Federal Energy Modelling Ignores Net-Zero Target, Locks In High-Carbon Investments, Analysts Warn

One of the key federal agencies responsible for charting Canada’s energy future is under fire for failing to include a full net-zero scenario in its latest annual modelling report released last week.

In Canada’s Energy Future 2021, the Canada Energy Regulator (CER) projected the country’s oil and gas production growing steadily to 5.8 million barrels per day in 2032, before falling off slowly to 4.8 million barrels per day in 2050, just a bit below today’s levels, The Canadian Press reported last week. Now, CBC says, outside analysts are pointing out the CER report included no roadmap to meet Canada’s legislated climate target and contribute to the global goal of holding average global warming to 1.5°C.

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“We have seen horrifying floods in B.C., wildfires throughout the summer, an extremely difficult season of drought for Canadian farmers—we are already experiencing the impacts of climate change,” said International Institute for Sustainable Development policy advisor Vanessa Corkal. “This report does not provide the information that helps us deal with and prevent those types of climate disasters.”

Julia Levin, senior program manager at Environmental Defence Canada, said the absence of net-zero modelling in the CER’s work leaves Canadian governments and businesses without the data to drive their own planning and decision-making.

“When you have a report that assumes Canada won’t even meet its own existing climate targets, and then that leads to a lock-in of decisions, that will make it more difficult for us to meet our climate targets,” she said. “There’s a bit of a self-fulfilling prophecy.”

Natural Resources Minister Jonathan Wilkinson appeared to echo the call for the CER to get with the program. In a series of tweets, he thanked the regulator for adding to a “growing body of knowledge on the clean energy transition”, before commenting that “going forward, I have asked the CER to look into how they could provide even more data in line with Canada achieving net-zero emissions by 2050.”

Levin and Corkal both pointed to analysis over the last seven months by 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. The big takeaway from the first of the two reports: “Beyond projects already committed as of 2021, there are no new oil and gas fields approved for development in our pathway, and no new coal mines or mine extensions are required.”

“It’s not a model result,” analyst Dave Jones of the clean energy think tank Ember told Bloomberg Green at the time. “It’s a call to action.”

“Big Oil and Gas has just lost a very powerful shield!” agreed Oil Change International Senior Campaigner David Tong.

But that shield is still alive and well for Canadian fossil companies, with the CER putting off a complete net-zero analysis for at least another year.

“With the assumptions of increasing policy action in the coming years, where the increase is at a pace like what we’ve seen in recent years, we see a lot of change,” CER chief economist Darren Christie told CBC. “But it’s not enough change, in all likelihood, to get us to net zero in 2050.”

Rather than publishing a report that sets its own assumptions about future oil and gas extraction, Christie added that “international demand for crude oil is a significant factor in the production of Canadian crude oil. And we talk in the report about the fact that future global demand is a key uncertainty when we think of what the production of Canadian oil could be.”

The need to take charge of those numbers apparently didn’t bother the IEA, which was formed in 1974 to protect the interests of countries at the heart of the fossil fuel economy. It took years of pressure, much of it led by Washington, DC-based Oil Change International, but the IEA finally embraced a net-zero pathway this past May—and Canada played an important behind-the-scenes role in prodding the agency in that direction, The Energy Mix reported exclusively at the time.

With that shift, “the IEA has shown us that this is something governments should be doing, and it really was disappointing that this year’s [CER] energy future failed to do what the IEA has done,” Levin told CBC this week.

“Canada needs to catch up to that analysis if we’re going to have a competitive Canadian economy that thrives in a net-zero economy and one that avoids climate disaster,” Corkal agreed. “We need to have data that’s granular and detailed enough at the domestic level to help Canadian businesses and investors plan.”

The CER is already laying the groundwork for next year’s report, and the shape of its net-zero analysis is “central to that conversation,” Christie told CBC. But the Calgary-based agency has been saying that for at least a couple of months, with iPolitics reporting in October that next year’s edition of Canada’s Energy Future will include net-zero modelling.

“We will be planning the details for the next iteration of Energy Futures this fall,” CER spokesperson Rebecca Taylor said at the time. It’s still not known whether the CER will put a net-zero scenario at the centre of next year’s report, or treat it as a secondary pathway, as the IEA did for many years—triggering billions or trillions in fossil investment by institutions that never read past the top-line results.

Long before last week’s release, the CER’s slow response had already raised serious flags with the country’s low-carbon modelling and analysis community.

“Essentially, you have the federal government saying we’re going to reduce emissions to net-zero by mid-century, and you have its main forecasting outfit issuing a forecast that says we’re going to keep using lots of oil and gas and producing lots of emissions through mid-century,” University of Ottawa public policy professor Nicholas Rivers told iPolitics in October. “So the forecast isn’t lined up” with the government’s stated policy objectives.

“Without that scenario, there’s a critical data gap, and we aren’t able to confront just how rapid some of that transition (must be),” IISD’s Corkal said at the time. “If we’re investing in things that (are) super-risky, that doesn’t set us up for economic prosperity in the long term.”

In May, two policy analysts at the University of Waterloo said the fossil fuels Canada still planned to extract at the time added up to 16% of the world’s remaining carbon budget. Based on last year’s version of the Canada’s Energy Future report, said political science professor Angela Carter and PhD candidate Truzaar Dordi, the CER saw fossil fuel output peaking only in 2039, and Canada producing more oil and gas in 2050 than it did in 2019.

“Canada’s anticipated oil and gas production doesn’t align with any kind of serious climate policy,” Carter told The Mix. “The two are at loggerheads. On one hand, we say we’ll be climate leaders, and on the other, we want to expand oil and gas production for nearly 20 years and produce more oil and gas in 2050 than we did before COVID. This is one of Canada’s fundamental dilemmas.”

“Based on that, of course, fossil fuel companies have permission to keep expanding oil and gas production, and the level of production will be supported by the federal government through technologies like hydrogen and carbon capture and storage (CCS),” Dordi added. “It also legitimizes status quo business plans that don’t necessarily align with the low-carbon transition.”