demand. Ninety per cent of the population lives within 160 kilometres
of Canada's southern border.}

^{14. Canada's trade-oriented economy is based on an
integrated North American market. This integration is seen as placing
some constraints on what Canada could do unilaterally in terms of
measures. There could be costs in applying measures significantly
different from those of the rest of the region. Canadas technology
markets in particular are highly integrated with, and dependent on,
those of the rest of North America. Many of Canadas measures, in
particular energy efficiency standards, are aimed at North American
harmonization. The team noted that new North American initiatives in
the climate field are envisaged, although the establishment of the
North American Free Trade Agreement in 1993 has not yet affected
climate policies.}

^{15. Canada has a high energy use per capita (8 tons
of oil equivalent per person in 1990 compared to an average of 4.8 in
OECD member countries) and the level of carbon dioxide
(CO₂) emissions per capita (17 tons in 1990 compared to an
OECD average of 12) is high despite the fact that 75-80 per cent of
the electricity is generated from hydro and nuclear plants. This
CO₂-free electricity is used to satisfy base load in major
parts of the country, while marginal electricity is often generated
from fossil fuels. The energy prices for}

^{end-users are also low relative to most other OECD
countries. Canada has a large and diverse indigenous energy resource
base, which, combined with the forest and mineral resources, provides
crucial input for energy-intensive Canadian industry. Canada has
recently seen rapid industrial growth, a substantial part of that
growth being in energy-intensive industries that are major
electricity users. Since the bulk of electricity is produced without
CO₂ emissions, this development is not reflected in the
emissions inventories in the same way as for countries more dependent
on fossil fuels. There is limited trade in electricity between
provinces due to regulatory factors, but there are substantial
exports (6 per cent of electricity production). The overall decrease
in energy intensity (energy input/gross domestic product) has been 17
per cent from 1973, compared with 24 per cent for the OECD average,
according to the International Energy Agency.}

^{16. The team noted also that the role of government
is being reoriented towards creating a level playing field in the
economy and towards reducing public spending and debt. Federal
spending is being radically reduced, and the climate change strategy
will have to be further developed within this context. Spending is
also being reduced at the provincial and municipal level. The
Canadian federal Government is no longer financially supporting new
"megaprojects" in the energy sector.}

^{17. A feature of Canada is the strong role, reflected
in the legislative structure, of provincial and territorial
governments in creating the framework for energy, transport,}

^{land-use, industry (licensing) and forestry sectors,
which is of particular relevance to the development of climate change
policy. Provinces and territories have different targets and
practices in these matters. Because of this situation, development of
a consensus approach to federal decision-making, involving the
provincial governments, is crucial. Historical reasons have also made
it necessary to seek a consensus on measures where the federal
Government formally has the legislative power.}

^{18. In developing the NAPCC, stakeholder involvement
was ensured through the National Air Issues Coordinating Mechanism
comprising senior provincial and federal officials, building upon a
history of five to six years of working on climate change through
various interdepartmental groups and committees, generally involving
stakeholders in and outside the governments. The team recognizes that
through the NAPCC there is now agreement on a platform from which to
develop further policies and measures, and that this highly
consultative process is crucial to identifying responsibilities and
options for detailed action.}

^{19. Canada's national commitment is to stabilize net
GHG emissions, aggregated on a global warming potential (GWP) basis,
at 1990 levels by 2000. This commitment is reaffirmed in the NAPCC.
Federal and provincial energy and environment ministers meet
regularly to review progress and evaluate options for further
progress. Since the team's visit one meeting took place in November
1995. The next is scheduled for December 1996, when the first review
of Canada's programme is expected to be released.}

^{II. INVENTORIES OF ANTHROPOGENIC EMISSIONS
AND REMOVALS}

^{20. The national report covers all major GHG and
precursors. Additional information on some other GHGs such as sulphur
hexafluoride (SF₆) was made available to the team, as were
some revised estimates of 1990 figures. The team concluded that in
giving this information Canada had followed the guidelines. The team
recognizes Canada's efforts to develop as accurate an inventory as
possible, and realizes that this work entails revisions of the 1990
figures based on new and better information. Based on the
Intergovernmental Panel on Climate Change (IPCC) 1994 GWPs,
CO₂ accounts for 79 per cent, methane (CH₄) 13
per cent, nitrous oxide (N₂O) 5 per cent and other gases 2
per cent of the emissions. Canada has not adjusted its inventory for
variations in factors such as temperature and electricity exports or
imports, although 1990 was a warmer year than average and Canada made
net exports of electricity.}

