Canada’s Energy Future 2019: Energy Supply and Demand Projections to 2040 (EF2019) is the first long-term energy outlook from the Canada Energy Regulator (CER). Like many activities of the CER, it builds on the 60 year history of the National Energy Board. The National Energy Board began releasing long-term projections in 1967.
The Energy Futures series explores how possible energy futures might unfold for Canadians over the long term. We use economic and energy models to make these projections. We also make assumptions about technology, energy and climate policies, human behaviour and the economy.
EF2019 provides an update to the baseline projection in the Energy Futures series, the Reference Case. The Reference Case is based on a current economic outlook, a moderate view of energy prices and technological improvements, and climate and energy policies announced and sufficiently detailed for modeling at the time of analysis. The Reference Case is based on several important assumptions and caveats. Please see the Assumptions section for more details.
1. Energy use grows slowly in the next 20 years. The mix of energy sources that Canadians use continues to change.
Canadian energy use grows slowly in the outlook. This is due to many factors, including improving energy efficiency. From 2018 to 2040, energy use increases by less than 5%. Over the same time, Canada’s population increases over 20%. The size of economy (measured as gross domestic product) increases over 40%. This means that energy use per person and per dollar of economic activity falls (See Figure ES1).
The types of energy that meet Canadians’ needs are also changing. Canadians use more natural gas and renewable energy, and less oil and coal (See Figure ES2).
2. Oil and natural gas production grows steadily over the projection period. Assumptions on short-term infrastructure developments and long-term energy prices underlie this growth.
Production of crude oil and natural gas increases in the outlook period. From 2018 to 2040, crude oil production grows by nearly 50%, to around seven million barrels per day (See Figure ES3). Natural gas increases by over 30%, to over 20 billion cubic feet per day (See Figure ES4). Almost all of this growth comes from sources that were a small portion of production just a decade ago. In situ oil sands production leads crude oil growth. Natural gas production is led by growth from tight and shale resources.
Projections are based on underlying assumptions about the future. These include:
A key issue in Canada’s energy system is the availability of crude oil export pipeline and rail capacity. This has implications for Canadian oil pricing and production trends. The EF2019 projections suggest that if announced pipeline projects proceed as planned, along with continued volumes of crude by rail, there would be adequate takeaway capacity to accommodate production growth over the next 20 years (See Figure ES5).
3. Technologies enabling Canada’s transition to a low carbon economy make inroads across the energy system.
New technologies are a key factor behind slow growth in energy use and the rising share of renewable energy. In recent years, costs for wind and solar power have fallen. In 2005, wind and solar made up 0.2% of Canada’s total generation. Combined they now make up 5%, and that share grows to nearly 10% by 2040 (See Figure ES6). Over the outlook period, installed capacity of wind nearly doubles, while solar more than doubles (See Figure ES7). This depends on many factors, including costs of wind and solar power continuing to fall. EF2019 assumes that the cost of wind power falls by 20% and solar by 40% from 2018 to 2040.
Increasing use of renewables makes Canada’s energy mix even more diverse. The wind and solar additions also help increase the already high share of non-emitting electricity generation. By 2040, the share of renewable and nuclear generation increases to 83% from 81%.
4. Canada is making progress in transitioning towards a low carbon future.
EF2019 includes programs and policies currently in place. These programs and policies have influenced Canada’s fossil fuel use trajectory. Comparing fossil fuel use levels in past Energy Futures projections shows this change in trend (See Figure ES8). Those projections saw significant growth in fossil fuel demand under the Reference Case assumptions. In the EF2019 Reference Case, fossil fuel demand growth is limited. It is also led by natural gas, which has the lowest GHG emission intensity. Coal use, which has higher GHG emissions, declines over the outlook period.
In order to meet Canada’s climate commitments, policy measures are being developed beyond those included in the Reference Case. This includes those planned as part of the Pan-Canadian Framework on Clean Growth and Climate Change, and various emerging provincial and territorial initiatives. As new and in-development measures become law, they will impact trends in Canada’s energy system and future Reference Case projections.