CANADA ECONOMICS

MONETARY POLICY

The Globe and Mail. 26 Oct 2017. Bank of Canada hits pause on rate hikes
BARRIE McKENNA, OTTAWA

Economists and investors are interpreting the central bank’s suddenly more guarded tone as a sign the next rate hike is now more likely to come later, rather than sooner. The Bank of Canada is suddenly in no hurry to push interest rates higher as it grapples with a raft of uncertainties, including the possible end of NAFTA, slowing growth and a puzzling lack of inflation.
After two quick and largely unexpected rate hikes in July and September, the central bank hit the pause button on Wednesday, opting to keep its benchmark interest at 1 per cent.
Governor Stephen Poloz acknowledged that the economy will likely need “less monetary stimulus” going forward. But he declined to be more specific about the timing or pace of future rate moves, insisting the bank would be cautious in the face of abnormal economic conditions.
“We have to validate our story in real time,” Mr. Poloz told reporters. “I’m afraid I can’t tell you whether it will be three months or six months or nine months or December. We learn from every data point.”
Economists and investors interpreted the central bank’s suddenly more guarded tone as a sign that the next rate hike is now more likely to come later, rather than sooner.
“It appears that the urgency to increase rates has faded,” TorontoDominion Bank economist Brian DePratto said in a research note.
The probability of a December rate increase has fallen to 34 per cent from 80 per cent since early September, according to Bloomberg’s gauge of investor sentiment. The chance of a January hike now stands at 64 per cent, down from more than 87 per cent a month ago.
The diminished likelihood of imminent rate hikes sent the Canadian dollar tumbling nearly a full cent immediately after the announcement, touching its lowest level against its U.S. counterpart since July. By the end of the day, the loonie was trading at 78 cents (U.S.), down from 78.8 cents ahead of the rate decision. The Bank of Montreal said it now expects the central bank’s next rate increase to come in March, rather than January, and that it will make three hikes in 2018, instead of four.
“We now believe that the bank will pause for longer, given the greater uncertainty over NAFTA, as well as the recent steps taken by [regulators] to cool the housing market,” BMO Nesbitt Burns Inc. chief economist Douglas Porter said.
At the other end of the spectrum, Laurentian Bank Securities is forecasting just one hike next year, pushing the overnight rate to 1.25 per cent.
Among the challenges facing Mr. Poloz is that while the economy is already running close to full capacity, inflation and wage growth are muted. Indeed, the bank said inflation won’t get back to its 2-percent target until the second half of next year because of the recent strength of the Canadian dollar. The dollar is up nearly 8 per cent since May, even after Wednesday’s decline.
The bank has also ratcheted up its concern about the Trump effect on Canada’s export-dependent economy. Rising protectionism in the United States is now “the greatest source of uncertainty” clouding Canada’s economic outlook, the bank warns in its latest monetary policy report, also released on Wednesday.
The bank cited both the uncertainty over the North American free-trade agreement and “targeted discretionary” protectionist measures, such as the massive tariffs imposed recently on Bombardier Inc.’s new C Series commercial jets.
The risk is that companies may respond to protectionist and competitive pressures by moving production out of Canada. Indeed, Mr. Poloz said it’s likely that businesses are already investing less than they otherwise would here because of the uncertain trade environment.
The NAFTA negotiations hit a major roadblock last week after the United States put tough demands on the table, including a minimum U.S. content threshold for autos, an end to the deal’s dispute-settlement regime and a phase-out of Canada’s protected dairy and poultry markets.
The Bank of Canada raised its forecast for growth this year to 3.1 per cent, or roughly in line with many private-sector forecasters. That’s up from its July forecast of 2.8 per cent. The bank sees growth slowing to 2.1 per cent in 2018 and 1.5 per in 2019.
The bank also said it expects growth to “moderate to a more sustainable pace” in the second half of this year, with annual GDP growth of 1.8 per cent in the third quarter and 2.5 per cent in the fourth quarter because of weaker consumer spending and housing activity.
The bank blamed the pullback on higher interest rates, tighter mortgage rules and measures in Ontario designed to discourage foreign speculators in the housing market. Exports and business will continue to make a “solid contribution” to growth, the bank said.
Another growing concern for the central bank is the “unexplained softness” of Canadian inflation. The bank pointed out that while the unemployment rate has continued to fall, other labour market indicators are still lagging, including wage growth and average hoursworked, both of which remain below historical averages.

