Throughout this Outlook, we consider three GHG emission reduction scenarios leading to net-zero in different years, a reference scenario for the business-as-usual case, and an additional one that takes into account the impact of the recently announced carbon pricing sched- ule to 2030 (as described in Table 1.1), all analyzed through NATEM.1
These scenarios were chosen to contribute to the objectives set out in the previous section, by:
- Outlining the feasibility and implications of net-zero (NZ) scenarios, with details of what form they would take and what technologies and uses they entail.
- Allowing for better insights into the optimal pacing of mitigation options by having scenarios with progressive targets on GHG emissions.
- Identifying highlights from the implications of pursuing an even more aggressive schedule than Canada’s 2050 target, one which aims to reach net-zero by 2045.
Table 1.1 – Description of the reference and GHG reduction scenarios #
All scenarios are based on targets from a national perspective. The model allocates reductions optimally across provinces in order to reach these targets, based on costs and available technologies. As a result, provincial pathways differ in the pace and extent of the transformations of the various sectors, and the remaining net emissions in each province vary based on their specific constraints. As Part 2 of this report shows, the results clearly indicate the need for a substantial amount of emissions capture, negative-emission activities, and direct air capture technologies for emissions to be neutral from a national perspective and compensate for each province’s remaining emissions.
Lastly, it is worth noting some of the main assumption categories used by the model:
- Prices of imported and exported energy commodities: prices used for REF and CP30 are aligned with the CER Reference scenario; prices in NZ scenarios are taken from the CER Evolving scenario;
- Demand projections for energy services: a starting point for energy services demand is built from the reference scenario, and NATEM has its own price elasticity mechanisms so that demands react to their own prices;
- Technological developments: the model uses an emerging tech- nology database based on the literature, where technologies are characterized according to their technology readiness level;
- Evolution of technical and economic attributes of technologies over time: realistic assumptions about the evolution of technologies and their cost are made based on a review of the literature; mid-point assumptions are made where wide discrepancies exist in projections;
- Climate change mitigation efforts in other countries: decreases in demand for exports result from price assumptions in the CER’s Evolving scenario, reflecting a certain level of climate change action around the world.
A discussion of the impact of each of these assumptions and some of the associated uncertainties is presented where relevant, including in sensitivity analyses (mainly in Chapter 9).
1 NATEM stands for North American TIMES Energy Model, an energy systems optimization model implemented by ESMIA Consultants Inc. It makes use of The Integrated MARKAL-EFOM System (TIMES) model generator developed and distributed by the Energy Technology Systems Analysis Program (ETSAP) of the International Energy Agency (IEA) and used by institutions in nearly 70 countries.
2 Two adjustments were necessary to incorporate this schedule: first, a discount rate was used to transform prices proposed by the government in the schedule into their equivalent for the year when they are applied (for instance, $170 announced this year is worth $131 in constant dollars for 2030, when adjusted for inflation; second, this maximum price reached in 2030 is then adjusted for inflation for the remainder of the period, i.e. until 2060.