^{21. Two separate methods of estimating emission
levels were used. A top-down approach was used for emissions of
CO₂, CH₄ and N₂O, based on regional
and national statistics and using emission factors and a mass-balance
approach. Emission factors and related activity levels are organized
by sector, using data from Statistics Canada and elsewhere. All the
information is contained in the addendum to the national
communication (supplementary tables). A bottom-up approach was used
for emissions of nitrogen oxides (NO_x), carbon monoxide
(CO) and non-methane volatile organic compounds (NMVOC), based on the
Residual Discharge Information System (a computerized database used
to maintain data on major emission sources). The standard IPCC tables
have been provided but some items remain to be completed. The
inventory data were prepared in consultation with provinces and
industry. The 1990 GHG emission estimates presented in the national
communication were calculated in consultation with provincial
ministries of environment and energy, Environment Canada, Natural
Resources Canada and industrial associations. Fuel carbon emission
factors were derived on a province-by-province basis. Methane
emissions were estimated based on methodologies similar to those
approved by the IPCC, including specific models.}

^{22. The figures given in the communication for
anthropogenic emissions of}^CO₂^{in 1990 were
not changed in the revision and are estimated at 460 500 Ggs.
Transportation accounted for 32 per cent, electricity generation 20
per cent, industry 16 per cent and residential use 9 per cent,
commercial sources 5 per cent, producer consumption 9 per cent, other
stationary sources 3 per cent, and industrial processes 6 per cent.
The uncertainty in these figures was estimated at 4 per cent, at a
confidence level of 95 per cent. The team noted that Canada's
anthropogenic CO₂ emissions have been growing during
recent decades, peaking in 1989 at 490 000 Ggs after being
temporarily down to 380 000 Ggs in 1983. In 1993 the level was 465
000 Ggs. Despite the fact that 75-80 per cent of the supply stems
from hydro and nuclear power, the team also noted the substantial
emissions from electricity generation caused by the high consumption
of electricity. The differences in per capita emissions among
provinces are due to their differing energy and industrial
structures. Finally, the team noted that emissions from
transportation and heating were broadly proportional to population in
the provinces.}

^{23. Canada was unable to provide the review team with
an estimate of the emissions or sink capacity associated with}^{land-use changes}^{and forestry}^{for 1990. There
are major uncertainties in the actual emission levels associated with
different types of land-use and}

^{changes in land use. Canada has carried out research
into these emissions and provided some results in the inventory
documentation.}

^{24. The}^{carbon reservoir in
forests}^{is roughly estimated at 12 Gt of carbon
(equivalent to 44 000 000 Ggs of CO₂) in forest biomass,
88 Gt (equivalent to 323 000 000 Ggs of CO₂) in soil and
0.6 Gt (equivalent to 2 200 000 Ggs of CO₂) in forest
products. In the original communication, forest land is described as
a significant net sink. The team was presented with information
indicating that forest land had changed from being a sink with a
capacity of approximately 200-260 000 Gg CO₂ per year
until about 1970, after which the sequestration rate fell rapidly so
that by 1989 analysis indicates that forests had become a net source
of about 60 000 Gg of CO₂. Figures for 1990 and after have
not been released; forest land is now thought to be a net source of
CO₂ although there are major uncertainties. This change is
believed to be attributable primarily to increased forest fires and
pests, while harvesting is seen as having had a limited effect. While
Canada has an active fire and pest control programme which can
contribute to its commitments under the UNFCCC, Canada's forest area
is vast and most of it is believed to be unaffected by anthropogenic
interference. Canada is currently examining possible causes for the
increased incidence of forest fires over the last 20 years. Factors
to be examined include climate and weather variations, changes in
type and age of trees, better reporting of fires and more people
visiting wilderness areas. Canada continues its work to build an
inventory of the anthropogenic carbon budget in its forests. This
work is important in providing a foundation on which to develop
forestry-related adaptation and mitigation
strategies.}

