Canada’s plan to expand electricity generation while cutting greenhouse gas emissions faces a growing complication: the country’s power sector is becoming a source of additional emissions even as Ottawa looks to electricity to replace fossil fuels across the economy.
New estimates released Thursday by the Canadian Climate Institute show national greenhouse gas emissions reached approximately 691 million tonnes of carbon dioxide equivalent in 2025, an increase of 0.9%, or roughly six million tonnes, from 2024.
The increase was concentrated in buildings and electricity generation, where greater natural gas consumption reversed reductions recorded the previous year.
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Electricity-sector emissions climbed approximately 5%, while emissions from buildings increased about 6%. The institute attributed much of the buildings increase to colder winter weather, which raised heating demand.
The Canadian Climate Institute estimates that Canada will need to at least double electricity generation to support a net-zero economy. Yet national electricity production has increased only 3% since 2005, according to its analysis, illustrating the scale of the expansion required.
The electricity sector has historically delivered some of Canada’s largest emissions reductions. Federal inventory data show electricity emissions declined 57% between 2005 and 2024, largely through the retirement of coal-fired generation.
The latest estimates indicate that greater reliance on natural gas-fired generation is beginning to work against that progress.
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The increase in national emissions did not principally come from oil and gas production. The institute estimates that emissions from oil and gas operations remained essentially unchanged in 2025, although the sector continued to represent Canada’s largest source of emissions.
Transportation emissions were also largely stagnant, while heavy industry recorded a slight decline that the institute associated more with weaker economic activity than structural decarbonization.
Canada’s emissions trajectory increasingly depends on changes in energy consumption as well as emissions from resource production. In 2024, the oil and gas sector accounted for 208 million tonnes of emissions, according to federal inventory figures.
Canada has committed to cutting emissions 40% to 45% below 2005 levels by 2030. The institute estimates that emissions in 2025 were only 9.5% below that baseline, leaving a substantial gap with four years remaining.
Its analysis also found that emissions produced per unit of GDP declined just 0.6% in 2025, considerably below the historical average of approximately 2.5%.
The federal government’s next official inventory, covering 2025, is expected in April 2027.
Until then, the independent estimates provide an early indication that Canada’s challenge extends beyond reducing emissions from oil production to ensuring that a larger electricity system also becomes a cleaner one.
