7.2 Local consumption and export markets


Canada is a major energy exporter (Figure 7.4), directing close to 60% of the energy it currently produces to foreign markets, chiefly the United States. The transformation of world energy systems could therefore have a significant impact on this trade as most of the renewable energy that will be added over the next few decades is expected to take place at the expense of fossil fuels. However, shifts in domestic consumption, which will reduce oil and gas imports, especially in the East, could even have a significant positive impact on Canada’s trade balance.

While world markets will have an impact on export opportunities for oil and gas, the rapid decrease in domestic production necessary in net-zero scenarios will affect these export levels as early as 2030. Figure 7.4 shows again the sharp distinction between net-zero scenarios and REF. It also highlights the limited impact of the additional constraints in the CP30 scenario on gas exports, which do not depart from REF. These trends remain over longer time horizons, although it should be noted that exports decrease after 2050 in REF and CP30 as a result of lower demand projections worldwide.

Of particular interest is the rapid expansion of liquefied natural gas (LNG), which increases similarly in all five scenarios in 2030 but less so after that in net-zero scenarios. LNG indeed becomes the main exported energy product in net-zero scenarios as early as 2030 (and even more so after that), almost matching current export levels for crude oil, up to a maximum of 51% of total exports in 2060 for CP30.

Figure 7.4 – International exports #

Figure 7.5 – International imports #

Imports are considerably lower than exports (Figure 7.5). Crude oil imports are relatively constant across scenarios in both 2030 and 2050. Natural gas imports are considerably lower in net-zero scenarios, especially on the longer term (-57% by 2050 for NZ50), resulting from the much lower consumption levels for the fuel. 

While crude oil imports are lower in 2050, imports of oil products increase across scenarios. This suggests that some of the efforts to reduce Canadian GHG emissions in aggressive scenarios could consist in shifting oil refinery emissions elsewhere (overwhelmingly to the United States), a phenomenon that can also affect oil production and import levels. In other words, given the nature of the optimization model and the fact that it accounts only for domestic emissions, the results underestimate the extent to which the consumption of oil and petroleum products must be reduced in the short term in order to achieve net-zero by mid-century. This transfer is a consequence of international agreements that assign emissions to the primary producing territory and not the final user. See Chapter 1 for more discussion of this issue.

General observations:

  • Given the importance of exports for the Canadian energy production sector today, the country’s export profile changes abruptly in net-zero paths, in line with the changes to production described in the previous section.
  • While the use of natural gas in Canada shrinks in all NZ scenarios, exports, especially LNG, expand slightly compared to 2016 levels. 
  • With the current GHG assignment for producing countries, oil imports could increase in NZ scenarios as compared to REF in order to reach domestic targets.