Therefore, in considering Canada’s road map to net-zero beyond 2030, our focus is on technological solutions that can help close the emissions gap. These innovations represent a transformative change, requiring an enormous amount of ingenuity and investment. However, as noted, the federal government will need to move quickly to facilitate this investment, since delaying action allows the challenge and its costs to grow. A swift response is also likely to allow Canadian companies operating in low-carbon areas where we have existing capacity—such as hydrogen as well as carbon capture and storage (CCS)—to capitalize on opportunities that arise as the world looks toward large-scale emissions reductions.
Relying on work done by ESMIA Consultants in their reference net-zero scenario,9 we identified 10 key technologies that could be instrumental in achieving the remaining emissions reductions: Figure 6 details, by sector, the amount of emissions expected to be produced in 2030 (numbers in brackets), after the carbon tax ramps up to $170 and the technologies that could be used to reduce emissions in that sector with a goal of achieving net-zero by 2050. Complete elimination of all the emissions detailed below will not be required due to technologies such as CCS.
Figure 6 explores the specific technologies that will be important in helping Canada reach its GHG-reduction goals:
Figure 6: Emissions levels in 2030* and technologies, by sector, to help achieve net-zero in 2050
Sector
Technologies
Manufacturing sector (110 megatonnes/year)
Green hydrogen
Small modular reactors
CCS/direct air capture
Households (109 megatonnes/year)
EVs and charging infrastructure
Electric heat sources for buildings
Smart microgrids
Direct air capture
Mining and refining (93 megatonnes/year)
Direct contact steam generation
Agriculture, forestry and fishing (89 megatonnes/year)
Liquid and solid biofuels
Transportation (51 megatonnes/year)
Electricity and transmission (47 megatonnes/year)
Shift to renewable energy for production
Battery energy storage
Other services (37 megatonnes/year)
Construction (5 megatonnes/year)
*Figures are subject to rounding
Electric vehicles emit no greenhouse gases and are a proven option for significantly reducing CO2 emissions worldwide. The current EV market share in Canada is roughly 0.7%, but it’s trending upward: EVs accounted for 3.5% of new car registrations in 2020, versus 2.9% in 2019.10 Still, this barely moves the needle toward Canada’s emissions-reduction targets. In order to spur adoption, manufacturers will likely need to develop more efficient and less expensive passenger EVs. Cities and municipalities would need to shift public transport to electric power to a greater degree. The advent of wireless charging (with the SAE J2954 charging standard) could propel the market forward by making it much more convenient to own and operate EVs. Similarly, more widespread public charging stations—including at shopping centres, hotels, parking facilities, gas stations, and residential buildings—could go a long way toward making EVs the preferred choice for consumers, businesses, and municipalities alike.
If consumers, businesses, and municipalities don’t shift toward EVs and/or vehicles that run on cleaner fuel, the Canadian transportation sector is expected to produce about 170 megatonnes per year of CO2e by 2050. But with advances in EV technology, the sector can reduce its CO2 emissions to fewer than 20 megatonnes per year—the amount necessary for Canada to meet its net-zero target by 2050.
Canada is a world leader in renewable energy. With its large land mass and diversified geography, the country has substantial renewable resources—including hydro, wind, biomass, solar, geothermal, and tidal energy—that can be used to produce electricity. Hydro power is our most significant renewable resource, providing 59.3% of the country’s electricity generation.11 In fact, Canada is the second-largest producer of hydroelectricity in the world. Meanwhile, wind accounts for 3.5% of our electricity generation, followed by biomass at 1.4%.12
Hydro power is Canada's most significant renewable resource, providing 59.3% of the country’s electricity generation
Electrical power is essential to reaching Canada’s emissions-reduction goals. But using it for transportation, heating and cooling, and industrial production demands an unprecedented scale-up of renewable generating capacity, as well as the infrastructure to deliver it. Some experts predict that Canada will need to triple its production of this resource by 2050. The challenge will be affordability; otherwise, governments risk significant backlash from citizens that are trying to decarbonize by using electric power, and risk compromising the competitiveness of industries that are transitioning to using this resource. Modelling shows that, in order to achieve net-zero emissions by 2050, Canada’s electricity output would have to shift significantly toward solar and wind energy—increasing from about 30 terawatt hours (from our modelled scenario) to almost 600 terawatt hours.2
Direct contact steam generation (DCSG) has many environmental uses. Among these, it can greatly improve oil recovery (in the form of bitumen); to achieve this goal, steam from waste water and hot flue or exhaust gases from combustion are injected into a reservoir. This process also has the potential to reduce the need for fresh water in energy generation and, because most of the CO2 created is also captured and recycled, to cut carbon emissions. Among other applications, it’s currently used in oil sands in conjunction with steam-assisted gravity drainage (SAGD).
DCSG can reduce GHG emissions produced during bitumen extraction by up to 85% while minimizing the need for fresh water and eliminating expensive water-treatment processes.13 This ultimately lowers the costs, as well as the environmental price, of bitumen extraction. DCSG has not yet been commercialized at scale, thus questions about true costs and efficacy remain. Nonetheless, since oil and gas comprise a large part of Canada’s GDP and will likely still be required even at reduced capacity, DCSG could play a vital role in the race to net-zero.
