To sign up to receive the latest Canadian Energy Centre research to your inbox email: inbox@canadianenergycentre.ca

Download the PDF here

Download the charts here

Worldwide concerns about energy security have put a renewed focus on the international liquefied natural gas (LNG) industry. The global demand for LNG is expected to increase over the next few decades.

Global demand growth will be driven primarily by Asian markets where the need for LNG is expected to increase from 277 million tonnes (MT) in 2025 to 509 MT by 2050 (see Figure 1). By 2050 the demand for LNG in Europe will be 83 MT and in Africa 20 MT. In South America too, demand will increase – from 13 MT in 2025 to 31 MT in 2050.

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

In North America (Canada, Mexico, and United States) a number of LNG projects that are either under construction or in the planning stages will benefit from the rise in global LNG demand.

North American LNG production is expected to grow from 112 MT in 2025 to over 255 MT by 2050 (see Figure 2). In Canada, the LNG projects under construction or in the planning stages include LNG Canada Phases 1 & 2, Woodfibre LNG, Cedar LNG, the Tilbury LNG expansion, and Ksi Lisims LNG. Canada’s LNG production is expected to grow from just 2 MT in 2025 to over 43 MT by 2050. In the United States production is projected to increase from 108 MT in 2025 to 210 MT in 2050.

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

This CEC Fact Sheet uses Rystad Energy’s Gas and LNG Markets Solution¹ to benchmark the cost competitiveness of LNG projects that are under construction and proposed in Canada compared to other LNG projects under construction and planned elsewhere in North America. (Note that the content of this report does not represent the views of Rystad Energy.)

The LNG cost competitiveness benchmarking analysis used the following performance metrics:

• LNG plant free-on-board (FOB) cost break-even;
• Total LNG plant cost (for delivery into Asia and Europe).

The objective of this LNG cost competitiveness benchmarking is to compare the competitiveness of Canadian LNG projects against those of major competitors in the United States and Mexico. The selection of other North American LNG facilities for the benchmark comparison with Canadian LNG projects (LNG Canada, the Tilbury LNG Expansion, Woodfibre LNG, Cedar LNG, and Ksi Lisims LNG) is based on the rationale that virtually all Canadian LNG plants are under construction or in the planning stage and that they compare well with other North American LNG plants that are also under construction or are being planned between 2023 and 2050. Further, to assess the cost competitiveness of the various LNG projects more accurately, we chose only North American LNG facilities with sufficient economic data to enable such a comparison. We compared the cost competitiveness of LNG coming from these other North American projects with LNG coming from Canada that is intended to be delivered to markets in Asia and Europe.

1. Rystad Energy is an independent energy research company providing data, analytics, and consultancy services to clients around the globe. Its Gas and LNG Markets Solution provides an overview of LNG markets worldwide. The Solution covers the entire value chain associated with gas and LNG production, country and sector-level demand, and LNG trade flows, infrastructure, economics, costs, and contracts through 2050. It allows for the evaluation of the entire LNG market infrastructure, including future planned projects, as well as the benchmarking of costs for LNG projects (Rystad Energy, 2024).

Comparison of LNG project FOB cost break-even (full cycle)

Figure 3 provides a comparison of the free-on-board (FOB) cost break-even for LNG facilities under construction or being planned in North America. FOB break-even costs include upstream and midstream costs for LNG excluding transportation costs (shipping) as seen from the current year. Break-even prices assume a discount rate of 10 percent and represent the point at which the net present value for an LNG project over a 20- to 30-year period becomes positive, including the payment of capital and operating costs, inclusive of taxes.

Among the selected group of North American LNG projects are Canadian LNG projects with an FOB break-even at the lower end of the range (US$7.18 per thousand cubic feet (kcf)) to those at the higher end (US$8.64 per thousand cubic feet (kcf)).

LNG projects in the United States tend to settle in the middle of the pack, with FOB break-even between US$6.44 per kcf and US$8.37 per kcf.

Mexico LNG projects have the widest variation in costs among the selected group of projects, ranging from US$6.94 per kcf to US$9.44 per kcf (see Figure 3).

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

Total costs by project for LNG delivery to Asia and Europe

The total cost by LNG plant includes FOB cost break-even, transportation costs, and the regasification tariff. Figure 4 compares total project costs for LNG destined for Asia from selected North American LNG facilities.

Canadian LNG projects are very cost competitive, and those with Asia as their intended market tend to cluster at the lower end of the scale. The costs vary by project, but range between US$8.10 per kcf and US$9.56 per kcf, making Canadian LNG projects among the lowest cost projects in North America.

The costs for Mexico’s LNG projects with Asia as the intended destination for their product tend to cluster in the middle of the pack. Costs among U.S. LNG facilities that plan to send their product to Asia tend to sit at the higher end of the scale, at between US$8.90 and US$10.80 per kcf.

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

Figure 5 compares total project costs for LNG to be delivered to Europe from select North American LNG facilities.

Costs from U.S. LNG facilities show the widest variation for this market at between US$7.48 per kcf and US$9.42 per kcf, but the majority of U.S. LNG facilities tend to cluster at the lower end of the cost scale, between US$7.48 per kcf and US$8.61 per kcf (see Figure 5).

Canadian projects that intend to deliver LNG to Europe show a variety of costs that tend to cluster at the middle to higher end of the spectrum, ranging from US$9.60 per kcf to and US$11.06 per kcf.

The costs of Mexico’s projects that are aimed at delivering LNG to Europe tend to cluster in the middle of the spectrum (US$9.11 per kcf to US$10.61 per kcf).

Source: Derived from Rystad Energy, Gas and LNG Markets Solution.

Conclusion

LNG markets are complex. Each project is unique and presents its own challenges. The future of Canadian LNG projects depends upon the overall demand and supply in the global LNG market. As the demand for LNG increases in the next decades, the world will be searching for energy security.

The lower liquefaction and shipping costs coupled with the lower cost of the natural gas itself in Western Canada translate into lower prices for Canadian LNG, particularly that destined for Asian markets. Those advantages will help make Canadian LNG very competitive and attractive to markets worldwide.

References (as of March 23, 2024)

Rystad Energy (2024), Gas & LNG Markets Solution <https://bit.ly/3Q6RorN>.

Creative Commons Copyright

Research and data from the Canadian Energy Centre (CEC) is available for public usage under Creative Commons copyright terms with attribution to the CEC. Attribution and specific restrictions on usage including non-commercial use only and no changes to material should follow guidelines enunciated by Creative Commons here: Attribution-NonCommercial-NoDerivs CC BY-NC-ND.

To sign up to receive the latest Canadian Energy Centre research to your inbox email: inbox@canadianenergycentre.ca

Download the PDF here

Download the charts here

Overview

Recent global conflicts, which have been partly responsible for a global spike in energy prices, have cast their shadow on energy markets around the world. Added to this uncertainty is the ongoing debate among policymakers and public institutions in various jurisdictions about the role of traditional forms of energy in the global economy.

One widely quoted study influencing the debate is the International Energy Agency’s (IEA) World Energy Outlook, the most recent edition of which, World Energy Outlook 2023 (or WEO 2023), was released recently (IEA 2023).

In this CEC Fact Sheet, we examine projections for oil and natural gas production, demand, and investment drawn from the World Energy Outlook 2023 Extended Dataset, using the IEA’s modelled scenario STEPS, or the Stated Policies Scenario. The Extended Dataset provides more detailed data at the global, regional, and country level than that found in the main report.

The IEA’s World Energy Outlook and the various scenarios

Every year the IEA releases its annual energy outlook. The report looks at recent energy supply and demand, and projects the investment outlook for oil and gas over the next three decades. The World Energy Outlook makes use of a scenario approach to examine future energy trends. WEO 2023 models three scenarios: the Net Zero Emissions by 2050 Scenario (NZE), the Announced Pledges Scenario (APS), and the Stated Policies Scenario (STEPS).

STEPS appears to be the most plausible scenario because it is based on the world’s current trajectory, rather than the other scenarios set out in the WEO 2023, including the APS and the NZE. According to the IEA:

The Stated Policies Scenario is based on current policy settings and also considers the implications of industrial policies that support clean energy supply chains as well as measures related to energy and climate. (2023, p. 79; emphasis by author)

and

STEPS looks in detail at what [governments] are actually doing to reach their targets and objectives across the energy economy. Outcomes in the STEPS reflect a detailed sector-by-sector review of the policies and measures that are actually in place or that have been announced; aspirational energy or climate targets are not automatically assumed to be met. (2023, p. 92)

Key results

The key results of STEPS, drawn from the IEA’s Extended Dataset, indicate that the oil and gas industry is not going into decline over the next decade—neither worldwide generally, nor in Canada specifically. In fact, the demand for oil and gas in emerging and developing economies under STEPS will remain robust through 2050.

Oil and natural gas production projections under STEPS

World oil production is projected to increase from 94.8 million barrels per day (mb/d) in 2022 to 97.2 mb/d in 2035, before falling slightly to 94.5 mb/d in 2050 (see Figure 1).

Source: IEA (2023b)

Canadian overall crude oil production is projected to increase from 5.8 mb/d in 2022 to 6.5 mb/d in 2035, before falling to 5.6 mb/d in 2050 (see Figure 2).

Source: IEA (2023b)

Canadian oil sands production is expected to increase from 3.6 mb/d in 2022 to 3.8 mb/d in 2035, and maintain the same production level till 2050 (see Figure 3).

Source: IEA (2023b)

World natural gas production is anticipated to increase from 4,138 billion cubic metres (bcm) in 2022 to 4,173 bcm in 2050 (see Figure 4).

Source: IEA (2023b)

Canadian natural gas production is projected to decrease from 204 bcm in 2022 to 194 bcm in 2050 (see Figure 5).

Source: IEA (2023b)

Oil demand under STEPS

World demand for oil is projected to increase from 96.5 mb/d in 2022 to 97.4 mb/d by 2050 (see Tables 1A and 1B). Demand in Africa for oil is expected to increase from 4.0 mb/d in 2022 to 7.7 mb/d in 2050. Demand for oil in the Asia-Pacific is projected to increase from 32.9 mb/d in 2022 to 35.1 mb/d in 2050. Demand for oil from emerging and developing economies is anticipated to increase from 47.9 mb/d in 2022 to 59.3 mb/d in 2050.

