It’s a nightmare story for provinces like Alberta and Saskatchewan that rely on fossil fuels to power their economies and keep the lights on..That’s because Canada’s Energy Regulator released its long awaited “pathways” to net-zero report — euphemistically titled Canada’s Energy Future: 2023 — that outlines steps the country would need to take to achieve what even its chief economist admits is “a very challenging and ambitious goal.”.The goal of the document was not to make recommendations; rather its authors say its purpose is to inform future policy steps that will be needed to reach net-zero under a range of scenarios.. Energy mixOil and gas — in green — under the CER’s net-zero scenarios. .Regardless, any achievable net zero scenario sees a 22% decrease in all forms of energy use by 2050, and even more — on the order of 65% — for fossil fuels such as oil and natural gas. Electricity will make up 41% of total end use energy consumption in the same period..The report was commissioned by Natural Resources Minister Jonathan Wilkinson and took 18 months to complete. The numbers are accurate as of March 31..On a technical briefing with with reporters, Jean-Denis Charlebois, the CER’s chief economist, said achieving net-zero emissions will require “significant contributions” from all sectors of the economy, but especially from the transportation and oil and gas sectors. .“While the way we use energy in our daily lives wouldn’t change much in a net-zero world, the fuels and technologies that power our energy system will undergo a significant shift, with widespread electrification and less reliance on fossil fuels,” he said..“The extent of the transformation would be substantial from the energy system we have today.” . Oil price scenariosOil price assumptions for net zero. .The report presents three scenarios: ‘Global Net-Zero’, ‘Canada Net-Zero’, and ’Current Measures,’ or business as usual. Each scenario differs based on the pace of climate action in Canada and globally, with two specifically designed to achieve net-zero greenhouse gas (GHG) emissions in Canada by 2050..It makes for grim reading, in Alberta at least..The report assumes greenhouse gas emissions from the oil and gas sector will fall 90% from 189 megatonnes (MT) in 2021 to 17 MT in 2050, assuming higher carbon taxes and an emissions cap..Under the CER modelling, oil production falls to 1.2 million barrels per day (bpd) by 2050, 76% lower than in 2022. Oil sands takes the biggest hit, falling to 1.59 million bpd in 2040 and just 580,000 bpd in 2050, or 83% lower than in 2022.. Oil sands forecastCER says oil sands production would have to fall 85% to meet net-zero targets. .Natural gas doesn’t fare much better; production falls 68%, reaching 5.9 billion cubic feet per day by 2050, even with widespread adoption of technologies such as carbon capture and storage. .Even LNG exports — which have been touted as the savior of Alberta’s natural gas industry — aren’t immune, reaching 2 Bcf/d by 2029, and then dropping to .3 Bcf/d by 2046 in response to falling LNG demand globally. .“While the economics of Canadian LNG were examined, these are assumptions, not results from the modelling,” it said. Charlesbois also admitted there had been no accounting for LNG exports to offset international emissions, in China for example..While hydrogen use increases, it barely tips the needle. The report sees it mainly as a niche fuel for heavy transportation..Those numbers are based on a carbon tax of $170 per tonne. And, in fact, Charlesbois strongly suggested those same carbon taxes will have to be dramatically increased to account for inflation..Charlesbois stressed the study results “are not predictions about the future nor are they policy recommendations.” Rather, they are the product of scenarios based on a specific premise and set of assumptions — namely that Canada achieves net zero by 2050..According to Charlesbois, the main takeaway is Canada “is on the path to net zero” but more — presumably restrictive — policies will have to be implemented as circumstances and technologies change..Immediately after the release of the report, Natural Resources Minister Jonathan Wilkinson issued a statement praising its findings. .“As the world accelerates climate action, Canada faces a choice: we can either lead in seizing the historic economic opportunities associated with building a global net-zero economy, or we can let them pass us by, with all the attendant consequences of being a late mover,” he said..Industry groups, however, panned the basic premise of the report — namely that energy consumption will drop 20% under any scenario. .Shannon Joseph, chair of the Energy for a Secure Future LNG advocacy group, said the numbers don’t add up after factoring the government’s stated goals for higher levels of immigration, manufacturing and mining those rare Earth minerals needed to make the energy transition possible..Notwithstanding that other countries will need clean sources of energy — Canadian natural gas as but one — to meet their own climate goals..”I don’t see how energy demand decreases,” she said. “Given the government’s stated goals, the assumptions implicit in the report, the math doesn’t seem to work.”