The Globe and Mail. 26 Oct 2017. BoC Decision. HBC’s real estate deal befuddles investors. Rally following news of HBC’s Lord & Taylor sale has since sputtered
DAVID PARKINSON
DAVID BERMAN, INSIDE THE MARKET



With its decision to hold back on a rate hike for the moment, the Bank of Canada signalled it’s in wait-andsee mode, with all eyes on inflation.
After Hudson’s Bay Co. announced on Tuesday morning that it is selling its flagship Lord & Taylor store in New York, investors who had bet on the retailer for its vast real estate holdings were vindicated: Turns out, store space is worth more than many observers had expected.
So why is HBC’s share price still in the doldrums?
The sale was initially greeted with enthusiasm. HBC shares surged as much as 7 per cent when trading began on Tuesday.
Investors liked the price that the Lord & Taylor store on Fifth Avenue had gone for: $850-million (U.S.).
The details also look good. The retailer, which also operates the Bay, Home Outfitters and Saks Fifth Avenue, will continue to occupy 25 per cent of the current space.
The rest will serve as the global headquarters for the company that is involved in the purchase – WeWork Cos., which provides office space to entrepreneurs and startups in 55 cities globally.
Rhone Capital, which has formed a joint venture with WeWork for the real estate transaction, has also agreed to a $500-million investment in HBC, in the form of preferred shares that can be converted to common shares within eight years.
However, the rally that immediately followed this news has since sputtered. HBC shares on Wednesday were back below $12 (Canadian), down 5.5 per cent since Tuesday morning and down 10 per cent over the past month, even as analysts raised their price targets on the stock.
Mark Petrie, an analyst at CIBC World Markets, raised his target to $14 from $12.50 previously. Brian Morrison, an analyst at TD Securities, raised his target to $13.50, also from $12.50.
The hikes reflect the idea that one of the key arguments in the bearish case for the stock – that former retail real estate might not be worth much – appears to be weak. After all, the Lord & Taylor flagship store went for 30 per cent more than its most recent appraised value in July, 2016.
That was more than analysts had been expecting. In raising his target price on the stock, Mr. Morrison commented: “The key driver of the increase pertains to the sale of the L&T flagship above what we had been previously accounting for.”
Of course, HBC has a sprawling empire of real estate, and perhaps not all of its stores will be as desirable as Fifth Avenue. Nonetheless, some observers have argued that the value of this real estate towers above HBC’s actual market value, creating an upside opportunity for anyone willing to bet on further store sales or an outright spinoff of the real estate into a separate company.
Earlier this year, an analyst at BMO Nesbitt Burns Inc. pegged HBC’s per-share value as high as $36, or about three times the current price.
Clearly, the market is not onside with this bullish assessment, and for a couple of reasons.
For one, the deal announced on Tuesday has at least one quirky element that is sure to rankle bullish enthusiasts: The preferred-share agreement with Rhone Capital stipulates that the holdings can be converted into common shares priced at $12.42 a share.
This conversion will dilute current shareholders. But more importantly, the conversion price, just 5.7 per cent above the current price, appears to undermine the intrinsic value of the company if its real estate is worth as much as some observers believe.
As Mr. Morrison explained in a note: “For a company stating that the value of its real estate is worth in excess of $35 a share, it seems at odds to be selling about 22 per cent of its pro forma equity at $12.42.”
There is also the issue of rent. One of the big problems with HBC spinning off or selling its real estate is that retailer will have to pay its landlord. And that’s a problem given the current competitive headwinds facing bricks-and-mortar retailers in general, and HBC specifically.
“The equity investment brings much needed cash, but the vast majority of cash flow is still needed for rent,” Mr. Petrie said in his note, which estimated that 66 per cent of estimated 2018 cash flow will be required to keep the lights on.
He added: “While there is potentially attractive upside in future real estate moves, the complicated structure, lack of transparency and operational uncertainty hold us back and we maintain a Neutral rating.”
He’s not alone, which is why the stock requires a lot of patience. HBC Close: $11.75, down 23¢

BLOOMBERG. 25 October 2017. With Economy Almost ‘Home,’ Poloz Is Treading Carefully on Rates
By Luke Kawa

• Bank of Canada holds rates steady, cites currency, Nafta
• Even so, activity is close to full capacity, governor says

The Canadian economy is almost home, according to the nation’s central bank, but Stephen Poloz is trying to make sure the roof doesn’t cave in.

