Subscribe
Share
Share
Embed
Journalist Markham Hislop interviews leading energy experts from around the world about the energy transition and climate change.
Welcome to episode 185 of the Energy Talks podcast. I'm energy and climate journalist, Markham Hislop. And today, we are going to be talking about one of my favorite subjects. Yes, folks, yet again, economic modeling. And you have heard me opine on many on occasion that Canada doesn't do nearly enough of this, and, I'd look to the US and the work that gets done out of the the big American, laboratories, that the tremendous amount of modeling to support their policy work.
Speaker 1:You see it being done in academics do it. You see some of the, the analysts and think tanks are doing it, and we do far, far less of it in Canada. And I think that our policy, making process is poor because of it. But but today, we're having its good news. I'm gonna be talking to Jean Denis Charlevoix, who is the chief economist of Canada Energy Regulator, which just published the Canada's energy future 2023 report, and it has, for the first time, net zero, modeling.
Speaker 1:And we're gonna be talking about oil and gas and that modeling. And I'm very curious because so many of our energy conversations hinge on where we think oil and gas is going to go over the next 5, 10, 15, 20 years. And I'm very curious to see what Jean Denis, has to say about that. So welcome to the interview.
Speaker 2:Thank you. Thank you. My pleasure.
Speaker 1:Look. Let why don't we just for our listeners, many of whom are probably, may not read your the the publication, Give us an overview of Canada's energy future 2023.
Speaker 2:So first, it comes from our energy information Regulator. That program works along our regulatory function that most people would be familiar with in terms of overseeing federally, regulated energy infrastructure in Canada. So energy futures 2023 is about, 3 scenarios, 2 of which where Canada meets net zero by 2050. That was the hard constraint, on our analysis, and we'll come back to this conversation. And and what we find, in our in our analysis is that, obviously, electricity is the backbone for, the energy transition and the pathways to net zero for Canada, playing a key role in increasing the efficiency of the energy system at the end use, level and also enabling emerging emerging sectors, for the use of electricity, whether it is through, transportation or hydrogen production, for example.
Speaker 2:The other 2 other key piece key pieces are, electricity cannot do it alone. There needs to be a portfolio of other technologies such as hydrogen, as I mentioned, but also carbon capture and storage, which I'm sure we'll we will come back to, that also have a key role in there. The other and last kinda highlight is, something that will not surprise anybody is that Canada, because it is a a trading nation, what's happening in the rest of the world has a great impact on supply demand of commodities and what and how we produce it here at home, which means that we need to pay special attention of global trends, and our analysis makes some assumption relying on the work of the International Energy Agency, about that global context. But that is a main driver actually specifically, about what's happening for the oil and gas sector.
Speaker 1:Let's talk about those assumptions for a moment because I've interviewed folks, economists from the International Energy Agency. We do we pay a lot of attention to their work, as well as a couple of other models like Bloomberg, NEF would be one we we we refer to quite often, maybe a little some in in BP. And one are one of the things that struck me over the last 5 years is the extent to which the IEA has really embraced net zero. It's embraced the the, clean energy, the energy transition. It it you know, you know, the IEA has been around for decades, and it was primarily put together, to provide information about oil and the global oil and gas industry to member governments.
Speaker 1:And that's but it's it's it seems to have made this pivot in the last 5 years. And because I rely on their on their graphs and on their data and their and their assumptions and and their scenarios quite a bit, I'm always surprised at the pushback I get from you know, in in public conversations about the IA as if it was some, you know, radical ecogroup. And it's not my understanding is that it still is a fairly conservative, when it comes to its assumptions about where the global energy system is going. Would you agree or disagree with that?
Speaker 2:We relied we chose to rely on the IEA because we believe it is a credible organization. And if we would have chosen, we could have chosen other points of reference, for the global context, but we thought, the IAA provided, the level of credibility we needed as well as the level of transparency and accessibility in its results, analysis, and data for us to use it and also for others to have, yeah, transparency into what is it that underlies those numbers. And to to your point about, you know, DIA embracing net 0, I I can't comment on that. But the point though is that when you set out to model net 0, of course, you will end up with results that are that illustrate a dramatic change into the existing energy system that we have. And this is what we have experienced at the CER.
