canada’s carbon conundrum - in1touchs...canada nfld ns pei nb qc on mb sk ab bc terr change in...

Canada’s Carbon Conundrum: Energy and growth in a climate-constrained world

J. David Hughes

Global Sustainability Research Inc.

October 29, 2020

Outline

- Carbon emissions in Canada and the World.

- The emissions reduction target for 1.5C warming.

- Canada’s current emissions by economic sector and province.

- Emissions projections given current oil and gas production forecasts.

- Government policy that guarantees targets will not be met.

- Trends in energy sector contributions to Canada’s economy.

- Realities of renewables and the way forward.

0

10

20

30

40

50

60

70

80

90

100

1850 1870 1890 1910 1930 1950 1970 1990 2010

% o

f 20

17 T

otal

Con

sum

ptio

n R

ate

Year

NuclearGasOilCoalHydro/renewablesWood

Total World Energy Consumption by Fuelas a Percentage of 2017 Levels,1850-2017

(data from Arnulf Grubler, 1998; BP Statistical Review of World Energy, 2018)© Hughes GSR Inc, 2019

55 times

1850-2017

86% N

on-Renew

able

COAL

OIL

HYDRO

GAS

0

10

20

30

40

50

60

70

80

90

100

1850 1890 1930 1970 2010

% o

f 20

17 T

otal

Con

sum

ptio

n R

ate

Year

NuclearGasOilCoalHydroWood

0

10

20

30

40

50

60

70

80

90

100

1850 1890 1930 1970 2010

% o

f 20

17 P

er C

apita

Con

sum

ptio

n

Year

NuclearGasOilCoalHydroWood

0

10

20

30

40

50

60

70

80

90

100

1850 1890 1930 1970 2010

% o

f 20

17 P

opul

atio

n

Year

World Population, Per Capita and Total EnergyConsumption, 1850-2017, as a Percentage of 2017 LevelsPopulation

(data from Arnulf Grubler, 1998; BP Statistical Review of World Energy, 2018; UN Population Bureau, 2019)© Hughes GSR Inc, 2019

Per Capita Consumption Total Consumption

6 times 9 times 55 times

86% N

on-Renew

able

GAS

COAL

OIL

HYDRO

COAL

OIL

WOOD

Oil33%

Gas24%

Coal27%

Nuclear4.4%

Hydro6.8%

0%

1%

2%

3%

4%

5%

1995 2000 2005 2010 2015

Perc

ent o

f Tot

al C

onsu

mpt

ion

Year

Waste/OtherBiofuelsBiomass/GeothermalSolarWind

Wind

(data from BP Statistical Review of World Energy, 2019)

Global Primary Energy Consumption by Source in 2018Comparison to Total Non-Hydro Renewable Energy

Renewable Energy by Source657 MTOE

© Hughes GSR Inc, 2019

Total Energy by Source in 201813865 MTOE

Renewables

4.7%

Large Hydro plus Renewables = 11.5%Total consumption has increased by 63% more since 2010

than all 2018 non-hydro renewables

84% of global energy provided by fossil fuel

0

100

200

300

400

500

600

700

Gig

ajou

les

per c

apita

in 2

018

Per capita primary energy consumption in 2018

(data from BP Statistical Review of World Energy 2019)© Hughes GSR Inc, 2019

OECD17% of world population2.4 times world average

3.4 times non-OECDNon-OECD

83% of world population0.7 times world average

0.3 times OECD

17% of World Population 83% of World PopulationCanada

5.1 times world average3.1 times Europe

17% of the World’spopulation consumes

3.4 times as much energy per capita as the other 83%

Emissions per capita by country in 2019

(BP Statisticall Review of World Energy 2020)© Hughes GSR Inc, 2020

World average

OECD 2.1 times worldaverage, 17% ofworld population

Non-OECD 0.8 times worldaverage, 83% ofworld population

Canada3.4 times world

average


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

1965 1971 1977 1983 1989 1995 2001 2007 2013 2019

Mill

ion

tonn

espe

r yea

r of C

arbo

n D

ioxi

deWorld carbon dioxide emissions from combustion of Oil, Gas and Coal, 1965-2019

Emissions havemore than tripled

since 1965

Up 205%


(IPCC Chapter 1 annex, October 2018)

