As a large, wealthy nation with diverse climates, long distances between our major cities, and a growing population, you may correctly guess that Canada uses quite a lot of energy. We are already the sixth-leading energy producer in the world — and we’re going to need to make more.
The Canadian population is poised to grow rapidly over the next two decades, reaching approximately 50 million by 2040, according to high-growth projections. In the same timeframe, the Canadian economy will also experience economic growth at an average annual rate of approximately 1.6 per cent. Although the pace of demand growth is projected to slow somewhat, we will still see a multifaceted challenge: increased energy needs, met by shifting energy sources, with lower emissions.
Population and GDP growth projections
More consumption, less carbon
In tandem with rapid population and GDP growth, total energy usage is expected to increase by five per cent by 2040, with the majority of the demand arising from the commercial and industrial sectors. While the projected increase may seem modest at first blush, that five per cent represents of tens of billions of kilowatt hours (kWh) of electric energy per year, over and above what we’re already producing.
At the same time, Canada’s energy supply will transition to lower carbon and more sustainable sources. We will consume more energy from natural gas and renewables, and less from coal and refined petroleum products. This change in the supply mix used for power generation contributes significantly to the shift to low carbon energy supply.
Projected supply mix, total energy use (Canada)
Hydro-powered generation is currently the dominant source for electricity, with a 55 per cent share in 2016. It will likely continue to maintain this position over the next two decades. Coal-fired generation will almost disappear from the map, falling dramatically from its seven per cent share in 2016. The shift to cleaner electric energy sources will be in natural gas and renewables. Natural gas generation will grow from 15 per cent to 21 per cent, and renewable sources from 12 per cent to 19 per cent share.
While natural gas is a cleaner option compared to oil, Alberta’s oil sands have also become less carbon intensive. From 2000 to 2016, the greenhouse gas emissions intensity of Alberta’s oil sands operations dropped by approximately 29 per cent due to technological and efficiency improvements, among other factors.
The future of oil
So how might these supply mix shifts impact our existing industries? With Canada’s vast supply of natural resources and a thriving oil and gas sector, experts are confident the industry will remain a vital part of the future energy mix. To date, the western Canada energy sector has met energy demand for the largest economic drivers in the east. In 2017, it supplied the majority of Ontario’s refinery demand for crude oil. Since 2015, the west has supplied crude oil to Montreal via the Enbridge Line 9 pipeline. The west also supplies liquid natural gas and crude oil across Canada and North America.
The oil and gas industry is already preparing for a lower-carbon future. Based on projections around the “evolving transition” scenario — that is, projections which assumes that policies, technology and social preferences evolve similarly to their current trajectory — global energy demand is likely to grow by about one-third by 2040. Oil and gas will certainly have a role to play in meeting that demand both in Canada and abroad, while working to cut down on carbon emissions.
Western Canada also has the reserves to power demand growth for generations to come. Canada’s oil reserves total more than 170 billion barrels, of which 164 billion barrels can be recovered from the oil sands using today's technology. The potential for unconventional petroleum in the Montney Formation, a geographic formation in Alberta and British Columbia, is estimated to have 449 Trillion cubic feet (Tcf) of marketable natural gas, 14,521 million barrels of marketable natural gas liquids (NGLs), and 1,125 million barrels of marketable oil. A nearby formation, the Duvernay Shale, contains 3.4 billion barrels of marketable light oil and field condensate and marketable gas resources equivalent to nearly 25 years of Canada’s annual consumption.
A balanced approach
As Canada’s supply mix continues to shift, supported by a rich resources landscape and unified commitment to cleaner production, we will be among the global leaders in clean power. Abundant hydro power, along with displacing coal generation with renewable generation, have already significantly contributed to reducing emissions in Canada. This will likely continue well into the future.
However, one challenge is that the energy sector requires significant capital to invest in rehabilitating aging infrastructure as well as in serving the market growth. With carbon regulations in northeast U.S., there is a marked need for clean power — and Canada has significant opportunity to gain from enhancing exports of power from clean-energy sources.
With the current energy transition, Canada needs to pursue a balanced approach: both developing our natural resources and investing in renewable technologies. Energy resources, as well as the energy infrastructure that delivers these products, are essential to the quality of life and economic prosperity that Canadians enjoy, both today and in the future.