Report says policy and technology change will be key drivers of Canada’s energy transition

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Calgary, AB — A new energy outlook from the Canada Energy Regulator (CER) finds that Canada’s fossil fuel consumption declines over the next 30 years but without an accelerated energy transition, fossil fuels will still make up more than 60 per cent of Canada’s fuel mix in 2050.

Canada’s Energy Future 2020: Energy Supply and Demand Projections to 2050 explores how new technologies and climate policy will impact Canadian energy consumption and production trends over the next 30 years. The outlook considers two scenarios with different rates of technological and government policy change: the Evolving Energy System Scenario and the Reference Energy System Scenario.

“Canada’s Energy Future 2020 marks an important inflection point, as Canada’s energy system is being shaped by COVID–19 and ongoing innovations in energy technology and climate policy,” Darren Christie, chief economist, Canada Energy Regulator. “In our Evolving Scenario, we now project that Canada has passed its peak for fossil fuel consumption and total energy demand.”

Under the Evolving Scenario, Canada’s domestic fossil fuel consumption has already peaked and will be 35 per cent lower by 2050. At the same time, renewables and nuclear become a larger share of Canada’s energy mix with electricity playing a greater role in satisfying end use energy needs. Electricity will become increasingly competitive with fossil fuels in many parts of the energy system, including for passenger vehicles.

Moderate growth in crude oil and natural gas production continues until it peaks around 2040. Canada’s major crude oil pipeline projects currently under construction will be able to accommodate expected future production growth over the next two decades.

Achieving net-zero greenhouse gases (GHG) emissions in Canada within the next 30 years will require stronger policies and greater adoption of low-carbon technologies. Canadian and international efforts to reduce GHG emissions will be a critical factor in how energy systems evolve in the long term.

“With the increasing pace of change in Canadian and global energy markets and climate policy, the need for up-to-date analysis on energy trends is greater than ever,” Gitane De Silva, CEO, Canada Energy Regulator. “Canada’s Energy Future series provides Canadians with a key reference point for discussing our country’s energy future and identifies key drivers of change that will impact Canada’s energy transition.”

Report highlights

  • Energy use in 2020 will fall by six per cent because of the COVID-19 pandemic, while crude oil production will decrease by seven per cent or 335 thousand barrels per day (Mb/d) compared to 2019.

Results from the Evolving Energy System Scenario

  • Total renewable and nuclear demand across the energy system grows by 31 per cent by 2050 and becomes a larger share of the energy mix. In 2050, 90 per cent of electricity generation comes from renewable and nuclear generation compared to 81 per cent today.
  • Fossil fuel consumption peaked in 2019. By 2030, fossil fuel consumption is 12 per cent lower and 35 per cent lower by 2050. Coal declines in the 2020s as it is phased out of electric generation.
  • Crude oil production grows from 4.9 MMb/d in 2019 to 5.8 MMb/d in 2039 where it peaks and then declines in the last decade of the projection to 5.3 MMb/d by 2050. Growth is largely due to expansions of existing in situ oil sands projects.
  • Natural gas production increases from 15.7 Bcf/d in 2019 to its peak of 18.4 Bcf/d in 2040. This growth is driven by increasing LNG exports, which increase to 4.9 Bcf/d by 2039. After 2040, natural gas production slowly declines to 16.8 Bcf/d by 2050.
  • Total demand for renewable energy sources such as hydroelectricity, wind, solar, and biofuels increases by 45 per cent from 2019 to 2050.
  • Electricity’s share of end-use demand increases by an average of one per cent per year from 2019 to 2050 or approximately 16 per cent currently to over 27 per cent in 2050 when half of all passenger vehicles sales are electric vehicles.

 

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