Canada's 2016 greenhouse gas emissions reference case: chapter 6

Oil price assumptions

Although oil prices have declined recently, there is significant uncertainty around how these changes will affect longer-term oil production. The emissions projections for the Reference Case in this report incorporate the National Energy Board’s integrated forecasts of oil and other energy prices and production from its report, National Energy Board’s most recent forecast presented in Canada’s Energy Future 2016: Update - Energy Supply and Demand Projections to 2040, October 2016. The National Energy Board’s expectation of medium-term recovery of oil prices is consistent with other major price forecasts.

Greenhouse gas (GHG) emissions are driven by oil production rather than price. While an expectation of lower oil prices for the foreseeable future does have the effect of reducing oil production forecasts, increases in the productivity of oil production have reduced this impact in the National Energy Board’s projections. Furthermore, existing oil sands production will likely continue due to substantial existing investments and the long time horizon of projects.

Finally, lower oil prices will lead to higher emissions as a result of an increase in energy demand from other sectors. Thus, any drop in GHG emissions in the oil-producing sector would be partially offset by a rise in emissions from other sectors.