From the Fraser Institute

By Jock Finlayson

While many Canadian politicians and activists continue to trumpet the “energy transition” and conjure visions of a low-carbon future that supposedly lurks just around the corner, along comes Natural Resources Canada with its latest Energy Fact Book. A careful review of the publication pours cold water on any notion of a rapid shift to a fundamentally different energy system, one that features a much smaller role for the fossil fuels that now supply the vast majority of the energy used by Canadians.

The book contains a wealth of information on Canada’s large and notably diverse energy sector, covering production, consumption trends, investment, and the environmental impact of energy production and use.  Separately, Natural Resources Canada also publishes “energy profiles” for the individual provinces and territories that provide further insight into energy production and consumption patterns across the country.

Starting with energy production (and considering all sources of energy, including uranium), crude oil accounts for about 45 per cent of Canadian energy output, measured in petajoules. Natural gas and natural gas liquids comprise another 32 per cent, with uranium chipping in 11 per cent of primary energy production. Smaller shares come from coal (5 per cent), hydroelectricity (5 per cent) and “other” renewables (3 per cent).

The statistics on energy output confirm that fossil fuels dominate the mix of energy sources produced in Canada. There’s little reason to believe this will change in a significant way in the near term.

Turning to energy consumption, a review of the most recent information leads to a broadly similar conclusion.

Based on Statistics Canada’s latest data, industry, collectively, is responsible for about 35 per cent of final end-use energy demand; this category includes manufacturing, natural resource extraction and processing, and construction. Transportation is the second-largest consumer of energy (29 per cent of final demand), followed by the residential (16 per cent) and commercial sectors (14 per cent).

What about the various sources of energy Canadians depend on for their comfort and well-being and to enable industrial and other business activity? Refined petroleum products rank first, providing about two-fifths of all energy consumed. Natural gas is second (35-36 per cent). Electricity comprises just 16-17 per cent of the energy used in Canada. Overall, fossil fuels still meet more than three quarters of Canadians’ requirements for primary energy.

Some may be surprised that electricity constitutes less than one-fifth of the energy used in Canada. A principal strategy of governments aspiring to slash greenhouse gas emissions is to redirect energy demand to electricity and away from oil, natural gas and other carbon-based energy sources. That makes sense, particularly since Canada’s existing electricity grid is about 80 per cent carbon-free. But a “big switch” to electricity won’t be easy. Consider that, over the first two decades of the millennium, Canadian natural gas consumption jumped by 34 per cent while electricity demand rose by 12 per cent. This underscores the resiliency of household and business demand for reliable affordable energy—of which natural gas is the best example.

Raising electricity’s share of total energy consumption will necessitate an enormous expansion across all segments of the Canadian electricity sector, encompassing not only the development of far more generation capacity but also the construction of additional transmission networks to deliver electric energy to end-users. Industry experts talk of boosting the amount of electricity produced in Canada by up to three times within two decades—a herculean task, assuming it’s even possible.

And, in line with the “net zero” goals espoused by many governments, virtually all of new electricity presumably must come from carbon-free sources (e.g., hydropower, other renewables, biomass, nuclear). There’s also the challenge of replacing the remaining carbon-based electricity still produced in Canada with carbon-free alternatives, as mandated by the Clean Electricity Regulations (CER) recently adopted by the Trudeau government.

Suffice to say the transition away from fossil fuels as the predominant source of energy consumed in Canada will be a lengthy and arduous journey and is sure to encounter more and bigger obstacles than most of Canada’s political class understands or cares to acknowledge.