Energy Future 2023 shows global transformation will require reckoning for Canada’s energy system

Today’s publication of Canada’s Energy Future 2023 brings Canada closer to catching up with the rest of the world on energy modelling aligned with a climate-safe future – and begins to challenge the country’s rampant blind spots around the future of oil and gas.

This report marks the first time the Canada Energy Regulator (CER) has modelled an energy scenario aligned with the Paris Agreement commitment to limit global temperature rise to 1.5°C, following the lead and based on the assumptions of the International Energy Agency (IEA)’s 2021 Net Zero by 2050 report. It’s a major step forward for the independent agency that will influence Canadian investment and policy decisions for years to come. This Global Net-Zero scenario is included alongside two others: a Canada Net-Zero scenario, which assumes a slower pace of global action, and a Current Measures scenario, which does not account for planned or new future climate policies.

“The Canada Energy Regulator today acknowledges a simple fact for the first time ever: the world has started moving to net-zero, and as a result, global demand for Canadian oil and gas will inevitably decline,” said Caroline Brouillette, Executive Director of Climate Action Network Canada. “With this acknowledgement must come a robust conversation – across government, across the political spectrum, and across jurisdictions – about planning to diversify Canada’s economy to seize the opportunity of the transition, and provide certainty to people and communities.”

• The Global Net-Zero scenario shows Canadian oil production peaking in 2026, and gas production already peaking this year. The recent IPCC AR6 report and the IEA’s Net Zero Roadmap have highlighted that no new investments in or expansion of oil, gas and coal are compatible with limiting warming to 1.5°C. Canada must urgently cap oil and gas emissions to align the sector’s trajectory with climate safety.

• In all three scenarios, the CER shows that Canada’s available pipeline capacity widely surpasses the crude oil Canada would export as a result of market forces. This underscores that Canada must cease expanding production and building new oil and gas infrastructure, which are already at risk of becoming stranded assets.

• All scenarios rely on varying amounts of Carbon Capture, Utilization and Storage (CCUS), fossil-based hydrogen, and Small Modular Reactors – technological solutions which are expensive, unproven, and dangerous to depend on.

• The report highlights that a 100% clean electricity grid is central to Canada reaching net-zero: with electricity demand expected to double by 2050, it is crucial that the Clean Electricity Regulations currently in development be as ambitious and stringent as possible and exclude loopholes for gas production.

• The report shows that new climate policies beyond currently announced and planned measures are needed for Canada to reach net-zero. Existing policies would bring only a 13% decline in Canada’s emissions from 2021 levels by 2050, highlighting the urgent need for the suite of policies promised by this government – and more –  to be implemented.

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