^{25. 1990 emissions of}^methane^{have been re-estimated at 3099 Ggs as compared
with 3736 in the original communication, largely because of a
downward revision of the estimates of emissions from landfills. Oil
and gas production accounted for 40 per cent of the emissions,
agriculture 29 per cent, landfills 25 per cent and coal mining 3 per
cent. Emissions associated with energy transformation were not always
presented in the IPCC format, because of differences in the detail of
the methane inventory and the data processing method used for the
submission. The emission factors were based on Canadian research. The
uncertainty in CH₄ emission figures is in the region of 30
per cent with a confidence level of 90 per cent.}

^{26. 1990 emissions of}^{nitrous
oxide}^{have been re-estimated at 99 Gg, compared
with}

^{92 Gg in the original communication. Fuel combustion,
mainly in transport, accounted for 50 per cent of this, industrial
sources 38 per cent, and fertilizer use 11 per cent. N₂O
emission figures for transport are based on choice of an emission
factor significantly higher than that used by other countries, which
is justified through research in Canada and France. The uncertainty
in N₂O emission figures is in the region of 40 per cent
with a confidence level of 85 per cent.}

^{27. Emissions of}^{perfluorocarbons
(PFC)}^{are estimated at 1.4 Gg of CF₄
and 0.144 Gg of C₂F₆ (1.8 per cent of total GHG
emissions) for 1990. Recent measurements in Canada are in line with
the emission figures reported. Emissions of}^{hydrofluorocarbons (HFC)}^{were
assumed to be zero in 1990.}^SF₆^{emissions made
up 0.51 per cent of total GHG emissions in 1990, which represents
0.120 Gg of SF₆ (or 2990 Gg in CO₂
equivalent).}

^{28. Emissions from}^{international
marine and aviation transport (bunker fuels)}^{are
reported separately}^.^{The team
noted that the estimates are based on fuel sales data, which because
all fuels are not necessarily bunker fuels, have a considerable level
of uncertainty.}

^{III. POLICIES AND
MEASURES}

^{29. Canadas National Report on Climate Change of 1994
described a range of measures implemented since 1990. The NAPCC of
1995 also described additional initiatives taken since 1990. The
measures in both documents are aimed at reducing emissions associated
with energy use, land-use and industrial processes, and also at the
enhancement of sinks. The measures described in the national report
provide examples of activities under way in Canada including federal,
provincial, municipal and private sector initiatives. The NAPCC
establishes the framework for future action and presents some new
initiatives, building on existing activities.}

^{30. The team concluded that measures described in the
national report and the National Action Program in principle cover
the full range of gases and sectors, although Canada still recognizes
the need to improve the understanding of inventories and mitigation
options in the land-use change and forestry sector, and for some
gases other than CO₂, to develop adequate
measures.}

^{31. The National Action Program emphasizes voluntary
action by individuals, industry, public organizations and others, but
also includes regulatory and information programmes. Measures in the
National Action Program, which is primarily a strategic document, are
described in a qualitative manner, with few details on the amount of
current emissions from the activity affected, the precise nature of
the measures, the anticipated effects of the measures or the current
state of implementation.}

^{32. Indicators of progress in implementation and
effects of measures are being developed and will be included in the
first formal review of the National Action Program to be completed by
November 1996. Canada will continue to review progress in meeting its
stabilization goal and additional measures that may be
required.}

^{33. The federal Government's policy on GHG mitigation
is guided by a number of principles including leading by example
(that is, putting the government house in order; the "greening" of
government) and creating the conditions for action by others. In the
climate change context, moving towards a level playing field for
energy supply options is seen as particularly important. The team
recognized as important, and also interesting to other countries, the
work of a multi-stakeholder task group that has produced a report on
barriers and disincentives to sound environmental practices in
government, addressing several energy sector issues.}

^{34. A framework for identifying subsidies on energy
use has been developed under the auspices of the National Air Issues
Coordinating Committee. The Government continues to analyse specific
subsidies in the context of a level playing field. The team sees this
type of research as important in drawing up an effective strategy for
climate change mitigation. It also commends the Task Force on
Economic Instruments and Disincentives, established in June 1994, for
its role in carrying out a systematic review of government policies
to identify barriers and disincentives.}

