Energy Regulator Projects Rising Oil Output through 2032, ‘Sets Canada Up for Climate Failure’

The Canada Energy Regulator (CER) is setting Canada up for climate failure with a report that projects increasing oil and gas production through 2032, relies overwhelmingly on unproven carbon capture technologies, and runs counter to decarbonization analysis and commitments from international agencies, the recent COP 26 climate summit, and the latest federal Speech from the Throne, according to climate policy and campaign groups responding to the report.

The report, released last Thursday, predicted unabated fossil fuel use (meaning fossil fuel combustion without carbon capture and sequestration) will decline 62% by 2050, The Canadian Press reports. But it also foresees total production rising to a peak of 5.8 million barrels per day in 2032, before declining slowly to 4.8 million barrels per day in 2050, only slightly below today’s levels.

The report says that’s because of the nature of Canada’s tar sands/oil sands facilities, which it says are long-lived and have low operating costs once built. [Especially if you ignore the cost of cleaning up 1.3 trillion litres of toxic mine tailings and abandoned wells that could cost up to C$260 billion to remediate—Ed.] The projections suggest the pipeline system out of Western Canada would still be nearly at capacity into the mid-2030s.

Climate Action Network-Canada said the CER modelled net-zero scenarios for the first time—but only for the electricity sector, not fossil fuels. And all the scenarios in the report are missing essential information on the greenhouse gas emissions that would result.

That means the scenarios in the CER report “are setting Canada up for climate failure,” CAN-Rac said in a release. And the “continued failure to confront the reality of the climate crisis” puts the CER “out of step with the International Energy Agency (IEA), which released a Net Zero by 2050 roadmap last May and included net-zero modelling in its fall World Energy Outlook 2021. In contrast to the CER that continues to model growth in Canadian oil and gas production, the IEA models scenarios that assume global oil demand has already peaked, and for global gas demand to peak by the mid-2020s.”

“Canada can’t implement a whole-of-government approach to the climate crisis if hard-won progress is undermined by a government agency’s continued production scenarios that ignore the science and Ottawa’s own climate commitments,” said CAN-Rac National Policy Manager Caroline Brouillette. “Canada needs a map towards a climate-safe future at the front and centre of its energy scenarios. Status quo modelling only sets us on a path to climate disaster.”

“In 30 years, if our oil production is at the same level it is today, we’re in serious trouble,” said Dale Marshall, national climate program manager with Environmental Defence Canada. “Because Canada is a high-cost, high-carbon oil producer, and if Canada is at the same level of production it’s at today, then that means other sources of oil will be even more so. And we’ll be cooked. That’s climate catastrophe.”

“The most ambitious scenario in Canada’s Energy Future 2021 assumes climate catastrophe and an economy unprepared for the global energy transition,” said Pembina Institute Senior Analyst Nichole Dusyk. “As Canadians experience the devastating impacts of climate change, it simply cannot be overstated how important it is for CER modelling to present scenarios that assume Canada and the world act to limit global warming to 1.5°. A roadmap to net-zero is essential to creating effective climate policies, such as the planned emissions cap for the oil and gas sector.”

Dusyk urged Natural Resources Minister Jonathan Wilkinson to “direct the CER to model energy pathways consistent with achieving net zero emissions to ensure that Canada has the necessary information to make policy and investment decisions that lead to a sustainable energy future.”

CP says the forecast is based on the regulator’s assumption that the current pace of increasing efforts to reduce greenhouse gas emissions in Canada and around the world will continue.

The CER also laid out a business-as-usual scenario that looked at energy demand in the event that there is no new climate action beyond current policies. It would see crude oil production peak at 6.7 million barrels per day in 2044.

Marshall said he was disappointed by how “pessimistic” the CER was in its forecast. Even its scenario that assumes an acceleration of climate policy efforts in years to come makes it clear that net-zero by 2050 targets are unlikely to be met.

“Their plan doesn’t even show Canada achieving its Paris climate commitments,” Marshall said. “I think the projections are unrealistic and overly pessimistic, in terms of what we might be seeing in climate action in Canada and around the world.”

But Ben Brunnen, chief economist for the Canadian Association of Petroleum Producers, maintained the CER overshot the mark when forecasting a decline in Canadian oil production by 2050. He said CAPP believes Canadian oil and gas producers have the capacity to invest in technologies that will allow them to meet more stringent policies around emission reduction, while still increasing production to meet global demand.

“Beyond 2035, there are so many variables that it creates pretty substantial uncertainty. But our expectation is we would not see as significant decline as what CER is anticipating,” Brunnen said. “I would actually expect that the Canadian oil and gas industry would potentially have a more favourable growth profile, compared to what CER is indicating.”

The Canada Energy Regulator also took its first look at what Canada’s electricity system might look like in a net-zero world, CP says. In these scenarios, emissions from the electricity sector drop dramatically, with battery storage playing a significant role alongside immense growth in wind and solar.

The main body of this report was first published by The Canadian Press on December 9, 2021.