Market Snapshot: A Closer Look at Unabated Fossil Fuel Use in Energy Futures 2021

Release date: 2022-01-26

In Canada’s Energy Future 2021 report (EF2021), one of the key findings is that the Evolving Policies Scenario^Footnote 1 projects unabated fossil fuel use to fall 62% by 2050 from 2021 levels. Unabated fossil fuel use is fossil fuel combustion without the application of carbon capture and storage (CCS) technology. The fall in use is driven by a decrease in overall demand for energy in the scenario (-21% from 2021 levels by 2050), as well as an increase in use of low and non-emitting energy sources like renewables and fossil fuels with CCS. While this implies a significant reduction in GHG emissions by 2050, achieving net-zero will likely require more change than included in this scenario.

This snapshot explores unabated fossil fuel use by sector in the Evolving Policies Scenario to highlight the opportunities and challenges of reaching net zero by 2050.

Figure 1 shows unabated fossil fuel use in the Evolving Policies Scenario, broken down by sector. It includes all fossil fuels used for energy purposes, as these make up most Canada’s emissions. It excludes fossil fuels used for feedstocks for industrial production, like petrochemical feedstocks and lubricants, because they are considered low-emitting in this scenario.^Footnote 2 Combined, the oil and gas and transportation sectors made up nearly 60% of the fossil fuel use in 2020, while the industrial (excluding oil and gas), residential, commercial, and electricity sectors made up the remaining 40%.

Figure 1. Unabated Fossil Fuel Use by Sector in the Evolving Policies Scenario

In EF2021 projections, there are two main reasons for sectoral differences in unabated fossil fuel use: 1) the availability and cost of low-carbon technologies and 2) the strength of policies applied to the sector. If the policies are strong enough to make low-carbon technologies more competitive than unbated fossil fuels, the new technologies will begin to make inroads. The policies applied in the Evolving Policies Scenario can be found in Appendix 1 of the EF2021 report.

In the Evolving Policies Scenario, the sectors that reduce their unabated fossil fuel use the most by 2050 from current levels are oil and gas (-79%) and electricity (-72%). The electricity sector has many low-carbon technologies available at relatively low costs, such as wind and solar. In addition, the costs for these technologies are assumed to drop considerably over the projection period in the Evolving Policies Scenario. The oil and gas sector relies predominantly on energy efficiency and carbon capture and storage (CCS) as options to reduce unabated fossil fuel use in the Evolving Policies Scenario. The reliance on CCS is mainly due to Alberta’s oil sands industry which can capture and store carbon at a relatively low cost compared to the rest of Canada due to its proximity to high-quality storage sites and a growing CO₂ transportation network in the province. Although CCS is a viable technology, there are currently very few large-scale CCS projects globally. Therefore, the level of implementation is a key uncertainty for the projections in EF2021.

Industry other than oil and gas (-36%) and transportation (-47%) reduce their unabated fossil fuel use the least from current levels to 2050. Although passenger transportation electrifies significantly by 2050, unabated fossil fuel use persists in freight transportation and aviation. Freight, aviation, and industry (excluding oil and gas) all feature fewer and more expensive low-carbon technologies than other sectors of the Canadian economy under the cost and policy assumptions in the Evolving Policies Scenario. Some examples include, electrified and biofuel-based freight transportation, hydrogen-based aviation, and major process shifts in cement and iron and steel making. Because of these assumptions, the industry and transportation sectors do not decarbonize as much as others.

The level of remaining unabated fossil fuel use in the Evolving Policies Scenario highlights that further change is likely needed to reach net-zero by 2050. It also shows where there are opportunities for significant emission reductions, like in electricity generation, and where there may be challenges, like in freight and aviation decarbonization.

Date modified:

2023-11-28