Source: IEA (2023b)

Source: IEA (2023b)

Natural gas demand under STEPS

World demand for natural gas is expected to increase from 4,159 billion cubic metres (bcm) in 2022 to 4,179 bcm in 2050 (see Figures 6 and 7). Demand in Africa for natural gas is projected to increase from 170 bcm in 2020 to 277 bcm in 2050. Demand in the Asia-Pacific for natural gas is anticipated to increase from 900 bcm in 2020 to 1,119 bcm in 2050.

Source: IEA (2023b)

Source: IEA (2023b)

Cumulative oil and gas investment expected to be over $21 trillion

Taking into account projected global demand, between 2023 and 2050 the cumulative global oil and gas investment (upstream, midstream, and downstream) under STEPS is expected to reach nearly U.S.$21.1 trillion (in $2022). Global oil investment alone is expected to be over U.S.$13.1 trillion and natural gas investment is predicted to be over $8.0 trillion (see Figure 8).

Between 2023 and 2050, total oil and gas investment in North America (Canada, the U.S., and Mexico) is expected to be nearly U.S.$5.6 trillion, split between oil at over $3.8 trillion and gas at nearly $1.8 trillion (see Figure 8). Oil and gas investment in the Asia Pacific, over the same period, is estimated at nearly $3.3 trillion, split between oil at over $1.4 trillion and gas at over $1.9 trillion.

Source: IEA (2023b)

Conclusion

The sector-by-sector measures that governments worldwide have put in place and the specific policy initiatives that support clean energy policy, i.e., the Stated Policies Scenario (STEPS), both show oil and gas continuing to play a major role in the global economy through 2050. Key data points on production and demand drawn from the IEA’s WEO 2023 Extended Dataset confirm this trend.

Positioning Canada as a secure and reliable oil and gas supplier can and must be part of the medium- to long-term solution to meeting the oil and gas demands of the U.S., Europe, Asia and other regions as part of a concerted move supporting energy security.

The need for stable energy, which is something that oil and natural gas provide, is critical to a global economy whose population is set to grow by another 2 billion people by 2050. Along with the increasing population comes rising incomes, and with them comes a heightened demand for oil and natural gas, particularly in many emerging and developing economies in Africa, the Asia-Pacific, and Latin America, where countries are seeing urbanization and industrialization grow rapidly.

References (as of February 11, 2024)

International Energy Agency (IEA), 2023(a), World Energy Outlook 2023 <http://tinyurl.com/4nv9xyfj>; International Energy Agency (IEA), 2023(b), World Energy Outlook 2023 Extended Dataset <http://tinyurl.com/3222553b>.

Creative Commons Copyright

Research and data from the Canadian Energy Centre (CEC) is available for public usage under Creative Commons copyright terms with attribution to the CEC. Attribution and specific restrictions on usage including non-commercial use only and no changes to material should follow guidelines enunciated by Creative Commons here: Attribution-NonCommercial-NoDerivs CC BY-NC-ND.

To sign up to receive the latest Canadian Energy Centre research to your inbox email: inbox@canadianenergycentre.ca

Download the PDF here

Download the charts here

The following summary facts and data were drawn from 30 Fact Sheets and Research Briefs and various Research Snapshots that the Canadian Energy Centre released in 2023. For sources and methodology and for additional data and information, the original reports are available at the research portal on the Canadian Energy Centre website: canadianenergycentre.ca.

Environment

1.

Canada’s share of Global CO2 emissions is dropping

Since the Kyoto Summit in 1997, Canada’s share of the world’s CO2 emissions has fallen from 2.2 per cent to 1.6 per cent. Canada’s share of world CO2 emissions decreased by 25 per cent from the Kyoto climate summit to the recent Dubai climate summit.

Source: CEC Research, Calculation from Various Database (2023)

2.

Canadian natural gas is getting cleaner

Emissions intensity is the emission rate of a given pollutant relative to the intensity of a specific activity or industrial production process. Emissions intensity is determined by dividing the number of absolute emissions by some unit of output, such as GDP, energy used, population, or barrel of oil produced. Between 2010 and 2021, the CO2 emissions intensity of Canadian natural gas production fell from 63.5 kilograms CO2e per barrel of oil equivalent to 44.5 kilograms CO2e per barrel of oil equivalent, a decline of nearly 30 per cent.

Source: Derived from Rystad Energy

3.

Canadian oil sands production is getting cleaner

Between 2000 and 2021, the emissions intensity of the oil sands subsector fell from 111.8 kilograms CO2e per barrel to just under 79.3 kilograms CO2e per barrel, a decline of over 29 per cent. As GHG emissions intensity in the upstream oil sector continues to decline and because Canada’s ESG performance remains highly rated, Canadian oil has the potential to become the barrel of choice on the world stage.

Source: Derived from Rystad Energy

4.

Canada’s oil and gas sector is doing its part to reduce methane emissions

Gas flaring is the burning off of the natural gas that is generated in the process of oil extraction and production. It is a significant source of greenhouse gas emissions (GHGs). In 2022, 138,549 million cubic meters (m3) (or 139 billion cubic meters (bcm)) of flared gases were emitted worldwide, creating 350 million tonnes of CO2 emissions annually. At 945 million m3 in 2022, Canada was the eighth lowest flarer among the world’s top 30 oil and gas producers (23rd spot). Canada decreased its flaring emissions by 320 million m3 from its 2012 level of 1,264 million m3, a 25 per cent drop. In 2022, Canada contributed just 0.7 per cent of the global amount of gas flaring despite being the world’s fourth largest oil producer.

Source: World Bank (undated)

5.

Environmental spending by Canada’s oil and gas sector remains high

Canadian businesses spent $28.6 billion on environmental protection between 2018 and 2020. When capital and operating expenses on environmental protection are combined, out of that $28.6 billion the oil and gas sector spent $9.4 billion, or nearly 33 per cent. In 2020 alone, when capital and operating expenses on environmental protection are combined, the oil and gas sector spent $2.7 billion, or 27 per cent of all Canadian business spending on the environment that year.

Source: Derived from Statistics Canada, Table 38-10-0130-01

6.

Alberta among top provincial spenders on environmental protection

Industries are not alone in spending money on environmental protection; provincial governments do as well. Total provincial government spending on environmental protection between 2008 and 2021 was nearly $143.5 billion. In 2021, Alberta spent $22.6 billion or 15.7 per cent of all provincial expenditures on the environment, while its proportion of the national population was 11.6 per cent.

Source: Statistics Canada, Tables 10-10-0005-01 and 17-10-0005-01; and authors’ calculations

Economics of the Oil and Gas Sector

7.

Revenue contribution from the oil and gas sector: $578.7 billion between 2000 and 2021

The gross revenue contribution to federal, provincial, and municipal governments received exclusively from the oil and gas sector was $578.7 billion between 2000 and 2021, an average of $26.3 billion per year. The $578.7 billion figure includes $461.6 billion in direct provincial revenues, $99.6 billion in direct federal revenues, and $17.3 billion in indirect federal, provincial, and municipal taxes.

Sources: Statistics Canada, 2022 (a, b, c, d), Statistics Canada 2023 (a,b), and CAPP, 2022

8.

Projected government revenues from Canada’s oil sands sector: US$231 billion from 2023 to 2032

Government revenues from Canada’s oil sands sector (which includes provincial royalties and federal and provincial corporate taxes) are expected to rise from US$17.1 billion in 2023 to US$28.7 billion in 2032—nearly US$231 billion cumulatively—assuming the price of oil is a flat US$80 per barrel. Both projections would be about 20 per cent more in Canadian dollars at the current exchange rate.

Source: Derived from Rystad Energy

9.

Projected capex from Canadian oil sands sector: nearly US$113 billion over the next decade

Capex from the Canadian oil sands sector is projected to reach US$112.7 billion over the next decade. Assuming a flat US$80 per barrel for the price of oil, oil sands sector capex is expected to rise from US$10.1 billion in 2023 to US$14.2 billion in 2032. Those projections would be about 20 per cent more in Canadian dollars at the current exchange rate.

Source: Derived from Rystad Energy

10.

Canadian overall upstream oil sector supply costs have declined over 35% since 2015

The cost of supply for the Canadian upstream oil sector is the minimum constant dollar price needed to recover all capital expenditures, operating costs, royalties, taxes, and earn a specified return on investment. Supply costs indicate whether the upstream oil sector is economically viable.

Supply costs within Canada’s upstream oil sector declined significantly between 2015 and 2022. At the end of 2015, the Canadian upstream oil sector’s weighted average breakeven price was nearly US$76.00 per barrel of Brent. By the end of 2022, that weighted average breakeven price was US$49.09 per barrel of Brent, a decline of US$26.91 per barrel, or over 35 per cent since 2015. This number incorporates different phases of oil production including producing, under development, and discovery.

Source: Derived from Rystad Energy

11.

Breakeven costs in Canadian natural gas sector fifth lowest in the world

The Canadian natural gas sector had a weighted average breakeven gas price of US$2.31 per thousand cubic feet (mcf) in 2022, fifth lowest among major natural gas producing countries. Only in Saudi Arabia (US$1.09 per mcf), Iran (US$1.39 per mcf), Qatar (US$1.93 per mcf), and the United States (US$2.22 per mcf) was the breakeven gas price lower. The weighted average breakeven costs for Canada‘s natural gas sector in 2022 were lower than in Russia, Norway, Algeria, China, and Australia.

Source: Derived from Rystad Energy

12.

Natural gas prices have skyrocketed

Natural gas prices have skyrocketed around the world in the last two years. In 2021, the price of natural gas in Asia was US$18.60 per million British thermal units (mmbtu) compared to US$4.40 per mmbtu in 2020—an increase of 323 per cent in just one year. By comparison, in 2021 natural gas sold for US$2.80 per mmbtu on Alberta’s AECO-C trading hub; in Asia it was US$15.88 per mmbtu more (or 564 per cent higher). Between 2019 and 2021, the price gap between Henry Hub in the US and AECO-C natural gas fluctuated from a high of 98 per cent in 2019 to a low of 26 per cent in 2020. In 2021, U.S. natural gas sold for US$3.84 per mmbtu, 40 per cent higher than the US$2.75 per mmbtu average price for AECO-C natural gas that year.

Sources: BP Statistical Review of World Energy and International Monetary Fund

13.

