$1 Trillion & 151,000 Jobs: Potential Economic Cost of Canada’s Oil & Gas Emissions Cap

Canada's oil and gas emissions cap potential economic cost of 1 trillion and 151,000 jobs

Alberta’s economic analysis of Canada's up-and-coming oil and natural gas emissions/production cap is raising alarm bells to the tune of $1 trillion.

Yes, that’s right. And the adverse economic consequences of the unnecessary policy – coming amid a time when global oil and gas demand continues to grow to new record highs and energy security remains a significant concern for our allies – don’t stop there.

Contained within the Alberta government’s submission to Ottawa, analysis by the Conference Board of Canada forecasts “severe negative impacts” according to reporting by the Calgary Herald, including:

• Between 82,000 and 151,000 jobs would be lost by the end of the decade across Canada, including anywhere from 54,000 to 91,000 in Alberta.

• Canada’s nominal gross domestic product (GDP) would drop anywhere from $600 billion to $1 trillion between 2030 and 2040.

• Alberta’s GDP would decrease by 3.8% between 2030 and 2040.

• Alberta government revenues would drop by $73 billion to $127 billion in the next decade, while federal government revenues would drop even further, between $84 billion and $151 billion.

Oil & Gas Production Cuts for Compliance

“The policy, as it’s announced right now, in our view is going to lead to significantly slower growth of the oil and gas sector, across the country and materially in Alberta,” said Tony Bonen, Director of Economic Research at the Conference Board of Canada.

“And it comes at a fairly high cost, in terms of the price-per-megatonne of greenhouse gas emissions that are reduced.”

The report looks at what will happen to the Canadian oil and natural gas sector if federal emissions targets are not achieved by 2030, which would likely result in production cuts for compliance.

The new technologies and innovations required to meet the cap targets are of particular concern, as some do not yet exist. Hence, Canadian production growth could drop about 11 per cent in the Conference Board’s base case.

The Montreal Economic Institute (MEI) also studied the cap’s effect on responsibly produced Canadian oil and natural gas in a previous report. It found that production could decrease by up to 42%, and the cap could cost Canadians up to nearly $80 billion annually from 2030 onward.

The federal cap aims to lower industry emissions by 35 to 38 per cent by the end of the decade compared to 2019 levels and is expected to be phased in between 2026 and 2030.

Canadian Leaders Calling Out the Emissions Cap

At a time when Canada’s competitiveness is already a significant concern, business leaders and organizations across the country are calling on the federal government to reconsider the cap altogether.

“Pursuing a sector-specific emissions policy would come at a high cost, further eroding the basis of Canada's carbon regime and creating undue harm to the economy and the purchasing power of Canadians,” says Goldy Hyder, President & CEO of the Business Council of Canada.

“Each time Ottawa forces the Canadian energy sector to contract, it is foreign producers who win. Ottawa does not have the means to affect global demand, so reducing local supply will only end up exporting jobs and tax revenues,” said Gabriel Giguère, Public Policy Analyst with MEI.

“A pathway to self-determination is being achieved through the ownership of oil and gas projects and involvement in the sector. This would result in a cap on Indigenous opportunity in the oil and gas sector,” says John Desjarlais, Executive Director of the Indigenous Resource Network.

These are just a few of Canada’s leaders and organizations sounding the alarm on the cap. Also see:

The World Needs More Canadian Energy – Not Less

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With affordability and energy security as major concerns for Canadians and our allies amid growing global oil and gas demand, reducing Canada’s capability to provide the world with energy it needs just doesn’t make sense.

In general, the consensus is that Canada’s emissions/production cap will:

  • Make Canadian energy less competitive and drive investment away
  • Cede Canada's market share to less responsible oil and natural gas producers globally
  • Block Indigenous communities from economic reconciliation through responsible resource development
  • Make life less affordable for Canadians by reducing our purchasing power
  • Be worse off for the global environment by increasing emissions, not reducing them

Canada is one of the most stable, responsible and reliable energy producers on the planet. As long as the world needs oil and natural gas, as much of it as possible should come from places like Canada with strong protections for human rights and the environment.

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