This process also has the potential to reduce the need for fresh water in energy generation and, because most of the CO2 created is also captured and recycled, to cut carbon emissions
Hydrogen is a core component of many chemical industrial processes, notably in refining petroleum and producing fertilizer, ammonia, and methanol, so using clean hydrogen helps reduce resulting emissions. Hydrogen can also be a fuel alternative for transportation, including in light- and heavy-duty vehicles, transit buses, and trains. Other applications include power generation and heat production—for which hydrogen can be burned alone or blended with natural gas to heat residential and commercial buildings or provide high-grade heat for industrial processes.
Hydrogen production from natural-gas reformation and coal gasification can be a major source of carbon emissions
Hydrogen combustion doesn’t produce carbon emissions or pollutants at the point of use. However, hydrogen production from natural-gas reformation and coal gasification can be a major source of carbon emissions—i.e., grey hydrogen. Further, the compression and liquefaction processes required to transport and store hydrogen are energy intensive, so if the power needed to drive these operations came from non-renewable sources, the entire chain could adversely affect hydrogen’s global carbon index over its life cycle.
The federal government’s hydrogen strategy, released in late 2020, suggests that this resource could satisfy 30% of Canada’s energy needs by 2030.14 The Minister of Natural Resources at the time noted that expanding Canada’s use of hydrogen could reduce GHG emissions by 2030 by as much as 45 megatonnes per year.
Canada currently produces an estimated three million tonnes of grey hydrogen annually from natural gas without the use of CCS, making it one of the world’s top 10 hydrogen producers. At present, steam methane reforming is the most cost-efficient means of producing hydrogen. However, this process generates carbon emissions and therefore must be coupled with a CCS system.
With existing hydrogen production and transportation infrastructure in Western Canada and opportunities for blending it with other resources for combustion, there are opportunities for further hydrogen development—but government support remains crucial. Green hydrogen could be produced by including CCS systems in existing and future plants. As detailed in this document (see also point 10), CCS has the potential not just to eliminate carbon emissions from hydrogen production, but also to capture additional emissions from the air, which could be critical in attaining Canada’s 2050 net-zero targets.
Biofuels can significantly reduce GHG emissions by decreasing or eliminating the need for fossil fuels. They’re generally less carbon intensive than fossil fuels throughout their life cycles, with improvements to their clean profiles resulting from advancements in production, processing, and energy efficiency. Nevertheless, Canada is behind its global competitors in establishing biofuel production capacity and use, with market-adoption rates behind those in the United States, the EU, and other regions. This contributes to our high GHG emissions from the transportation sector, among others.
The need for energy-dense liquid biofuels is anticipated to grow for use in light and heavy-duty transportation in the decades ahead
Biofuels are a proven environmental commodity: they’ve reduced GHG emission as a result of renewable-fuel regulations and low-carbon fuel standards in Canadian provinces. Consequently, the need for energy-dense liquid biofuels is anticipated to grow for use in light and heavy-duty transportation in the decades ahead. In response, the country’s clean liquid fuel sector aims to expand production from three to 8.5 billion litres per year by 2030.15
Expanding use of biofuels and other non-fossil clean fuels from 7% in 2017 to 10%–15% by 2030 would reduce GHG emissions by 15 million tonnes per year.16 Additionally, their use can potentially displace a significant amount of diesel and gasoline use. With reasonable investments, biofuel use could increase from the roughly 6% in our modelled transport-sector fuel mix to roughly 14% in order to reach net-zero.
Many of Canada’s remote/off-grid communities rely on diesel oil for electricity generation—a highly polluting and costly process. However, we have the potential for one of the world’s most promising domestic markets for SMRs, with conservative estimates valued at $5.3 billion between 2025 and 2040.17 In comparison, the global value of SMR markets is projected to reach $150 billion in that same time period.18
Some SMR designs could be used in the near term, with most becoming available in the next seven to 15 years. For some of the more highly tested technologies, these timeline challenges are more dependent on clarifying related economic, social, regulatory, and waste-management issues than on fine-tuning reactor design. Although the country’s regulatory framework and waste-management regimen are well positioned to respond to an SMR paradigm shift, modernization is needed to reflect the realities of operating these smaller reactors.
SMRs have the potential to reduce reliance on coal and diesel, especially in remote communities, thus helping Canada to reach net-zero by 2050. They could also help to drive deep industrial decarbonization, including green mining, and provide opportunities for new applications for nuclear energy, such as space exploration. With the ability to generate energy on demand, SMRs could also play a vital role in a deeper integration of variable renewable energy sources (e.g., wind and solar) across Canada, especially in regions that lack significant hydro-power capacity. Overall, SMRs could potentially meet about 9% of Canada’s electricity needs at net-zero.
