Introduction

Canada’s Energy Future 2023: Energy Supply and Demand Projections to 2050 (EF2023) is the latest long-term energy outlook from the Canada Energy Regulator (CER). The Canada’s Energy Future series explores how possible energy futures might unfold for Canadians over the long term. We use economic and energy models to explore how supply and demand for energy could evolve. EF2023 is the CER’s first long-term outlook that models scenarios where Canada reaches net-zero greenhouse gas (GHG) emissions by 2050. To model net-zero we begin with the end goal in mind—net-zero GHG emissions in 2050—and use our models to identify pathways to that point. This is a different approach compared to past versions of the report where we ran our models without restrictions, giving us insights into what a given premise meant for the future.

EF2023 includes three scenarios, two that reach net-zero by 2050

EF2023 contains three scenarios. Two of these scenarios explore pathways where Canada achieves net-zero emissions by 2050. In the Global Net-zero Scenario, we assume Canada achieves net-zero emissions by 2050. We also assume the rest of the world reduces emissions enough to limit global warming to 1.5 Celsius (°C). In the Canada Net-zero Scenario, Canada also achieves net-zero emissions by 2050 but the rest of the world moves more slowly to reduce GHG emissions. The third scenario, the Current Measures Scenario, assumes limited action to reduce GHG emissions beyond measures in place today. In this scenario, we do not require our modeling results achieve net-zero GHG emissions in Canada by 2050. We also assume limited future global climate action.

Five “What if” cases explore uncertainties on the path to net-zero

In addition to the three main scenarios in EF2023, you will find five cases in this report that ask: “What if?” There are many uncertainties on the pathway to net-zero. These cases explore some of them by changing some key assumptions in EF2023 and showing what it could mean for Canada’s pathway to net-zero:

• What if the technologies to enable wide-scale adoption of hydrogen are more or less costly?
• What if small modular reactor (SMR)^Definition* technology matures less quickly and is more costly?
• What if direct air capture (DAC)^Definition* technology matures more quickly and is less costly?
• What if carbon capture, utilization, and storage (CCUS)^Definition* technology does not mature as quickly and is more costly?
• What if electricity vehicle charging patterns result in higher peak electricity demand?

We have been working to improve our analytical tools over the past several years to ensure we are up to the challenge of modeling net-zero. In late 2021, the Honourable Jonathan Wilkinson, Minister of Natural Resources and the Minister responsible for the CER, wrote a letter to the Chairperson of the CER’s Board of Directors, Cassie Doyle. The letter requested that the CER undertake scenario analysis consistent with Canada achieving net-zero emissions^Footnote 1 by 2050 as soon as possible. Minister Wilkinson requested that the analysis:

• Include fully modelled scenarios of supply and demand for all energy commodities in Canada.
• Be consistent with a global context in which the world achieves its Paris Accord goal of limiting warming to 1.5°C.
• Consider relevant uncertainties, including future trends in low-carbon technology and energy markets.

In her response, Chairperson Doyle welcomed the clarity provided by the Minister’s letter and confirmed the next Canada’s Energy Future report will include net-zero scenarios.

Consultation and collaboration have always been key to the Canada’s Energy Future series. We sought advice and feedback from various experts throughout the process, with the goal of validating our approach, assumptions, and preliminary results to ensure EF2023 was technically robust and credible.

Federal departments, particularly Natural Resources Canada and Environment and Climate Change Canada, played an important role in supporting the EF2023 analysis. While the CER is ultimately accountable for the content of EF2023, both organizations supported our efforts by contributing substantial technical expertise to the analysis. This collaboration ensured we had the best possible information about the latest technologies and climate policy developments. The CER would like to thank both organizations for their steadfast support in this endeavor.

We also sought advice from some of the top experts outside of government, both in Canada and internationally. Conversations with experts from organizations like the International Energy Agency, Canadian Climate Institute, and Institut de l’énergie Trottier were instrumental to ensuring our approach was sound. We deeply appreciate their advice.

The CER would also like to thank the many experts who responded to a technical discussion paper and survey on our preliminary approach in the Spring of 2022. This early feedback on our project was important in setting the direction of our work. A summary of that engagement is on our website: Discussion Paper Results – A Summary of What we Heard.

The Scope of EF2023

The projections in EF2023 are based primarily on economic and technical factors. This includes economic activity, relevant policies, technology performance and costs, energy costs, and the characteristics of various energy devices. Our models simulate the decision-making of households and businesses based on those factors, which differ in each of our scenarios.

The future of energy in Canada is, however, much broader than the economic and technical factors driving the projections in EF2023. Many of these are beyond the scope of our analysis. These include evolving societal preferences, regulatory frameworks and decisions, socioeconomic and affordability considerations, and the interaction between the energy transition and Canada's journey towards Reconciliation.

An example would be the choices our model makes regarding the type of power generating facilities that might be built to meet growing electricity demand in a given year. Our model simulates what technology is likely to be chosen based on: the upfront costs of various options, future fuel costs, the impact on grid stability, and any relevant policy considerations, such as carbon pricing.

Given our assumptions, the model might suggest that building a wind farm, for example, is the optimal outcome. However, the process to build such a facility would also depend on additional factors like the results of regulatory decision-making and societal viewpoints towards the project. We look at these factors in a general sense to assess if our projections are reasonable, but these factors are not easily accounted for within our energy models or study design, and largely fall outside the scope of EF2023.

Another aspect of Canada’s energy future outside the scope of EF2023 is how climate change will impact the economy and energy system. Many of the impacts of climate change on Canada today are described in Canada’s National Adaptation Strategy. These impacts include more frequent and intense weather events, such as floods and heat waves, and more gradual impacts such as permafrost thaw and coastal erosion. According to the United Nations International Panel on Climate Change, global surface temperatures are very likely to increase until at least 2050. This increase suggests that the impacts of climate change on the energy system and economy will increase over the projection period. Our models do not currently account for the wide range of climate impacts on the energy system and economy.

We base the projections in EF2023 on several important assumptions, which we outline in the Scenarios and Assumptions chapter. The Results chapter describes our projections of the Canadian energy system to 2050 for each of the three scenarios. Finally, the Access and Explore Energy Futures Data chapter links to data, tools, and interactive data visualizations that offer further insight into EF2023.

Date modified:

2023-11-24