^{35. Various measures and strategies for climate
change mitigation have been evaluated over the years in Canada. The
National Air Issues Coordinating Mechanism established a group which
developed a catalogue of more than 80 possible measures to mitigate
GHGs, published in a report released in 1994. The effects of these
measures on GHG emissions and the economy were evaluated, although
this report was not published in time for the review. It was not
clear to the team how the federal Government and the provinces would
follow up this work in terms of implementing these measures for their
intended purpose. It should be noted that carbon taxes are not under
consideration for the time being in Canada, and major shifts in the
tax system aimed at reducing emissions are not envisaged in the short
to medium term.}

^{36. At the federal level, the main new initiative
described in the National Action Program is the Climate Change
Challenge Voluntary and Registry Program (VCR), which is aimed at all
Canadians but targets industrial and commercial enterprises and
federal, provincial, territorial and local governments in particular.
The VCR was endorsed by all energy and environment ministers by late
1994, and the first "Memoranda of Understanding", developed as a
complement to the VCR between the Canadian Government and major
business associations have recently been signed. At this early stage
of implementation, it is not clear what new actions will be taken as
a result of this programme and consequently what effect it will have
on GHG emissions. It is expected that industry will be able to make
the largest contributions. The team noted that the VCR is a sort of
"outreach" programme, which builds on other existing programmes and
will report on their activities. As an example, it is expected that
existing voluntary agreements related to energy efficiency in
businesses will be reported under the VCR. The need for coordination
is recognized. Draft guidelines for reporting on actions were
circulated to the stakeholders, and final guidelines were completed
in the summer of 1995.}

^{37. Federal measures also include the development of
new energy efficiency standards and labelling under the Energy
Efficiency Act as well as the continuation of existing programmes. A
range of federal efficiency and alternative energy programmes rooted
in the Act are in place and are reported on to Parliament annually.
Around half of the effect of such programmes is expected to be
efficiency improvements. Standards are applied extensively in order
to eliminate products with the poorest energy efficiency from the
market. Dissemination of new technology is encouraged through
"leading by example" by the government and through other
information-based measures. Measures by provinces include a wide
range of fiscal, regulatory, planning and other instruments. The team
sees Canada's ongoing development of comprehensive statistics on
energy use as crucial for developing and monitoring the
policy.}

^{38. In the energy and transformation industries
sector (which accounted for 16.3 per cent of the GHGs emitted in
1990), utilities in Canada have a history of developing and using
integrated resource planning and demand side management techniques.
Surplus capacity of electricity has, for example, led to a decision
to close one nuclear power unit and has reduced the potential for
developing new supply options in the short to medium term, including
renewables and combined heat and power stations, and also reduced the
incentive for conducting demand side management programmes. Such
programmes are now focused more on provision of information than on
financial incentives. Despite the overcapacity, two major utilities,
Ontario Hydro and TransAlta Corporation, have set targets to
stabilize GHG emissions by 2000 at 1990 levels, and they are pursuing
these through such actions as purchasing renewable energy and
expanding this capacity, improving the efficiency of operations,
promoting energy initiatives by customers and developing GHG offset
projects. Ontario Hydro has also committed itself to reducing 2005
levels by 10 per cent compared to 1990.}

^{39. Canada has a history of considerable government
involvement in the energy sector, particularly in the financing of
projects for the extraction of fossil fuels as well as in developing
other energy sources. Some of these projects may have pushed the
Canadian emissions higher than they would have been without this
interference in the market. The redirection of policies has also
included a decision by the federal Government that it will no longer
be financially supporting new "megaprojects" in the energy sector,
although there are contractual obligations to be fulfilled under
existing ones.}

^{40. The fossil fuel production industry is one of the
first areas to be targeted under the VCR, with a signature from the
producers' association already in place. The team noted the
importance of this target group both for CO₂ and for
CH₄ emissions, given the growth in activities that is
envisaged.}

^{41. Emissions from}^industry^{(27.2 per cent of GHGs emitted in 1990) are
expected to show the highest growth. The VCR and related voluntary
approaches, for example the Canadian Industry Program for Energy
Conservation, are seen as playing an important role in improving
energy efficiency and reducing energy costs in industry by raising
corporate awareness and inviting top-down
commitment.}

