VANCOUVER (miningweekly.com) – A new assessment released Wednesday by the Canadian National Energy Board (NEB) has cast a shadow over the country’s long-term energy prospects, lowering both the future price of crude and the estimated increase in Canadian oil production by 2040.

In its energy market assessment titled ‘Canada’s Energy Future 2016: Update’ the NEB points to rapidly evolving energy market conditions and policy developments over the past year.

The reference crude oil price is now $90/bl by 2040, or $17 lower than the NEB’s projections released early this year. Canadian crude oil production projections see an increase from 4-million barrels a day in 2015 to 5.7-million barrels a day by 2040 – almost 400 000 bbl/d lower than forecast in the January report.

“Canada’s energy system continues to face a great deal of change and uncertainty. The NEB’s updated energy outlook reflects recent volatility in global crude prices, as well as the ongoing impact of climate policies,” stated chief economist Shelley Milutinovic.

The report suggests that energy use, including energy derived from fossil fuels, will continue to increase, but at a slower pace compared with the NEB’s last projections, and at a much slower pace than Canada has seen over the last 25 years.

In the report’s reference case, Canadian crude oil production continues to grow, but at a slower rate than in the previous report released in January. The global price of oil remains a key uncertainty for future growth, the NEB stated.

In the electricity sector, recent policy announcements have had a significant impact going forward, with more growth in renewables than projected in the NEB’s January report. By 2040, coal-fired generation without carbon capture and storage technology accounts for a very small part of Canada’s electricity mix.

Electricity generated from coal (a greenhouse-gas-intensive power source) is forecast to drop to 10% of the current levels by 2040, owing to federal regulations and the planned phase-out of coal in Alberta by 2030.

To replace declining coal generation, considerable natural gas and renewable energy will be added over the projection period. Hydroelectric capacity is forecast to increase by 15% from 2015 levels and combined solar, wind and biomass capacity is forecast to more than double by 2040.

Earlier this month, the federal government announced its plan to price carbon pollution, a central component of the Pan-Canadian Framework on Clean Growth and Climate Change. The plan represents one of the most significant federal climate policy announcements in Canada and the NEB requires additional time to analyse its effects, it said.

This plan is not included in this update but the NEB will update its projections in 2017 to reflect the evolving climate policy frameworks in Canada.