Key Insights from the Canada Energy Dashboard

Modeling Canada’s net zero energy-economy is complex. At Navius, we’ve done many different analyses of our net zero future, but never like this. This time, we’re using a newly fully integrated energy-economy-electricity model (gTech-IESD).

This integration of the electricity system and wider macroeconomy is important to fully understand the complexity of Canada’s net zero future. Electrification is expected to play a key role in achieving net zero emissions, and there are important feedbacks between Canada’s electricity sector and other sectors of the economy. For example, the cost of electricity supply, including cost declines in solar, wind and battery technologies, impacts how much electrification occurs across the economy and the cost of achieving net zero emissions.

The Canada Energy Dashboard allows us to explore these interactions by presenting results of over 300 scenarios, including over 200 net zero scenarios, simulated in this newly integrated model. Refer to this model documentation for detail on the model integration, scenario design, and technology assumptions behind the results presented on the dashboard.

Below are three key insights that we can draw from the Canada Energy Dashboard.

Figure 1: GHG emissions in one scenario presented on the Canada Energy Dashboard. In this scenario, Canada achieves net zero emissions by 2050, where residual emissions are offset by additional carbon storage resulting from changes in land use and forestry, which provides 103 Mt of offsets in 2050.

Insight 1: Net zero emissions is achievable in Canada

Over 200 different net zero pathways for Canada are presented on the Canada Energy Dashboard. These pathways account for uncertainty in future technology costs, oil demand, and offset availability, all of which will impact how Canada achieves net zero emissions by 2050.

All 216 net zero scenarios presented on the Canada Energy Dashboard achieve net zero emissions, highlighting that there are many different ways for Canada to achieve this goal by 2050.

Depending on the opportunities and constraints of the future, our path to net zero will rely on a range of different technologies and abatement actions. Even in the most techno-pessimistic scenario presented on the dashboard, where many low carbon technologies and fuels have higher costs than anticipated or are not commercialized, we still achieve net zero emissions in Canada.

There is uncertainty in the path we will take to achieve net zero, demonstrated by the range in outcomes across scenarios presented on the Canada Energy Dashboard. However, it is certain that it’s possible to achieve this goal. The role of some technologies in our net zero future is more certain than others, which leads to our next insight.

Insight 2: Ten technologies could transform Canada’s economy towards net zero

More than 300 different technologies and fuels that can satisfy the demand for energy services within scenarios presented on the Canada Energy Dashboard. Of these, ten technologies and fuels stand out as potentially important under the constraints of net zero emissions.

Two technologies stand out as playing a particularly important role in Canada’s net zero future. These include:

1. Wind and solar electricity generation

Solar and wind generation begins to dominate Canada’s electricity grid, accounting for up to a third of Canada’s electricity generation in 2030 and more than half by 2050. Although natural gas with carbon capture and storage remains important as firm generation capacity out to 2050 in all net zero scenarios, by 2050, solar and wind make up 38-63% of electricity generation in Canada, generating 375-810 TWh of electricity in 2050 across the country.

2. Short-duration battery storage

Short-duration battery storage, such as lithium-ion batteries, supports increased renewable generation while maintaining grid reliability. By 2030, up to 68 GW of battery storage capacity is deployed across Canada, which grows to as much as 1004 GW by 2050. Battery storage plays a particularly important role in regions across Canada without access to large hydroelectric generation, such as Alberta and Saskatchewan, which rely more heavily on renewables to meet future growth in electricity demand.

Figure 2: Electricity generation in Canada in one of the net zero scenarios presented on the Canada Energy Dashboard. In this scenario, renewables make up 27% of generation in 2035 and 52% in 2050.

Some technologies show up in all net zero scenarios and are likely to play an important role in Canada’s net zero future. These include:

3. Battery electric vehicles

Significant adoption of zero-emission vehicles occurs across all net zero scenarios, with battery electric vehicles dominating the light-duty vehicle market. Battery electric vehicles make up 41-89% of light-duty vehicle market share by 2050, driving decarbonization of this sector.

4. Electric heat pumps

Heat pumps play an important role in decarbonizing the buildings sector in most net zero scenarios, accounting for up to 40% of heating market share and almost completely replacing natural gas furnaces in 2050 in some scenarios.

5. Carbon capture and storage

Carbon capture and storage plays an important role in decarbonization across sectors, including in the electricity sector for natural gas fired generation, in industry to decarbonize hard-to-abate emissions such as those from process heat, and for hydrogen production via stream methane reformation with natural gas. Carbon capture is adopted widely across sectors and regions in all net zero scenarios, with total CO₂ sequestration ranging from 32-162 Mt per year by 2050.

6. Bioenergy

Bioenergy plays an important role across all net zero scenarios, with liquid biofuels blended into the gasoline and diesel used in vehicles and renewable natural gas blended into the natural gas stream for use in industry and home heating. Bioenergy adoption ranges from 83-2260 PJ in 2050 across net zero scenarios.