Projected government revenues from the Canadian natural gas sector: over US$227 billion through 2050

Government revenues from the Canadian natural gas sector are projected to reach over US$227 billion through 2050. Under a Henry Hub price for natural gas of US$3.00 per thousand cubic feet (kcf), government revenues from the country’s natural gas sector are expected to rise from US$1.4 billion in 2023 to US$3.4 billion in 2050. Should the Henry Hub price reach US$4.00 per kcf, government revenues from the country’s natural gas sector would be projected to rise from US$2.0 billion in 2023 to US$10.0 billion in 2050.

Source: Derived from Rystad Energy

14.

Small business plays a key role in the oil and gas sector

Small business plays a key job creation role in Canada’s economy. Statistics Canada defines small businesses as those with between one and 99 paid employees. Medium-size enterprises are those with 100 to 499 employees, while large enterprises have 500 or more employees. In 2022, of the oil and gas firms in Canada, 96.0 per cent were small, 3.5 per cent were medium-sized, and 0.6 per cent were large companies.

With the exception of construction, the oil and gas sector in Canada has a higher proportion of small businesses than other major industries. As of 2022, 96.0 per cent of all oil and gas energy firms had between 1 and 99 employees compared with 93.2 per cent in manufacturing, 89.6 per cent in utilities, and 99.0 per cent in the construction sector. The all-industry average is 98.0 per cent.

Source: Authors’ calculation based on Statistics Canada Table 33-10-0661-01

15.

Canada’s oil and gas sector has an impact on key industries across the Canadian economy

In 2019, the activities of the Canadian oil and gas sector were indirectly responsible for significant portions of the GDP created by other key industries across Canada. The sector’s activities generated $100.9 million in GDP in the food and beverage merchant wholesalers industry that year and nearly $4.1 billion in GDP in architectural, engineering, and related services. In 2019, the top five industries whose GDP was most affected by their association with Canada’s oil and gas sector included:

• Architectural, engineering, and related services: $4.1 billion
• Machinery, equipment, and supplies merchant wholesalers: $3.4 billion
• Banking and other depository credit intermediation: $2.1 billion
• Computer systems design and related services: $1.7 billion
• Electrical power generation, transmission, and distribution: $1.5 billion

Source: Statistics Canada

16.

Employment and wages in the oil and gas sector remain high

In 2021, the oil and gas sector directly employed 147,371 Canadians. The number of direct jobs in the sector rose from 158,483 in 2009 to 185,393 in 2014, then fell to 134,939 in 2016, the result of the sharp decline in energy prices, before rising to 160,379 in 2019 as energy prices gradually recovered. The onslaught of COVID-19 in 2020 saw oil and gas sector jobs fall back to 135,475, before recovering to 147,371 in 2021. The average salary of a worker in the Canadian oil and gas sector in 2021 was $133,293. The average salary for a worker in the sector had risen from $103,448 in 2009 to $133,776 in 2015, before leveling off to $129,716 in 2019 due to the energy price slump. However, between 2009 and 2021, the average annual wage of a worker in the Canadian oil and gas sector increased by nearly 29 per cent.

Source: Statistics Canada

Social and Governance

17.

Women’s employment in Canada’s oil and gas sector is recovering

The number of females employed in the oil and gas sector reached a high of 42,440 in 2013, dipping to 30,285 in 2020 due to COVID-19, and then recovering somewhat to 33,068 in 2021. Between 2009 and 2021, the average wage for a female worker in the Canadian oil and gas industry increased by over 53 per cent.

Source: Statistics Canada

18.

Diversity increasing in the oil and gas sector

Between 2009 and 2021, workers in the Canada’s oil and gas sector who identified as Indigenous increased by nearly 17 per cent. Between 2009 and 2021, the average salary of an Indigenous person employed in Canada’s oil and gas sector increased by over 39 per cent.

Source: Statistics Canada

19.

More new Canadians working in the oil and gas sector over the long term

In 2021, 24,931 immigrants were directly employed in the Canadian oil and gas sector. The number of immigrants employed in the oil and gas industry reached 28,469 by 2014, declining to 21,622 in 2016 before recovering to 26,569 in 2019. Between 2009 and 2021, immigrant employment in the Canadian oil and gas sector increased by over 9 per cent. Between 2009 and 2021, the average wage and salary of an immigrant employed in the Canadian oil and gas sector increased by nearly 25 per cent.

Source: Statistics Canada

Carbon Capture, Utilization and Storage (CCUS)

20.

Carbon Capture, Utilization and Storage (CCUS) growing across the world

At the end of 2022, there were 65 commercial carbon capture, utilization and storage (CCUS) projects in operation globally capable of capturing nearly 41 million tonnes per annum (mtpa) of CO2 across various industries, including the oil and gas sector. There are another 478 projects in various stages of development around the world that will be capable of capturing roughly another 559 mtpa of CO2. These projects are in various stages of development: some are at the feasibility stage while others are in the concept and construction phases. If all projects move ahead as scheduled, by 2030 it is estimated that nearly 500 CCUS projects could be operating worldwide, having the ability to capture 623.0 mtpa of CO2. In fact,  between 2023 and 2030, global carbon capture capacity could grow from 43.5 mtpa to 623.0 mtpa, an increase of over 1,332 per cent.

Source: Derived from Rystad Energy

21.

Projected Carbon Capture, Utilization and Storage (CCUS) in Canada has a bright future

Global carbon capture capacity and worldwide spending trends to date underline the fact that the future is bright for Canadian investments in CCUS. Assuming that appropriate government policies and regulations are put in place, Canada can expect to see further project announcements and increased investment in the technology. Canada will likely emerge as a CCUS heavyweight given the prevailing policy environment and the existential need for oil sands players to decarbonize. Rystad Energy estimates that Canada alone could account for around 20 per cent of cumulative carbon capture demand between 2023 and 2030.

Source: Derived from Rystad Energy

Nuclear and Renewables

22.

Nuclear energy a stable source of electricity production in Canada

Nuclear power plants have been producing electricity in Canada since the 1960s. As of 2022, four nuclear power plants operate in Canada: three in Ontario and one in New Brunswick. Canada’s share of nuclear electricity production has remained relatively stable over the past few decades. In 1990, nuclear energy accounted for about 14.8 per cent of Canada’s electricity production; by 2021, this share had decreased only slightly to about 14.3 per cent.

Source: International Atomic Energy Agency

23.

Canada’s trade in renewable products is modest

Trade is an essential component of Canada’s economic activity, accounting for about two-thirds of the economy and employing 3.3 million people. In 2021, Canada imported solar panel products with a value of CAN$653 million and wind turbine products with a value of CAN$91 million. The value of the solar panels and wind turbines Canada imported was much higher than the CAN$260 million export value for both products.

Source: Government of Canada, Trade Data Online

Liquefied Natural Gas (LNG)

24.

Global LNG production projected to rise

Global liquefied natural gas (LNG) production is expected to reach nearly 720 million tonnes by 2035. That year the United States is projected to be the world’s leading LNG producer at 259 million tonnes, followed by Qatar at 121 million tonnes, and Australia at 78 million tonnes. Russian LNG supply was expected to grow to 54 million tonnes by 2035, but this is now in question, leaving opportunities for countries such as Canada to fill the void. In fact, by 2035, Canada could be the fifth largest LNG producer at nearly 33 million tonnes of LNG.

Source: Derived from Rystad Energy

25.

Canadian LNG exports could help reduce global emissions

Asia is a significant source of CO2 emissions. Canadian LNG exports can help in reducing emissions from the Asian energy mix. If Canada increases its LNG export capacity to Asia, by 2050 net global emissions could decline by 188 million tonnes of CO2 equivalent per year. That would have the annual impact of taking 41 million cars off the road.

CEC Research Briefs

Canadian Energy Centre (CEC) Research Briefs are contextual explanations of data as they relate to Canadian energy. They are statistical analyses released periodically to provide context on energy issues for investors, policymakers, and the public. The source of profiled data depends on the specific issue. This research brief is a compilation of previous Fact Sheets and Research Briefs released by the centre in 2023. Sources can be accessed in the previously released reports. All percentages in this report are calculated from the original data, which can run to multiple decimal points. They are not calculated using the rounded figures that may appear in charts and in the text, which are more reader friendly. Thus, calculations made from the rounded figures (and not the more precise source data) will differ from the more statistically precise percentages we arrive at using the original data sources.

About the author

This CEC Research Brief was compiled by Ven Venkatachalam, Director of Research at the Canadian Energy Centre.

Acknowledgements

The author and the Canadian Energy Centre would like to thank and acknowledge the assistance of an anonymous reviewer for the review of this paper.

Creative Commons Copyright

Research and data from the Canadian Energy Centre (CEC) is available for public usage under creative commons copyright terms with attribution to the CEC. Attribution and specific restrictions on usage including non-commercial use only and no changes to material should follow guidelines enunciated by Creative Commons here: Attribution-NonCommercial-NoDerivs CC BY-NC-ND.

To sign up to receive the latest Canadian Energy Centre research to your inbox email: inbox@canadianenergycentre.ca

Download the PDF here

Download the charts here

Introduction

High energy prices, inflation, war, and the ongoing economic recovery from the pandemic has highlighted the general worldwide demand for electricity, particularly in Asia and Europe. The growing demand for electricity on these two continents has led some electricity producing plants to rely increasingly heavily on coal as a power source.

The electricity sector accounts for 34 per cent of the world’s energy-related carbon dioxide (CO2) emissions. In this Fact Sheet, we detail recent trends in electricity production and demand across the globe as well as CO2 emissions from the electricity sector worldwide.

Carbon dioxide emissions from the world’s top ten emitters between 2000 and 2022

A total of 38.2 gigatonnes (Gt) of energy-related CO2 was emitted globally in 2022, an increase of 53 per cent from 2000. However, the increase is not consistent for all countries; between 2000 and 2023, CO2 emissions trends diverged. Emissions from China, India, and Indonesia more than doubled in the last two decades, whereas emissions for other countries remained relatively consistent or even declined.

In 2022, Canada’s total energy-related CO2 emissions were 0.62 Gt, or 1.6 per cent of the global total. That compares to emissions of 0.64 Gt in South Korea, 1.09 Gt in Japan, 2.8 Gt in India, 5.0 Gt in the United States, and 13.0 Gt in China (see Figure 1).