^{42. Energy efficiency measures have been targeted the}^{residential and commercial
sectors}^{(11.3 per cent of GHGs emitted in 1990,
excluding electricity), especially in buildings, with publicity
campaigns to encourage energy efficient practices in new buildings
and retrofits. More than half the energy is used for space heating.
Pursuing the philosophy of "leading by example", the Government runs
a federal buildings initiative involving private sector energy
management companies and private financing for the project's capital
expenditure. The team also noted the voluntary standard R-2000
Program, which is regularly strengthened to identify more
energy-efficient residences. The programme includes partnerships with
suppliers. The R-2000 Home Program and model energy-efficient
building code provisions have contributed to improving the energy
efficiency of new housing in Canada. The average new house uses up to
35 per cent less energy today than a new house constructed in 1980.
Building codes were to be strengthened in 1995. Canada intends to
build on its experience with voluntary action, with, for example,
programmes targeting commercial buildings (C-2000) and retrofitting
(Reno$ense).}

^{43. The}^{transportation
sector}^{accounted for 27.1 per cent of GHGs
emitted in 1990, 31.5 per cent of CO₂ and 37 per cent of
N₂O. The projections reflected in the national report
included tighter fuel economy standards for cars (better "corporate
average fuel economy" - CAFE) in the United States, with a similar
voluntary standard ("corporate average fuel consumption" - CAFC) in
Canada, as an influence that would reduce transportation fuel use.
The National Action Program reported that CAFE standards were no
longer expected to become stricter and that energy intensity in the
Canadian car fleet would therefore fall more slowly than had been
anticipated. Other economic factors were also involved, however, in
the lower growth apparent in the revised projections compared with
what was previously reported.}

^{44. Transport fuel and vehicle purchase taxes and
other fees vary between provinces, and gasoline taxes are
significantly higher than in the United States, but lower than in
other OECD countries. As an example of provincial measures, Ontario
has introduced a "feebate" system, under which car purchasers pay a
tax, or receive a rebate, according to the fuel economy of the car
they are buying. At present, the size of the tax or rebate is
limited, but the team sees such innovative measures as potentially
effective if they are developed further, especially since the trend
recently has been towards vehicles and light trucks with lower fuel
efficiencies. An information initiative about energy efficiency
options targeting private motorists was launched in October 1994. A
fleet energy programme is ready for launching in 1995, and a
voluntary programme that targets vehicle manufacturers is also under
implementation.}

^{45. Research and development (R&D) and
implementation programmes are encouraging the use of alternative
fuels, which provide the energy source for a considerable number of
vehicles. Some cities have introduced transport control measures such
as reducing provision of city centre parking space and establishing
bus lanes to ensure the smooth running of public transport. The
federal Government extended an excise tax exemption in 1992 to the
ethanol portion of low level ethanol-gasoline blends to provide
ethanol with the same tax treatment as other alternative
fuels.}

^{46. The NAPCC mentions several approaches to sink
enhancement and emission mitigation in the}^{forestry and agriculture}^{sectors. The programme mentions only one initiative that is being
implemented, under which a utility is encouraging farmers to use
practices that increase soil carbon; other measures are at the
analytical stage. Still, Canada's fire, insect and disease protection
methods have an effect in emissions in these
sectors.}

^{47. The team noted that 93 per cent of forested land
is public property, almost all of it in the hands of provinces and
territories that lease it out to forestry companies. However,
Canada's forest area is vast and much of it is natural forest without
anthropogenic interference. Canada is working to build its
anthropogenic inventory of net emissions from forests as a foundation
for the development of adaptive and mitigative strategies. There
appears to be a potential to develop sink-enhancement measures which
can contribute to Canada's commitment to limit net greenhouse gas
emissions. The team was informed of a considerable tree planting
programme instigated by the Government, and of reporting routines to
Parliament on forestry activities.}

^{48. The options for reducing}^{HFCs,
PFCs and SF₆}^{together with}^{nitrous oxide emissions from industrial sources
and methane from landfills}^{are being explored in
Canada. Evidence from other countries indicates that there could be
cost-effective measures in this area.}

