Item - 2025.IE26.3

The Executive Director, Environment, Climate and Forestry, and the Chief Financial Officer and Treasurer recommend that: 

1. City Council receive for information Attachment 1 and Attachment 4 to the report from the Executive Director, Environment, Climate and Forestry and the Chief Financial Officer and Treasurer, which together represent the Advanced Plan for Community emission sources as required by section 669-2.3C (1) of Code Chapter 669 (Climate Change Goals and Governance).

2. City Council direct the Executive Director, Environment, Climate and Forestry, in consultation with the Chief Financial Officer and Treasurer, to report to Infrastructure and Environment Committee in the second quarter of 2028 with a financial analysis of reaching Toronto’s net zero goals by 2040. The financial analysis will include estimated funding needs to achieve the City’s target of net zero greenhouse gas emissions from corporate building and transportation sources, including those activities that will need to be undertaken by Divisions, Agencies and Corporations.

The Executive Director, Environment, Climate and Forestry recommends that:

3. City Council receive for information Attachment 2, “Advanced Plan for actions to achieve the 2026-2030 greenhouse gas emissions budget for Corporate emission sources - Buildings, and Accountability Plan” as required by section 669-2.3D (1) of Code Chapter 669 (Climate Change Goals and Governance).

4. City Council receive for information Attachment 3, “Advanced Plan for actions to achieve the 2026-2030 greenhouse gas emissions budget for Corporate emission sources - Transportation, and Accountability Plan” as required by section 669-2.3E (1) of Code Chapter 669 (Climate Change Goals and Governance).

5. City Council direct the Executive Director, Environment, Climate and Forestry; in consultation with the Executive Director, Corporate Real Estate Management Division, the Chief Executive Officer, Toronto Transit Commission, the Chief Executive Officer, Toronto Community Housing Corporation, and other affected City Divisions, Agencies and Corporations; to report to Infrastructure and Environment Committee in the second quarter of 2028 with a policy to guide the transition of all City of Toronto Divisions and Agencies away from the procurement and operation of equipment that combusts fossil fuel in City-owned facilities by 2040; such policy to include:

a. timeline, resources for, and process for the phase-out of procurement and operation of equipment that combusts fossil fuel, subject to a list of exceptions, determined based on the Zero Carbon Transition Plans for buildings that must be developed by December 31, 2027, as required by Municipal Code Chapter 669, Appendix A section 4A(7)(c);

b. an appropriate report back mechanism for adherence to the policy through Municipal Code Chapter 669; and

c. other elements deemed necessary to operationalize the policy and enable the City’s transition away from equipment that combusts fossil fuel in City-owned facilities by 2040.

6.  City Council amend Code Chapter 367, as follows:

a. in §367-2.1.A.(2), delete “2026” and replace with “2027” in order to postpone the required reporting; and

b. in §367-2.4.B., renumber subsection (3) as subsection (4) and add a new subsection (3) to address the 2026 reporting year that states:  “(3) On or before July 2, 2026 for the 2026 reporting year.”

7. City Council direct that the amendments to Code Chapter 367, described in Part 6 above, come into force on January 1, 2026.

8. City Council authorize the Deputy City Manager, Corporate Services, or their designate, until December 31, 2030, to negotiate and enter into agreements, as may be required, to support the implementation of the City Council-adopted recommendations presented in the Transform TO Net Strategy Action Plan 2026-2030 with non-profit, public, and private sector organizations to: 

a. collaborate on projects or initiatives; 

b. provide in-kind and / or financial support from the approved Environment, Climate and Forestry Division budget on projects or initiatives; and / or 

c. receive funding, on terms and conditions acceptable to the Deputy City Manager, Corporate Services, in consultation with the Executive Director, Environment, Climate and Forestry, and in a form satisfactory to the City Solicitor.

This report responds to requirements in the City of Toronto Municipal Code Chapter 669, Climate Change Goals and Governance to provide the TransformTO Net Zero Strategy Action Plan (2026-2030) ("the Plan"). The Plan, available in Attachment 1, focuses on mitigating greenhouse gas emissions to limit future climate change and was co-developed with Divisions, Agencies and Corporations, including Finance and Treasury Services, with further analysis required for future considerations.

In 2021, City Council adopted the TransformTO Net Zero Strategy, along with an ambitious target of net zero greenhouse gas emissions by 2040 community-wide, and the first implementation plan. Since that time the City's approach to climate has developed substantially and now includes a robust Carbon Accountability framework, delivery of foundational programs and projects, in-house technical greenhouse gas modelling, a sophisticated understanding of the City's climate opportunities and challenges, and advisory tables, all of which informed the development of this Plan.

The City is moving toward net zero greenhouse gas emissions community-wide and doing as much as it can as soon as it can, while being sensitive to residents' and businesses' current economic situations and the limitations on what actions can reasonably and legally be implemented by municipal governments. The actions in the Net Zero Strategy Action Plan (2026-30) are designed to benefit Torontonians by contributing to climate resilience, considering affordability and opportunities for economic prosperity, improving health and leading to more equitable outcomes, as well as reducing greenhouse gas emissions that cause climate change.