Sources: IEA World Energy Statistics database and Enerdata

Demand for electricity and sources of emissions

Global domestic electricity consumption increased from 13,188 terawatt-hours (TWh) in 2000 to 25,681 TWh in 2022 and estimates are that global demand for electricity will rise to 35,000 TWh by 2040.¹

That is a jump of 94 per cent, or 12,492 TWh, between 2000 and 2022. During the same period, electricity consumption in Asia rose a whopping 280 per cent. In Africa the demand for electricity increased by 90 per cent (see Figure 2). Coal remains the world’s largest source of fuel for electricity generation, with approximately 10,317 terawatt-hours of electricity generated by coal-fired plants in 2022 (see Figure 3).

1. The IEA’s Electricity Market Report 2022 states that nearly all of the increase is attributable to growing electricity consumption in developing countries across southeast Asia and Africa.

Sources: IEA World Energy Statistics database and Enerdata

Sources: IEA World Energy Statistics database and Enerdata

In recent years, electricity generated from the combustion of coal declined in Canada, the United States, Europe, and Africa. However, electricity generated from coal combustion has continued to grow in China, India, and other parts of Asia.

Between 2000 and 2022, the share of coal-powered electricity generation in Asia increased from 49.8 to 56. 3 per cent, while in Canada it decreased from 19.4 per cent to less than 5 per cent.

Sources: IEA World Energy Statistics database and Enerdata

Source of emissions in the electricity sector

The electricity sector accounts for 34 per cent of the carbon dioxide emitted across the world. The sector emitted 13.05 gigatonnes of CO2 in 2022, an increase of 5.01 Gt from 2000. In Asia, between 2000 and 2022, CO2 emissions from the electricity sector increased from 2.5 Gt to 8.3 Gt and the sector’s share of carbon dioxide (CO2) emissions increased from just over 32 per cent to well over 40 per cent (see Figure 5).

Sources: IEA World Energy Statistics database and Enerdata

Coal burned to generate electricity accounts for the majority of the CO2 emitted in power generation. In 2022, coal-fired electricity\ generation accounted for 9.89 Gt, or nearly 76 per cent of the worldwide CO2 emissions from the electricity sector. The share was even higher in Asia where 92 per cent of emissions from the electricity sector come from coal combustion. Asian coal-fired plants accounted for 7.62 Gt of the total 8.26 Gt of emissions from the sector on that continent (see Figure 6).

Sources: IEA World Energy Statistics database and Enerdata

Conclusion

The global electricity sector, and particularly the sector in Asia, is a major source of CO2 emissions. Relative to Canada’s existing carbon emissions, emissions from the coal-fired power plants worldwide will make any reductions in Canada’s carbon emissions and resulting job losses, higher taxes, and higher costs for consumers and businesses—meaningless.

As 56 per cent of the electricity in Asia is generated by coal-fired plants, a transition from coal- to gas-fired electricity generation in the region could lead to significant reductions in CO2 emissions, reducing emissions by 50 per cent on average. The corollary is that there is a potential market in Asia for natural gas extracted in and exported from Canada. Canada has an opportunity to play a useful and meaningful role in reducing CO2 emissions from the electricity sector by encouraging and contributing to the global natural gas market.

Notes

This CEC Fact Sheet was compiled by Ven Venkatachalam at the Canadian Energy Centre (www.canadianenergycentre.ca). The author and the Canadian Energy Centre would like to thank and acknowledge the assistance of an anonymous reviewer in reviewing the data and research for this Fact Sheet.

References (live as of November 2, 2023)

Canadian Energy Centre (November 7, 2022), Canadian LNG has massive opportunity in Asia: report <https://tinyurl.com/2p9525j6>; Enerdata (2022), Power Plant Tracker database <https://bit.ly/3xfgOdF>; IEA (2022), Electricity Market Report – January 2022 <https://bit.ly/3M0723j> IEA (Undated), World Energy Statistics Database <https://tinyurl.com/ytz789m4>

Creative Commons Copyright

Research and data from the Canadian Energy Centre (CEC) is available for public usage under Creative Commons copyright terms with attribution to the CEC. Attribution and specific restrictions on usage including non-commercial use only and no changes to material should follow guidelines enunciated by Creative Commons here: Attribution-NonCommercial-NoDerivs CC BY-NC-ND.

To sign up to receive the latest Canadian Energy Centre research to your inbox email: inbox@canadianenergycentre.ca

Download the PDF here

Download the charts here

Overview

This Fact Sheet analyzes the upstream oil industry’s record on flaring in Canada relative to other top oil-producing countries. Gas flaring is the burning off of the natural gas that is generated in the process of oil extraction and production. Flaring is relevant because it is a source of greenhouse gas emissions (GHGs) (see Appendix).

In 2022, 138,549 million cubic meters (m3) (or 139 billion cubic meters (bcm)) of flared gases were emitted worldwide, creating 350 million tonnes of CO2 emissions annually. Canada is a significant oil producer; it has the third-largest proven crude oil reserves and is the fourthlargest crude oil producer in the world (Natural Resources Canada, undated), and so contributes to flaring.

Flaring comparisons

This Fact Sheet uses World Bank data to provide international comparisons of flaring. It also draws on U.S. Energy Information Administration (EIA) crude oil production data to compare flaring among the top 10 crude oil producing countries.

Table 1 shows gas flaring volumes in 2012 and 2022. In absolute terms, Russia recorded more flaring than any other country at 25,495 million m3 (25.4 bcm) in 2022, which was 1,628 million m3 (7 per cent) higher than in 2012.

The four countries that are the top GHG emitters through flaring (Russia, Iraq, Iran, and Algeria) accounted for 50 per cent of global gas flaring in 2022.

At 945 million m3, Canada was the eighth lowest flarer in 2022 (23rd spot out of the top 30 countries). It decreased its flaring emissions by 320 million m3 from the 2012 level of 1,264 million m3, a 25 per cent drop.

In 2022, Canada contributed just 0.7 per cent of the global amount of gas flaring despite being the world’s fourth largest oil producer (see Table 1).

Sources: World Bank (undated)

Flaring declined worldwide between 2012 and 2022

Figure 1 shows the change in flaring volumes between 2012 and 2022. Nine countries flared more in 2022 than in 2012, while 21 countries flared less. In the last decade, the global flaring volume decreased by 3 per cent.

• The three countries that most significantly increased flaring between 2012 and 2022 were the Republic of the Congo (65 per cent), Iran (56 per cent), and Iraq (41 per cent).
• The three countries that most significantly decreased flaring between 2012 and 2022 were Uzbekistan (-76 per cent), Columbia (-75 per cent) and Kazakhstan (-74 per cent).
• As noted earlier, flaring fell by 25 per cent in Canada between 2012 and 2022.

Sources: World Bank (undated)

Comparing flaring to increased production

The decreases in flaring in Canada between 2012 and 2022 shown in Table 1 and Figure 1 understate the magnitude of the decline in flaring in the country. That is because Canada’s crude oil production increased by 45 per cent in that period, even as absolute flaring decreased by 25 per cent (see Table 2).

Canada compares very favourably with the United States, which increased crude oil production by 82 per cent and decreased flaring by 16 per cent.

Sources: World Bank (undated) and EIA (2023)

Largest oil producers and flaring intensity

To fully grasp how much more effective Canada has been than many other oil producers in reducing flaring, Table 3 compares both flaring intensity (gas flared per unit of oil production) and crude oil production among the top 10 oil producing countries (which account for 73 per cent of the world oil production).

Canada is the fourth-largest producer of crude oil, and its gas flaring intensity declined by 48 per cenft between 2012 and 2022. Four of the top 10 oil producers witnessed their flaring intensity increase between 2012 and 2022.

Sources: World Bank (undated) and EIA (2023)

Conclusion

Gas flaring contributes to greenhouse gas emissions. However, it is possible for countries to both increase their oil production and still reduce flaring. Canada is one noteworthy example of a country that has significantly reduced flaring not only compared to its increased production of crude oil, but also in absolute terms.

Appendix

Background

Flaring and venting are two ways in which an oil or natural gas producer can dispose of waste gases. Venting is the intentional controlled release of uncombusted gases directly to the atmosphere, and flaring is combusting natural gas or gas derived from petroleum in order to dispose of it.¹ As Matthew R. Johnson and Adam R. Coderre noted in their 2012 paper on the subject, flaring in the petroleum industry generally falls within three broad categories:

• Emergency flaring (large, unplanned, and very short-duration releases, typically at larger downstream facilities or off-shore platforms);
• Process flaring (intermittent large or small releases that may last for a few hours or a few days as occurs in the upstream industry during well-test flaring to assess the size of a reservoir or at a downstream plant during a planned process blowdown); and
• Production flaring (may occur continuously for years while oil is being produced).

To track GHGs from flaring and venting, Environment Canada (2016) defines such emissions as:

• Fugitive emissions: Unintentional releases from venting, flaring, or leakage of gases from fossil fuel production and processing, iron and steel coke oven batteries, or CO2 capture, transport, injection, and storage infrastructure.
• Flaring emissions: Controlled releases of gases from industrial activities from the combustion of a gas or liquid stream produced at a facility, the purpose of which is not to produce useful heat or work. This includes releases from waste petroleum incineration, hazardous emission prevention systems, well testing, natural gas gathering systems, natural gas processing plant operations, crude oil production, pipeline operations, petroleum refining, chemical fertilizer production, and steel production.
• Venting emissions: Controlled releases of a process or waste gas, including releases of CO2 associated with carbon capture, transport, injection, and storage; from hydrogen production associated with fossil fuel production and processing; of casing gas; of gases associated with a liquid or a solution gas; of treater, stabilizer, or dehydrator off-gas; of blanket gases; from pneumatic devices that use natural gas as a driver; from compressor start-ups, pipelines, and other blowdowns; and from metering and regulation station control loops.

1. Many provinces regulate flaring and venting including Alberta (Directive 060) British Columbia (Flaring and Venting Reduction Guideline), and Saskatchewan (S-10 and S-20). Newfoundland & Labrador also has regulations that govern offshore flaring.