In statements Wednesday from Ottawa, the Bank of Canada governor emphasized a cautious approach to removing monetary stimulus, even as he said activity is close to full capacity. At the same time, the Bank of Canada still expects growth to exceed potential through 2018, setting up a trajectory for rate increases that’s less steep than investors had originally priced in after two interest rate hikes in a six-week span earlier this year.

This won’t be “a very aggressive rate hike cycle,” said Mike Greenberg, a portfolio manager at Franklin Templeton Investments in Toronto. “I don’t think they are in a big rush.”

The Canadian dollar sank more than 1 percent against the U.S. dollar and investors pushed back bets on the timing of further interest rate increases from the central bank after Poloz, who left his benchmark rate at 1 percent, warned that the prior appreciation of the currency would dampen export growth and inflation.

“The Bank of Canada is buying itself some time,” said Frances Donald, senior economist at Manulife Asset Management. “It’s easier to target the Canadian dollar than other parts of financial conditions, and it’s clear financial conditions in Canada needed a breather.”

Implied odds of a December rate increase fell to one-in-three after the Bank stood pat, from almost 50 percent before the decision. The yield curve for Canadian Bankers’ Acceptances shows markets are pricing in a less urgent path for rate normalization, with the total amount of tightening expected in 2018 only modestly reduced relative to a month ago.


Erik Hertzberg/Bloomberg

Donald shifted her call for the next rate hike to January from December in light of the cautious tone from the central bank.

Getting “home” is a favorite analogy of Poloz to describe the economy’s very long odyssey back to full capacity in the wake of the financial crisis and oil shock.

Sweet Spot

The economy is in a “sweet spot” where it “could be capable of generating more non-inflationary growth than we are assuming,” Poloz said in a press conference following the rate decision.

The Bank estimates the output gap – the difference between the economy’s potential growth and actual growth – entered the third quarter at zero after torrid growth of 4.5 percent in the second quarter.

Meanwhile, increasingly synchronized global growth paints a relatively sunny picture of foreign demand for Canadian goods and services in the future, although uncertainty surrounding the future of the North American Free Trade Agreement is already hurting growth.

“There’s clearly a dovish tilt running through these releases, but policymakers have given themselves a lot of optionality here,” said Brian DePratto, senior economist at Toronto-Dominion Bank. “Read between the lines –- an economy growing at potential or above with the output gap closed while continuing to create jobs doesn’t need a policy rate at 1 percent.”

Inflation Outlook

Excess capacity in the labor market suggests little risk of inflation overheating in the near term, said Poloz, who highlighted involuntary part-time workers, subdued work force participation among youths, lower than expected hours worked and softness in wage growth as signs the economy has further room for improvement.

The Bank of Canada expects a broad-based pick-up in business investment to continue, with capital spending playing a larger role in driving economic activity. Policy makers raised their assessment of how fast the economy can grow without generating inflationary pressures, with Poloz later telling reporters that the revision was a conservative one.

Inflation is expected to return to 2 percent in the second half of 2018, later than the Bank expected three months ago, due to the loonie’s increase.

"Given our recent history with inflation running below target, we continue to be more preoccupied with the downside risks to inflation," said Poloz.

Rotation of Growth

Household spending and residential investment, bastions of Canada’s expansion in recent years, are poised to contribute less to growth in 2018, with the latter turning into a net drag on activity the following year.

The introduction of tougher mortgage qualifying rules is expected to shave 0.2 percent off the level of gross domestic product by the end of 2019, policy makers said, while rising borrowing costs as well as slower growth of disposal income should bring about a deceleration in consumption growth.

The Bank also revamped its main policy model to reflect that elevated household debt leaves the economy more sensitive to interest rate increases.

