Alberta is warning hundreds of billions in revenue and thousands of jobs are at risk if the Liberal government moves ahead with its oil and gas emissions cap.
The province cited an S&P study that analyzed the economic impact of the controversial cap.
Alberta Premier Danielle Smith, Minister of Environment Rebecca Schulz, and Minister of Energy Brian Jean issued a joint statement urging the feds to ditch their proposed oil and gas emissions cap. If they don’t, Canadians will feel the consequences.
“Only an out-of-touch federal government would sacrifice Canadian livelihoods knowing its actions will end up increasing global emissions,” wrote the Albertan leaders.
Much of the statement cites S&P Global’s Economic Impact Assessment of Canadian Conventional Oil and Gas, which the Albertan leaders claim is “a reckless gamble that will devastate Canadian families and do nothing to reduce global emissions.”
The S&P report highlights three scenarios: the reference case (current policy), the stress case (40% emissions cap by 2030 and 55% by 2035), and the high case (increased investment in export and production infrastructure).
Walking the path of the stringent emissions cap would cost Canada 51,000 jobs and $247 billion in GDP contributions by 2035, showed the study. Compared to the reference case, a 40% cap applied by 2030 would result in one million fewer barrels of oil being produced daily. A mandated 55% emissions cap by 2035 would result in losing two million barrels of oil daily.
S&P Global estimates that conventional oil and gas production will be 17% lower by 2035 in the stress case compared to the reference case.
“Alberta will bear the brunt of this production cut, but the pain will be felt across every province and territory,” reads the joint statement.
If instead of punishing the oil and gas industry, Canada “debottlenecked” existing pipelines and LNG export capacity, an 8% growth in oil and gas production would support 36,000 additional jobs per year across the country, compared to the reference case, and more than $100 billion in additional GDP contributions by 2035.
This would result in $1.3 trillion in GDP contributions and support 383,000 Canadian jobs annually by 2035, compared to the 347,000 jobs of the reference case.
S&P’s report showed that oil and gas production can grow while simultaneously reducing emissions through decarbonization investments.
“Make no mistake: this isn’t about emissions… Even without this unconstitutional cap, S&P Global found that total emissions from the oil and gas sector are set to decline before 2035, thanks to new technologies already being put in place,” reads the joint statement.
“The sector’s (greenhouse gasses) emission intensity is expected to decline by at minimum 17% from its 2023 levels under all production scenarios, leading to lower absolute emissions vs. 2023,” reads S&P’s study.
The report was completed by S&P Global Commodity Insights for the Canadian Association of Petroleum Producers.
Following the report, CAPP President & CEO Lisa Baiton said that the emission cap is “unnecessary and should not proceed.”
She said that the industry is already growing production while lowering emissions under existing policy measures.
“Instead, Canada should give the policies in place time to work while collaborating with industry and provinces on pragmatic solutions to deliver emissions reductions in the short term while positioning Canada and our energy industry for long-term success,” said Baiton.
The Organization for Economic Cooperation and Development forecasts that Canada’s per capita GDP will perform the worst out of all its 38 member nations over the next four decades. A stifled oil and gas industry will worsen this.
“It’s time to scrap the cap. Ottawa’s reckless scheme threatens not only Alberta jobs but Canada’s economic future. Billions in investment will vanish, retirement savings will be threatened, and families will feel the pinch. We can reduce emissions and enjoy a thriving economy, but only if Ottawa abandons the proposed oil and gas emissions cap for good,” concluded the joint statement.
The report focused solely on conventional oil and gas production and did not include oil sands production.