Notes

This CEC Fact Sheet was compiled by Ven Venkatachalam and Lennie Kaplan at the Canadian Energy Centre: www.canadianenergycentre.ca. All percentages in this report are calculated from the original data, which can run to multiple decimal points. They are not calculated using the rounded figures that may appear in charts and in the text, which are more reader friendly. Thus, calculations made from the rounded figures (and not the more precise source data) will differ from the more statistically precise percentages we arrive at using source data. The authors and the Canadian Energy Centre would like to thank and acknowledge the assistance of an anonymous reviewer in reviewing the data and research for this Fact Sheet.

References (All links live as of September 23, 2023)

Alberta Energy Regulator (2022), Directive 060: Upstream Petroleum Industry Faring, Incinerating, and Venting <https://bit.ly/3AMYett>; BC Oil and Gas Commission (2021), Flaring and Venting Reduction Guideline, version 5.2 <https://bit.ly/3CWRa0i>; Canada-Newfoundland and Labrador Offshore Petroleum Board (2007), Offshore Newfoundland and Labrador Gas Flaring Reduction <https://bit.ly/3RhKpKu>; D&I Services (2010), Saskatchewan Energy and Resources: S-10 and S-20 <https://bit.ly/3TBrVGJ>; Johnson, Matthew R., and Adam R. Coderre (2012), Compositions and Greenhouse Gas Emission Factors of Flared and Vented Gas in the Western Canadian Sedimentary Basin, Journal of the Air & Waste Management Association 62, 9: 992-1002 <https://bit.ly/3cJRqPd>; Environment Canada (2016), Technical Guidance on Reporting Greenhouse Gas Emissions/Facility Greenhouse Gas Emissions Reporting Program <https://bit.ly/3CVQR5C>; Natural Resources Canada (Undated), Oil Resources <https://bit.ly/3oWWhW0>; U.S. Energy Information Administration (undated), Petroleum and Other Liquids <https://bit.ly/2Ad6S9i>; World Bank (Undated), Global Gas Flaring Data <https://bit.ly/3zXuxGX>.

Creative Commons Copyright

Research and data from the Canadian Energy Centre (CEC) is available for public usage under creative commons copyright terms with attribution to the CEC. Attribution and specific restrictions on usage including non-commercial use only and no changes to material should follow guidelines enunciated by Creative Commons here: Attribution-NonCommercial-NoDerivs CC BY-NC-ND.

To sign up to receive the latest Canadian Energy Centre research to your inbox email: research@canadianenergycentre.ca

Download the PDF here

Download the charts here

Overview

Small business plays a key job creation role in Canada‘s economy. There is a general notion that only big companies benefit from the development of Canada’s oil and gas sector.

As this Fact Sheet demonstrates, the vast majority of Canada’s oil and gas firms are small businesses. When Canada’s oil and gas sector is healthy, the small businesses therein are able to flourish.

This Fact Sheet compares oil and gas companies by size (small, medium, and large) as measured by employee counts; it then compares the share in the industry that are small businesses; and then compares these businesses by country (Canada with the U.S., Norway, and then with the European Union.

Comparisons of Canadian oil and gas firms by size

For the purposes of our analysis, Statistics Canada defines small businesses as those with between one and 99 paid employees. Medium-size enterprises are those with 100 to 499 employees, while large enterprises have 500 or more employees.

As of 2022, for oil and gas firms in Canada:

• 96.0 per cent are small;
• 3.5 per cent are medium-size companies; and
• 0.6 per cent are large companies (see Figure 1).

Source: Authors’ calculation based on Statistics Canada Table 33-10-0661-01

Industry comparisons in Canada

In Canada, the oil and gas sector has a higher proportion of small businesses than other major industries, with the exception of construction. As of 2022, 96.0 per cent of all oil and gas energy firms had between 1 and 99 employees compared with 93.2 per cent in manufacturing, 89.6 per cent in utilities, and 99 per cent in the construction sector. The all-industry average is 98 per cent¹ (see Figure 2).

1. The 98 per cent average for all industries is high largely because of the sheer size of the construction sector. In 2022, there were 154,252 firms in that sector compared with 51,726 in manufacturing, 6,486 in oil and gas, and 1,410 in utilities.

Source: Authors’ calculation based on Statistics Canada Table 33-10-0661-01

Canada-U.S. comparisons of oil and gas sector company size by employee count

Canada and the United States define small businesses differently. In Canada, small businesses have 1 to 99 employees whereas in the United States they have from 1 to 499 employees.

For a more standardized comparison between the two countries, Figure 3, which includes oil and gas extraction firms only, shows both the number of companies with 1 to 99 employees and the number with 1 to 499 employees in each country.

Using Canadian definitions of firm size:

• Small business comparisons: 94.0 per cent of all oil and gas extraction firms in the United States have between 1 and 99 employees compared with 96.0 per cent in Canada.
• Small and medium-size business comparisons: Adding in medium-size employee counts (defined in Canada as 100 to 499 employees), reveals that 96.7 per cent of all oil and gas firms in the United States have between 1 and 499 employees (i.e., are small and medium-size using Canadian definitions) compared with 99.4 per cent in Canada.
• Large oil and gas companies: Corporations with over 500 employees comprise 3.3 per cent of all oil and gas firms in the United States while in Canada “big oil and gas” accounts for just 0.6 per cent of all oil and gas firms (see Figure 3).

Sources: Derived from Statistics Canada Table 33-10-0661-01 and U.S. Small Business Administration (2023)

Comparing Canada with Europe: Number of firms involved in oil and gas

The final set of comparisons contrasts Canada with Norway (another major oil producer) and with the European Union (of which Norway is not a member). The first comparison (Figure 4a) illustrates the number of oil and gas firms in each jurisdiction, which makes it plainly obvious how important the oil and gas sector is to Canada.²

• Of the three jurisdictions, Canada has the greatest number of oil and gas extraction firms by far—small, medium, and large—at 1,162 in total.
• In contrast, Norway has just 38 oil and gas extraction firms³ and the European Union just 198 firms in total involved in oil and natural gas activity.

2. Canada-European Union comparisons are drawn from a smaller subset of oil and gas activity—oil and gas extraction only—which allows for international comparisons. 
3. Large firms dominate Norway’s oil and gas sector given that all of its oil and gas comes from offshore drilling, which is a complicated and expensive undertaking.

Source: Eurostat (undated) and Statistics Canada Table 33-10-0661-01

Unlike Canada-U.S. comparisons, data limitations do not allow for exact firm size comparisons based on 1-99 or 1-499 employee counts between Canada, Norway, and the European Union. The best we can do is compare firms in Canada with 1-199 employees (i.e., below 200) with those in Norway and Europe that have 1-249 employees (i.e., below 250). Figure 4b breaks down the proportion of oil and gas extraction firms by size for each jurisdiction.

• Norway has just 28 oil and gas extraction firms with fewer than 250 employees;
• The European Union has 185 firms that employ fewer than 250 employees; and
• Canada has 1,115 oil and gas extraction firms with fewer than 200 employees. In other words, even with Canada’s more limited employee count, the absolute number of oil and gas companies in Canada with smaller workforces is about five times that of Norway and the European Union combined (1,115 firms versus 213 oil and gas enterprises in Norway and the EU together).

Source: Eurostat (undated) and Statistics Canada Table 33-10-0661-01

“Big oil” is a more accurate description in Europe than Canada

This slightly modified comparison shows that smaller businesses constitute 73.7 per cent of all oil and gas extraction firms in Norway, 94.3 per cent of all firms in the European Union, and 96.0 per cent of all and gas extraction firms in Canada (see Figure 4c). Canada’s oil and gas extraction sector is thus overwhelmingly composed of small and medium-size businesses relative to Norway and the European Union.

Source: Eurostat (undated) and Statistics Canada Table 33-10-0661-01

Conclusion

Most oil and gas firms in Canada are small or medium-size businesses whether measured domestically and compared with other sectors, or in international comparisons with the United States, Norway, and the European Union.

Notes

This CEC Fact Sheet was compiled by Ven Venkatachalam and Lennie Kaplan at the Canadian Energy Centre: www.canadianenergycentre.ca. The authors and the Canadian Energy Centre would like to thank and acknowledge the assistance of an anonymous reviewer for reviewing the data and research for this Fact Sheet.

References (All links live as of July 31, 2023)

Canada (2022), Key Small Business Statistics 2022, Innovation, Science and Economic Development Canada <https://tinyurl.com/2hme3n9s>; Eurostat (undated), Enterprise Statistics by Size Class and NACE Rev.2 Activity (from 2021 Onwards) <https://tinyurl.com/34auxean>; Statistics Canada (2023), Table 33-10-0661-01, Canadian Business Counts, with employees, December 2022 <https://tinyurl.com/5n82zpa2>; U.S. Small Business Administration (2023), 2022 Small Business Profile <https://tinyurl.com/3c6as4en>; United States Census (2023), 2020 SUSB Annual Data Tables by Establishment Industry <https://tinyurl.com/59u4t446>.

Creative Commons Copyright

Research and data from the Canadian Energy Centre (CEC) is available for public usage under creative commons copyright terms with attribution to the CEC. Attribution and specific restrictions on usage including non-commercial use only and no changes to material should follow guidelines enunciated by Creative Commons here: Attribution-NonCommercial-NoDerivs CC BY-NC-ND.

To sign up to receive the latest Canadian Energy Centre research to your inbox email: research@canadianenergycentre.ca

Download the PDF here

Download the charts here

Introduction

In recent years, all forms of energy have played some role in the global economy, and nuclear energy is no different. Nuclear energy is unique in that it plays an important role in some countries, while in other countries it is less prevalent. Nuclear energy is essential in such as areas as electricity generation, medicine, industry, space exploration, and national security.

Decisionmakers are debating the role of various forms of energy production, generation and use in the energy mix. In this CEC Fact Sheet, we look at the role of nuclear energy in countries where it is in use as a source of primary energy.

Nuclear energy in the global primary energy supply

As of 2021, there were 437 operational nuclear power reactors in 32 countries, with the United States (U.S.) leading the way with 93 reactors. In Europe, France leads with 56 nuclear reactors.

In the Asia Pacific region, China has 53 nuclear reactors, Japan has 33, and South Korea has 24.

Across the world, 56 new reactors are under construction in 19 countries, with China leading the way with 16 facilities being built.

Canada had 19 reactors in operation as of December 2021 (see Table 1).

Source: IAEA, 2022

According to the International Energy Agency (IEA), nuclear energy accounted for around four per cent of the world’s primary energy¹ supply in 2021. However, the share of nuclear energy in primary energy varies widely by region.