Investing in climate action reduces the high cost of adapting to Toronto's changing climate and responding to extreme weather events. The City is already taking action to address climate risks, and existing climate change adaptation actions are identified at toronto.ca/climateready. Key initiatives that promote climate-resilient natural and built environments include the Toronto Green Standard, Toronto Green Streets, the Wet Weather Flow Master Plan, a new incentive for rain barrels on private property, and the Ravine, Biodiversity, Pollinator Protection and Parkland Strategies. Responding to climate impacts is a core component of the City's Emergency Response Plan, as well as key people-centered initiatives such as the Heat Relief Strategy, the Air Conditioner Assistance Program and the Wildfire Smoke Response Strategy. The City also has a long track record on climate action to reduce greenhouse gas emissions, such as improving affordability of energy efficient retrofits for homeowners with support from the Home Energy Loan Program, replacing TTC diesel buses with hybrid and battery-electric buses to improve air quality, and introducing the first Carbon Budget for 2025. A comprehensive description of the City's latest greenhouse gas-reduction actions is available in the Net Zero Strategy 2024 Progress Report on Implementation Progress. Strengthening the City’s relationships with Indigenous communities is understood to be critical to climate work however, City staff must continue to build internal capacity so that engagements with Indigenous partners are informed, respectful and reciprocal.

Achieving Toronto's climate goals will require coordination with, and prioritization of, strong climate action policy leadership alongside adequate and stable long-term funding, policy and program supports from other levels of government. A shifting policy and program landscape in recent months at other levels of governments is an ongoing source of uncertainty for those looking to take action to reduce emissions and the businesses and supply chains that enable those actions. Since the beginning of 2025, there have been a number of global, national and provincial actions that directly impact the City’s ability to achieve its net zero target, including its ability to establish a successful Building Emission Performance Standards program. These include the removal of a consumer carbon price, the non-renewal of federal funding to support home and building energy retrofits in the recent federal budget, and imposition of tariffs and legislative changes that make more challenging the ability of municipalities to implement climate-positive programs. Given these challenges, along with the affordability and economic competitiveness questions raised by Toronto City Council this past July (2025.EX25.6), City staff have not brought forward a bylaw for consideration and will continue to review opportunities to address these challenges before seeking Council direction on a bylaw. The City will also postpone the data reporting requirement for buildings exceeding 929 square metres (~10,000 square feet) but less than 4,645 square meters (~50,000 square feet) until 2027, while work continues to put in place a reporting help centre and streamline access to building data.

When only City-led actions are considered and federal and provincial policies removed, a significant gap remains between the Business-as-Planned emissions trajectory and the level required to reach the City’s 2040 net-zero community emissions target. More specifically, community-wide modelling to 2040 shows that a combination of the Business-as-Planned actions already being implemented by the City and covered in the Net Zero Strategy Action Plan (2026-2030), and additional quantifiable actions proposed in Attachment 1, anticipate a decline in emissions by approximately eight per cent (1.1 Metric Tons of Carbon Dioxide Equivalent) compared to the Business-as-Usual scenario by 2040. This highlights the importance of coordination with other levels of government and the prioritization of strong climate action policy, programs and funding to achieve Toronto's climate goals.

While community emissions remain challenging to address, the City has made policy changes, dedicated budget and driven operational commitments to make corporate emissions targets more achievable. City corporate modelling shows a smaller gap between anticipated emissions from corporate sources and the 2040 net zero target after planned climate actions are implemented. The greatest corporate greenhouse gas-reducing actions modelled are the TTC Green Bus Program and actions related to decarbonizing existing City buildings and fleets. As directed by City Council through Item 2024.IE12.3, this report includes recommendations to transition the City's own equipment to lower carbon energy sources.

The Net Zero Strategy Action Plan (2026-2030) will not meet the 2030 target of 65 percent reduction from 1990 levels, nor will the emissions budget allotted for community-wide emissions be achieved for this time period given the external factors described in this report. Affordability challenges combined with changes to federal and provincial policies have resulted in a Plan which moves climate action forward while supporting residents with their everyday essential life activities, strengthening Toronto's resilience to future risks posed by shifting energy policy, focusing on corporate decarbonization, and ensuring that equity is embedded in climate work going forward.   

In addition to the Net Zero Strategy Action Plan (2026-2030), an update on the City’s approach to public electric vehicle charging is provided in Attachment 7 of this report. An update on vehicle idling (responding to a separate City Council direction, 2025.IE19.2 Decision Part 3) is available in Attachment 8.

Please note that the signature from the Chief Financial Officer and Treasurer relates only to those portions of the report that support Recommendations 1 and 2, including Attachments 1 and 4.