Canada recently adopted a goal of achieving zero emissions by 2050 and raised its targets to reduce greenhouse gas emissions by 2030. It is currently committed to reducing its greenhouse gas emissions by 40–45 percent from 2005 levels by 2030.
The new goal is significant. In addition, the pursuit of carbon neutrality is fundamentally changing the approach Canada must take to achieve its goals.
This is shown in Canadian Energy Outlook 2021, a report we wrote in collaboration with Olivier Ban from Pôle e3c at HEC Montreal and ESMIA consultants. It presents the results of modeling various scenarios for the decarbonization of Canadian society.
This is the second edition Energy Outlook for Canada scenarios are presented with forecasts of the development of energy production and consumption, as well as all greenhouse gas emissions associated with human activities. It compares the transformation scenarios over the next 40 years using the most detailed hypotheses available about how technology will evolve.
Analysis has long shown that in order to reduce greenhouse gas emissions, Canada must transform its energy system, which accounts for more than 80% of its emissions. Regional diversity, the economic weight of the sector (accounting for 10.2 percent of GDP) and high per capita energy consumption (second only to Iceland in the OECD) exacerbate the challenges that Canada faces in undertaking this necessary transformation. …
To better understand these problems, Canadian Energy Outlook 2021 simulates and analyzes the evolution of the energy system of Canada until 2060 according to five scenarios. This is a reference scenario that includes all existing measures (REF), a scenario that adds the announced increase in the carbon price to $ 170 per tonne by 2030 (CP30), and three scenarios for achieving carbon neutrality by 2060. , 2050 and 2045 (NZ60, NZ50 and NZ45).
The 2050 carbon neutral scenario, which requires a 40 percent reduction in greenhouse gas emissions by 2030 from 2005, is in line with Canada’s new targets. The model uses optimal trajectories to achieve these goals while minimizing the required investment.
Transforming the Canadian Economy
Strictly speaking, these trajectories are not predictions – real investments are rarely optimized due to short-term calculations, technological biases, preference for an easy exit, political pressure, etc. important keys to developing effective decarbonization strategies that will be required to fundamentally transform the Canadian economy. in less than three decades.
The results of this exercise are too numerous to describe in detail, so we will limit ourselves to a few of them.
The goal of net zero changes everything… When we got to this new Energy Outlook for CanadaWe expected the more ambitious federal targets to be an adjustment to the 80 percent cut scenarios we looked at in 2018.
This was not the case. The challenge of carbon neutrality is a qualitative change in the nature of the problem. This is no longer the case when we have to settle for solutions that partially reduce emissions here and there, in the hope that the amount of reductions will lead us to the goal. Carbon neutrality requires that the chosen solution, where technically feasible, provide for zero emissions or removal of greenhouse gases. The problem of capturing and capturing greenhouse gases is such that they should only be used as a last resort.
This suggests that much less effort needs to be spent on improving the efficiency of fossil fuel technologies and more on green energy technologies. He rejects the concept of transient energy sources such as natural gas, which is incompatible with carbon neutrality.
Electricity will play a critical role in the transformation… This is not entirely new. All simulations and analyzes in recent years show that renewable electricity will make a key contribution to meeting emission reduction targets. The models predict that electricity production must increase 2.3 times to achieve carbon neutrality (1.4 in Quebec). Growth in renewable energy will be driven across Canada by wind power, while remaining coal and natural gas production will be largely eliminated.
New in this discovery is that the models predict relatively small amounts of biomass electricity associated with carbon capture (BECSC). Although it is more expensive to generate electricity from biomass than wind power, it can be used to reduce greenhouse gas emissions in sectors that are difficult to decarbonize, such as agriculture, industry and transportation.
Not all sectors are equal… The availability of low emission solutions is not the same across all sectors of the economy, which also perform differently. For example, while transport accounts for 30 percent of Canada’s greenhouse gas emissions, decarbonization of the sector has been particularly slow and difficult due to a lack of reliable solutions. This means that other sectors will have to step up their efforts to compensate for this.
In the short term, this will be the case in the oil and gas sector, which will need to reduce its emissions by more than 60 percent by 2030 to reach this first milestone, as well as in the industrial sector. The latter can react quickly with the help of governments. In the medium term, the construction sector will have to do the same. Heating technologies with low greenhouse gas emissions exist and are available. The challenge here is to transform millions of buildings. It takes time and clear vision.
The economic implications of the energy transition are uncertain in projections for the next 30 years. However, estimates of the net cost of massive electrification of Canada’s power mix show that Canadians can save more than $ 60 billion annually from 2050 by switching from oil and natural gas to renewable electricity.
The marked drop in low-carbon prices across all sectors is also reflected in the evolution of the marginal abatement cost curve from 2018 to 2021. The marginal abatement cost curve shows the highest cost per tonne of carbon dioxide to achieve a certain overall reduction in greenhouse gas emissions. The marginal cost of reducing emissions in Canada by 65 percent, presented here, is about a third of what was projected for 2018.
While uncertainty remains, it is clear that with huge global investment in low greenhouse gas technologies, prices will continue to fall and the transition will be even less costly than what is currently projected.
However, we still have a long way to go, as large-scale integration of these technologies requires a clear plan, investment in exploration and development, and consistent policies. Despite recent efforts by the federal and several provincial governments, the measures taken are still largely insufficient to meet the 2030 and 2050 targets.
Our simulations show that this is technically and economically feasible. What is still lacking is a solid, reliable, effective strategy and, above all, citizens, thinkers, business leaders and politicians who are convinced of the need and ability to act.