IPCC Special Report on Global Warming of 1.5ºC

Higher Probabilityof attaining 1.5C

Lower Probabilityof attaining 1.5C


0

50

100

150

200

250

300

350

400

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Con

sum

ptio

n (M

illio

n To

nnes

Oil

Equi

vale

nt)

Year

RenewablesHydroNuclearCoalGasOil

Canada Energy Consumption by Fuel, 1965-2016

© Hughes GSR Inc, 2017 (BP Statistical Review, 2017; other renewables include wind, solar, biomass, geothermal and biofuels)

Oil +85%

183% Consumption Growth 1965-2016

Hydro +231%

Coal +21%

Gas +339%

Other Renewables

30%

27%

5.7%7%

27%

3.1%

Oil32%

Gas29%

Coal4.2%

Nuclear6.6%

Hydro25.4%

0%

1%

2%

3%

1995 2000 2005 2010 2015

Perc

ent o

f Tot

al C

onsu

mpt

ion

Year

Waste/OtherBiofuelsBiomass/GeothermalSolarWind

Wind


Canada Primary Energy Consumption by Source in 2018Comparison to Total Non-Hydro Renewable Energy

Renewable Energy by Source12 MTOE


Total Energy by Source in 2018344 MTOE

Renewables

3.4%

Waste/OtherLarge Hydro plus Renewables = 28.8%

Total consumption has increased by 68% more since 2010than all 2018 non-hydro renewables

65% of Canada’s energy provided by fossil fuel

0

100

200

300

400

500

600

700

800

1965 1971 1977 1983 1989 1995 2001 2007 2013 2019

Mill

ion

Tonn

esca

rbon

dio

xide

equ

ival

ent

Combustion emissions Other gases and sources


Canada emissions from combustion and other gases and sources, 1965-2019

Combustion emissions have

more than doubledsince 1965

Up 114%


Other gases and sourcesare flat since 1990

0

100

200

300

400

500

600

700

800

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Meg

aton

nes

per y

ear (

CO

2e)

Natural Gas Production and Processing Conventional Oil ProductionOil Sands (Mining, In-situ, Upgrading) Oil and Gas TransmissionDownstream Oil and Gas ELECTRICITYTRANSPORTATION HEAVY INDUSTRYBUILDINGS AGRICULTURE

Electricity

Transportation

Buildings

Heavy Industry

Oil Sands

Agriculture

Natural GasConventional Oil

Canadian Emissions by Economic Sector, 1990-2018

© Hughes GSR Inc, 2020 (data from Canada’s National Inventory Report 2020)

Oil and G

as Production 26%

Although Canada has committed to a 30% reduction from 2005 by 2030, emissions

were down emissions only 0.14% from 2005 in 2018

Change in Emissions by economic sector from 2005 to 2018 and 2017 to 2018

© Hughes GSR Inc, 2020 (data from Canada’s National Inventory Report 2020 https://unfccc.int/documents/224829)

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

NATIONALGHG TOTAL

Oil and Gas Electricity Transportation Heavy Industry Buildings Agriculture Waste & Others

Perc

enta

ge c

hang

e in

em

issi

ons

over

per

iod

2005-2018 2017-2018

No improvement from 2017-2018 except electricity which is mostly a

result of converting from coal to gas

https://unfccc.int/documents/224829

Emissions by Province and Economic Sector, 2018


0

50

100

150

200

250

300

NFLD NS PEI NB QC ON MB SK AB BC TERR

Emis

sion

s (M

egat

onne

s C

O2e

per

yea

r)

