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By rdnewsNOW staff

Alberta

Provincial government releases third impact report on proposed emissions cap

Jun 19, 2024 | 5:45 PM

In December 2023, the Government of Canada proposed a regulatory framework for an oil and gas sector emissions cap as part of its goal to achieve net-zero GHG emissions by 2050.

In response, the Government of Alberta commissioned a report by Deloitte Canada, which estimated that the proposed emissions cap could cut oil production by more than 626,000 barrels per day, resulting in $282 billion in lost GDP over 10 years. This is the third report of its nature that has been released this year.

“Three internationally respected firms have now shown that the federal emissions cap will devastate Alberta’s economy and hurt all of Canada. There can no longer be any debate – the federal cap will lead to production cuts, lost jobs, reduced income, weakened investment and less funding for essential services – devastating families and businesses from coast to coast. Let’s scrap the cap and reduce emissions without hurting Canadians,” said Rebecca Shulz, Minister of Environment and Protected Areas.

The report estimated that the federal oil and gas emissions cap could lead to a 10 per cent reduction in oil production and a 16 per cent reduction in conventional gas production in Alberta in 2030. Similar production cuts were estimated in British Columbia, Saskatchewan, and Newfoundland and Labrador.

It also suggested the cap would result in 90,000 lost jobs across Canada; Alberta’s GDP would be reduced by 4.5 per cent; and the rest of Canada’s GDP by 0.4 per cent cumulatively by 2040. It proposed the cap would result in $282 billion in lost GDP in Canada from 2030 to 2040, including $191 billion reduced from Alberta alone.

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Government officials say the costs of the cap may go beyond the oil and gas sector to impact supply chains and sectors including mining, refining products, utilities, agriculture and forestry, construction and services sectors.

Reports were also produced by the Conference Board of Canada and S&P Global Commodity Insights earlier this year.

In January, the Conference Board of Canada found that the proposed federal cap could require production cuts, causing between 80,000 and 150,000 jobs lost by 2030, and reduce Canada’s nominal GDP by $600 billion or more between 2030 and 2040. These results were publicly released as part of Alberta’s technical response on the Federal Oil and Gas Emission Framework.

In May, analysis from S&P Global Commodity Insights found that a 40 per cent emissions cap could lead to a reduction in oil and natural gas production of one million barrels per day by 2030 and a 2.1 million barrel reduction by 2035. In addition, officials suggest such a cap could reduce more than 51,000 jobs. It also found that the cap could result in $75 billion less in upstream investments by 2035 and $247 billion less GDP between 2024 and 2035.

The Deloitte, Conference Board of Canada and S&P Global analyses each contained unique assumptions, and all three models found the federal emissions cap could require oil and gas production cuts, and negatively impact investment and economic activity across Canada.

Alberta’s government says it will continue to call for the federal government to abandon the proposed oil and gas emissions cap and work with all provinces and territories to develop pathways to achieve emissions reductions while supporting economic growth.