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Executive Summary

Overview and Background

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.

Energy Futures continues to evolve to meet Canadians’ needs

This first Energy Futures report from the Canada Energy Regulator includes an update to the baseline Reference Case projection and a new look and feel. Energy Futures data is accessible in many different platforms including interactive data tables, machine readable files on OpenGov, and as part of online learning tools. See the Access and Explore Energy Futures Data section to access various data sets and tools.

For the 2020 report, we will produce meaningful and useful scenario and sensitivity cases, as well as extend the projection period beyond 2040. Any comments or views on what types of analysis you would like to see in future CER Energy Futures reports can be sent to: energyfutures@cer-rec.gc.ca

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Key Findings

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).

Figure ES1 Energy per Person and Energy per $ GDPFigure ES1
Description

This figure illustrates how energy use per person and energy use per dollar of GDP has changed since 2005. Energy use per person is expected to decline by 16% by 2040, while energy use per dollar of GDP is expected to decline by 29%.

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).

Figure ES2 Total Primary Energy Use in Canada by Fuel Type, 2017 vs 2040Figure ES2
Description

This chart compares primary energy use in 2017 to 2040, by fuel. Other renewables’ share of total energy use increases from 7% in 2017, to 8% in 2040, or an increase from 916 petajoules in 2017 to 1080 by 2040.

Nuclear electricity’s share of total energy use decreases from 8% in 2017, to 7% in 2040, or a decrease from 1056 petajoules in 2017 to 1003 by 2040. Hydroelectricity’s share of total energy use increases from 10% in 2017, to 11% in 2040, or an increase from 1407 petajoules in 2017 to 1581 by 2040.

Coal’s share of total energy use decreases from 5% in 2017, to 1% in 2040, or a decrease from 738 petajoules in 2017 to 167 by 2040. Oil products’ share of total energy use decreases from 35% in 2017, to 32% in 2040, or a decrease from 4739 petajoules in 2017 to 4482 by 2040. Lastly, Natural gas’s share of total energy use increases from 35% in 2017, to 40% in 2040, or an increase from 4670 petajoules in 2017 to 5645 by 2040.

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:

  • Infrastructure developments: In the short term, EF2019 assumes that major pipeline projects proceed in line with announced in-service dates. This reduces constraints on take away capacity for both oil and natural gas. As a result, Canadian benchmark prices for crude oil (such as Western Canadian Select (WCS)) and natural gas (such as Nova Inventory Transfer (NIT)) improve relative to international prices.

  • Liquefied natural gas (LNG) exports: Potential for LNG exports is an important driver of natural gas production. EF2019 includes growing levels of LNG export volumes from British Columbia (B.C.) over the projection period. Large scale LNG exports begin in 2024, rising to 3.7 billion cubic feet per day (Bcf/d) by 2040.

  • Policy: Alberta’s crude oil production curtailment policy is scheduled to continue through 2020. Based on the infrastructure assumptions, in EF2019 the policy does not continue beyond what is currently planned.

  • Long-term increasing prices: For crude oil, global oil prices increase to 2018 US$75 per barrel (US$/bbl) in the long term. North American natural gas prices increase steadily to 2018 US$4.00 per million British thermal units (US$/MMBtu). These price assumptions are based on consensus views from other agencies, as well as CER analysis. Many factors could influence future price trends. These include use of new technologies, and the impact of climate change policies around the world on long-term oil and natural gas demand.

Figure ES3 Crude Oil Production by TypeFigure ES3
Description

This chart shows crude oil production by type from 2005 to 2040 with the historical data through 2018 and forecast through 2040. Oil sands in situ production grows from 1.6 Mb/d in 2018 to 2.7 Mb/d in 2040. Oil Sands mining grows from 1.5Mb/d in 2018 to 1.7 Mb/d in 2040. Other production grows from 1.7 Mb/d in 2018 to 2.7 Mb/d in 2040.

Figure ES4 Natural Gas Production by TypeFigure ES4
Description

This graph shows natural gas production by type from 2005 to 2040 in the Reference Case. Total production in 2005 was 17.2 Bcf/d, with tight and shale gas production at 4.7 Bcf/d. In 2040 total gas production increases to 21.4 Bcf/d in 2040, with tight and shale gas making up the majority of production at 18.0 Bcf/d.

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[1], 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).

Figure ES5 Current and Announced Crude Oil Export Pipeline Capacity vs. Projected Crude Oil Supply Available For ExportFigure ES5
Description

This chart shows the current and announced crude oil export pipeline capacity versus the projected crude oil supply available for export. Existing pipeline capacity grows from 2.9 MMb/d in 2010 to 4.3 MMb/d in 2040. Announced pipeline capacity additions grow from 0 MMb/d in 2010 to 1.7 MMb/d in 2040. Crude oil exports by rail grow from 0 MMb/d in 2010 to 0.4 MMb/d in 2040. Crude oil available for export grows from 2.2 MMb/d to 6.2 MMb/d by 2040.

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%.

Figure ES6 Electricity Generation by FuelFigure ES6
Description

This graph shows total electricity generation by fuel type from 2005 to 2040. In 2005 total generation was 595.4 TW.h and this increases to 737.1 TW.h in 2040. The biggest fuel type is hydro and makes up 439.5 TW.h of generation in 2040.

Figure ES7 Installed Capacity of Wind and SolarFigure ES7
Description

This chart shows total non-hydro renewable capacity. Solar capacity increases from 2.9 GW in 2018 to 6.0 GW by 2040, wind capacity increases from 13.0 GW in 2018 to 23.8 GW by 2040, and Biomass capacity increases from 2.5 GW in 2017 to 3.2 GW by 2040.

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[2], 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.

Figure ES8 EF2019 Fossil Fuel Use Projections by Fuel vs. Total Fossil Fuel Use Projections from Past Energy Futures ReportsFigure ES8
Description

This chart breaks down EF2019 fossil fuel demand projections by fuel, and compares them to past total fossil fuel demand projections from prior Energy Future’s reports. Coal demand declines from 1292PJ in 2005 to 167PJ in 2040. Oil demand declines from 4777PJ in 2005 to 4482PJ in 2040. Natural gas demand increases from 3628PJ in 2005 to 5645PJ in 2040. Relative to prior EF projections, EF2019 total fossil fuel demand is projected to be lower throughout the forecast period.

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  • [1] Additional details on project timing and assumptions can be found in the main report.
  • [2] Under the Paris Agreement Canada has committed to an economy-wide target to reduce GHG emissions to 30% below 2005 levels by 2030.
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