ELECTRICITY TRANSPORTATION HEAVY INDUSTRY BUILDINGS AGRICULTURE WASTE OTHER OIL AND GAS

Oil and gas production

Alberta is the largest emitterdue to oil and gas production


Emissions per person by Province and Economic Sector, 2018


0

10

20

30

40

50

60

70

CANADA NFLD NS PEI NB QC ON MB SK AB BC TERR

Tonn

es C

O2e

per

per

son

per y

ear

TRANSPORTATION AGRICULTURE HEAVY INDUSTRY ELECTRICITY BUILDINGS WASTE OTHER OIL AND GAS

Oil and gas production

Alberta and Saskatchewan are byfar the largest per capita emitters


Emissions change by Province and economic sector from 2005 to 2018


-80

-60

-40

-20

0

20

40

60

80

CANADA NFLD NS PEI NB QC ON MB SK AB BC TERR

Cha

nge

in E

mis

sion

s fr

om 2

005

to 2

018

(meg

aton

nes)

OIL AND GAS ELECTRICITY TRANSPORTATION HEAVY INDUSTRY BUILDINGS AGRICULTURE WASTE OTHER

Oil and Gas production

Buildings

Electricity production

Heavy Industry

Transportation

Oil and gas production is by far the largest source of emissions growth

since 2005.


The Carbon Conundrum:

- Despite committing to the Paris Agreement and net-zero emissionsby 2050, the Federal, Alberta and BC governments are doubling down by ramping

up oil and gas production, the largest source of emissions growth since 2005.

- The Canada Energy Regulator (CER) forecasts continued growth in oil and gas production through 2040.

- The Federal government is spending $12.6 billion to triple the capacity of the Trans Mountain pipeline (TMX).

- The Alberta government is lowering corporate taxes and providing loan guarantees to TC Energy to build the Keystone XL pipeline.

- The BC and Federal governments laud LNG exports and are providing billions in subsidies to LNG Canada.

Canadian Emissions by Economic Sector with oil sands cap, 1990-2050

© Hughes GSR Inc, 2020 (data from Canada’s National Inventory Report 2020; CER Energy Futures 2019 reference case from 2019-2040; assuming flat emissions from 2040-2050)

0

100

200

300

400

500

600

700

800

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Meg

aton

nes

per y

ear (

CO

2e)

Oil Sands (Mining, In situ, Upgrading) Oil and Gas Transmission Downstream Oil and GasNatural Gas Production and Processing Conventional Oil Production ElectricityTransportation Heavy Industry BuildingsAgriculture Waste OtherParis Agreement (30% by 2030; 80% by 2050) Oil and gas sector without oil sands cap

Electricity

Transportation

Buildings

Heavy Industry

Downstream Oil and Gas

Oil Sands (emissions capped at 100 Mt)

Agriculture

Natural Gas

Conventional Oil

Exceeds 2050 target by 81%

Paris Agreement30% below 2005

by 2030

Non-oil and gasmust contract50% from 2018emission levelsby 2030, 88% by2040, and 122%

by 2050

Target80% below

2005 by 2050Oil and gas sectorwithout emissions cap

(Exceeds 2050 target by 101%)

2018 emissions 0.14%below 2005 level CER oil and

productionforecasts doom

Canada’semissions target

if realized.

0

10

20

30

40

50

60

70

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Meg

aton

nes

per y

ear (

CO

2e)

Conventional Oil Production Oil and Gas TransmissionDownstream Oil and Gas Natural Gas Production and ProcessingLNG Canada upstream emissions reduced by 15% LNG Canada terminal emissionsELECTRICITY TRANSPORTATIONHEAVY INDUSTRY BUILDINGSAGRICULTURE WASTEOther CleanBC Plan (40% by 2030; 80% by 2050)

Downstream Oil and Gas

Natural Gas productionand processing without

LNG reduced by 15%

Conventional Oil

(data from Canada’s National Inventory Report 2020; CER Energy Futures 2029 reference case from 2019-2040; assuming flat emissions from 2040-2050)© Hughes GSR Inc, 2020

