One of the highlights of the report is that in the coming decades, Canadian energy use and economic growth will continue to decouple. Economic growth is forecast to increase relatively faster than energy use in Canada. iStock/Getty Images photo.
Canadian energy efficiency expected to improve even as economy grows
While speaking to the Toronto Region Board of Trade, National Energy Board (NEB) Chair and CEO Peter Watson released the regulator’s report on the outlook for Canadian energy.
Canada’s Energy Future 2018: Energy Supply and Demand Projections to 2040 explores how possible Canadian energy futures may unfold over the long term. The NEB says its energy analysts use economic and energy models to make their projections.
“The increasing pace of change in energy markets and climate policy development suggest that the need for up-to-date analysis on energy trends is greater than ever,” said Watson.
According to the report, even though Canadian crude oil is selling at high-price discounts, oil and natural gas production are expected to grow from current levels in the coming 20 years.
Oil output is forecast to increase by 58 per cent and natural gas production is expected to rise by 33 per cent over the next 20 years. The Alberta oil sands is expected to lead the way with production rising from 2.8 million barrels per day (b/d) in 2017 to 4.5 million b/d by 2040. LNG exports and rising natural gas prices will fuel an increase in natural gas production to 20.9 Bcf/d by 2040.
“We believe that currently there are three fundamental trends that provide the groundwork for the projections,” Watson wrote in his introduction to the report.
“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.”
Improved technology to reduce emissions will help oil and gas production remain competitive in this changing environment.
“Canada’s energy future will depend on how the country can remain competitive in a global context,” said Jean-Denis Charlebois, chief economist at the NEB. “Technological innovation is key.”
Along with growing oil and gas output, the NEB says there will be significant growth in renewable sources of energy and will continue to play a large role in Canada’s electricity generation mix in the next two decades. Total Canadian electricity generation increases by over 78 TW.h from 2017 to 2040, an increase of about 12 per cent.
Wind capacity is forecast to double and solar to nearly triple over the projection period. By 2040, the share of non-emitting electricity generation increases to nearly 84 per cent in the Reference Case and 90 per cent in the Technology Case, compared to approximately 80 per cent currently.
The Reference Case, which is based on a current economic outlook, a moderate view of energy prices, and includes climate and energy policies similar to those announced at the time of analysis. The Technology Case explores what Canada’s energy future might look like with greater climate policy ambition, innovation and technology adoption.
In a scenario with greater adoption of new energy technologies, the NEB says Canadians will use over 15 per cent less total energy and 30 per cent less fossil fuels by 2040.
Improvements in energy efficiency will enable Canadians to use less energy, even as the economy grows. Canada’s energy demand growth is slowing while sources to meet these demands are becoming less carbon intensive.
The NEB report says sources to meet Canada’s energy demand will become less carbon intensive, with more natural gas and less coal and oil products used in the future.
One of the highlights of the report is that Canadian energy use and economic growth will continue to decouple. Economic growth is forecast to increase relatively faster than energy use in Canada.
Finally, in the Reference Case, energy use per dollar of GDP is nearly 30 per cent lower than current levels by 2040, while energy use per person is nearly 15 per cent lower than current levels by 2040.
“The Energy Futures reports are the flagship publication of the NEB’s Energy System Information Program,” writes Watson.
“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.”