^{49. The consensus-building approach adopted by the
federal Government will inevitably take some time to have a
noticeable effect on GHG emissions. However, the effort to involve
all stakeholders is beginning to bear fruit, and there is now a broad
consensus among governments that in order to close the stabilization
gap further options need to be developed.}

^{50. The NRCC estimates the impact of the federal
energy efficiency and alternative energy initiatives and related
provincial initiatives at about 3 per cent of CO₂
emissions in 2000. No further quantification was provided for
measures included in the NRCC or NAPCC.}

^{51. Canada is investigating the economic, social and
environmental effects of measures taken to mitigate GHG emissions but
has only to a limited extent communicated information on these
effects to the UNFCCC or to the review team. The federal Government
is working on indicators to assess progress in climate change
mitigation. At the time of the team's visit, the Government was
aiming to have a blueprint for these indicators available for review
by the meeting of federal and provincial energy and environment
ministers in November 1995; the actual indicators will be used for
the review of policies and measures to be undertaken by December
1996. Given the limited time left to 2000, the team saw these
meetings as important opportunities for ministers to review Canadas
commitments and the actions taken to meet them, and it also noted
that the NAPCC is seen as a flexible instrument allowing for prompt
action. Still, many new measures could yield more the sooner they are
implemented, and the time left to develop, implement and benefit from
the full effect of new initiatives is limited.}

^{IV. PROJECTIONS AND EFFECTS OF POLICIES AND
MEASURES}

^{52. Canada provided projections of its emissions of
energy-related CO₂, CH₄ and N₂O in
2000 and 2020. The estimates for these sources were revised in the
update to Canadas Energy Outlook (October 1994). The NAPCC builds on
the update when giving figures for 2000 on a GWP basis in accordance
with the recommendations made by the IPCC in 1994.}

^{53. The current projections indicate that, without
new measures, aggregate GHG emissions in 2000 will be 13 per cent
above those in 1990 (growing from 577 to between 645 and 655 Mt of
CO₂ equivalent), and that growth in emissions will
continue after 2000. This is largely due to economic factors and
population growth, while energy efficiency and changes in the energy
mix are expected to reduce the growth. Emissions per capita are
projected to be stable to 2010. Since 1973, they have been
fluctuating in a range of more or less 10 per cent around the
average. Compared to the original communication, energy-related
CO₂ emissions for 2000 have been revised from 510 to 518
Mt, energy-related CH₄ from 1290 to 1527 t and
energy-related N₂O from 52 to 51 t.}

^{54. These projections do not take account of the
effects of new measures included in the NAPCC, such as the VCR, since
these have not been estimated, but they do include the effects of
most measures in place in early 1995. The revised projections do not
reflect any stricter fuel efficiency standards for vehicles in North
America, as the tightening of standards is seen as less likely than
before. Consequently, if the background assumptions hold, emissions
growth could be expected to be lower than the projected 13 per cent
owing to the new initiatives in the NAPCC, but quantitative
information was unavailable to the review team to indicate the
feasibility for Canada of meeting its commitment to stabilize
emissions in 2000 at 1990 levels. The federal and provincial
governments are exploring how}

^{performance indicators could be used to complement
the assessment of progress in climate change
mitigation.}

^{55. The aggregate figures in the NAPCC include
non-energy emissions. Disaggregated figures for these sources were
not included in the communication or the NAPCC, but were presented to
the team. In the light of the actual development of PFC and other
non-energy GHG emissions in other countries, the Canadian projections
for these could be high.}

^{56. Canada has not presented projections for
emissions related to land-use change and forests, since the
inventories are not yet fully developed and there is significant
uncertainty regarding the anthropogenic effects in these sectors. The
acquisition of the data will be important for Canada, given its
commitment to a net approach to GHG mitigation. Recognizing that most
of the forest area is believed to be unaffected by anthropogenic
interference, the team still concluded that development of net
anthropogenic emissions or sequestration from this sector could be
significant inside a net approach.}

^{57. The principal tool for the projections is an
econometric energy market model. The modellers work closely with
energy technology analysts to incorporate information based on
technical studies and technology vintage models. The assumptions,
including a gross domestic product (GDP) growth rate of 2.8 per cent
for Canada and 2.6 per cent for the United States and an oil price of
US$ 20 a barrel, and the tools used for the projections are
well-documented and were considered reasonable by the
team.}