Speaker 2:And, you know, some might look at our, energy futures 202023 report and say, oh my god. Like, the the CR is out there now in terms of quote, unquote radical results. But to that, I say, look. The outcome was already predetermined. We had to model 2 net 0 by 2050.
Speaker 2:So in that context, I think it's inevitable that, the changes and the results that we have are quite fundamentally different than the matter in which the energy system is is operating today.
Speaker 1:Well, let's talk about that a little bit because I'm just curious what your take is on it. And the reason for that is a point that I make quite often in these kinds of interviews, which is I do about 4 or 500, expert interviews, every year. So between the podcast and the video inter video interviews that I do, and I deliberately try to split them roughly in half. So half would be Canadian sources like yourself, the other half would be sources from the United States or Europe or Asia Pacific, trying to get a perspective outside Canada. And my take on this is that if I talking to an American, a European, or somebody from China or one of the other Asia Pacific countries, the the perception is that the energy transition is moving much quicker than somebody in Canada would think it is moving.
Speaker 1:And I I did I don't know that I I have a require I'm just curious what you think of that if, based on your experience.
Speaker 2:That's a that's a very interesting question. Like, if we if we look at the coal phase out that was a legislative couple years ago, What we observe is that, different jurisdictions have been able to execute the coal phase out much quicker than what originally foreseen. So on like, I think in the early years, I think it's it's fair to say, yes, things are moving quickly. More and more, we see the uptake on electric vehicles, being increasing through time. But I think what we what we have noticed actually in our analysis is that as we progress through the projection period by 2050, is that there comes a time when the the the proverbial low hanging fruits have been used up.
Speaker 2:Right? And that emissions at the margin become increasingly, challenging and costly to manage and and remove. So, I think this also explains maybe some, some of our results that are, I think, more ambitious, so to speak. I will just point out to our results regarding direct air capture, for example, or the extent to which we have to use carbon capture and storage. But that's an illustration that when you start off on the transition, show sure.
Speaker 2:The easy emissions are easily removed at the beginning, but then as you progress, it becomes increasingly challenging. So I think the pace the pace will vary through the through the transition.
Speaker 1:I I think that's a very good point. And the another point that I often make is that, you know, transitions follow because they're based on technology, they follow the s curve, more or less. And and the s curve, the bottom flat part of the s curve has long, long roots. I mean, a lot of technology we're talking about, like commercial solar panels from the seventies and commercial wind turbines in the eighties and lithium ion batteries were introduced in the nineties. I mean, this is not like these tech clean energy technologies sprang out of nowhere 5 years ago.
Speaker 1:There's long, long roots to this energy transition. And for many of them, we passed the, the inflection point on the exponential growth. But it the exponential growth doesn't last forever. It there's usually a a tailing off at the last, you know, the last 10, 20, 30% of the market where it becomes flatter. And is that where you're talking about the the the the marginal, emissions are become harder and more costly to abate?
Speaker 2:To a large extent, yes. I have to say though that our analysis is mostly focused on the the cost of technologies and how in a net zero world where clean technologies get adopted at at a broader scale, then cost would tend to fall because there's more familiarity, more, like, more availability of such technology. Then if costs are are declining through time, then this enables greater adoption of the technology. While at the same time, there is an increasing cost of carbon that unabated emissions of carbon face that cost. So there there's this jewel effect where on one hand, clean tech, has cost declining.
Speaker 2:And then for those emissions that remain, it becomes more and more costly to to have them, then other technologies become, economically viable. Hence, for example, the the the the the negative, 46 megaton of direct air capture that we have in our results.
