Low Carbon Scenarios for Canada
Presentation slides for:Ralph Torrie, Vice President, ICF International

rtorrie@icfi.com
Japan-UK Joint Research Project Expert Workshop“Developing Visions for a Low-Carbon Society through SustainableDevelopment”, Tokyo, June 2006

• Canadian Context• Research Method• Low Carbon Scenario for Canada• Key Conclusions• Observations and Research Issues

Canadian Domestic Demand for Primary Energy, 1926-2003
14,000PETAJOULES

12,00010,000
8,000
6,000
4,000
2,000
0
1926

1931

1936

1941

1946

1951

1956

1961

1966

1971

1976

CoalPetroleum

Natural Gas and NGLs

HydroW ood

Nuclear

1981

1986

1991

1996

2001

Population, GDP, Energy and CO2 in Canada, 19262003
18.00
16.00
14.00

Population

GDP

EnergyCO21946

1956

1966

12.00
10.00
8.00
6.00
4.00
2.00
0.00
1926

1936

1976

1986

1996

Canadian Energy and CO2 -- KAYA Factors
6.50
6.00
5.50
5.00
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
1926

1931

1936

1941
Pop

1946

1951

GDP/cap

1956

1961

1966

Energy/GDP

1971

1976

1981

CO2/Energy

1986
CO21991

1996

2001

Energy Productivity of the Canadian Economy, 1926-2003
100.0

1997$ OF GDP PER DOMESTIC ENERGY USE

90.0

80.0

70.0

60.0

50.0

40.0

30.0
1926

19311936

1941

1946

1951

1956

1961

1966

1971

1976

1981

1986

1991

1996

2001

Energy Growth in Canada, 1970-1998

4500

PJ

EnergyProductivity

4000
3500
3000
2500
2000

Gas

1500
1000
500
0

Oil

CoalHydro
NuclearWood

Low Emission Futures and theCanadian Context• Ongoing population growth• A large and growing fossil fuel production
sector oriented to export markets• Energy intensive industrial production,although declining• Fuel and electricity relatively inexpensive

Oil Production (bbl/day)
7,000,000

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

1985
1988
1991
1994
1997
200020032006200920122015201820212024202720302033203620392042204520480

Oil Sands
HeavyFrontier
LightEnergy Related Carbon Dioxide Emissions
In Canada, 1926-2050
800

MEGATONNES

600

400

20001926

Long term anddeep emission
reduction nature ofthis scenario takes
us outside theclimate change
policy box,
supports a “freshlook” at strategies
and options
1951

1976

2001

2026

205
0

• Canadian Context• Research Method• Low Carbon Scenario for Canada• Key Conclusions• Observations and Research Issues

Elements of Method – LCS for Canada• Current work restricted to energy-related greenhouse gas emissions,which constitute about 80% of Canadian GHG emissions• Normative, target-oriented scenario approach – 60% reduction in
GHG emissions by 2050, relative to current levels.
• Conventional demographic and aggregate economic growth
projections adopted• End use focus, with full cycle emission factors. Power plant andfossil fuel industry emissions allocated to end users• Oil and gas production assumed independent of Canadian demand• Full cycle emission factors, with power plant emissions andemissions of oil and gas sector allocated to end users (emissions
associated with oil and gas exports treated separately)• Emission reductions close gap between a reference scenario or “topline” and the targeted emissions level – “gapology”.

Elements of Method – LCS for Canada• Centre for Spatial Economics provided macroeconomic forecast to“seed” the initial scenario• Systematic Solutions Energy 2020 model for simulation of emission
scenario and emission reduction policies• Historical analysis of activity drivers to calibrate model and inform
scenario analysis• Interviews with industry leaders to explore plausible long term
futures for major industries in Canada• Results presented in the form of “Socolow” wedges• Only a single illustrative scenario presented at this time
• Next steps: Economic analysis of scenario and details of policy
roadmap• Canadian Context• Research Method• Low Carbon Scenario for Canada• Key Conclusions• Observations and Research Issues

Energy Related GHG Emissions in Canada,Source Allocation
vs. End Use Allocation
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Source Allocation
End UseTotal Oil and Gas Industry
Oil/gas industry allocated to export

End Use Allocation
Power Plants
End Use w Upstream Allocation

Energy-Related GHG Emissions bySector in 2003
(with end use allocation of emissions from power plants and oil and gasproduction)

Oil and Gas Exports
12%
Agriculture3%
Mining1%

Passenger
Transportation
21%

Heavy Industry
11%

Other Industrial
10%

Residential
14%

Service
13%

Freight
Transportation
15%

Greenhouse Gas Emissions by
End UseNon-Energy
16%

Moving People
19%

Electricity Specific
10%High Temp Heat
15%

Moving Freight15%
Low Temp Heat
25%

Energy-Related CO2 Emissions inCanada, 1990, 2003 and 2050 “BAU”

1,400
Mt eCO2

1,200
1,000800
600
400200cleAUCyBll5050

BAUFu20

2003

FC03

Power Plants
End Use w Upstream Allocation

20

End UseOil and Gas
Oil/Gas Exports

20FC
90
19

19900

GHG Emissions by Sector
1,400

Mt eCO2
1,200

1,000

800

600

400

20001990

Residential
Other Industry
Freight Transportation

2050 Baseline

Service Sector
MiningOther2050 All Wedges

Energy Intensive Industry
Personal Transportation
Oil & Gas Exports

GHG Reduction Wedges for Canada -- All Wedges
1400
Megatonnes eCO2
1200
1000
800
600
40020002005
Target2010

