A report issued by the Canada Energy Regulator (CER) last fall found that the country’s fossil fuel consumption is expected to fall in the coming 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 examined how new technologies and climate policy will impact Canadian energy consumption and production trends over the next 30 years.
“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,” said Gitane De Silva, Chief Executive Officer, Canada Energy Regulator.
The agency’s outlook considered two scenarios with different rates of technological and government policy change: the Evolving Energy System Scenario and the Reference Energy System Scenario.
Under the Evolving Scenario, Canada’s domestic fossil fuel consumption has already peaked and will be 35 per cent lower by 2050. By 2030, fossil fuel consumption is 12 per cent lower and 35 per cent lower by 2050. Coal declines this decade as it is phased out of electric generation.
“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,” said Darren Christie, Chief Economist, Canada Energy Regulator. He added “In our Evolving Scenario, we now project that Canada has passed its peak for fossil fuel consumption and total energy demand.”
Renewables and nuclear will grab 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.
Total renewable and nuclear demand across the energy system is expected to grow by 31 per cent by 2050 and become a larger share of the energy mix. In 2050, the report says 90 per cent of electricity generation will come from renewable and nuclear generation compared to 81 per cent today.
As well, moderate growth in crude oil and natural gas production is forecast to continue and peak around 2040. The CER says Canada’s major crude oil pipeline projects currently under construction will be able to accommodate expected future production growth over the next two decades.
Crude oil production is forecast under the Evolving Scenario to grow from 4.9 million barrels per day (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 is forecast to increase from 15.7 billion cubic feet per day (Bcf/d) in 2019 to its peak of 18.4 Bcf/d in 2040. This growth is driven by increasing LNG exports, which rise 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 is forecast to increase by 45 per cent from 2019 to 2050 under the Evolving Scenario. 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.
The Reference Energy System Scenario forecasts relatively unchanged fossil fuel consumption due to steady improvements in energy efficiency which offset population growth and rising industrial output, particularly in the oil sands.
Also, significantly higher assumed crude oil prices, greater volumes of assumed LNG exports, moderately higher natural gas prices, and a lack of additional domestic climate policies beyond those currently in place drive higher future production for both crude oil and natural gas. Natural gas plays a larger role in the electricity mix while renewable and nuclear generation account for 81 per cent of generation, which is the same share as today.
Electricity’s share of end-use demand grows more slowly and reaches 20 per cent in 2050, when 20 per cent of passenger vehicles sold are EVs. Renewable generation also grows in the Reference Scenario, although at a slower pace.
The CER argues that to achieve net-zero greenhouse gases (GHG) emissions in Canada within the next 30 years, stronger policies and greater adoption of low-carbon technologies will be required. Canadian and international efforts to reduce GHG emissions will be a critical factor in how energy systems evolve in the long term.
The COVID-19 pandemic is impacting Canada’s energy system. Canada’s post-COVID economic recovery is a significant unknown facing the energy sector for the near-term, and one of many uncertainties for the long term.
Energy use in 2020 dropped by six per cent due to the pandemic. Crude oil production fell by seven per cent, or 335,000 barrels per day, compared to 2019.