Speaker 1:Is it fair to say then that this is an unusual time in in policy history? You don't usually get the new technologies on the s curve, you know, exponential growth declining exponential, cost declining exponentially, and that at the same time, those marginal costs up at the top of the s curve then face, pressure from, from a carbon price or from other regulations designed to make them more expensive. This seems to me, I'm not an economist, but I'd I'd be I I can't think of another example like this.
Speaker 2:I tend to agree. This is, this is an unusual, transition in the sense that it is one that is driven by policies, which put in place a new supply and demand dynamics and and and and cost on different sources of energy to give effect to reducing emissions. This is another piece that we find in our report is that policies that are being rolled out both domestically in Canada, but significantly so globally, again, in the context of some of the assumptions that we've made for our 2 net zero scenarios where policies have an effect on a new supply and demand dynamics for oil and gas specifically, such that the demand for such commodities declining, then lower price, more challenging for producers to continue to produce. So, this what drives this are policies that that that put a cost on carbon, a cost that didn't exist prior.
Speaker 1:Can you talk about the 3 scenarios and what are some of the, you know, the under basic underlying assumptions for each one?
Speaker 2:Right. So we have three scenarios, 2 of which where Canada meets net zero emissions by 2050. The third scenario we have is called current measures, which essentially models the policies that are in place as of March 2023 and assumes no further policies or no further increments in terms of stringencies of existing policies. Then our 2 net zero scenarios, one is called global net zero, which reflects essentially not only Canada meeting net zero emission by 2050, but also in a global context where, other countries are also effectively becoming net zero by 2050. So it's a net zero planet.
Speaker 2:Right? Our second net zero scenario, is called a Canada net zero. Canada meets the the objective, but the rest of the world is not moving as fast as, the global net zero scenario. So, we use the IEA announced pledges scenario, which is akin to kind of a one point 7 degree c, temperature increase, world, whereby, the global net zero scenario is incurred into the IEA, net 0 by 2050 scenario, more of a 1.5 degree c scenario. We also use so so from though from that premise and the global context on the IEA, the we derive, the global prices for oil and gas as well as, prices for technologies, whether it's solar, wind power, those kinds of things, because in this global world where technologies are are traded, then, if there's greater adoption of it across the globe, then Canada would also be facing those kinds of, those kinds of improved costs, for example, through transition.
Speaker 1:Yeah. We should point out that this is fairly standard. I mean, pretty much, all of the modeling I've seen, the first scenario is status quo. Not much changes. We just keep going the way we are.
Speaker 1:The second one is it's the policies we've announced. We actually follow through on them, and that's kind of the middle scenario and then you've got the net zero modeling. And and everybody has some variation, on that. And so let's apply this to, oil and in you know, when we're talking about Canadian crude oil production, we're talking about the oil sands because that's 80% of Alberta production and 67 66, 67% of Canadian production, and so it plays an outside outsized role, in the industry. And my take on the as all on the oil sands has always been that the, it's a different beast because it you have a 100, a 102, 103,000,000 barrels a day of oil demand globally, but 10.5 of that or 10,500,000 per day of that is heavy crude oil, and that's where, the that's where the oil sands plays.
Speaker 1:5,500,000 barrels a day of that refining capacity is in the US. That's where all of the exports go, from the oil sands, and and Canada's kind Alberta's kind of the the the big player in in in the US market. And it just is I've always taken it as a a given that that market might very well, show more resilience even after global oil demand peaks begins to decline. Light sweet crude may would probably decline quicker than heavy because it goes into into petrochemicals and it goes into aviation and bunker c for ship marine shipping, things that for which we don't have ready substitutes yet. Is that a reasonable assumption?
Speaker 2:To some extent it is. At the same time, kind of 2 two nuances that we, that we highlight in our report about that. First is the fact that, you you've highlighted the the the declining global demand for oil and gas. And interestingly, even if in our global net zero scenario, Canadian production declines to 1,200,000 barrels per day, by 2050. This represents actually the same share of global market that current that kinda currently hold in a almost a 100, 1,000,000 barrels per day global market.