7. Hydrogen

Produced either via natural gas reformation with carbon capture, or from renewable electricity via electrolysis, hydrogen is consumed for energy across all net zero scenarios. It is blended into the natural gas system as well as used in fuel cell electric vehicles to power heavy-duty transportation. Depending on the future cost of hydrogen production and hydrogen fuel cells, hydrogen vehicles could make up 41% of the heavy-duty vehicle fleet by 2050 in Canada.

Adoption of these seven technologies shows up consistently across the 216 net zero pathways on the Canada Energy Dashboard, after accounting for uncertainty in future technology costs, oil demand and offset availability, suggesting that these technologies are very likely to play an important role in Canada’s net zero future.

Figure 3: Vehicle market share in one net zero scenario presented on the Canada Energy Dashboard. Battery electric vehicles make up 81% of light-duty market share by 2050 in this net zero scenario. Heavy-duty vehicles are predominantly powered by battery electric and hydrogen fuel cell vehicles.

Other technologies may play an important role in Canada’s net zero future if investments are made to drive innovation and make them cost competitive.
These include:

8. Long duration electricity storage

Hydrogen storage is a longer duration storage option that can be used to help balance an increasingly intermittent electricity grid over a seasonal timescale, such as from summer when the sun is shining to winter when demand for space heating is high. Hydrogen becomes an important option for electricity storage in some net zero scenarios presented on the Canada Energy Dashboard, including those in which battery costs remain high while hydrogen production costs come down more quickly. In this case, 1.9 TWh of hydrogen storage is deployed by 2050.

9. Direct air capture

If direct air capture of CO₂ is commercialized, it could transform Canada’s net zero future. By providing cost-effective emissions offsets, direct air capture facilitates the continued production and consumption of fossil fuels in hard-to-abate sectors, allows for continued natural gas generation of electricity, and leads to greater overall economic growth while achieving net zero emissions. If available, direct air capture is adopted to a significant extent in all net zero scenarios after 2040, with adoption ranging from 267-489 Mt by 2050.

10. Small modular nuclear reactors

Small modular nuclear reactors are not available in the scenarios presented on the Canada Energy Dashboard due to uncertain costs and availability. However, it is worthy of note here as other research suggests this technology could play an important role in Canada’s net zero future, though an uncertain one. This is a technology we hope to include in a future iteration of the Canada Energy Dashboard.

The extent of the role for these technologies in Canada’s net zero future is less certain and will depend on investments made to drive down costs and facilitate adoption. If they do become widely adopted, however, these technologies could play a transformative role in defining Canada’s net zero pathway. They could also have a significant impact on the cost of achieving net zero emissions in Canada, which leads to our final insight.

Figure 4: Carbon capture adoption in one net zero scenario presented on the Canada Energy Dashboard. Direct air capture technology is available in this scenario, providing 336 Mt per year of emissions offsets across Canada by 2050.

Figure 5: GDP in one net zero scenario presented on the Canada Energy Dashboard. Canada’s economy grows at of 1.4% from 2020-2050 in this net zero scenario, where the majority of economic activity remains concentrated in sectors that do not produce many emissions (services).

Insight 3: Canada’s economy continues to grow in all net zero pathways

In the legislated policy scenario presented on the Canada Energy Dashboard (federal and provincial policies legislated as of January 2023), Canada’s economy grows at an average annual rate of 1.77-1.90% from 2020 to 2050. In all net zero scenarios, this growth rate is lower, but still positive.

In all 216 net zero futures presented on the Canada Energy Dashboard, Canada’s economy continues to grow annually out to 2050, while achieving the goal of net zero emissions.

The average annual growth rate ranges across net zero scenarios from 1.00-1.84% from 2020-2050. The low end of this range represents a net zero future where low carbon technologies including solar, wind, batteries, carbon capture and storage, and hydrogen are high cost, there is low availability of emissions offsets, including no commercial deployment of direct air capture, and there is low global demand for Canadian oil. The upper end of this range is a more technology-optimistic scenario, in which the cost of these low carbon technologies comes down, direct air capture technology becomes commercially available, and global demand for Canadian oil remains consistent with current demand.

Some sectors in Canada’s economy experience significant investment and grow at a greater rate in a net zero future.

Looking at total economic growth rates masks longer term structural changes that are occurring within Canada’s economy in a net zero future. For example, the “low carbon economy” booms in response to net zero (where the “low carbon” economy is defined here as technologies, services and resources that increase renewable energy supply, enhance energy productivity, or improve infrastructure and systems that transmit, store and use energy while reducing emissions).

The low carbon economy grows at a rate of 5.2-7.6% from 2020 to 2050 across net zero scenarios, with cumulative investment in these sectors, such as renewable electricity, electric vehicles, low carbon fuels and carbon capture technologies amounting to $2.1-3.3 trillion (CAD 2015) between now and 2050 in response to net zero policy.

This highlights a significant opportunity for growth in sectors that are aligned with Canada’s 2050 goal as our economy transitions to achieve net zero emissions.