ARCHIVED – Discussion Paper Results – A Summary of What we Heard

On this page:

• Introduction
• Who we heard from
• What we heard
• Closing and next steps

Canada’s Energy Future, including Net-Zero Analysis: Approach and Scenarios Discussion Paper

Introduction

A key publication of the Canada Energy Regulator (CER) is Canada’s Energy Future. Canada’s Energy Future is a series of reports that explore possible energy futures for Canadians over the long term. It uses economic and energy models to make projections about how the future might unfold, while making assumptions about certain trends, including climate policies, technology, and consumer behaviour. The next version of the Canada’s Energy Future report (EF2023) will be the first to include modeling consistent with Canada’s commitment to achieve net-zero^Definition* emissions by 2050.

On 24 May 2022, the CER released a Discussion Paper along with survey questions. The paper, targeted to external experts, described potential options the CER is considering related to the modeling, methodology, and assumptions for EF2023. The survey contained technical and non-technical questions designed to receive feedback on our approach.

The objective of this targeted engagement activity was to inform about the EF2023 net-zero modeling work, and to obtain feedback on our proposed methods and assumptions. The commentary period lasted one month, and your answers helped the CER gain:

• High-level feedback on the proposed modeling approach and preliminary assumptions;
• Insights about alternative modeling scenarios that are of interest to Canadians; and
• Other inputs that could enhance the content of the report, such as on energy technologies.

We are striving for transparency in our net-zero modeling efforts. This transparency includes summarizing and publishing what we heard from the Discussion Paper survey. The names of individual or group respondents will remain confidential.

Who we heard from

The CER received 61 responses from academia, environmental non-governmental organizations (ENGOs) and institutes, government, industry and industry associations, and others.

What we heard

Many respondents appreciated the opportunity to provide input and were supportive of the CER developing net-zero scenarios for EF2023. Aside from input specific to energy modeling, responders provided important insights on a wide range of energy technologies, infrastructure projects, and climate policies.

We’ve also heard there is significant enthusiasm for the CER to broaden the scope of EF2023 to investigate how different net-zero pathways could impact Canadians. The feedback will help inform EF2023 and future CER analysis.

The following section summarizes key themes of what we heard from respondents. We are considering all the input we received and will carefully determine what will be integrated into EF2023, and how.

Scope of the net-zero analysis

The Discussion Paper described parameters that will set the scope of the CER’s net-zero analysis:

• Consistent with Canada achieving net-zero emissions by 2050.
• Fully modelled scenarios of supply and demand for all energy commodities in Canada.
• A global context in which the world achieves the Paris Agreement goal of limiting global warming to 1.5°C.
• Inclusion of relevant uncertainties, including future trends in low-carbon technology and energy markets.

We asked respondents to describe any other factors the CER should include (or exclude) in our net-zero analysis. Most respondents supported the parameters identified by the CER, and expressed interest in seeing EF2023 expand its scope of analysis to address more factors, such as:

• The socio-economic impacts of the transition towards a net-zero economy, such as employment and economic growth.
• The possible roadblocks to achieving net-zero, and potential solutions.
• The level of investment required to meet net-zero, and the possible impacts of climate change on the reliability and resiliency of energy systems.
• The inclusion of scope 1, 2, and 3 emissions (direct and indirect emissions), including in the context of Canadian energy exports.

Scenarios and assumptions

The Discussion Paper described our approach to developing net-zero scenarios, and how those scenarios will rely on various input assumptions. We sought feedback on several of these assumptions. For instance, the CER proposed relying on the International Energy Agency’s (IEA) Net Zero by 2050 report as a source for several international assumptions (such as crude oil and natural gas prices, cost of various energy technologies, and global economic growth). We asked respondents to provide input on this and other assumptions, and this is what we heard.