Speaker 2:So so that's one point. The second point is there were I'm sure you'll recall, you know, a couple of years ago, because oil sands, projects had important sunk cost at the beginning and but then a lower marginal cost, going forward, they would be able to fare reasonably well in a low price environment. Well, that remains true, but what is different in our analysis is that, again, because Canada needs to meet net 0 by 20 50 and manage those emissions, then Canadian producers are facing very real very real decarbonization costs, and those costs are most acute for oil sands producers versus conventional producers, because of the, emission intensity of the two methods of production. So what we see through the projection period is that relatively speaking, conventional production tends to be more resilient because of that JG intensity and the fact that conventional producers do not face the same decarbonization cost as oil sands and also because of the shorter time period, in terms of recovering capital, which is especially important in a in an environment where price is declining at a pace that is somewhat worrisome for producers that don't have perfect foresight into the future as it relates to pricing.
Speaker 1:What about some of the subsectors within the oil sands? And I was looking today at, an S and P Global emissions, report for the oil sands. And not all methods of producing, bitumen are equal. So for instance, CCS dilbit, which is combined, steam cycle, no, combined cyclical steam, CCS, is very, very intense. And it's I think the average the highest one is about a 160 kilograms of CO 2 equivalent per barrel.
Speaker 1:But then there's there's also synthetic crude oil, SCO. And and so that also has very high emissions intensity. And but others, such as, oh, sag d, Bilbit, has Mining. Quite quite low. Yeah.
Speaker 1:Well, side d has low and then mining, PFT, paraffinic, froth treatment, has is fairly low. And so it would seem that the abatement costs for those different types of production would be very, very different, and that might then, fact it might affect the assumptions behind, you know, what kind of production is more competitive or less competitive going forward.
Speaker 2:That's that's true. And that's something that we take into account in our analysis. And, again, what what we what we find and it's a bit contrary to maybe the the the general premise out there is that what is biting the most, for Canadian producers, irrespective of the method of production that you have, described, is the unforgiving global price environment. That actually has a price of oil of, $24 by 2050. We take this from the IEA, but at that price point, only the most efficient producer from a cost perspective are able to continue to produce.
Speaker 2:And this is the the driver that explains to the greater to the greatest extent the the the decline in production that we see, in our in our projection period as it relates to oil.
Speaker 1:How do you see this? And I guess this is maybe a reflection of the IEA's data analysis. But I've talked to a variety of economists about, you know, what happens when, oil peak, oil demand comes along. And then generally, I think people, you know, assume there's gonna be a a bit of a bumpy plateau for a few years, and then there'll be a a decline curve will start. Nobody knows what kind what that decline curve will look like just yet, but nevertheless, you know, like, decline curve.
Speaker 1:So my question has always been, okay, so you let's say it peaks at a 103,000,000 barrels a day. That's the hypothetical just for the sake of argument. And and then you have it goes down to a 100, and you have a 103,000,000 barrels a day of supply chasing a 100,000,000 barrels a day of demand, and then that same amount of supply chasing 95,000,000 barrels a day. You know? What's your take on the dynamic there?
Speaker 1:Like, you know, in a in a perfect world, or in a world populated, or created by economists, then the least the the highest cost producers would just drop out of the of the market. But, of course, we have Nash, National Oil Companies, and we have the Saudis and others who need 80, 90 barrels a day to meet their their government, revenue requirements, and so they might not behave that way in a perfectly rational in a pat rational way. And it seems to me that the best, most likely scenario would be chaos or at least volatility, a lot of volatility and disruption. What is that a reasonable assumption?
Speaker 2:Well, the the the assumption that we've made is is this decline in oil prices down to 24. And at the same time, we fully acknowledge that this is a main uncertainty of our report in terms of how things will actually turn out. Because as you point out, we've seen not too long ago, OPEC, taking measures to limit production in order to sustain a certain level of price. So it's not to say that this will not actually continue into the future. So we need to acknowledge that this is an uncertainty.