BC emissions from oil and gas in CER’s Reference Case with LNG Canada

AgricultureWaste

Oil and Gas transmission

Buildings

Heavy Industry

Transportation

Other

Exceeds target by 160%

CleanBC Plan(40% below 2007

by 2030; 80% by 2050)

LNG Canada terminal emissions

LNG Canada upstreamemissions

Electricity

CER oil and production

forecasts doom BC’s emissions target if

LNG Canada is built

Government rhetoric used to justify these projects is mostly false

- These projects will provide “thousands of jobs” only during the construction phase of 2-3 years. TMX will provide 90 permanent jobs according to Kinder-

Morgan and LNG Canada will provide 350 permanent jobs according to its website, along with some jobs producing the gas required.

- TMX will not provide Canadian producers with a price windfall in Asia, in fact they will likely lose money based on prices over the past decade and transport costs.

- LNG Canada will not save the world from global warming, in fact it will make the problem worse over the critical next 2-3 decades due to fugitive methane.

- Claims that these projects are needed to provide funds for roads and hospitals are belied by the poor economics and the fact that royalty and tax revenue from

oil and gas production has plummeted over the past two decades.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Ener

gy S

ecto

r per

cent

age

of G

DP

NFLD Manitoba Saskatchewan Alberta BC Other Canada Canada Total

Energy Sector percentage of GDP by province

(Statistics Canada Table 36-10-0402-01 retrieved June 27 2020, https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3610040201 )© Hughes GSR Inc, 2020

Newfoundland

Canada total

Other Canada

Alberta

Saskatchewan

BC Manitoba

https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3610040201

0%

2%

4%

6%

8%

10%

12%

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Ener

gy S

ecto

r per

cent

age

of G

DP

NFLD Manitoba Saskatchewan Alberta Alberta oil sands BC Other Canada

Energy Sector percentage of Canadian GDP by province

(Statistics Canada Table 36-10-0402-01 retrieved June 27 2020, https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3610040201 )© Hughes GSR Inc, 2020

Newfoundland

Alberta oil sands

Other Canada

Alberta

Saskatchewan

BC

1.7%0.7%

2.8%2.3%

0.9%0.5%

https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3610040201

0

1

2

3

4

5

6

$0

$2

$4

$6

$8

$10

$12

$14

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Production (million barrels oil equivalent per day)

Rev

enue

per

bar

rel o

il eq

uiva

lent

($20

18)

Average royalty reveue Non-royalty revenue Total production Oil production Gas production

Alberta gross non-renewable resource revenue per barrel versus production

(production from Canada Energy Regulator, retrieved September 27, 2020; revenue from Alberta Government, retrieved September 28, 2020)© Hughes GSR Inc, 2020

Net royalty revenues

Total production

Land sales, rentals and leases

Revenue per BOEdown 79% since 2005

2

2.6

3.2

3.8

4.4

5

5.6

0

400

800

1,200

1,600

2,000

2,400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Billion cubic feet per dayR

oyal

ty R

even

ue ($

mill

ion)

Royalties Production

Total BC Royalties Paid

(Data from CAPP Statistical Handbook; production data from CER, current as of October 22, 2019)© Hughes GSR Inc, 2019

Gas production

Total Royalty Revenue

RoyaltyRevenue

Down 84%Since 2005

0

20

40

60

80

100

120

140

2011 2012 2013 2014 2015 2016 2017 2018 2019

Bar

rels

of P

rodu

ctio

n pe

r Em

ploy

ee

All sectors BOE/person Oil Sands bbl/person Conventional O&G E&P BOE/person

Productivity per Employee by Oil and Gas production Sector, 2011-2019

(employment data from Petroleum Labour Market Information,2019; production data from NEB, 2019)

Oil Sands productivity per employee up 72%


Conventional E&P productivity per employee up 30%

All sectors productivity per employee up 47%

Fewer employees are required due to

Artificial Intelligence and

digitalization

http://www.energysafetycanada.com/aboutus/about/petrolmi.cfm

What about renewable energy from solar and wind?

- Important to emphasize but there is seasonal and hourly variability that requires backup and/or storage.

