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Letter from the Chair and CEO of the National Energy Board

I am pleased to introduce the 2018 edition of the National Energy Board’s (NEB) Energy Futures series. Canada’s Energy Future 2018: Energy Supply and Demand Projections to 2040 (EF2018) carries on the tradition of energy outlooks that the NEB has been producing for over 50 years. EF2018 is the only publicly available long-term Canadian outlook that provides data and analysis on all energy commodities and all provinces and territories. This report provides Canadians a key reference point for discussing the country’s energy future.

The pace of change in Canadian and global energy markets, policy, and technology trends suggests that the need for timely analysis is greater than ever. Over the course of preparing this report, there were numerous significant market and policy developments:

  • In oil markets, higher than usual price discounts between Canadian and global benchmarks returned, and global crude benchmark prices reached their highest levels since 2014.
  • On the natural gas side, a positive final investment decision on the LNG Canada liquefied natural gas export project was announced.
  • On the policy front, there were numerous policy developments at the provincial level, mostly in relation to future carbon pricing.
  • The renegotiation of NAFTA was finalized and the United States-Mexico-Canada Agreement (USMCA) was ratified.

One thing is for sure: the energy landscape will continue to change.

In this environment of change, how do we go about creating a meaningful long-term projection? We believe that currently there are three fundamental trends that provide the groundwork for the projections. First, continuous improvement in energy efficiency causes energy use and economic growth to further decouple. Second, falling costs of renewables such as wind and solar, leading to a more diverse energy mix. Third, the oil and gas sector has the ability to respond and remain competitive under challenging market conditions.

The day-to-day volatility of energy market prices, market sentiments, and policy direction are important. At the same time, the impacts of these dynamic factors on the energy outlook will be shaped by these long-term, fundamental trends.

Our Reference Case reflects the robustness of some key trends from previous energy outlooks.

EF2018 also focuses on several key uncertainties that have been significant in 2018. Energy prices have varied significantly, and our High Price and Low Price cases show large potential variation across these cases for oil and gas production. Our Technology Case explores the potential impacts of increased adoption of lower carbon technologies and strengthened climate policies across the world on the Canadian energy system.

A thread that runs through all of the analysis is the existence of numerous challenges and opportunities, and the necessity for market players to innovate to successfully navigate this new environment. This report highlights numerous technological advancements, such as falling costs of renewables and improved efficiency of energy production and consumption. Innovation will also be important in policy design, market-based rules and regulations for incorporating new technologies, ways of communicating and engaging with stakeholders in energy matters, and sharing and improving Canadian energy information and analysis.

The Energy Futures reports are the flagship publication of the NEB’s Energy System Information Program. The objective of the program is to publish products that are beneficial and informative for a diverse audience, and that reflect the diversity of relevant energy issues in Canada. We strive to increase the public’s energy literacy in an engaging and transparent way. The NEB endeavors to play a leading role, along with other Government institutions, in providing Canadian energy data and analysis, and we are making great strides in that direction. Our Energy Futures reports are an example of providing fact-based data and analysis on the conversion, transportation, distribution, and consumption of energy products that serve the needs of Canadians, as well as what the future of energy might hold. These reports aim to provide a baseline for Canadians to have an informed discussion on current energy issues and policies.

I would like to thank the many stakeholders who engaged in helpful discussions on the future of energy in Canada during the creation of this report. This includes our federal government partners, provincial governments, and other energy experts across Canada. We have also benefitted greatly from discussions and collaboration with international experts from groups including the International Energy Agency, the U.S. Energy Information Administration, and participants of the Energy Modeling Forum.

We are proud of the contributions that EF2018 has provided to the Canadian energy conversation and we encourage Canadians to stay engaged in the energy dialogue.

 

C. Peter Watson, P. Eng., FCAE
Chair and CEO
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