New modelling from the Canada Energy Regulator suggests Canadian oil production will plummet by 2050 害羞草研究所� and large portions of Alberta害羞草研究所檚 oilsands facilities will be shut down 害羞草研究所� if the world is successful in reaching net-zero greenhouse gas emissions within that time.

The scenario is one of three laid out in a report released Tuesday, and marks the first time the regulator has presented a long-term outlook for Canadian energy using net-zero as a baseline.

In an interview, federal natural resources minister Jonathan Wilkinson cautioned against focusing too much on the most dramatic scenario, adding that the regulator害羞草研究所檚 report also paints a picture of an alternate future in which progress to net-zero occurs at a slower pace.

But he said the report makes it very clear that in order for Canada害羞草研究所檚 energy sector to remain competitive on the world stage, it will need to act quickly to reduce emissions.

害羞草研究所淭his report helps us in the context of the argument I have been making publicly for some time 害羞草研究所� which is, it is strongly in the economic interest of the oil and gas sector, which is an important economic sector for Canada, to focus on decarbonization,害羞草研究所� Wilkinson said.

害羞草研究所�(And) to partner with the government, for provinces to partner with the federal government, to drive that as fast as we possibly can.害羞草研究所�

According to the Canada Energy Regulator report, if the world is successful in reaching the goals established at the Paris climate conference and holding global temperatures to 1.5 degrees Celsius of warming through government policy, global fossil fuel use will drop by 65 per cent from 2021 to 2050.

That would prompt a collapse in global oil prices, to as low as US$35 per barrel by 2030 and US$24 per barrel by 2050, it said.

The report concludes that as a result of these low prices, much of Canada害羞草研究所檚 crude oil production would become uneconomic, causing companies to reduce output to 1.2 million barrels per day by 2050, 76 per cent below 2022 levels.

The regulator modelled two other scenarios 害羞草研究所� one in which Canada achieves net-zero by 2050, but large developing countries like China and India move at a slower pace.

In that version 害羞草研究所� which most closely represents the commitments made by international governments to this point 害羞草研究所� the CER said global oil prices will likely remain above US$60 per barrel all the way to 2050, with Canadian oil production declining by just 22 per cent.

The report also looked at what would happen in a 害羞草研究所渂usiness as usual害羞草研究所� case, which assumes no additional efforts to reduce emissions beyond what is already in place, and no further attempts to reach Paris climate targets.

In that scenario, Canadian oil production would actually rise to reach 6.1 million barrels per day by 2050 害羞草研究所� 20 per cent higher than in 2022.

Canada Energy Regulator chief economist Jean-Denis Charlebois told reporters the three scenarios laid out are models, not forecasts, and the regulator has not made any predictions about which is most likely to become reality.

害羞草研究所淎t the end of the day, we don害羞草研究所檛 comment or opine on the likelihood of it happening,害羞草研究所� he said.

害羞草研究所淚t remains to be seen whether it will actually look that way in the real world.害羞草研究所�

Even in the most dramatic scenario, some demand remains for oil, Wilkinson said. But he said Canadian companies will have to decide where the future is headed as they decide how to invest their capital going forward.

害羞草研究所淭hey have to build their own business case. And that includes looking at the future they believe to be the most likely future,害羞草研究所� he said.

In the report害羞草研究所檚 most aggressive climate-action scenario, Alberta害羞草研究所檚 oilsands are drastically affected. The comparatively high emissions intensity of oilsands production compared with conventional oil and gas drilling could make the sector too expensive to continue in the long-term, the report states.

In the report害羞草研究所檚 global-net-zero-by-2050 scenario, only the lowest-cost oilsands facilities will still be producing by then, with the most costly facilities starting to shut down in the early 2030s.

The Pathways Alliance 害羞草研究所� an industry group made up of six of Canada害羞草研究所檚 largest oilsands producers 害羞草研究所� was quick to rebut that possibility on Tuesday.

害羞草研究所淭hese are scenarios, they害羞草研究所檙e not forecasts,害羞草研究所� said Pathways spokesman Mark Cameron in an interview.

害羞草研究所淚n fact, global oil demand was at a record level in 2022. We haven害羞草研究所檛 yet seen the world changing its oil demand.害羞草研究所�

Cameron pointed out that in the Canada Energy Regulator害羞草研究所檚 more moderately paced scenario 害羞草研究所� in which oilsands production declines less and more slowly 害羞草研究所� companies rely heavily on carbon capture and storage technology to reduce emissions and stay competitive for longer.

This is in line with the Pathways Alliance害羞草研究所檚 own net-zero plan, which proposes that member companies invest in a yet-to-be-committed-to massive carbon capture and storage network in northern Alberta, at a cost of $16.5 billion.

害羞草研究所淭he Pathways plan is assuming that there is a continuing market for oil and gas, and we want to provide to that market in as low-emissions a way as possible,害羞草研究所� Cameron said.

In a statement, Canadian Association of Petroleum Producers CEO Lisa Baiton said oil and gas markets can shift rapidly, as has been proven by recent events such as the COVID-19 pandemic and the war in Ukraine.

害羞草研究所淲hat we know today is global demand for oil and natural gas is rising,害羞草研究所� Baiton said.

害羞草研究所淐anada has an important role to play in ensuring a secure supply of reliable energy is available to Canadians as well as our trading partners and allies around the world.害羞草研究所�

But Greenpeace senior energy strategist Keith Stewart said he believes it害羞草研究所檚 time for oil and gas companies to recognize that the future growth of their industry is incompatible with a net-zero future.

害羞草研究所�(This report) should be the final nail in the coffin of those who argue for expanding oil and gas production, because it is clear that is only profitable in a future where the current climate change-fueled wildfires and heat waves are thought of as the good old days,害羞草研究所� Stewart said.

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