For the first time, Canada’s national energy regulator has looked at how oil and gas production will change in a net-zero world, where countries hit their climate goals — and it shows a future without much demand for Canadian fossil fuels.
In its widely read annual report on the country’s energy future, the Canada Energy Regulator (CER) modelled scenarios where the world and Canada successfully head toward net-zero carbon emissions by 2050, which is seen as key to limiting global warming to 1.5 C above pre-industrial levels — the goal of the international Paris Agreement.
The regulator found that in such scenarios, oil and gas production in Canada would start declining as early as 2026, because of falling oil prices and demand, as the rest of the world turns toward cleaner energy sources.
“We can’t ignore what’s happening internationally, and betting on failure internationally is an economically risky thing to do for Canada,” said Dale Beugin, executive vice-president at the Canadian Climate Institute, a climate policy think-tank in Ottawa.
Suncor equipment is shown at their oilsands facilities in Alberta. Canadian oil production will peak in a net-zero emissions future, according to analysis from the Canada Energy Regulator, but exactly when that happens depends on how fast other countries cut their emissions. (Jason Franson/The Canadian Press)
Global prices drive Canadian oil exports
The projections come at a particularly lucrative time for the industry; the five largest companies that operate in Canada’s oilsands made about $35 billion in profits in 2022.
But the models should be a warning for many oil and gas companies, climate experts say, calling into question the future of fossil fuel use and production in Canada.
On the other hand, the analysis spells out a dramatically expanded role for cleaner energy in Canada’s future, from sources like hydro, wind, nuclear and hydrogen.
“The rate of international decarbonization — the rate at which the rest of the world takes seriously climate change and reduces its emissions, maybe very quickly — has really big implications for demand for the exports of Canadian oil and gas,” Beugin said.
“And the biggest threat to the oil and gas sector in Canada isn’t domestic climate policy. It is actually market conditions over the longer term.”
A aerial view of the Trans Mountain marine terminal in Burnaby, B.C., which serves as a distribution point for crude and refined oil. ( Jonathan Hayward/The Canadian Press)
Exactly when oil and gas production peaks depends on how far other countries go in their efforts to slash greenhouse gas emissions, according to the CER. It modelled two net-zero emissions scenarios: one where global emissions head to net-zero by 2050, and one where the world doesn’t act as fast, but Canada still heads to net-zero for its own emissions by 2050.
Canada’s oil production starts declining by 2026 in the global scenario and by 2029 for the Canada-only scenario, with similar results for gas.
Beugin stressed that these were projections based on different scenarios, and not predictions of what was going to happen.
But the projections could still influence decisions on expanding oil production and investing in carbon capture technologies, which would capture the industry’s carbon emissions and keep them out of the atmosphere.
Choosing where to invest
The report shows that “we need to be careful, especially where public money is dedicated. We need to ensure that it goes to projects that are going to be competitive in the long term,” said Jan Gorski, director of the oil and gas program at the Pembina Institute, an energy think-tank.
“And not every project will be competitive. Some of those projects will likely come offline as oil demand declines, but some will be competitive and will stick around.”
The Quest carbon capture and storage facility in Fort Saskatchewan, Alta. Quest is designed to capture and store more than one million tonnes of CO2 each year. (Jason Franson/The Canadian Press)
The CER’s analysis also looked at how much carbon Canada’s oil and gas industry would have to capture during production. In the global net-zero scenario, the industry would need to capture about 22.5 megatonnes of CO2 per year by 2036.
By the end of 2022, Alberta had the capacity to capture around three megatonnes of CO2 every year, although this could increase if several proposed carbon capture projects go ahead.
That depends on more help from the government, according to Mark Cameron, vice-president of external relations at Pathways Alliance, the oilsands industry group.
Cameron says globally, in places like Norway or the U.S, public investment in carbon capture pays for much more of a project’s costs than in Canada.
“We need more fiscal certainty,” he said.
The need for more public support has been disputed by some. The federal government’s tax credit for carbon capture projects is expected to cost about $1.5 billion a year.
Cameron also said he doubts the CER’s global net-zero emissions scenario will come to fruition, or that demand for Canadian oil will slow so soon.