In the 1990s, six per cent of the world’s primary energy came from nuclear energy. By 2021, just over four per cent of the world’s primary energy came from nuclear.

In Europe, the nuclear energy share was just over nine per cent in 2021. For North America, it was seven per cent. In Asia, the share has decreased from around four per cent in 1990 to around two per cent in 2021 (see Figure 1).

As noted above, the share of nuclear energy in primary energy varies widely by region due to factors such as energy policies, resource availability, and economic considerations. For example, some countries have abundant oil and gas reserves and may rely more heavily on these sources for their primary energy supply. In contrast, others may have more limited access to traditional energy sources and look to nuclear energy to diversify their energy mix

1. The source for primary energy takes many forms, including fossil fuels, renewables, and nuclear energy. Primary energy sources are converted to electricity, a secondary energy source.

Source: IEA Database, 2023 and BP Database, 2022

Nuclear energy and electricity generation

Nuclear energy plays an essential role in electricity generation, providing about 10 per cent of global electricity generation. From the first civilian nuclear electricity generation facility back in 1954, nuclear energy has come a long way.

According to the International Atomic Energy Agency (IAEA), world nuclear electricity production increased steadily between 2000 and 2021. In 2000, global nuclear electricity production was 2,443 Terawatt hours (TWh); by 2021, it had increased to 2,653 TWh.

According to the IAEA, as of December 2021, the top five countries producing electricity from nuclear energy were the U.S. (772 TWh), China (383 TWh), France (363 TWh), Russia (208 TWh), and South Korea (150 TWh). Other countries that produce significant electricity from nuclear power include the Ukraine, Germany, Japan, and Spain. Canada produced 87 TWh in 2021 (see Figure 2).

Source: IAEA, 2022

Nuclear power in Canada

Nuclear power plants have been producing electricity in Canada since the 1960s. As of 2022, four nuclear power plants operate in Canada. Of the four plants, three are in Ontario and one in New Brunswick.

According to data from the IAEA, Canada’s share of nuclear electricity production has remained relatively stable over the past few decades. In 1990, nuclear energy accounted for about 14.8 per cent of Canada’s electricity production; by 2021, this share had decreased only slightly to about 14.3 per cent.

Over the same period, Canada’s nuclear power production increased from 69.9 TWh in 1990 to 86.8 TWh as of 2021 (see Figure 3).

It is worth noting that nuclear energy remains an integral part of Canada’s energy mix, particularly in Ontario, where it is the largest source of electricity generation. Sixty per cent of Ontario’s power needs are met by nuclear energy.

Source: IAEA, 2022

Dependence on nuclear power

Several countries rely heavily on nuclear power to meet their electricity needs. France is the world’s most nuclear-dependent country, accounting for approximately 69 per cent of its electricity generation capacity. France has 56 nuclear reactors, making it the second largest in terms of the number of nuclear power plants after the U.S (see Table 1).

Of interest, the Ukraine relies heavily on nuclear power, accounting for around 55 per cent of electricity generation capacity. Ukraine has 15 nuclear reactors, making it one of Europe’s largest nuclear energy producers.

Nuclear power accounts for around 52 per cent of Slovakia’s electricity generation capacity. Slovakia has four nuclear reactors and plans to build two additional facilities.

Belgium relies on nuclear power for around 51 per cent of its electricity generation capacity.

Hungary obtains around 47 per cent of its electricity from nuclear power, with four reactors currently in operation.

South Korea generates around 28 per cent of its electricity from nuclear power, with 24 reactors currently operating.

As of 2021, Canada generates around 14 per cent of its electricity from nuclear power, with 19 reactors currently in operation.

The United States is the world’s largest nuclear power producer, with 93 nuclear reactors generating over 20 per cent of the country’s electricity (see Figure 4).

Source: IAEA, 2022

Global nuclear electricity generation capacity

Nuclear electricity generation capacity² remains a relatively small percentage of global electricity generation capacity and has declined steadily since the 2000s. The share of nuclear electricity generation capacity was 10 per cent in 2000. By 2021, it had decreased to five per cent (see Figure 5).

2. Electricity generation means the conversion of any energy sources into electrical energy. Electricity generation can be divided into two categories of energy: conventional and renewable generation. Conventional electricity producers uses energy sources such as oil, coal, gas and nuclear. Renewable electricity generators use wind, solar and hydro energy. Electricity generation capacity is the maximum electricity output an electricity generator can produce under specific conditions. The installed generation capacity specifies the maximum possible electricity generation that can be produced by the installation and usually provided in megawatts.

Source: Enerdata, 2022

The share of global electricity generation capacity from renewable energy sources such as hydro, wind, solar, geothermal, and biomass has increased marginally between 2000 and 2021.

Fossil fuel-based electricity generation capacity continues to dominate the global electricity generation mix, with coal, natural gas, and oil combined accounting for approximately 55 per cent of the world’s electricity generation capacity in 2021.

Across Asia, installed nuclear power generation capacity has increased as a percentage of the overall installed capacity from all sources. Between 2000 and 2021, Asia saw the highest jump at 74 per cent, followed by G20 countries³ at eight per cent. In America⁴, installed nuclear electricity generation capacity decreased by three per cent, while in G7 countries,⁵ installed nuclear electricity capacity decreased by about 17 per cent. The most significant decrease of 22 per cent was seen in Europe (see Figure 6).

3. The G20 countries include Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Türkiye, the United Kingdom, the United States, and the European Union.
4. America includes countries in North, South and Latin America.
5. The G7 countries include includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.

Source: Author’s calculations derived from Enerdata, 2022

Conclusion

Overall, while global nuclear electricity generation capacity has increased, its growth has been slower than other types of electricity generation.

Countries and regions have different energy sources for their electricity generation, depending on resource availability, energy policies, and economic considerations.

Asia is becoming increasingly reliant on nuclear energy to meet its electricity needs. With so many Asian countries investing heavily in this form of power generation, it looks likely that the growth trend over the past 20 years will in the future.

Notes

This CEC Fact Sheet was compiled by Ven Venkatachalam and Lennie Kaplan at the Canadian Energy Centre (www.canadianenergycentre.ca). The authors and the Canadian Energy Centre would like to thank and acknowledge the assistance of two anonymous reviewers in reviewing the original data and research for this Fact Sheet.

References (all links live as of April 12, 2023)

British Petroleum Company (2022), BP Statistical Review of World Energy in 2022: 71st Edition <https://on.bp.com/3nuuApW>; Canada Nuclear Safety Commission (n.d.),<https://bit.ly/3G3XKTn>; Nuclear power plants Enerdata (2023), Power Plant Tracker Database <https://bit.ly/3xfgOdF>; International Atomic Energy Agency (IAEA) (2004), Fifty Years of Nuclear Power – The Next Fifty Years, Non-serial Publications, IAEA, Vienna; IAEA (2022), Nuclear Power Reactors in the World, Reference Data Series No. 2, IAEA, Vienna <https://bit.ly/40Hokdn>; International Energy Agency (IEA) (2023) World Energy Statistics Database <https://bit.ly/31ca8fp>; Ontario Power Generation (n.d.), Nuclear power <https://bit.ly/3Zshy9P>.

Creative Commons Copyright

Research and data from the Canadian Energy Centre (CEC) is available for public usage under creative commons copyright terms with attribution to the CEC. Attribution and specific restrictions on usage including non-commercial use only and no changes to material should follow guidelines enunciated by Creative Commons here: Attribution-NonCommercial-NoDerivs CC BY-NC-ND.

Reducing Canada’s oil and gas production to help fight climate change would likely backfire and cause an increase in global emissions, according to a new report published by the Canadian Chamber of Commerce.  

“Regardless of whether Canada ‘leaves its resources in the ground,’ other countries will not produce or consume less energy. Doing so could in fact worsen global emissions by making way for dirtier energy sources and suppliers,” wrote Eric Miller, fellow with the chamber’s Future of Business Centre.   

Miller called on government and business to recognize natural gas as an essential component of transformation to a lower carbon energy mix. Canada, he said, should build infrastructure to transport natural gas across the country and to global markets. 

“In many ways, Canada is an energy superpower,” he said, noting Canada has an abundance of natural gas, oil, hydro, nuclear power, renewables, and critical minerals “I think Canada should be at the forefront of supply, but we’re not, and other countries are stepping up and getting those benefits.” 

Of all established energy options, natural gas is the cleanest, emitting approximately half the C02 as coal, said Miller. If just 20 per cent of Asia’s coal-fired power was converted to natural gas, he said, global emissions would drop by more than Canada’s total annual emissions. 

“In other words, converting a relatively small share of Asia’s power infrastructure would ‘save a Canada’ in emissions,” he said. 

Miller’s report follows good news for Canada’s nascent liquefied natural gas (LNG) industry, with the $18 billion first phase of the LNG Canada terminal now more than 70 per cent complete.  

In March, the proposed $3 billion Cedar LNG export facility at the Port of Kitimat received environmental approval from the federal and provincial governments. Also on the west coast, Woodfibre LNG announced it will begin construction of its $5.1 billion LNG facility in September.  

“We share the internationally accepted view that liquefied natural gas is the only practical energy source to reduce carbon emissions while at the same time offering immediate opportunities to reconcile Indigenous economies,” said First Nations LNG Alliance CEO Karen Ogen in response to the Cedar approval.  

Canada’s primary LNG competitor – the U.S. – advanced from zero LNG exports in 2015 to become the world’s largest LNG exporter last year. Meanwhile, Canada’s first project has yet to come online.  

“[There have been] no fewer than eighteen proposals for LNG export terminals in Canada,” Miller said. “What that has meant is that in this moment, when Canada could have really benefited from having that infrastructure, it isn’t available.” 

To help dislodge Canada’s regulatory log jam, Miller is calling for updated legislation to increase Canadian competitiveness. Indigenous communities across the country should be encouraged to expand participation in natural gas projects, he said. 

Natural gas also fortifies power systems that include renewables, said Miller, noting gas can provide the baseload capacity needed to even out intermittent power generation from sources like wind and solar.  

“Canadian producers supply, for example, one-third of the natural gas used by renewables-focused California,” he said, noting that even if the share of renewables doubled, California’s system would still need a sizeable natural gas backstop. 

The unaltered reproduction of this content is free of charge with attribution to Canadian Energy Centre Ltd. 