^{58. The NRCC provides the results of sensitivity
tests which show that a 1 per cent higher GDP growth rate beginning
in 1993 and an oil price US$ 5 a barrel lower starting in 1994 would
increase the CO₂ emissions by 6 and 3 per cent
respectively in 2000. The importance of variations in these and other
factors is also stressed in other documents. The assumptions and
results have been checked against those of other modelling exercises,
which tended to give higher estimates.}

^{V. EXPECTED IMPACTS OF CLIMATE CHANGE}

^{59. Canadas territory covers several climatic zones
and is potentially vulnerable to climate change in a variety of ways.
Sectors based on renewable natural resources, such as agriculture,
forestry and fisheries, are important to the Canadian economy and the
impacts of climate change could be particularly great in these
sectors. In recognition of this, Canada has a strong and
comprehensive scientific research programme on the possible impacts
of climate change, but also acknowledges that studies on the indirect
effects of climate change on Canada will need to be pursued,
particularly on the question of water resources.}

^{60. Impacts could include lower precipitation in some
areas, increased risk of forest fires and insect infestation, and
hence decreased forest and crop productivity. Scientists will also
explore the possibility that the incidence of forest fires is linked
in some way to climate change. Changes in seawater temperature and
circulation could affect fish populations. A serious possible impact
is seen as coming from the increased frequency and strength of
extreme events. Climate change will also cause changes in natural
ecosystems through, for example, accelerated permafrost degradation.}

^{61. Canada is carrying out some major case studies on
impacts in the Mackenzie and St. Lawrence Great Lakes river basins
and the prairies. The team concluded that Canadas research in the
area of impacts and vulnerability, being both comprehensive and in
depth, could be important also for other countries in similar
climatic zones.}

^{VI. ADAPTATION MEASURES}

^{62. Canada is conducting a comprehensive R&D
programme as well as taking action to improve information-sharing on
the potential impacts of climate change and adaptation needs and
strategies. This includes the development of communication and
information networks. A separate task force under the Canadian
Climate Program Board, the major coordinating body of the Canadian
Climate Program, which covers all climate-related activities in
Canada, has produced a comprehensive report on adaptation issues
there. However, at present Canada is not taking any specific
adaptation measures as such, although there is an autonomous
adaptation to the already major experienced and expected variation in
the natural conditions. Studies cover various regions and sectors
(for example, forestry, fisheries) and include assessment of the
impacts of multiple pollutants and stresses on ecosystems.
Researchers are developing models for improved assessment of impacts
and adaptation strategies. Stakeholders are also looking into
practical measures such as changing species in forestry and into
insurance matters, but a similar multi-stakeholder process to what is
taking place in the field of mitigation has not yet been developed,
although adaptation is also covered in the NAPCC.}

^{VII. FINANCIAL ASSISTANCE AND TECHNOLOGY
TRANSFER}

^{63. Canada contributed to the Global Environment
Facility (GEF) in its pilot phase and is contributing its full share
to the 1994-1996 replenishment of the GEF. Its official development
assistance was equivalent to about 0.45 per cent of GDP in 1993
according to OECD statistics. Canada reported a number of additional
bilateral development projects which contribute to the objectives of
the UNFCCC, including mitigation, adaptation and capacity building.
Currently, the Canadian International Development Agency (CIDA) has a
broad portfolio which includes a large number of fossil-fuel-related
projects inherited from PetroCanada International. A change in this
portfolio is envisaged as these projects reach completion. Projects
undertaken by CIDA and the Ministry of Foreign Affairs and
International Trade are increasingly screened for consistency with
international environmental agreements. The personnel of these
organizations are currently undergoing a major training programme to
be able to undertake the task. Such screening does not at present
apply to the Canadian Export Development
Corporation.}

^{64. Canada works through its representatives on the
steering bodies of the World Bank Group and regional development
banks to encourage the incorporation of the UNFCCC objectives in
their lending policies.}

^{65. The team noted that a considerable proportion of
Canadian companies are multinational, and that this structure is seen
as important for technology transfer, particularly in the
manufacturing industry, but also in areas such as electricity
production.}