Economic growth is expected to moderate to 1.8 percent in the third quarter, which policy makers attributed to temporary factors weighing on shipments abroad, including scheduled curbs on auto production.

The Bank of Canada’s long-desired rebalancing of the economy toward exports and business investment is expected to take shape in the fourth quarter, with growth rebounding to 2.5 percent –- well above the estimated sustainable speed for the expansion.

— With assistance by Greg Quinn, Erik Hertzberg, and Theophilos Argitis

BOMBARDIER

The Globe and Mail. 26 Oct 2017. Boeing CEO vows to keep up fight against Bombardier. Boeing Co. is pressing ahead with its trade battle against Bombardier
NICOLAS VAN PRAET

Inc., saying the Canadian plane maker’s new partnership with Europe’s Airbus SE won’t allow it to escape U.S. import duties on its C Series airliner.
Buoyed by early trade rulings against Bombardier from the U.S. Department of Commerce and flush with a backlog of 5,659 commercial airplanes at the end of its latest quarter, Boeing chief executive officer Dennis Muilenburg vowed on Wednesday to keep fighting the Montreal-based transportation company. He played down the impact of the Airbus-Bombardier alliance on Boeing and said “nothing has changed” in Boeing’s strategy going forward.
“The Department of Commerce will go through its evaluation. And I think you’ve seen in the initial evaluation that there are concerns” about Bombardier’s actions, Mr. Muilenburg told reporters on a conference call. “We don’t see the recent announcements around the partnership plan or new production lines changing that process or changing our position on the fact the trade matter needs to be addressed. It’s important that everybody plays by the same rules.”
Boeing’s decision to double down on its trade complaint comes after many observers characterized the U.S. plane maker as the big loser in the wake of Airbus’s deal to take control of Bombardier’s C Series program. Sources say Boeing had been offered the same deal as Airbus but walked away in August, after which senior lawmakers in Canada and Britain vowed to retaliate against Boeing if it didn’t drop its trade suit. By digging in further now, Boeing exposes itself to further lost business in the two countries.
Earlier this month, Prime Minister Justin Trudeau said he warned U.S. President Donald Trump that the trade dispute was blocking “any military procurements from Boeing.” It has been the standard line in Ottawa for months that Boeing, having failed to act as a trusted or valued partner, has effectively been shut out of any new federal contracts. That policy remains unchanged, federal officials said.
That’s a risk Boeing appears to have thought through. The company says it does $4-billion a year of business in Canada, with 560 suppliers and an overall impact of 17,000 jobs. It recently launched a multimedia campaign to highlight its contribution to the economy.
“We are mindful that when we bring a trade case like this, that there are ripple effects and implications to various customers and country relationships,” Mr. Muilenburg said. “We do think that our long-term relationships in the U.K. and Canada will certainly outlast this current trade matter.”
Boeing sued Bombardier in April, alleging the Canadian plane maker used unfair government subsidies to clinch an important contract for 75 CS 100 planes to Atlanta-based Delta Air Lines at “absurdly low” sale prices. The U.S. Department of Commerce sided with Boeing in rulings in September and October and slapped preliminary import duties totalling 300 per cent on C Series planes. That legal process continues with final rulings expected early next year.
Bombardier denies any wrongdoing and says Boeing cannot prove it was harmed by Bombardier’s actions because it did not offer Delta any planes of its own. Canada, Britain and Quebec, which all provided support to Bombardier to get the C Series to market, say their investments adhere to World Trade Organization rules.
Bombardier is now working to finalize its agreement with Airbus, a process that could stretch well into 2018. Airbus is taking 50.01 per cent of the C Series program for no cash consideration up front, pledging in exchange to throw its considerable global logistics and sales power behind the aircraft. The partners estimate there is a market for about 6,000 planes the size of the C Series over the next two decades.
The prospect of the C Series getting shut out of the U.S. market accelerated Bombardier’s talks with potential suitors, which sources say also extended to state-owned players in China. While sources told The Globe and Mail that the Canadian government was not keen on a Bombardier deal with China because of intellectual property issues, Boeing’s leadership was betting on China taking over the C Series, not Airbus, according to CNN. Bombardier (BBD.B) Close: $2.74, down 14¢ Boeing (BA) Close: $258.42 (U.S.), down $7.58

THE GLOBE AND MAIL. REUTERS. OCTOBER 26, 2017. Bombardier to lay off 280 staff at Belfast plant as part of global cuts

BELFAST, NORTHERN IRELAND - Bombardier Inc will cut 280 non-production jobs at its Belfast plant in Northern Ireland as part of 7,500 layoffs worldwide announced last year, the Canadian plane manufacturer said on Thursday.