Speaker 2:And at the same time, the way we have, conducted our analysis is that, and that's now a little bit of the nitty gritty details, but the point is that if Canadian producers can economically, produce oil or or gas, same dynamic with natural gas, produce oil at the prevailing market price, then that barrel will be produced and will clear the market. So it's a bit of a arguably a simplifying assumption acknowledging that there are different type or grades of oil and this is something that that we have in mind for future modeling improvement. Coming back to your initial point, modeling is always, right, an evolving exercise, and the work we've done in 20 well, 2022, 2023, and then Modeling Net 0 builds upon the the previous iterations of our modeling user size and previous energy futures work, which we will continue to build upon this 2023 report for the future iteration, that we are still scoping out.
Speaker 1:Now you mentioned that the, g the emissions abatement costs would be a burden for the oil sands and would affect their competitiveness going forward. But what about for both light sweet crude and various types of heavy crude? Canada Canadian producers are generally far from market, particularly from Alberta. And, pipeline tolls, as I recall them, are, you know, to get to US markets are around 7.9, maybe even as much as $15 and can be more if it's oil if it's by rail. And how does that play into it?
Speaker 1:Because I I mean, if you had 12 to $15 off the price of a barrel and your, you know, your barrel's down at your price is down at $30, you better be a pretty efficient producer to survive it. $30, $40.
Speaker 2:Absolutely. Absolutely. And this is now I've been talking about $24, by 2050 from the IEA, and this this $24 is the Brent price, from which we adjust to take into account the the particularities that you outlined, which means that there's a historical discount from brand to WTI, which we assume at about $2.5, I believe. And then from, WTI to WCS, again, to reflect Canadian particularities at about, $12 and and a half, to reflect the difference in quality as well as transportation costs.
Speaker 1:Yeah. That make that makes sense, and it also makes life very difficult for Canadian producers once it gets down in that in that range. Okay. What about different regions? Because Alberta is not quite the same as Saskatchewan.
Speaker 1:Saskatchewan and Alberta are not quite the same as Newfoundland and Labrador. Is there any variation in your modeling, between regions?
Speaker 2:I think the the most noticeable distinction is between onshore and offshore. So, basically, Alberta, Saskatchewan, apart from the distinction, conventional oil sands that we've already talked about, the piece about the the trend and the off shore are are somewhat well, they they fall the same trend, but what's noticeable is because is because of the the the nature, the complexities, and also the lead time to replace declining production in the offshore. We see production, declining, on a similar path in the offshore irrespective of the scenario, including current measures, which, again, we we recognize that this is an uncertainty. It depends on the level of exploration and, you know, how how effective that is. But it is one point where there there's a different quite of a distinction because when you look at oil production onshore, then it it reaches about in a current measure scenario, why are 1 the one where we freeze current policies reaches, you know, more than 6,000,000 barrels per day.
Speaker 2:But on the offshore, we assume that there's no, incremental discoveries over and above, the project that we assume will come online and, you know, around 2030, you know, acknowledging that, has announced a 3 year delay there. But then we'll follow a natural decline as well as the existing projects without, incremental production, offsetting that decline.
Speaker 1:Let's talk about natural gas now because this is in the news all the time these days because of Alberta's insistence that somehow, exports of clean for listeners who can't see me doing this, I'm putting scare quotes around clean, LNG off the West Coast could be sent to, you know, Japan or or, or China and other Asian countries that are burning a lot of coal, displace coal, earn credits under article 6 of the Paris Agreement. There's a big scrap. Energy media is knee deep in this because we've interviewed carbon management consultants who say that that's not the way. That's not it'll be very, very, very, very, very, very, very difficult under article 6. And then to get to bring the Canadian government to the table, introduces a couple of more varies.
Speaker 1:And, anyway, it's unlikely, that this is going to happen. But there's a lot of noise in Western Canada about increasing LNG production on the West Coast. How did that play into your assumptions? And I mean by that, I mean, how did LNG play into your assumptions about natural natural natural gas production in Western Canada?