“The global net-zero scenario implies a very aggressive collective action on reducing emissions, which, right now, we’re not seeing things moving that quickly. Last year, we actually saw oil demand hit a record level in 2022,” he said,
“And we’re still seeing the Chinese economy rebounding from COVID and so on. So we don’t think that we’re seeing peak oil demand as early as 2026.”
Much more clean electricity
The CER’s scenarios show electricity use increasing to power all the electric cars, building heating systems and other clean technologies that will replace fossil fuels in the lives of Canadians. And that new electricity will come from cleaner sources — with wind energy growing nearly seven to nine times its current levels by 2050.
A wind plant in Nova Scotia. The role of wind power, which is one of the cheapest sources of energy, is set to dramatically expand in a net-zero emissions future. (Andrew Vaughan/The Canadian Press)
That’s not surprising for Binnu Jeyakumar, director of the electricity program at the Pembina Institute.
“The reason models do this is because wind is the cheapest source of electricity, so it makes sense to build a lot of wind,” she said.
That’s because wind plants have become much less expensive to build and install and, unlike other power sources like gas plants, they don’t consume any fuel — an advantage it shares with solar energy.
“By 2030, you’ll get to a place where new wind and solar will be cheaper than existing gas power plants. So that’s how fast the economics are changing for clean energy,” Jeyakumar said.
EDMONTON – RCMP say a second suspect has been arrested in the killing of an Alberta county worker.
Mounties say 28-year-old Elijah Strawberry was taken into custody Friday at a house on O’Chiese First Nation.
Colin Hough, a worker with Rocky View County, was shot and killed while on the job on a rural road east of Calgary on Aug. 6.
Another man who worked for Fortis Alberta was shot and wounded, and RCMP said the suspects fled in a Rocky View County work truck.
Police later arrested Arthur Wayne Penner, 35, and charged him with first-degree murder and attempted murder, and a warrant was issued for Strawberry’s arrest.
RCMP also said there was a $10,000 reward for information leading to the arrest of Strawberry, describing him as armed and dangerous.
Chief Supt. Roberta McKale, told a news conference in Edmonton that officers had received tips and information over the last few weeks.
“I don’t know of many members that when were stopped, fuelling up our vehicles, we weren’t keeping an eye out, looking for him,” she said.
But officers had been investigating other cases when they found Strawberry.
“Our investigators were in O’Chiese First Nation at a residence on another matter and the major crimes unit was there working another file and ended up locating him hiding in the residence,” McKale said.
While an investigation is still underway, RCMP say they’re confident both suspects in the case are in police custody.
This report by The Canadian Press was first published Sept. 13, 2024.
RICHMOND, B.C. – The Integrated Homicide Investigation Team says the 26-year-old son of a man found dead on British Columbia’s Sunshine Coast has been charged with his murder.
Police say 58-year-old Henry Doyle was found badly injured on a forest service road in Egmont last September and died of his injuries.
The homicide team took over when the BC Coroners Service said the man’s death was suspicious.
It says in a statement that the BC Prosecution Service has approved one count of first-degree murder against the man’s son, Jackson Doyle.
Police say the accused will remain in custody until at least his next court appearance.
The homicide team says investigators remained committed to solving the case with the help of the community of Egmont, the RCMP on the Sunshine Coast and in Richmond, and the Vancouver Police Department.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, have broken off without an agreement following 15 hours of talks.
Joe McCann, president of Amalgamated Transit Union Local 1724, says they stayed at the bargaining table with help from a mediator until 2 a.m. Friday and made “some progress.”
However, he says the union negotiators didn’t get an offer that they could recommend to the membership.
McCann says that in some ways they are close to an agreement, but in other areas they are “miles apart.”
About 600 employees of the door-to-door transit service for people who can’t navigate the conventional transit system have been on strike since last week, pausing service for all but essential medical trips.
McCann asks HandyDART users to be “patient,” since they are trying to get not only a fair contract for workers but also a better service for customers.
He says it’s unclear when the talks will resume, but he hopes next week at the latest.
The employer, Transdev, didn’t reply to an interview request before publication.
This report by The Canadian Press was first published Sept. 13, 2024.