The jobs of the 4,200 workers at Bombardier's cutting-edge Belfast wing factory have been put under threat in recent weeks by a trade dispute with U.S. rival Boeing Co that led the United States to move to impose a potential 300 percent duty on Bombardier's CSeries next-generation passenger jet.

However, Airbus' deal this month to buy a majority stake in the CSeries gave the Canadian firm a possible way out of the trade row.

Bombardier Belfast said in a statement the cuts in its support personnel were part of plans laid out last year to reduce its workforce by 10 percent through 2018, with most of the layoffs slated for its rail operations.

The cuts on Thursday follow 95 redundancies announced at Bombardier's Northern Ireland operations last month.

"This highlights our concerns that the Airbus agreement secured in the last fortnight has not provided any long-term guarantees to Northern Ireland workers," Davy Thompson, who represents the plant's workers for the Unite trade union, said in a statement.

INTERNATIONAL TRADE

The Globe and Mail. 26 Oct 2017. U.S. durable-goods orders beat expectations in September
LUCIA MUTIKANI, Reuters

New orders for key U.S.-made capital goods increased more than expected in September and shipments rose for an eighth straight month, pointing to robust business spending that should help to mitigate the impact on the economy from the hurricanes.
Other data on Wednesday showed new single-family home sales vaulting to a near 10-year high last month. The signs of strong business investment on equipment in the third quarter and a pickup in the housing market supported views the Federal Reserve will increase interest rates in December.
“The positive reports keep the economy’s wheels turning, and the Fed on track for another rate hike this year,” said Chris Rupkey, chief economist at MUFG in New York. “Businesses don’t invest in the future if they don’t think consumers will be there to buy their goods and services.”
The U.S. Commerce Department said non-defence capital-goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 1.3 per cent last month after an upwardly revised 1.3-percent increase in August.
Economists had forecast orders of these so-called core capital goods increasing 0.5 per cent last month after a previously reported 1.1-per-cent jump in August. Core capital-goods orders advanced 3.8 per cent year on year.
Shipments of core capital goods climbed 0.7 per cent after soaring 1.2 per cent in August. Core capitalgoods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.
Core capital-goods shipments have now increased for eight straight months. Business investment on equipment stumbled in late 2015 and much of last year as declining oil prices hurt profits. Spending is in part being supported by a weakening U.S. dollar, strengthening global growth and steady oil prices.
The dollar briefly rose against a basket of currencies after the data as traders anticipated an interest-rate hike in December, which would be the third this year.
Prices for U.S. Treasuries fell, with the yield on the benchmark 10-year bond rising to a seven-month high. U.S. stocks were trading slightly lower after lacklustre earnings reports from AT&T and Boeing.
Business spending on equipment probably contributed to economic growth in the third quarter, which could help to cushion the blow on GDP from Hurricanes Harvey and Irma.
Economists estimate that Harvey and Irma, which devastated parts of Texas and Florida, sliced off as much as one percentage point from thirdquarter GDP.
The government is due to publish its advance GDP estimate for the July-September quarter on Friday. According to a Reuters survey of economists, the economy probably grew at a 2.5-per-cent annualized rate in the July-September period, slowing down from the second quarter’s brisk 3.1-per-cent pace.
But the Commerce Department report, which also showed inventories increasing 0.6 per cent in September, the largest gain since June, 2015, suggested third-quarter economic growth could surprise on the upside. The economy’s improving prospects were also underscored by a second report from the Commerce Department showing new home sales surged 18.9 per cent to a seasonally adjusted annual rate of 667,000 units last month amid an increase in all four regions.
That was the highest level since October, 2007, and the gain was the largest since January, 1992. New home sales are, however, volatile month to month, and last month’s jump likely exaggerates the health of the housing market, which has struggled for much of this year.
“There are several reasons … to be reluctant to believe the upbeat message from today’s home sales report,” said Daniel Silver, an economist at JPMorgan in New York. “This recent surge in activity has not been evident in a number of the other housing indicators that we track.”
Strong business spending on equipment is helping to support manufacturing, which accounts for about 12 per cent of the U.S. economy. Overall orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, shot up 2.2 per cent last month amid a 5.1-per-cent rise in demand for transportation equipment.
Durable-goods orders increased 2.0 per cent in August. Unfilled orders for durable goods increased 0.2 per cent in September after being unchanged the prior month.