Speaker 2:So first point is that because LNG opens up, new markets for Canadian producers, it will generate incremental production, compared to if there would be no LNG. And and the ratio we use is, 70 5%, meaning that, 75% of LNG export will actually translate into incremental production that would not occur otherwise. And so that being said, we we see LNG exports occurring in the three scenarios at different levels, obviously, reflecting the different price environment. And, we see so about 2 BCF, to start with. And even in the global net zero scenario, 2 BCF starting in the late 20 twenties.
Speaker 2:And what's particular in the global net zero scenario is that by the late 20 forties, for projects that are not electrified, then, they face those carbon costs that we have discussed priorities. They also face, you know, an unforgiving price environment globally, which makes their economics very challenging. So from, you know, from 2 BCF level, we see by 2046, 47 at a tail end of the projection period, again, acknowledging it's uncertain. We we understand each other here. But only the electrified exports would remain at the tail end leaving about 300 MMCF, by that point.
Speaker 2:And then so that's for the global net zero scenario. And then we go by increments, in terms of an additional maybe an additional 2 BCF, in the Canada net zero scenario and even more so, in the current measure scenario. What's the one assumption we've made in our analysis is that, because the, coastal gas link project, is, I think, expandable up to 5 bcf a day, That effectively act as a as a cap, for LNG reach or or natural gas reaching the West Coast for LNG exports. So that is a constraint that we've put on our our on our analysis to avoid making other types of assumptions. But, again, as as we've discussed prior, this is an uncertainty, but a piece that is worth mentioning here in the conversation.
Speaker 1:So if I understand this correctly, LNG Canada phase 1 will I forget what the consumption is per day, but that's that's built in. And then the assumption around growth of LNG exports is essentially LNG Canada phase 2.
Speaker 2:You got it. Yeah. That's essentially it.
Speaker 1:Right. And then you don't assume that there are any other LNG plants constructed after LNG Canada phase 2.
Speaker 2:In the Canada net zero scenario, and you've mentioned, LNG Canada, the the other project I'll mention is, Woodfiber that that we have included in our analysis, and we are fully aware that there are other projects, on the table, that have been some of them are quite along into the regulatory process, and, you know, they they may materialize. Again, it's for the project developers to to make the required investment decisions. But in our analysis, you know, given the price environment and what we foresaw what we foresee, we believe that, those LNG export levels are what is achievable in the context of the the three scenarios that that we had, acknowledging that at 5 BCF a day, you know, in the current measure scenario, then there is room for, you know, more than, only LNG Canada and Wood Fiber. And then, you know, again, I I remind your, your audience of the nature of our analysis, right, where we force the system to meet net 0 by 2050. And then there's a there's an open question as to whether or not reality will turn out to be that way, and I think it plays out into the investment decision that, in fact, not only, LNG project developers are are weighing, but also other, other, hydrocarbon projects or pipeline projects, for example.
Speaker 1:Yes. So now I think we should point out for for our listeners that, you can go on to the energy talks, podcast episodes and you'll find, I think, 4 or 5, interviews that we've done with with both opponents and proponents of West Coast Canada, LNG development and some very interesting observations. I mean, there are at least one economist who is who has identified that, you know, West Coast LNG projects, their capital costs are twice those of the US Gulf Coast. I mean, you're just you know, you're building something into Houston or or Louisiana, your costs the capital costs are much lower than if you're building something in Kitimat. But then it it it becomes such a complex calculation because then we've got this huge bulge of of new LNG supply that's coming into the market in the next, in the next couple of years, I think, 24, 2024, 2025, 2026.
Speaker 1:And, who knows where global markets are going to go as regions like Europe, step up their electrification efforts, that could throw a wrench into everybody's LNG plans. I mean, it's just very much is it fair to say and and and I'll back up a little bit. In our in my take on energy transitions, I've mentioned the long roots, the the the bottom of the s curve where technologies are inching all their way along as they become, better and better and better and lower and lower cost and more competitive. Finally, they get to be competitive. They hit the the inflection point.
