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Canada’s Emissions Trends

Environment Canada
July 2011

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Annex 2:

Alternate Emissions Scenarios

Emissions projections are subject to uncertainty, and are most appropriately viewed as a range of plausible outcomes. Many of the events that shape emissions and energy markets cannot be anticipated. In addition, future developments in technologies, demographics, and resources cannot be foreseen with certainty. Typically, these key uncertainties are addressed through alternative cases.

The sensitivity analysis presented here focuses on two key uncertainties:

  • The growth of the economy
  • The evolution of world oil prices and their impacts on macroeconomic growth and energy consumption

The emissions outcomes of these alternative cases are presented as stand-alone and in combinations in Table A2.1.

Table A2.1 Sensitivity analysis – change in GDP and/or world oil price
Cases GHG emissions (in Mt CO2e)
  2015 2020
Low GDP 733 768
High GDP 754 810
Low World Oil Prices 726 764
High World Oil Prices 764 817
Low GDP – Low World Oil Prices 716 747
High GDP – High World Oil Prices 775 839
Baseline Scenario 741 785
Sensitivity Results 716 – 775 747 – 839

The higher GDP case assumes stronger economic growth in the goods producing sector. By 2020, Canadian GDP in the high GDP case is some 29 per cent higher than 2008 levels, compared with 25 per cent higher in the baseline scenario.

By 2020, Canadian GDP in the low GDP case is some 21 per cent higher than 2008 levels, compared with 25 per cent higher in the baseline scenario.

In the baseline scenario, the world oil price is projected to grow from $70/bbl ($US) in 2010 to $96/bbl ($US) in 2020. A higher price scenario, in which 2020 prices are $US186/bbl, is used alone and in combination with different GDP growth assumptions. A low price scenario is also included where the world oil price remains fairly stable at $US52/bbl after 2015.

Greenhouse gas emissions in the “high-GDP/high oil price” scenario are about 18 per cent higher in 2020 than 2010 levels. This compares with 11 per cent higher in the baseline scenario over the same period. As economic activity increases, there will unquestionably be a higher demand for energy and a corresponding increase in emissions. In contrast, emissions are expected to be much lower if the Canadian economy grows at a slower pace. Emissions could be as little as 5 per cent higher than 2010 levels by 2020, compared with 11 per cent higher in the baseline scenario. Expected growth of the economy is the primary driver of expected emission growth. Any variation in this path will lead to a different set of projections about expected future emissions.

The growth in emissions is expected to slow down as the world price of oil increases since overall economic activity would decline as the price of oil rose. However, the increase in price drives higher production in the oil and gas sectors, resulting in increased emissions from this sector in the high world oil price case, where emissions rise by 129 Mt from 2010 to 2020; whereas they only rise by 75 Mt in the baseline scenario and by 37 Mt in the low price scenario.

The range in projected emissions from all scenarios rises as we extend our projection further into the future. The strong assumptions made about the growth in Canadian GDP and the future world oil price can alter 2020 emission projections by up to 92 Mt.

Under all scenarios over the forecast period, emissions are expected to grow the fastest in oil sands extraction and upgrading. Electricity generation and the conventional oil and gas sectors are projected to see an emissions decrease. Emission changes in the transportation sector show a deceleration from the long-term growth trend in all scenarios.

Emissions from the electricity sector could decrease by as much as 33 Mt—or as little as 26 Mt—over the 2005 to 2020 projection period, depending on the assumptions used. The baseline scenario projects that electricity emissions would fall by 31 Mt.

The oil sands sector displays the fastest growth in emissions, but it also displays the greatest range of uncertainty about future emissions depending on the assumptions used. Emissions could rise by as much as 76 Mt—or as little as 28 Mt—over the 2005 to 2020 period. The baseline scenario projects that oil sands emissions would increase by 36 Mt.

 

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