With a highly variable climate, Canada uses more energy than many other industrialized countries to heat and cool buildings. According to stats from 2018, around 47% of Canadians use natural gas to heat their homes, roughly 37% use electricity, approximately 9% use oil, and the rest use wood and propane.19 About 84% of the country’s residential GHG emissions come from space and water heating—mostly from burning natural gas.20 Thus, renovating existing buildings is central to reducing energy demands and associated emissions, as is switching to electric heat sources.
Heat pumps, which transfer thermal energy between two locations, are a particularly promising source of electric heat. They represent a rare technology in which typical efficiencies are well over 100%—i.e., more energy is produced than that required to displace it. In Canada, where winter air temperatures can drop below –30°C, geothermal heat pumps can operate more efficiently because they rely on warmer and more stable ground temperatures rather than the colder air. These ground-source systems can reduce heating and cooling costs substantially, with savings of about 65% compared with electric furnaces.21
In addition to electric heat sources, solar power is a viable, low-emissions alternative for heating homes.
Relative to 2018 figures, electric heating systems could decrease energy demands in Canadian buildings by 2050 by as much as 35%.22 These gains would come without curtailing building services, since about 85% of reductions would stem from heating and cooling savings. A shift to electric-power sources could also potentially reduce resulting CO2 emissions from more than 40 megatonnes a year in the ESMIA model to less than one megatonne a year by 2050’s net-zero target.
A microgrid is a small network of distributed, often renewable, energy sources. It can tie into a central electricity grid as well as operate on its own. In instances such as power outages and severe weather, it can continue to supply electricity to connected homes and buildings.
Microgrids are essential to mitigating GHG emissions. Often powered by smart technologies, they can help to integrate more highly distributed renewable-energy-generation sources into Canada’s main power grid while increasing energy resiliency and affordability, especially for smaller towns and remote communities. In particular, microgrids can provide a vital service for the almost 300 remote communities in Canada, many of which use diesel generators to produce electricity. In addition to being a highly polluting energy source, diesel power is expensive, with remote communities often paying up to 10 times more than those connected to the main grid. In contrast, power companies can often implement microgrids quickly and affordably in lieu of building more costly central generating plants.
Microgrids can provide a vital service for the almost 300 remote communities in Canada, many of which use diesel generators to produce electricity
Battery storage captures excess renewable energy and injects it into power grids for an immediate supply to offset demand peaks; it also balances these grids by regulating fluctuations and managing congestion. In light of these benefits, electricity-system operators and regulators are actively exploring options for increasing integration of this technology into the grid, such as by reviewing market rules in Ontario and Alberta and implementing pilot projects in Quebec and Saskatchewan.
Battery-storage technology is readily available and rapidly becoming more economical. It can convert variable renewable energy sources such as wind and solar power into immediately available electricity. If fully utilized, it could contribute more than 60 terawatt hours of electricity to the grid by 2050 to help reach net-zero emissions.
Electricity-system operators and regulators are actively exploring options for increasing integration of battery storage technology into the grid
Canada took a relatively early position on CCS, being among the first to develop operational expertise and intellectual property regarding this technology. Five major post-combustion carbon-capture projects are currently operating in Western Canada: Canadian Natural Resources Limited plant, SaskPower’s Boundary Dam, Shell Quest, Weyburn, and Alberta Carbon Trunk Line (ACTL). In total, roughly 5.5 megatonnes of CO2 emissions are captured annually in Canada. In aggregate, the Alberta government has committed $1.24 billion through 2025 for ACTL and the Shell Quest project, which will help reduce GHG emissions by 2.76 million tonnes per year (i.e., equivalent to the annual emissions of 600,000 vehicles).23
Meanwhile, DAC systems, such as that implemented by West Coast-based Carbon Engineering, remove CO2 from the atmosphere, purify it, and then use only energy and water to produce pipeline-ready compressed CO2 gas. Benefits of DAC include generating limited land and water carbon footprints and being able to build plants close to suitable storage or utilization sites, thus eliminating the need for long-distance CO2 transport.
Regardless of the method of capture, options such as enhanced recovery of oil and of coal-bed methane provide short-term opportunities for storing CO2. Options for longer-term storage, such as saline aquifers, are presently being studied.
As an early adopter of CCS, Canada has attracted considerable attention from other nations that were looking for ways to reduce their GHG emissions. This has led to the creation of the International CCS Knowledge Centre in Regina, a joint venture of BHP and the Government of Saskatchewan.
The US Department of Energy has assessed the potential storage capacity of these technologies across the United States and parts of Canada, determining that there’s sufficient available space for approximately 600 years of CO2 emissions, calculated from total US fossil-fuel production at current rates.24 CCS can also be applied to a number of heavy-emissions industrial activities beyond using oil and gas, including generating power and producing concrete, steel, and fertilizer.
CCS and DAC are projected to be essential not just for attaining Canada’s net-zero goals but for hitting global targets by 2050. CCS technologies could potentially capture more than 150 megatonnes of CO2 a year in Canada by 2050 but would require sizable investments in order to be widely implemented across heavily polluting industries. Additionally, regulatory certainty would be needed to unlock and maintain the technologies’ potential—i.e., legislation that establishes rules for governing CCS and then prevents them from being reversed in future is crucial.