Speaker 1:And and then there's generally a period of of really intense disruption as they get into the marketplace, and they begin to challenge the the incumbent energy sources or the incumbent technologies. And it seems like, the 20 twenties are that period of disruption. It's very volatile. We're seeing the oil market do things that that nobody expected given the levels of capital investment that, the underinvestment that's taking place. We're seeing, we're seeing, all sorts of changes in in in regulatory behavior, investor behavior, brought on by uncertainty and and the perception of risk that the energy transition creates for them.
Speaker 1:And, but I was wondering what the, CER's economic modeling team would think of that. You know, is this a period of disruption volatility that makes it more difficult for you to model, or does that just not matter at this point?
Speaker 2:I think the the way we see it is that once we embark on this pathway to net 0, the disruption will occur throughout the projection period. As as we see it, I mean, I think it it starts, I think, most acutely, in the electricity sector where, you know, the deployment I mean, we've talked about the phase out of carbon, sorry. The the phase out of coal. The the the greater deployment of wind power and, you know, the electricity system on this pathway to net 0 reaching net 0 by 2035, is quite the disruption. Right?
Speaker 2:And then as you move into the 20 thirties, this is where we see, the peak of capital deployment as it relates to carbon capture and storage, then being played out obviously in oil and gas, but also in a number of other, industrial sectors. And then as you continue to progress down this pathway to net 0 and tackling the challenging emissions, then, this is where you see an increase in direct air capture. This is where you see the greater deployment of small modular reactors. So this goes, you know, way beyond the, the oil and gas sector that we've mentioned, but affects the whole energy system, in a different way, at different times, which is quite fascinating actually when you when you think about it.
Speaker 1:Oh, it it absolutely is even when you're not thinking about it. It's still it's still fascinating. And one of the reasons why I find it fascinating is because of the 4 sectors, and we're talking here about power, transportation, industry, and buildings, of the the 4, the 2 that most affect future demand for oil, which is power sector, which is essentially the rise of renewables and and clean electricity of all kinds, which whether it's be hydro or geothermal or nuclear or whatever, coupled with the changes in transportation around the automakers, the far the the switch from, internal combustion engine to, electric vehicles is taking pay place, and at a pace that nobody expected even, you know, 2, 3 years ago. It it's come right out of left field where suddenly everybody's all in on electric, and they're scrambling to deploy capital and and build out their supply chains and their and their factories and train up their their workers and all of that. It's just it's it's mind boggling how fast that particular industry is being disrupted.
Speaker 1:And, essentially, the the, all of these electric vehicles are essentially the techno the demand technology that displaces oil, and electricity is the supply technology. And the 2 of them together are the thing that will eventually, lead to the decline in in oil demand. And and so it's is is your is my perception of the rate of disruption, the rate of change, the rate of growth of these new clean energy technologies. Is that a a reasonable take on what you're seeing and and and as you went through your modeling?
Speaker 2:Yes. That that reflects the the trends and the the the the trends and the yeah. That we see in the pathway to net 0. I think there there comes a point where when you look at that and also reality, what's happening in the real world like, yes. We see, grid penetration of the XUV vehicle.
Speaker 2:Like, we no argument there. But then there there's still question as to, okay, as we progress down this pathway, is there, are we moving fast enough, or or is there enough in place to enable that transition? And I think that's an open question. In effect, when you look at, the assumptions of our two scenarios, what we see is that the the policies that are currently in place or the policies that are announced are actually not sufficient to bring Canada to net 0, and there more needs to be done. This is something policymakers know and acknowledge, and, this is what our analysis showed as well.
Speaker 1:Well, Jean Denis, this has been a a fascinating discussion. I really, appreciate this, and we'll look forward to energy futures, 2024. So we can do it all over again next year. Thank you very much for this.
Speaker 2:My pleasure. And just so we're clear, it may be 2024 or maybe 2025. We haven't decided yet or committed to a timeline for an acceleration.
Speaker 1:Well, if if if it turns out to be 2025, we'll have you on next year to explain why there's a delay.
Speaker 2:Anytime. It was a pleasure.