Canada’s National Energy Board has cut its projection of global oil prices in 2020 from US$80 to $68 per barrel, and foresees less Canadian fossil production over the longer term due to lower global prices and tougher environmental regulations.
While the Board still expects oil prices to reach US$90 in 2040—well below the $107 it projected in January—“the lower prices are expected to translate to lower long-term production for Canada, where costs are comparatively high,” the National Observer reports.
The embattled NEB reported its conclusions earlier this week without factoring in some key developments: the recently-announced federal floor price on carbon, a blockbuster Oil Change International study on the limited atmospheric space for future fossil development, and the even more recent report from the normally staid International Energy Agency (IEA), which is now projecting a 42% increase in global renewable energy capacity between 2015 and 2021.
“We’re in a time of so much considerable change when it comes to climate policy, which is very influential when it comes to energy markets,” said NEB Chief Economist Shelley Milutinovic, explaining why Prime Minister Justin Trudeau’s landmark carbon pricing announcement came too late to be reflected in the analysis. “It’s a very fast-moving target.”
Yet another influence the NEB pricing missed: Late last week, Environment and Climate Minister Catherine McKenna told media she expected to release a package of climate initiatives, possibly including home energy efficiency and electric vehicle incentives, before federal and provincial first ministers meet December 9 to finalize a pan-Canadian climate plan. “Whether it’s through creating incentives for Canadians to have more energy-efficient homes or on the electric vehicle side, I think there’s some real opportunities to not only tackle climate change but to grow our economy,” she said.
At the international level, meanwhile, some analysts are interpreting this week’s IEA report as something of a correction for the same kind of blinkered projections for which the NEB has gained a solid reputation. “Although the IEA aims to provide its 29 member nations impartial advice, it’s been criticized for publishing conservative estimates that failed to predict the rapid growth of wind and solar farms as a source of electricity,” Bloomberg reported earlier this month.
“IEA said its latest revision was driven in part by [renewable technology] cost,” adds Greentech Media’s Julia Pyper. “However, policy shifts were the primary reason for the IEA’s new projection. The U.S. alone represents nearly half of the forecast revision thanks to the extension of federal tax credits for solar and wind,” and “the IEA’s outlook is also more optimistic due to higher renewables targets set under China’s 13th five-year economic plan.”