• Net-zero by 2050 should be the main scenario because it is the only one consistent with Canada’s commitment to net-zero by 2050. Some respondents also suggested the net-zero scenario should align with other national targets, such as the 2030 target of a 40-45% reduction in greenhouse gas (GHG) emissions relative to 2005.
• All assumptions should be clearly stated, along with some contextual information about their inclusion.
• Most respondents supported relying on the IEA’s Net Zero by 2050 scenario as the best choice for international assumptions, along with some caveats:
  • While the IEA is the leading authority on international energy systems modelling, alternatives exist. The CER should rationalize its reliance on the IEA’s assumptions.
  • Some respondents commented that the IEA has relatively low assumptions on oil and gas prices, and relies strongly on unproven or uncertain technologies, such as carbon capture and storage^Definition* technologies and energy storage.
  • The CER should be consistent with the IEA’s statement that “No new oil and natural gas fields are needed in the net-zero pathway.”
• Assumptions should reflect recent major geopolitical events and their potential long-term impacts on global energy systems.
• Assumptions should be region-specific (provinces and territories) to reflect the diversity of Canada’s energy systems.
• Potential resource constraints, such as for biomass, land use, critical minerals, labor, and others, should be considered.
• Negative emissions technologies should be constrained and limited to the hard-to-abate sectors to prevent the model from over-relying on them instead of other carbon abatement technologies.

Exploring uncertainty

The Discussion Paper described the importance of exploring uncertainties about Canada’s pathways to net-zero in EF2023. We asked respondents to identify key topics of uncertainty, and here are the main ones that were mentioned:

• Future role of clean technologies (hydrogen, small modular reactors, negative emissions technologies, renewables, etc.).
• Transition effort asymmetry: what if the rest of the world moves at a different speed than Canada towards net-zero, and fails to limit average global warming to 1.5°C?
• Future international demand and prices of oil and natural gas.
• Demand growth from developing economies (e.g., for liquefied natural gas).
• Behavioral changes in how Canadians use energy.
• Political, geopolitical, regulatory, and financial uncertainty.
• Cost and impact of climate change (such as floods and forest fires).
• Large-scale infrastructure developments (such as larger and deeper regional electric system integration).

Policy/initiatives modeling

The Discussion Paper describes the methodology we will use to model net-zero. We sought feedback on how EF2023 should consider policies that are established, under development, or proposed, as well as the evolution of climate policy in a net-zero world. We asked respondents how existing and future policies and regulations should be included in the modeling, and this is what we heard:

• Modeling should be made consistent with Canada’s Emissions Reduction Plan (ERP) and other announced policies, such as the Clean Electricity Regulations, the Zero Emissions Vehicle sales mandate, and more.
• Carbon pricing should be the main mechanism to model climate policy stringency beyond existing policies and plans. Carbon pricing could be a proxy for other, more speculative policies. The CER could also draw from proposed policy initiatives included in the IEA NZ by 2050 report, or from existing municipal or provincial policies in Canada or other jurisdictions.
• Policy assumptions should be consistent with Canada’s commitment to phase out inefficient fossil fuel subsidies by 2023.

Reflecting Indigenous interests

In the survey, we asked respondents how best to meaningfully engage with Indigenous Peoples to better understand how to reflect their point of view in the report. Here is what we heard:

• Respondents recognized that the best way to engage with Indigenous communities and to reflect their interests in EF2023 is by recognizing them as rights holders, and by asking them how we should engage with them. Some suggested doing so in a way that is consistent with the guide on Canada’s Partnership with Indigenous Peoples on Climate or with the guidelines set by the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP).
• Respondents noted that remote communities, many of which are mostly Indigenous, will be particularly vulnerable to the impacts of climate change. They possess significant knowledge that could be leveraged to determine potential future net-zero pathways.

Using EF2023

EF2023 will be the first Canada’s Energy Future report to fully model potential pathways towards a net-zero future by 2050 for Canada. We asked respondents how they expect to use this report. This is what we heard:

• The report will be a useful addition to national and regional dialogues on Canada’s transition towards a net-zero economy. EF2023 has the potential to advise climate policy development and inform investment decisions.
• It will also be useful for policy analysis, research, participation in government consultations, public outreach, and educational purposes.

Closing and next steps

Respondents overwhelmingly expressed support for the CER tackling energy modeling consistent with Canada’s net-zero by 2050 objective. There was widespread enthusiasm for the CER to develop net-zero pathways, based on transparent assumptions, to share with Canadians. We have also heard that the opportunity to engage on our preliminary assumptions and methodology is seen as an important step to ensure the transparency and legitimacy of the upcoming report.

We also noted that there is significant interest for this type of research to address complex questions, including those related to climate justice, economic shifts, reconciliation with Indigenous peoples, socioeconomic impacts, and financing. The Canada’s Energy Future series is primarily a technical and economic assessment of the energy outlook. EF2023 could be seen as a supporting piece for future research on such topics.

Date modified:

2023-11-24