Hikes to oil production and rebounding air travel put a drag on Canada’s climate progress last year, a report published Thursday by a leading policy institute found, though the country was still able to make a fractional cut to its planet-warming emissions.

The new estimates from the Canadian Climate Institute show Canada cutting emissions by about 0.8% last year compared to 2022, and 8% since 2005, The Canadian Press reports.

The country will need to speed up that progress if it hopes to hit its 2030 target to cut emissions by 40 to 45% compared to 2005 levels, the institute said.

“Sustained policy effort in the electricity sector demonstrate that significant progress is achievable, but other sectors need to follow suit and accelerate their momentum to keep Canada on track,” it said.

The report cites industrial carbon pricing and coal phaseouts as two policies that helped drive the electricity sector’s decarbonization efforts, with emissions falling 6.2% year over year, or 62% since 2005.

“What we’ve been able to do in electricity is nothing short of astounding, and it continues in this year’s estimate,” said Dave Sawyer, the institute’s principal economist.

Emissions from buildings also dropped 6%, the report said, largely due to lower gas heating demands during Canada’s warmest winter on record.

The entire year was the second warmest on record in Canada and the warmest globally, driven by climate change and boosted by El Niño conditions.

Of the eight major sectors of Canada’s economy, the report said transport saw the biggest annual increase, rising by about 1.6%, driven by a major rebound in domestic aviation.

Oil and gas continued to hold back Canada’s progress, continuing its long-standing trend of annual emissions increases. Sector emissions were up about 1% over 2022 or 12% since 2005, driven by higher production.

“Once again, progress in Canada’s emissions reductions is starkly different across sectors,” said Canadian Climate Institute president Rick Smith. “Governments right across the country need to accelerate developing policy and strengthen measures already in place, like electrification and industrial carbon pricing systems.”

Oil and gas now accounts for just under a third of Canada’s total emissions, the Climate Institute reported. And a report released simultaneously by the Calgary-based Pembina Institute said the oil sands sector alone produces 12% of the country’s annual climate pollution, the Globe and Mail reports.

“As its emissions increase, the oil sands sector remains in a strong financial position, which companies are using to pay down debt, give record returns to shareholders, and invest in increased production capacity,” the Globe writes, citing the Pembina analysis. “But they are failing to spend on activities to reduce their environmental footprint.”

Aly Hyder Ali, oil and gas program manager at Environmental Defence Canada, said the 2023 numbers spotlight the need for a cap on oil and gas emissions.

“The report shows that climate policy works to reduce [greenhouse gas] emissions, but Canada will fall short of its 2030 climate goals without decisive action on oil and gas emissions,” he said in a release.

The Climate Institute publishes its early estimates each year, eight months ahead of the country’s official emissions inventory, to offer a high-level snapshot of emissions trends before the government reports its final results under United Nations climate pacts. The independent early estimates are based in part on annual Statistics Canada data on production, demand, and demographic activity.

While a growing population and economy helped drive up emissions in 2023, it was more than offset by climate policy and changing markets, the report said, including from clean energy advances, CP says.

Yet, the report noted the uptake in clean energy is still off pace. While electricity emissions are way down, demand for electricity has not significantly increased, suggesting a slow switch from fuels to electricity.

“We’re seeing electricity flat, demand flat, in fact, and so most of the reductions are coming from fuel switching—coal to gas, for example. So, fossil to fossil,” said Sawyer.

“This is an indicator we’re going to be watching more closely.”

At the same time, “battery storage is absolutely taking off, which allows us to basically put more… wind and solar into the grid,” he told CBC, while federal and provincial energy retrofit grants have seen significant uptake.

“People are naturally upgrading their houses and the new buildings are way more efficient than the old 50-year-old buildings,” Sawyer said.

The main body of this report was first published by The Canadian Press on Sept. 19, 2024.