EDC. OCTOBER 26, 2017. Canada’s Foray into Other Markets
By Peter G. Hall, Vice President and Chief Economist

Trade with America is dominating the headlines daily, as the future of free trade with Canada’s number one partner is hotly debated. Billions of dollars of two-way trade are at stake, not to mention countless livelihoods – on both sides of the border. But even at the best of times, trade with the US is pretty big news in Canada. A quieter but potent force is the trade Canada does with less-traditional countries – those fast-growing emerging markets. Amid the current trade turmoil, and further-reaching anti-trade, anti-globalization sentiment, how is Canada faring in these lesser-known parts of the planet?

Trade in goods is the better-known story – and it’s dramatic. Back in 2000, just 5 per cent of Canadian merchandise exports were destined for emerging markets. That share doubled to 10 per cent by 2008, and although trade was wracked by the global recession, since then the share has risen further – it is now pushing 13 per cent. Given Canada’s growing presence in the emerging world, and much faster growth profile of these markets over the long term, this share of our trade is most likely to continue rising well into the future. Certain regions of Canada are already well on the way: British Columbia gets the prize for most rapid diversification, currently second among the provinces at 25 per cent of all merchandise exports. Saskatchewan – perennially diversified – is number one, at 41 per cent. Among industries, agricultural products is a standout, but others are doing well.

The story doesn’t stop at goods, though. Trade with emerging markets in services is surprisingly strong. Back in 2006, it amounted to roughly 19 per cent of total exports of services – a much larger share than our goods trade. The share hasn’t risen as dramatically, though; while average growth among sales of services to the emerging world is 5 per cent, compared with developed-market sales growth of just 3.1 per cent, the total share of sales rose more modestly, to 22 per cent by 2015, the latest year of comparative data. Given that services trade will grow in importance over time, this beachhead in the developing world is strategically significant.

A further element of truly integrated trade is foreign investment. On this front, emerging market activity is also impressive. Annual growth in the stock of Canadian investment in emerging markets has averaged 8.6 per cent since 2007, just nudging ahead of growth to the developed world over the same time. The share of total overseas investment fluctuates from year to year, but the trend in activity is generally up from 8.9 per cent in 2007, hitting as much as 11 per cent in the years since.

With the investments in overseas markets come sales into those markets – and from those installations to still other markets – known technically as foreign affiliate sales. As long as trade continues to broaden its reach around the globe, this form of trade is likely to grow in significance. Growth in this form of Canada’s activity with emerging markets has fallen marginally shy of affiliate sales in OECD countries. However, what is surprising about the data is that emerging markets already account for roughly 28 per cent of all activity. The cost advantage of operations together with rising wealth inside these markets suggests a growing share of overall foreign affiliate sales activity over time. While a more obscure part of our overall trade, this is one to watch in the coming years.

These pieces of what we generally call Canada’s international diversification story are inspiring, but they mask one key underlying reality: among firms in Canada, export data are very skewed. Over the time period of these dramatic developments, large Canadian companies are the dominant players. Survey data shows that large firms – 3 per cent of the exporting population – account for about 60 per cent of sales, a share that has barely budged over the reference period. But in this data, some encouragement: small firms actually seem more adventurous. While only 6 per cent of large firms export only to non-US destinations, the number for small firms is 19 per cent.

The bottom line? Amid unsettling trade-talk, there is a glimmer of hope. Canada is, over time, turning more of its attention to smaller but faster-growing markets. And that trade is not just happening in a rudimentary way; activity through multiple means suggests a maturity that portends well for future activity.