To sign up to receive the latest Canadian Energy Centre research to your inbox email: research@canadianenergycentre.ca

Download the PDF here

Download the charts here

Introduction

The Russian invasion of Ukraine is having an impact on the world’s natural gas markets. Natural gas supply security has become a key concern for governments and industries worldwide.

According to the International Energy Agency (IEA), natural gas is among the world’s fastest-growing energy sources, representing more than 23 per cent of global energy demand ( IEA, 2022). Natural gas is vital to the energy mix in many emerging economies, including countries in the Asia-Pacific region.

Recent forecasts from various sources predict a growing demand for natural gas in the short-term as developing countries move away from coal. In the last few years (2019-2023), the demand for and production of natural gas has fluctuated across regions. World demand for natural gas has increased by two per cent in that time, while world production has increased by just one per cent. Demand for natural gas in the Asia-Pacific region increased by 11 per cent while production in the region increased by only 7 per cent.

As the world’s fifth-largest producer of natural gas, Canada has the potential to capitalize on energy demand in the Asia-Pacific region.

In this CEC Research Brief, we explore North American natural gas price differentials, as well as prices for natural gas in significant Asian trading hubs, including Japan, South Korea, and the average in the region.

Source: Author’s calculations from IEA (2022)

Current Reliance on the United States and Prospects in Asia

In Canada, 98 per cent of natural gas production takes place in Alberta and British Columbia. Alberta’s gas production represented 63 per cent of total Canadian natural gas production in 2020.

All of the natural gas Canada exports is sent to the United States, though such exports have been decreasing in recent years. The emergence of shale gas in Western Canada and the United States has changed international natural gas market dynamics, increasing supply and decreasing prices.¹

In 2021, about 99 per cent of the total natural gas imported by the United States came from Canada, with nearly all transported to the U.S. by pipelines. In 2021, Canada exported 2.78 trillion cubic feet (tcf) to the U.S., down from its peak of 3.78 tcf in 2002. However, the expansion of shale gas production in Canada and the U.S. has also created an opportunity for both countries to supply new markets in Asia.

1. Beyond shale gas being lower cost, many other factors influence natural gas prices including demand and supply, production and exploration, storage and withdrawal, weather, and access to demand markets, such as the Asia-Pacific region.

Source: EIA (2023)

Natural Gas Price Differences Between Canada and the U.S.

Between 1990 and 2021, US Henry Hub and Canadian AECO-C natural gas spot trading prices closely tracked each other. However, short-term price differences can be significant and advantageous to the U.S. (see Figure 3).²

• For example, the prices were closest to each other in 2008 when U.S. natural gas sold for US$8.85 per million British thermal units (mmbtu), just 11 per cent higher than the US$7.99 per mmbtu that Canadian (AECO-C) natural gas fetched that year.
• In contrast, the price gap was widest in 2018 when U.S. natural gas sold for US$3.13 per mmbtu, 179 per cent higher than the US$1.12 per mmbtu average price for AECO-C natural gas that year.
• Between 2019 and 2021, the price gap between US Henry Hub and AECO-C natural gas fluctuated from a high of 98 per cent in 2019 to a low of 26 per cent in 2020. In 2021, U.S. natural gas sold for US$3.84 per mmbtu, 40 per cent higher than the US$2.75 per mmbtu average price for AECO-C natural gas that year.

According to Alberta’s Energy Regulator (AER), many factors cause the observed price differences between AECO-C and Henry Hub natural gas, infrastructure constraints being among the most significant. Other factors include demand and supply, the exchange rate, and transportation costs. The AER estimates that the AECO-C and Henry Hub price differential will increase to US$0.98 per mmbtu by 2031 (AER, undated)

2. According to the EIA, most of the spot price volatility in Canada’s AECO-C trading hub is due to regulatory changes for Western Canada’s pipeline operations.

 Sources: BP Statistical Review of World Energy (2022)

Natural Gas Prices in Asia and Comparisons with Henry Hub and AECO-C

In contrast to the relatively close tracking between U.S. and Canadian natural gas prices over time, the opposite is true when comparing the Canadian with the Asian average price over the years, and in country-specific comparisons with Japan and South Korea.

Natural gas prices skyrocketed worldwide in the last two years, and Asia was no exception. In 2021, the Asian natural gas price was US$18.60 per mmbtu, compared to US$4.40 mmbtu in 2020, an increase of 323 per cent (see Figure 4).

Historically, natural gas prices in Asia on average have been much higher than in Canada. The exceptions were in 2003, when Asian spot prices were just three per cent higher, and in 2005, when they were three per cent lower than in Canada. In most other years, the percentages and prices for natural gas sold in Asia have been significantly higher than in Canada.

For example,

• In 2021, natural gas sold for US$2.80 per mmbtu on the AECO-C trading hub and for US$18.60 per mmbtu in Asia; US$15.88 per mmbtu more, or 564 per cent higher.
• The trend since 2009 has been for Asian natural gas prices to be higher than Canadian natural gas prices by triple percentages, i.e., selling for between 122 and 775 per cent more in Asia than in Canada, depending on the year.

Sources: BP Statistical Review of World Energy (2022) and International Monetary Fund (2023)

Price comparisons between Canada and Japan generally follow the same pattern; since 2009, price differences between Canada and Japan have been substantial (see Figure 5).

• Price divergence between Japan and Canada began to increase in 2006. Every year after 2006, prices for natural gas in Japan were higher, from 22 per cent more (in 2006) to 751 per cent more (in 2018).
• In 2021, the dollar gap between prices in Canada and Japan was US$7.27 per mmbtu; natural gas sold for US$2.80 per mmbtu in Canada and US$10.07 mmbtu in Japan that year, or 260 per cent more.

Sources: BP Statistical Review of World Energy (2022)

In a comparison with South Korea, where data is available only from 2009 onward, prices for natural gas in that country have always been above those in Canada with the difference ranging from US$1.90 per mmbtu in 2009 to US$15.80 per mmbtu in 2021.

Sources: BP Statistical Review of World Energy (2022)

Natural Gas Pricing in Recent Years

Many factors influence global natural gas prices, including supply and demand, production and exploration levels, the location and size of storage facilities, weather patterns, and buyers’ and sellers’ views of future trends.

In the last two years, two factors have had a profound impact on gas prices. First, Russia’s invasion of Ukraine disrupted global gas supplies and resulted in skyrocketing global gas prices. Second, as the world economy opened up after the COVID lockdown, the demand for natural gas in both developed and developing countries increased.

Benchmark oil prices, such as Brent crude or West Texas Intermediate (WTI), are available for global markets. However, there are no comparable significant international benchmark prices for natural gas. Spot prices for natural gas are region-centric. For example, Henry Hub is the benchmark price for North American natural gas. In Alberta, it is AECO-C; in the U.K., it is the National Balancing Point (NBP); in the Netherlands, it is the Title Transfer Facility (TTF); and in the Asian-Pacific LNG market, it is the Japan/Korea Marker (JKM).

The AECO-C is the spot trading price for Alberta gas. The AECO-C hub is Canada’s largest natural gas trading hub, and the AECO-C price serves as a benchmark for Alberta wholesale natural gas transactions.

The AECO-C natural gas price is discounted compared to the benchmark price for natural gas in North America, the Henry Hub price. Henry Hub is the central pricing point for natural gas produced in the United States. The AECO-C and Henry Hub price differential increased in 2022 to more than US$2.00 per mmbtu (see Figure 7).

Source: Derived from the Rystad Energy UCube (2023)

The discount for Canadian natural gas relative to Henry Hub exists partly because Alberta and other western Canadian natural gas fields are further away from U.S. markets than American suppliers, and Canadian transportation costs are thus higher.

This, combined with the fact that the U.S. is currently the only market for Canada’s natural gas (Canada has yet to complete a single LNG export terminal, though one is under construction at Kitimat, British Columbia) means that AECO-C natural gas has traded at a discount of more than US$2.00 per mmbtu in recent years, or about 60 per cent of the Henry Hub price.

However, lower natural gas prices in Western Canada can benefit from upcoming liquefied natural gas (LNG) projects designed to transport natural gas to Asia-Pacific markets because they will reduce an LNG plants’ input costs.

As noted earlier, in recent years, a new benchmark has been developed for LNG in Asia-Pacific markets—the Platts Japan/Korea Marker (JKM)—which is now the benchmark price for LNG deliveries in Japan and Korea. Japan and Korea are among the largest global importers of LNG accounting for 41 per cent of the world’s LNG imports (see Figure 8).

Canada is a late entrant into the LNG market. At one point, 18 LNG projects were proposed. One, LNG Canada, is under construction in B.C. Four additional facilities are proposed in the province: Woodfibre LNG, Tilbury LNG, Cedar LNG and Ksi Lisims LNG.

Given that the demand for LNG in the Asia-Pacific market is currently being filled by traditional players such as Qatar and Australia, the entry of new players, such as Canada, will create a different dynamic in the coming years. The AECO-C benchmark natural gas price is lower than the Asia-Pacific benchmark LNG price, which could mean that buyers in the Asian-Pacific might turn to Canadian LNG for supply, assuming the near- to medium-term completion of LNG projects in Canada.

Source: BP Statistical Review of World Energy (2022)

Canada’s Natural Gas Advantage

Western Canada currently has a cost advantage over other LNG-exporting countries such as the U.S. and Australia.

• This is partly due to lower ambient temperatures in Canada’s western provinces (cooler temperatures help lower liquefaction costs). Specifically, British Columbia’s temperature is cooler than other major LNG-producing regions such as Qatar, Australia, and the U.S. Gulf Coast. British Columbia has an energy efficiency advantage of 34 per cent over Australia, 32 per cent over Qatar, and 26 per cent over the U.S. Gulf Coast for LNG liquefication.
• Qatari LNG is the most competitive from a cost perspective. However, LNG buyers have concerns about becoming overly dependent on one country. Shipping costs to Northeast Asia from Canada are estimated at about 96 cents per mmbtu. In comparison, shipping costs to Northeast Asia from the U.S. Gulf of Mexico are estimated at US$2.22 per mmbtu (see Figure 9). Further, Canada’s West Coast is closer to Japan than Qatar is to Japan; Qatar is 11,773 kilometres from the Japanese port of Himeji and 12,056 kilometres away from the port at Sodegaura. Meanwhile, Canada’s westernmost port (Kitimat) in British Columbia is 7,698 kilometres from Himeji and 7,322 kilometres from Sodegaura.

