Last year, the federal government released its proposed regulatory framework for an oil and gas sector emissions cap that sets mandatory targets for all upstream oil and gas facilities and liquefied natural gas facilities. The framework has drawn strong criticism from many provinces, industry, business groups and Canadians.

A new report by Deloitte Canada, commissioned by the Alberta government, estimates that the proposed federal oil and gas emissions cap could cut oil production by more than 626,000 barrels per day, costing Canadians $282 billion in lost GDP over 10 years. This is the third report released this year finding that a federal cap will require deep production cuts, lead to billions in lost GDP and damage the Canadian economy.

“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.”

Rebecca Schulz, Minister of Environment and Protected Areas

The analysis 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 are estimated in British Columbia, Saskatchewan, and Newfoundland and Labrador.

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. The cap would result in $282 billion in lost GDP in Canada from 2030 to 2040, including $191 billion reduced from Alberta alone.

“This report shows that the cap will harm GDP, cost jobs, and weaken investment. There are ways to reduce emissions without harming our collective wellbeing, and it’s time to give up on this failed idea.”

Nate Horner, President of Treasury Board and Minister of Finance

Notably, the costs of the federal emissions cap go far beyond the oil and gas sector. The negative impacts will be transmitted through supply chains and across sectors including mining, refining products, utilities, agriculture and forestry, construction and services sectors.

In January, analysis from the Conference Board of Canada found that that the proposed federal cap would require production cuts, lead to 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, such a cap would reduce more than 51,000 jobs. It also found that the cap would result in $75 billion less in upstream investments by 2035 and $247 billion less GDP between 2024 and 2035.

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

Alberta’s government continues 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.

Quick facts:

  • Deloitte was engaged to conduct an independent assessment and economic analysis of the potential impact of the federal oil and gas emissions cap.
  • The analysis estimated that the cap could lead to:
  • A reduction in oil production by 626,000 barrels and 2.2 billion cubic feet per day of gas per day in 2030.
  • Approximately 90,000 lost jobs across Canada. Of this, Alberta is estimated to lose 55,000 jobs, followed by 12,000 from Ontario and 2,500 from Quebec with the remainder coming from other parts of Canada.
  • $282 billion in lost GDP across Canada from 2030 to 2040, including $191 billion reduced from Alberta alone.
  • 4.5 per cent reduction in Alberta’s GDP and 0.4 per cent reduction in the rest of Canada’s GDP cumulatively by 2040.
  • Government tax revenues, which fund the many services and programs Canadians rely on, would be reduced by 5.8 per cent in Alberta and 1.3 per cent in Canada overall in 2040.
  • Deloitte’s analysis was based on its independent technical assessment of viable technologies and ongoing efficiency gains to reduce emissions, including the level of carbon capture and storage that it considered likely to be in place by 2030.

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