ENERGY

National Energy Board. October 26, 2017. New long-term energy outlook shows Canadian fossil fuel use peaking

Calgary – The National Energy Board (NEB) today released its updated long-term energy outlook, which shows Canadians will likely use less fossil fuels in the future, thanks to climate policy and technology. The report also explores additional scenarios for climate policy and new technologies to further impact Canadian energy consumption and production trends.

Canada’s Energy Future 2017: Energy Supply and Demand Projections to 2040 explores how possible energy futures might unfold for Canadians over the long term. The report uses economic and energy models to make projections based on certain sets of assumptions given past and recent trends.

The report’s baseline outlook is the Reference Case, which is based on a current economic outlook, a moderate view of energy prices, and includes climate and energy policies similar to those announced at the time of analysis. This projection shows Canadian fossil fuel use peaking around 2019, and flattening out in the long term.

The report also looks at two scenarios to examine climate policy and technology trends beyond those included in the Reference Case. The Higher Carbon Price case considers the impact of carbon pricing that continues to increase in the long term. The Technology Case considers increased carbon pricing plus the greater adoption of select emerging production and consumption energy technologies such as electric vehicles and solar power.

All three cases included in Canada’s Energy Future 2017 show Canada reducing our fossil fuel consumption trends compared to previous outlooks. And despite these reductions, the outlook for economic growth and energy production is similar to or higher than in recent Energy Futures outlooks. The results also suggest that more action will be needed to meet Canada’s climate change commitments. This highlights the importance of ongoing dialogue and discussion of new ideas to continue driving Canada towards a low carbon future, which is a key component of the Government of Canada’s recent Generation Energy initiative.

As the only publically available, long-term energy supply and demand outlook covering all energy commodities and all provinces and territories, the NEB’s Canada’s Energy Future series provides Canadians with a key reference point for discussing the country’s energy future.

In addition to the report, Canadians can review this information with the NEB’s leading edge data visualizations tool. With a few clicks, Canadians can explore the type and quantity of energy produced and required in every province and territory, and what that energy mix is forecast to look like decades into the future. Users can now also compare how the energy mix in each region changes over time. With millions of unique possibilities, each user can tell the story that most interests them.

The National Energy Board is an independent federal regulator of several parts of Canada’s energy industry. It regulates pipelines, energy development and trade in the public interest with safety as its primary concern. For more information on the NEB and its mandate, please visit www.neb-one.gc.ca

Quotes

“Energy Futures 2017 shows that real progress is being made towards a low carbon future. Canadian fossil fuel use peaks and then begins to decline, with the extent of that decline depending on future policy and technology assumptions. Still, there is more work to be done and new ideas will be required.”

– Shelley Milutinovic, Chief Economist, National Energy Board

Quick Facts

• The Energy Futures 2017 Reference Case is the first Reference Case in the Energy Futures series where fossil fuel consumption peaks within the projection period.
• Canadian fossil fuel consumption in the Higher Carbon Price Case is eight per cent lower than in the Reference Case, and 13 per cent lower in the Technology Case by 2040.
• Renewable capacity grows quickly, with wind capacity doubling and solar more than tripling by 2040 in the Reference Case.
• Despite different energy outcomes, Canadian real gross domestic product (GDP) growth is similar in all three scenarios in Energy Futures 2017.
• Future policies and technology trends, both domestically and globally, will shape Canada’s sustainable energy future.

Canada’s Energy Future 2017: http://www.neb-one.gc.ca/nrg/ntgrtd/ftr/2017/index-eng.html
Fact sheets: http://www.neb-one.gc.ca/nrg/ntgrtd/ftr/index-eng.html
Exploring Canada’s Energy Future: https://apps2.neb-one.gc.ca/dvs/?page=landingPage&language=en

DAIRY

StatCan. Dairy statistics, August 2017

The volume of yogurt produced in August was 33 561 tonnes, up 2.4% from August 2016. Production of cottage cheese increased 10.3% from the same month a year earlier to 1 915 tonnes in August 2017, while cheddar cheese production increased 9.2% over the same period to 13 921 tonnes.

Cheddar cheese stocks on September 1 were at 51 654 tonnes, down 1.1% from the same day a year earlier.

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/171026/dq171026e-eng.pdf

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LGCJ.: