Posted on Tue, 01/26/2016 - 07:56
In this blog, we summarize the work we at CESAR are doing to take government agency projections for HOSG and LOSG scenarios, and assess their implications on all parts of Alberta’s energy systems, assuming a ‘Business-as-Usual’ (BAU) future. BAU scenarios incorporate existing technologies, trends and policies that define demand for fuels and electricity in all parts of the economy, and therefore determine the resulting energy use and greenhouse gas emissions.
BAU scenario models are like a key that opens many doors. They provide a ‘benchmark’ to examine and test the energy systems-level implications and impacts of alternative scenarios, driven by shifts in economics, policies or technologies.
For example, if we accept the HOSG scenario as the benchmark, we can then explore the implications for Alberta’s energy systems of a sustained lower oil price, by comparing the HOSG scenario with a LOSG scenario.
To build these scenarios, we used the Canadian Energy Systems Simulator (CanESS) model from whatIf? Technologies Inc. It integrates a wide variety of datasets4 from 1978 to the present to create a coherent, technology-rich, integrated model of the energy systems of Alberta and other provinces. By training the model to reconstruct past energy systems from technology-rich datasets, it is possible to project energy flows and greenhouse emissions in future energy systems in which specific technology pathways have been defined.
In the CanESS model, the primary drivers for most calculations are assumptions about future population and GDP. To generate these values for Alberta, we drew on government HOSG and LOSG projections as described in a backgrounder document that can be downloaded here. In effect, the LOSG scenario assumes that all existing oil sands production would be maintained and only those oil sands projects that have already begun construction would be completed and go into production. No new projects would be built in a low-oil price environment of the LOSG scenario.
So what do the results for the LOSG scenario tell us about the impacts on, and implications for, Alberta’s future energy systems when compared to the benchmark HOSG scenario?
Population. The LOSG scenario projected a population growth in Alberta of 1.2 million or 19% fewer people by 2040 (Figure 1) than in the HOSG scenario. Hence, the total population in 2040 in the LOSG was projected to be 5 million compared with 6.2 million in the HOSG scenario. Between 2016 and 2040, population growth in the HOSG scenario averaged 1.63% per year, but only 0.78% per year in the LOSG scenario, a growth rate similar to that seen in Quebec between 2000 and 2015. Prior to the collapse in oil prices, the growth rate in Alberta was as high as 3.3% in 2013. With low oil prices, we are now starting to see out-migration from Alberta to other provinces.
Gross Domestic Product (GDP). By 2040, Alberta’s GDP in the LOSG scenario was projected to be $270 billion per year (in 2002$), or 29% lower than the GDP projected in the HOSG scenario (Figure 1). Part of this difference could be attributed to the difference in population growth between the two scenarios. However, in 2040, the LOSG scenario assumed a per capita GDP of $55,000 or 10% less than the $61,000 per capita GDP projected in the HOSG scenario by 2040. Both scenarios projected an increase from the $52,000 per capita GDP for Alberta in 2014.
Energy Demand. The LOSG scenario projected 28% lower total energy use in Alberta by 2040, when total energy use in the province would be 4,215 petajoules per year compared with 5,824 petajoules per year projected in the HOSG. Not surprisingly, most (65%) of this difference can be attributed to lower energy use in the oil and gas sector in the LOSG scenario. However, other sectors were also lower in energy use in the LOSG scenario, reflecting the lower population and GDP assumptions that were used.
Greenhouse Gas (GHG) Emissions. The LOSG scenario projected a smaller increase in GHG emissions in Alberta (which were 264 megatonnes per year in 2014) compared with the HOSG scenario. By 2040, the LOSG projected 25% lower GHG emissions in Alberta (when emissions would be 307 Mt/yr) than in the HOSG scenario (409 Mt/yr in 2040).
In the LOSG scenario, the oil and gas sector was responsible for 41% of Alberta’s total GHG emissions by 2040, compared with 46% in the HOSG scenario.
While the oil and gas sector’s share of provincial GHG emissions was projected to be smaller in the LOSG scenario, in these BAU scenarios Alberta would continue to be Canada’s largest emitter of GHGs in 2040.
Despite the lower total emissions in the LOSG scenario, the per capita emissions were similar to that in the HOSG scenario (Figure 3, lower panels).
Figure 3. Actual and projected total greenhouse gas (GHG) emissions (upper panels) and per capita GHG emissions (lower panels) by sector in Alberta for the period ending in 2040. Future projections were based on high (HOSG, Panel A) vs. low (LOSG, Panel B) Oil Sands Growth Scenarios.
Modelling Energy Systems Choices. The two BAU scenarios explored here – HOSG and LOSG – were defined by economic and market forces affecting oil price that are external to the province of Alberta, and over which neither Alberta nor Canada have any significant influence.
What should be of more interest to Canadian policy makers is how policy and technology decisions made in this country could alter our energy systems and their contributions to both greenhouse gas emissions and the economy of the province and nation. For this work, the BAU-LOSG scenario should probably be chosen as the ‘benchmark’ scenario and, in essence, become the ‘key’ that can be used to open a wide range of doors to alternative scenarios.
Examples of the questions that could be answered by exploring the alternative scenarios behind these doors include:
- What policy and technology options does Alberta have to achieve the government’s objective for an accelerated phase-out of coal power, and 30% renewable generation by 2030? How do these alternatives compare in system-level greenhouse gas emissions and in the cost of electricity in the province?
- What role could existing or emerging technologies for in situ oil sands play in reducing the GHG emissions associated with bitumen extraction between now and 2040? What policies could be implemented to incentivize desired technology choices?
- How do biomass energy and carbon sequestration technologies compare in their economic viability and their capacity to reduce system level GHG emissions? What policy options could be used to incentivize new industries in this area?
- What would be the climate change implications of energy-efficiency programs targeted at residential or commercial buildings?
- What impact might self-driving, car-sharing electric vehicles have on Alberta’s GHG emissions, urban design and demand for oil?
- Since the Y and Z generations seem to be more indifferent to personal mobility than previous generations, what are the implications for GHG emissions, oil demand and urban design over the next 20 years?
In future blogs, we hope to share some of the insights CESAR researchers have gained in exploring these and other questions.
We would also like to hear from you about technology or policy choices that you think would benefit from scenario analysis.
1 Canada’s Energy Futures 2013, National Energy Board (https://www.neb-one.gc.ca/nrg/ntgrtd/ftr/2013/index-eng.html)
2 Population Projection 2015, Alberta Treasury Board and Finance (http://www.finance.alberta.ca/aboutalberta/population-projections/2015-2041-alberta-population-projections.pdf)
3 National Energy Board 2013 (https://www.neb-one.gc.ca/nrg/ntgrtd/ftr/2013/ppndcs/pxmcrcnmc-eng.html)
4 These datasets include, but are not limited to, those of Statistics Canada, Natural Resources Canada, Transport Canada, Environment Canada and numerous research publications.