2015
2020
Carbon Capture

2025

2030
Freightvehicle eff

2035

2040
2045
EE in Oil and Gas
SectorCogeneration

Electricity Intensity Improvements

Urban FormWind pow er

Auto fuel eff

Tran propane & CNG

Ethanol

EE - Secondary Mfg

Ind Eff - Energy Intensive

Oil and Gas - Reduce Fugitive

New nuclear

Biomass

New res bldg

Retro comm bldg

Retro res bldg

New comm bldg

Commerical Lights and equip

Industrial Shift

Wave pow er

Large hydroRes w ater heat

TKT Reduction/Mode Shifts

Res Appliances

Geothermal

Small hydroPassenger Mode Shift

Landfill gas electricity

Solar Water Heat

Hydrogen

Biodiesel

RESIDUALEl transmission

2050

The Top Seven Reduction
Wedges
Wedge
Carbon Capture
Truck efficiency improvement
EE in Oil and Gas Sector
Cogeneration
Electricity Intensity Improvements
Urban FormWind power
Personal vehicle fuel efficiency

Mt eCO2
191
126
74
73
65
52
50
46

GHG Reduction Diagram for Canada -- Aggregate Wedges
1,400
Megatonnes eCO2
1,200

1,000

800
600

400

200

0
2005

2010

2015

2020

2025

2030

2035

2040

2045

TargetCarbon Capture

Nuclear

Biofuels and alt fuels

Renewable Electricity

Energy Intensity

Urban Form

Cogeneration

Energy Eff and Conservation

Residual2050

• Canadian Context• Research Method• Low Carbon Scenario for Canada• Key Conclusions• Observations and Research Issues

Sustainable, Low Emission Futures –The Technologies• A doubling, and then a redoubling, of energy efficiency,
delivers benefits more effectively and on a larger scale than
all the other options – low emission future not possible
without this.
• Combined heat and power is also an essential element of
the low emission future• Renewable electricity (wind, solar) developed on a base ofmuch more efficient electricity use• Energy efficient urban forms that allow access with lower
rather than higher levels of mobility• Biofuels – can they be developed sustainably?
• Carbon capture and storage technologies are necessary IF
oil and gas production in Canada proceeds as expected

The long term, deep reduction scenario,
combined with the full cycle allocation ofemissions, reshapes the climate change response
agenda: Less emphasis on large final emitters, more on end use
efficiency
 Current investments are key opportunities for long term
reductions (buildings, industrial production technology, urbanplanning, etc)
 Scaling up technology deployment capability is critical (business,financing and manpower infrastructure) Solutions are being developed in a globalized market forenergy-related technologies – other economies are moving
aggressively to capture these opportunities
 Emissions from growth oil and gas production do not block thepossibility of a low emission future for Canada, provided CCS
technology can be successfully deployed The power sector in a low emission future is transformed.
Efficiency and electricity productivity improvements continue,and renewable electricity (wind, wave, PV, etc) develops
globally as a growth industry. Combined heat and power
production is a “must have”.

Key Lessons and Strategic
Directions• Must be comprehensive• Integrated Approach• Long lived capital stock is a priority• Synergies exploited• Air pollution reductions and other cobenefits are key drivers of successful
emission reductionComprehensive• Single largest wedge is carbon capture andstorage at 18% of gap and truck and off-road
fuel efficiency at 12% of gap; there is no “silverwedge”.
• In aggregate, demand side delivers 53% of thegap (efficiency, intensity improvement,cogeneration), but it is distributed broadly;
renewable electricity and alternative fuelsaccount for another 18%.

Integrated Approach• We started with 1,600 Mt of emission reductions fromthe wedges when counted separately, greater thanprojected BU emissions in 2050. When combined in
an integrated scenario, total emission reductions
dropped by nearly 40% to 1,000 Mt, just enough tofill “the gap” between BU and the target.
• Electricity demand and supply interaction is strong.
• Emissions intensity of energy production sector,
including CCS, interacts strongly with efficiency.
• Demand side measures interact with each other.

Lost Opportunities• Even on a 50 year time frame, lost opportunities
are here now (new buildings, urbaninfrastructure, industrial capital)• The world is preparing for a carbon constrained
economy – businesses and economies are
moving NOW to sell into this future (energy
efficient technology, carbon capture and storage,
renewable energy technology, etc)

Synergies• Emission reductions are consistent withsome exogenous trends in Canadiansociety – these synergies can be exploited
to promote lower emissions (urban
redensification, refurbishment of post-War
infrastructure, higher value addedindustrial production)

Collateral Benefits• Co-benefits of emission reduction will be critical tosuccess:– Reduced air pollution and improved public health– Higher performance buildings– Economic competitiveness in global market– Enhanced urban environments– Employment generation across a broad spectrumof skills and professions– Technological advancement• Canadian Context• Research Method• Low Carbon Scenario for Canada• Key Conclusions• Closing Observations

Implementing Low Emission Futures– The Eye of the Needle
 Low emission futures have policy implications well beyond conventionalenergy policy. They must be developed in a broader context of sustainable
development
 Energy price based strategies necessary but not sufficient Technology deployment fundamentally economic, but constrained byunderdeveloped organizational and financial infrastructure, entrenchedadvantage of commodity suppliers, and externalization of environmental
costs.
 Global marketing, rapid deployment will characterize demand sidedevelopments.
 Local authorities must engage; community transformation
 Climatic conditions will deteriorate for decades, regardless of mitigation
effort A discontinuity in the climate change response policy environment can be
expected on the 2050 time scale