CER projections see Canada’s use of fossil fuels fall by 2050

News Release
For Immediate Release

December 9, 2021 – Canada Energy Regulator

Canada is on track for a significant reduction in fossil fuel use by 2050, according to a new energy outlook from the Canada Energy Regulator (CER). Canada's Energy Future 2021: Energy Supply and Demand Projections to 2050 (EF2021) projects fossil fuel use, without carbon capture and storage technology, falling by 62 per cent in the next 30 years if Canada and the world continue the current pace of increasing action to reduce greenhouse gas (GHG) emissions. The same projection sees Canadians reducing their overall energy consumption by 21 per cent over the same period.

EF2021 explores how new technologies and climate policy will impact Canadian energy consumption and production trends over the next 30 years. The two main scenarios in the report play out differently depending on the degree of action to reduce GHG emissions.

The report shows that electricity will play a more significant role in satisfying energy needs. There is a nearly 45 per cent increase in electricity use to offset the decline in fossil fuel use. Low-cost wind and solar power provide much of the additional electricity needed to meet new demand over the projection period. Natural gas generation for electricity increasingly includes carbon capture and storage. By 2050, low and non-emitting electricity generation rises to 95 per cent from 82 per cent in 2021.

For the first time, EF2021 introduces six new scenarios to explore what Canada's electricity system might look like in a net-zero world. Electricity will be an essential contributor on Canada's path to reach net-zero. In these scenarios, the emissions from the electricity sector drop dramatically, with battery storage playing a significant role alongside immense growth in wind and solar. The report projects Canadian power systems to remain distinct across the country, even in a net-zero future.

Despite relatively low prices and more ambitious climate policies in the report’s main Evolving Policies Scenario, Canadian crude oil production levels are resilient to 2050. Production in 2050 is only slightly below today's levels. These levels largely stem from the nature of oil sands facilities, which are long-lived and have low operating costs once built. Production projections suggest the pipeline system out of Western Canada would still be nearly at capacity into the mid-2030s.

While Canadians will use less fossil fuels as Canada’s energy system decarbonizes, fossil fuel demand remains in 2050. Achieving net-zero will likely require greater long-term change than shown in the Evolving Policies Scenario.

The CER produces neutral and fact-based energy analysis to inform the energy conversation in Canada. This long-term Canadian energy supply and demand outlook covers all energy commodities and Canadian provinces and territories and makes projections using economic and energy models.

Report highlights

Results from the Evolving Policies Scenario

  • Energy use in Canada falls 21% from 2021 to 2050 as energy efficiency improves.
  • Fossil fuel use (without carbon capture and storage) falls 19% by 2030, 45% to 2040, and 62% to 2050.
  • Low and non-emitting electricity generation make up 82% of total generation in 2021, rising to 88% by 2030, 94% by 2040, and 95% by 2050.
  • Despite total energy use falling, electricity demand grows 44% from 2021 to 2050 (or by about 245 terrawatt-hours (TWh)), much of it from new areas such as electric vehicles and hydrogen production.
  • Natural gas production remains relatively stable through much of the projection period before declining gradually to reach 13.1 Bcf/d by 2050, 17% lower than current levels.
  • Nearly 40% of Canadian natural gas production is liquefied and exported to global markets by 2050.
  • Crude oil production growth will slow in the next 10 years, peaking to 5.8 MMb/d in 2032 and declining slowly thereafter to reach 4.8 MMb/d in 2050.
  • Total Canadian fossil fuel use declines over 40% from 2021 to 2050. However, projections differ across the various fossil fuels, and the resulting GHG emissions are increasingly captured and stored.
  • Over the longer term, although natural gas remains an important part of Canada’s energy mix, total demand declines from around 13 Bcf/d in 2021 to 8.5 Bcf/d in 2050.
  • Total Canadian use of refined petroleum products and natural gas liquids falls by 43% by 2050, led by declines in gasoline and diesel fuel demand.
  • Coal drops to less than 1% of Canada’s energy mix by 2035, compared to 5% in 2019.

Results from the Current Policies Scenario

  • Moderate growth in Canadian energy use over the projection period is due to the lack of additional climate action beyond current policies, and the resulting higher crude oil and natural gas production, and less electrification.
  • Significantly higher assumed crude oil prices, greater volumes of assumed LNG exports, moderately higher natural gas prices, and a lack of additional domestic climate policies beyond those currently in place drive higher future production for both crude oil and natural gas.
  • Crude oil production peaks at 6.7 MMb/d in 2044. Natural gas production continues increasing in the longer term, reaching 22.2 Bcf/d by 2050.
  • Wind and solar generation also increases, but to a lesser degree than the Evolving Policies Scenario. The share of low and non-emitting electricity increases marginally to 83% by 2050, compared to 95% in the Evolving Policies Scenario.

Results from the Net-Zero Electricity Scenarios

  • Wind, solar, and battery storage dominate electric capacity additions in all six net-zero electricity scenarios, making up between 82-85% of added capacity.
  • With rising levels of wind and solar, all scenarios require flexible generation sources to balance supply and demand. There are large differences in the types and capacities of flexible generation sources adopted among scenarios.
  • In each net-zero electricity scenario, the ten provinces meet their electricity demands in diverse ways, with widely varying mixes of hydro, nuclear, fossil fuel with carbon capture and storage, wind, solar, hydrogen, and biomass with carbon capture and storage.

Quotes

"The CER is evolving our Energy Futures series to meet the changing needs of Canadians. We are focused on providing timely and relevant information about our energy system in an engaging and transparent way. I hope this report sparks a conversation on Canadian energy."

Gitane De Silva
Chief Executive Officer
Canada Energy Regulator

“Global and Canadian efforts to reduce GHG emissions will be a critical factor in how our energy systems evolve in the long term. Advances in clean technology and evolving government policies will be the difference-makers.”

Darren Christie
Chief Economist
Canada Energy Regulator

Associated Links

The Canada Energy Regulator (CER) works to keep energy moving safely across the country. We review energy development projects and share energy information, all while enforcing some of the strictest safety and environmental standards in the world. To find out how the CER is working for you visit us online or connect on social media.

Contacts

Karen Ryhorchuk
Communications Officer
Canada Energy Regulator
Email: media@cer-rec.gc.ca
Telephone: 403-671-9756
Telephone: 403-292-4800
Telephone (toll free): 1-800-899-1265
Facsimile: 403-292-5503
Facsimile (toll free): 1-877-288-8803

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