- Electricity is only 17% of Canada’s end use energy. 80% of end-use energy is currently provided by fossil fuel.

- According to BP’s 2020 net-zero analysis, electricity could be scaled to 53% of global final consumption by 2050, but that would mean nearly doubling global

electricity generation and a many-fold increase in non-hydro renewables which are currently less than 10% of global generation.

- As a result, we will likely need fossil fuels at some level for the foreseeable future, even with aggressive efforts to build renewables and reduce and electrify

consumption. Canada exports more than half of its oil and gas production so there is a vast opportunity to cut emissions by reducing production.

Liquids43.6%

Natural gas34.4%

Coal1.4%

Electricity17.0%

Renewables3.6%

Canada Delivered Energy by Fuel in 2020

© Hughes GSR Inc, 2020 (data from EIA International Energy Outlook, 2019, https://www.eia.gov/outlooks/ieo/tables_ref.php )

79.4% of Canada’send-use energyis provided by

fossil fuel

https://www.eia.gov/outlooks/ieo/tables_ref.php

Share of electricity in total final consumption

Electricity demand

Change in electricity demand by sector, 2018-2050

0%

10%

20%

30%

40%

50%

60%

2000 2010 2020 2030 2040 2050

Rapid

Net Zero

Business-as-usual

0

5000

10000

15000

20000

25000

Rapid Net Zero Business-as-usual

Buildings

Industry

Transport

79%

BP’s 2020 Energy Outlook – Electricity as share of final end use energy

87% 83%

Increase in global generation by 2050

Hydro59%

Gas9%

Coal9.1%

Nuclear15.3%

Hydro25.4%

0%

1%

2%

3%

4%

5%

6%

7%

1995 2000 2005 2010 2015

Perc

ent o

f Tot

al G

ener

atio

nYear

Waste/OtherBiomass/GeothermalSolarWind

Wind


Canada Electricity Generation by Source in 2018Comparison to Total Non-Hydro Renewable Generation

Renewable Generation by Source45 TWh


Total Generation by Source in 2018654 TWh

Renewables

6.9%

Waste/OtherLarge Hydro plus Renewables = 66%

Carbon-free = 81%

18% of Canada’s generation provided by fossil fuel

-1000

0

1000

2000

3000

4000

5000

2010 2011 2012 2013 2014 2015 2016 2017 2018

Tera

wat

t-hou

rs

NuclearOilGasCoalHydroOther Non-renewable

World Electricity Generation Additions by Fuel, 2010-2018

(data from BP Statistical Review of World Energy,2019)© Hughes GSR Inc, 2019

Gas

Hydro

Coal

-1000

0

1000

2000

3000

4000

5000

2010 2011 2012 2013 2014 2015 2016 2017 2018Te

raw

att-h

ours

SolarWindGeo-BiomassOther Renewable

Non-renewable Renewable

WindSolar

Non-renewable generationmade up 71% of total

generation growthfrom 2010 to 2018

Takeaways

- Canada and the world face an EXTREMELY daunting challenge to transition from fossil fuel and contain global warming.

- Reducing energy consumption will be one of the biggest tools in the toolbox hence the need to MAXIMIZE ENERGY EFFICIENCY AND CONSERVATION.

- Current government policy to build more fossil fuel infrastructure and justify it with false narratives is THE WRONG WAY FORWARD.

- The government’s $12.6 billion to be spent on TMX and the billions in subsidies to LNG Canada will exacerbate the emissions problem. These funds would be

far better spent directly on reducing emissions through incentivesfor efficiency, conservation and renewable energy.

- Canada urgently needs a viable energy strategy to provide long-term energy security for Canadians and meet emissions reduction targets.

For further analysis of BC LNG and the TMX project Google:

- BC’s Carbon Conundrum (July, 2020)

- Reassessment of need for the Trans Mountain expansion project (October, 2020)

canada’s carbon conundrum - in1touchs...canada nfld ns pei nb qc on mb sk ab bc terr change in...

Documents