Canada’s fossil fuel consumption may have peaked, with renew Canada’s energy regulator says the country’s domestic fossil fuel consumption will have peaked in 2019 if the world continues along its trajectory of increased action on climate change.
The modelling in Canada Energy Regulator’s (CER) Energy Future 2020 report, released Tuesday, projects a 12-per-cent drop from 2019 oil and gas consumption levels by 2030, and a 35 per cent fall by 2050. At the same time, it expects renewables and nuclear energy use will grow by 31 per cent by 2050.
If, however, global action to reduce greenhouse emissions does not develop beyond measures currently in place, it projects that fossil fuel consumption will remain relatively unchanged. In that scenario, it expects the crude benchmark price to average US$75 a barrel between 2025 and 2050, compared with US$57 if there is a growing global shift towards more emissions reduction measures and greener energy.
The CER report emphasizes that its numbers are projections - not predictions - and depend on a wide range of macroeconomic factors and assumptions, including global policy choices around climate change.
It lays out two scenarios – evolving, in the case of increased climate action, and reference, which is business as usual. The costs of renewable energies drop significantly under both.
Although the evolving scenario has Canada consuming fewer fossil fuels, that’s not reflected in oil production, which the CER projects will increase steadily until peaking in 2039 at 5.8 million barrels per day. That growth will be largely due to expansions of existing in situ oil sands projects.
Natural gas production is also expected to increase, peaking at 18.4 billion cubic feet per day by 2040.
Even as fossil fuel consumption declines in the face of increased action on climate change, oil and gas are still set to comprise more than 60 per cent of Canada’s fuel mix in 2050, according to the report.
“Achieving net-zero GHG emissions by 2050 will require an accelerated pace of transition away from fossil fuels,” it notes.
The reference scenario, on the other hand, shows increased future production for both crude oil and natural gas, due to significantly higher oil prices and liquid natural gas exports.
Either way, major crude oil pipeline projects under construction – including Keystone XL, Trans Mountain and the Enbridge Line 3 replacement - will be able to accommodate all future oil production growth in both scenarios, the report notes.Enbridge Inc. said late Monday that the Energy U.S. Army Corps of Engineers announced approvals for the last remaining federal permits for the company’s planned Line 3 crude oil pipeline replacement across northern Minnesota, bringing the project a step closer to construction.The CER also notes an economy-wide carbon price would reach $75 per tonne in 2040 and $125 per tonne in 2050 under the evolving scenario – a projection sure to capture the attention of provinces like Ontario and Alberta, which are fighting the federal government in court over the current carbon tax