Source: Wood Mackenzie (2022)

• Canadian LNG going to Northeast Asia is also among the lowest emitting sources of LNG. Canadian LNG has fewer upstream and liquefaction emissions than the average Northeast Asia LNG supplier (see Figure 10).

These distinct advantages of Canadian LNG offer a compelling case for Canadian liquefied natural gas exports to the Asia-Pacific.

Source: Wood Mackenzie (2022)

Conclusion

Comparing the market for natural gas in the form of LNG between Western Canada and the Asia-Pacific shows that the price difference between Canada and Asia provides an opportunity for natural gas produced in Canada to be exported to Asia Pacific markets.

The Russian invasion of Ukraine and the after-effects of the COVID pandemic have rekindled the debate about global energy policies. The world is looking for energy security and every country wants to reduce its dependence on one country for the majority of its energy needs.

The lower liquefaction and shipping costs coupled with the lower cost of the natural gas itself in Western Canada translate into lower LNG prices in Canada. Those advantages will help make Canadian LNG very competitive and attractive to the Asia Pacific market.

The price differentials, along with Canada’s natural advantages, give Western Canada an excellent opportunity to supply natural gas to the Asia-Pacific markets at competitive prices while also bolstering energy security for countries such as Japan and Korea. Canadian LNG could be a strong competitor to the traditional natural gas exporting countries now serving the Asia-Pacific LNG market.

References (All links live as of February 25, 2023)

Alberta Energy Regulator (Undated), Natural Gas Prices, <https://www.aer.ca/providing-information/data-and-reports/statistical-reports/st98/prices-and-capital-expenditure/natural-gas-prices>.

BP (2023), Energy Outlook, 2023 edition, <https://www.bp.com/en/global/corporate/energy-economics/energy-outlook.html>.

BP (2022), Statistical Review of World Energy 2022 (71st edition), <https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html>.

Canadian Energy Regulator (2017), Market Snapshot: LNG Projects have an Energy Efficiency Advantage Compared to Other LNG Producers in Warmer Locations, Government of Canada, <https://www.cer-rec.gc.ca/en/data-analysis/energy-markets/market-snapshots/2017/market-snapshot-lng-projects-have-energy-efficiency-advantage-compared-other-lng-producers-in-warmer-locations.html>.

Claudio Steuer (2019), Outlook for Competitive LNG Supply, Oxford Institute of Energy Studies, <https://www.oxfordenergy.org/publications/outlook-competitive-lng-supply/>.

International Energy Agency (IEA) (2022), World Energy Outlook 2022 <https://www.iea.org/reports/world-energy-outlook-2022>.

IEA (2022), Gas Market Report Q4-2022, <https://www.iea.org/reports/gas-market-report-q4-2022>

International Monetary Fund (IMF) (2023), Global price of LNG, Asia (PNGASJPUSDM), Retrieved from FRED, Federal Reserve Bank of St. Louis, <https://fred.stlouisfed.org/series/PNGASJPUSDM>.

J. Peter Findlay (2019), Canadian LNG Competitiveness, Oxford Institute of Energy Studies, <https://www.oxfordenergy.org/wpcms/wp-content/uploads/2019/12/Canadian-LNG-Competitiveness-NG-156.pdf>.

Natural Resource Canada (Undated), Energy Facts, Government of Canada, <https://natural-resources.canada.ca/science-and-data/data-and-analysis/energy-data-and-analysis/energy-facts/20061>.

Rystad Energy UCube (2023), Upstream Solution, <https://www.rystadenergy.com/services/upstream-solution>.

U.S. Energy Information Administration (Undated), Natural Gas Imports and Exports, Natural Gas Explained <https://www.eia.gov/energyexplained/natural-gas/imports-and-exports.php>.

Wood Mackenzie (November 2022), The Role of Canadian LNG in Asia, Public Report (November), <https://www.canadianenergycentre.ca/wp-content/uploads/2022/11/WM-CEC-Role-of-Canadian-LNG-in-Asia-Public-Report.pdf>

CEC Research Briefs

Canadian Energy Centre (CEC) Research Briefs are contextual explanations of data as they relate to Canadian energy. They are statistical analyses released periodically to provide context on energy issues for investors, policymakers, and the public. The source of profiled data depends on the specific issue.

About the authors

This CEC Research Brief was compiled by Ven Venkatachalam, Chief Research Analyst, Canadian Energy Centre and Lennie Kaplan, Executive Director of Research, Canadian Energy Centre. The authors and the Canadian Energy Centre would like to thank and acknowledge the assistance of two anonymous reviewers in reviewing the data and research for the initial edition of this Research Brief.

Creative Commons Copyright

Research and data from the Canadian Energy Centre (CEC) is available for public usage under creative commons copyright terms with attribution to the CEC. Attribution and specific restrictions on usage including non-commercial use only and no changes to material should follow guidelines enunciated by Creative Commons here: Attribution-NonCommercial-NoDerivs CC BY-NC-ND.

To sign up to receive the latest Canadian Energy Centre research to your inbox email: research@canadianenergycentre.ca

Download the PDF here

Download the charts here

Overview

There has a lot of discussion about the role that carbon capture, utilization and storage (CCUS) will play in reducing global greenhouse gas emissions.

In this Canadian Energy Centre (CEC) Fact Sheet, using the Rystad Energy CCUS Solution, we examine projected trends in global and Canadian carbon capture capacity and spending to date between 2023 and 2030.

The written content in this report has been prepared by the CEC and does not represent the views of Rystad Energy.

Background on the Rystad Energy CCUS Solution

The Rystad Energy CCUS Solution provides data covering carbon capture, transportation, and storage for both commercial and pilot projects, including analysis of such key indicators as carbon capture capacity and spending to date on CCUS.

These capabilities allow us to analyze short- and long-term CCUS capacity and spending to date under various global decarbonization scenarios, including net zero (Rystad Energy, 2023).

Potential for CCUS to capture 623 mtpa of CO2 globally through 2030

According to Rystad Energy, at the end of 2022, there were 65 commercial CCUS projects in operation globally capable of capturing nearly 41 million tonnes per annum (mtpa) of CO2 across various industries, including the oil and gas sector.

There are another 478 projects in various stages of development in the global pipeline that will be capable of capturing roughly another 559 mtpa. Some of these projects are currently in various stages of development, including in the feasibility stage, while others are in the concept and construction phases (Rystad Energy, 2023).

Figure 1 breaks down global carbon capture capacity by sector. By 2030, it is estimated that nearly 500 CCUS projects could be operation worldwide, having the ability to capture 623.0 mtpa of CO2, if all projects move ahead as scheduled (see Figure 1).

In fact, between 2023 and 2030, global carbon capture capacity could grow from 43.5 mtpa to 623.0 mtpa, an increase of over 1,332 per cent.

Oil and gas sector global carbon capture capacity will reach over 140 mtpa by 2030

Beyond carbon capture capacity that is still being evaluated, the sectors which are expected to experience the greatest growth between 2023 and 2030 are hydrogen production (5.5 mtpa rising to 98.7 mtpa); gas processing (24.7 mpta rising to 110.0 mtpa); and coal power generation (3.0 mtpa rising to 55.0 mtpa).

Carbon capture capacity in oil refining is anticipated to grow from 1.4 mtpa in 2023 to 30.4 mtpa in 2030, meaning that carbon capture capacity in oil refining and gas processing combined will grow from 26.1 mtpa to 140.4 mtpa (see Figure 1).

Source: Derived from the Rystad Energy CCUS Solution

Global spending on CCUS could reach over $256 billion to date through 2030

Projected spending to date on CCUS is set to expand significantly between 2023 and 2030, increasing from $4.7 billion in 2023 to $37.7 billion in 2030, an increase of about 702 per cent. In fact, cumulative spending to date on CCUS between now and 2030 is projected at over $256 billion (see Figure 2).

About 52 per cent of cumulative CCUS spending to date between 2023 and 2030 (about $133 billion) will go towards the CO2 capture segment. Spending on CO2 capture rises from $2.6 billion in 2023 to $14.4 billion in 2030, an increase of nearly 4,539 per cent (see Figure 2).

Source: Derived from the Rystad Energy CCUS Solution

Transport is the second largest segment of projected CCUS spending between 2023 and 2030, at about 28 per cent of total spending, or $72.5 billion cumulative.

The storage segment will see projected spending of 20 per cent, or $51.0 billion cumulative through 2030 (see Figure 2).

According to Rystad Energy, North America and Europe are expected to continue to dominate the global CCUS market through 2030 (see Figure 3).

Source: Rystad Energy research and analysis, CCUS Market dashboard

Implications for Canada

Global carbon capture capacity and worldwide spending to date trends underline the fact that the future is bright for Canadian investments in CCUS. Assuming that appropriate government policies and regulations are put in place, Canada can expect to see further project announcements and increased investment.

In fact, according to Rystad Energy, “Canada will likely emerge as a CCUS heavyweight given the prevailing policy environment and the existential need for oil sands players to decarbonize. Rystad Energy estimates that Canada alone could account for around 20 per cent of cumulative carbon capture demand between 2023 and 2030” (see Figure 4).

Source: Rystad Energy CCUSCube

Notes

This CEC Fact Sheet was compiled by Lennie Kaplan at the Canadian Energy Centre (www.canadianenergycentre.ca). The author and the Canadian Energy Centre would like to thank and acknowledge the assistance of two anonymous reviewers in reviewing the data and research for this Fact Sheet. 

The written content in this report was prepared by the Canadian Energy Centre (CEC) and does not represent the views of Rystad Energy.

References (links live as of March 8, 2023)

Rystad Energy (2023a). CCUS Solution. 2023. <http://bit.ly/3YT5Hlu>; Rystad Energy (2023b). Five key trends to watch in Canada’s upstream oil and gas sector in 2023. <https://bit.ly/3YT5Hlu>.

Creative Commons Copyright

Research and data from the Canadian Energy Centre (CEC) is available for public usage under creative commons copyright terms with attribution to the CEC. Attribution and specific restrictions on usage including non-commercial use only and no changes to material should follow guidelines enunciated by Creative Commons here: Attribution-NonCommercial-NoDerivs CC BY-NC-ND.