The Canada Energy Regulator’s First 1.5˚C Scenario Is an Important Milestone

June 20, 2023

On Tuesday, the Canada Energy Regulator (CER) released its flagship report: Canada’s Energy Future. For the first time, it contains an ambitious climate scenario aligned with limiting global warming to 1.5˚C, though its optimistic view of carbon capture and storage (CCS) is out of step with accepted science.  

The scenarios contained in the annual Canada’s Energy Futures reports are widely used to guide investment decisions in the energy sector and provide plausible trajectories for Canada’s energy system. The scenarios include the anticipated production and use of oil, natural gas, hydrogen, and electricity. 

Two of the three scenarios in this year’s report model how Canada can reach its official goal of net-zero emissions by 2050. Of those two models, one shows global climate action limiting warming to 1.5˚C. 

“This is a significant milestone for the Government of Canada,” says Nichole Dusyk, Senior Policy Advisor, IISD. “This is the first time we’ve seen official modelling that marries 1.5˚C with reaching Canada’s net-zero goal by 2050. And as can be expected with any scenario that models ambitious global action to limit climate change, it shows declining Canadian oil and gas production.”   

“The CER scenarios confirm that limiting catastrophic climate change, for Canadians and the world, means sharply declining global demand for oil and gas. This is reflected in declining production in Canada.” 

In the most ambitious scenario in the report, crude oil production peaks in 2026 and declines 76% between 2022 and 2050. However, both net-zero scenarios are heavily dependent on CCS.  

Previous IISD analysis has shown that all major 1.5˚C scenarios with feasible amounts of CCS see global oil and gas production declining by at least 65% by 2050 and confirm the International Energy Agency’s conclusion that there is no room for new oil and projects if the world is to limit warming to 1.5˚C. However, the CER’s 1.5˚C scenario is not consistent with this position and makes room for the continued expansion of liquified natural gas production and export.  

While the scenarios in Canada’s Energy Future illustrate the scale of transformation required for Canada’s energy system, assumptions around the potential for CCS in the fossil fuel industry are overly optimistic.  

“Over-reliance on CCS means even the most ambitious CER scenario—with oil production falling to 1.22 million barrels per day in 2050 and new LNG facilities becoming uneconomic—paints a rosy picture of the future of the Canadian industry. Future CER modelling needs to limit the use of carbon removal and storage to levels that are considered feasible by the scientific community.” 

Statement details