^{Joint implementation/Activities implemented
jointly under the pilot phase}

^{66. Canada supports the concept of joint
implementation/activities implemented jointly under the pilot phase
(JI/AIJ) as a voluntary approach to encourage private sector
participation. Canada awaited the decisions of the Conference of the
Parties at its first session before taking any initiatives on this
issue. There are some projects under way as part of industry
activities that could be reported as AIJ projects. Canadian policy is
that straight land purchases should not be used for JI/AIJ purposes
(for example, without a clear management regime for sustainable use).
AIJ projects can be reported under the VCR. Currently, Canadian
industry seems interested in building on its strengths in exploring
this opportunity, which means that projects are likely to include the
areas of, in particular, energy technology and energy management.}

^{VIII. RESEARCH AND SYSTEMATIC
OBSERVATION}

^{67. Canada undertakes a range of research activities
on climate change which are well organized and integrated with the
international research community. The Climate Change Research
Network, a collaborative effort including university, government and
industry scientists from across the country, provides a
well-coordinated base of expertise and knowledge for assessing
Canada's vulnerabilities to the threat of climate change. Canada has
also contributed extensively to the work of the IPCC. Canada is
co-chair on one of the three IPCC Working Groups and has provided
lead and supporting authors, as well as reviewers, for IPCC
Assessment Reports.}

^{68. The Canadian Climate Program (CCP) is a
cooperative effort of federal and provincial agencies, the academic
community and the private sector for all climate-related activities.
The major coordinating body is the CCP Board, established in 1979.
The CCP Board has an advisory role in relation to its parent bodies.
It also provides reports and advice to Canadas federal and provincial
environment ministries. Participants in the CCP Board are five
federal government departments, provincial governments, universities,
agencies and associations.}

^{69. Major activities include: collection and analysis
of climate data, climate modelling, policy research on GHG mitigation
strategies, climate-change-related research in forestry, agriculture
and forestry, as well as a significant number of socioeconomic
impacts studies across Canada. The team recognized that Canada, given
its size and natural conditions, plays an important international
role in monitoring. It carries out continuous monitoring of
CO₂, CH₄ and N₂O at four locations,
and it also has a network of stations providing long and continuous
historical temperature records sufficiently devoid of human
interference to be trustworthy for analysis.}

^{70. R&D into energy technology is carried out
mainly by NRCan programmes. The Federal Program of Energy Research
and Development ensures that other government departments also
undertake R&D into energy-related matters within their respective
sectors of the economy. In view of general government spending cuts,
the overall funding has been decreasing and reassessment of the
R&D programme is currently being undertaken with a view to
shifting the relative emphasis of public R&D spending from fossil
fuels towards renewables and energy efficiency. However, substantial
involvement with the private sector in the R&D activities, either
in a cost-shared or a task-shared manner, accelerates market
development. Some tax breaks are available for alternative
technologies.}

^{IX. EDUCATION, TRAINING AND PUBLIC
AWARENESS}

^{71. Canadas NRCC includes a description of public
information programmes, training programmes for drivers, etc. It was
also produced as a document to increase public awareness, and
therefore covers general climate change issues in considerable
detail. Given the focus of Canadas NAPCC on voluntary approaches,
training is an essential component.}

^{The multi-stakeholder process is in itself important
to public awareness, and wide public involvement is a general
practice in Canadian political life.}

^{72. School programmes are managed at the provincial
and local levels of government. Some initiatives on school education
programmes were mentioned in Canada's original communication, but not
in the NAPCC. An example of federal/provincial cooperation and
coordination is the air issues schools programme, funded through the
National Air Issues Coordinating Committee, and supported by all the
provinces and the federal government. There are also some independent
school projects focusing on climate change that have been initiated
by non-governmental organizations.}

^{73. Environment Canada has produced publicity
material including a series of leaflets, fact sheets, newsletters and
a primer on global warming. The R&D programmes also have a public
awareness aspect. Environment Canada recognizes the need for
coordination of education and public awareness efforts on climate
change. Non-governmental organizations are given financial support
from the Government partly because of their role in providing
information on climate change.}

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1. In accordance with decision 2/CP.1, the full draft of this report was communicated to the Canadian Government, which had no further comments.