For years, the federal government has been targeting net zero by 2050 and putting in place an aggressive approach to reduce emissions as outlined in its Emissions Reduction Plan. This scheme, which included the carbon tax, emissions cap, electricity regulations and other initiatives, has drawn strong criticism from provinces, industry, business groups and Canadians.
A report by the Conference Board of Canada, commissioned by Alberta’s government, sheds new light on the negative impacts of the federal government’s punitive environmental approach. By 2050, Alberta’s GDP will shrink by 11 per cent, employment will decline by four per cent and the average person will have $3,300 less in disposable income – while Canada still misses its emissions target.
Alberta’s government is calling on the next federal government to permanently abandon the carbon tax, emissions cap and the entire flawed federal approach. Instead, the federal government should focus on reducing emissions without hurting the economy or making life harder for Albertan and Canadian families.
“These findings should send a message to whoever ends up being the next federal government. Our province remains firmly committed to protecting the environment and creating a future for our children, but that can’t be achieved by trampling on Canadians’ livelihoods. Ottawa has offered nothing but penalties and vague rhetoric. Instead of meaningful incentives to reduce emissions, we get carbon taxes, a production cap, and layers and layers of costly regulations, all burdening families and workers who are already stretched thin.”
The Conference Board of Canada assessed how Alberta businesses and consumers will react to the federal policies based on the costs and effectiveness of the technologies necessary to meet the federal targets.
It found that Alberta will be disproportionately impacted by the current federal plan, experiencing a deep recession in 2030 and subsequently slower economic growth going forward. According to the report, compared to the 2050 baseline scenario, Alberta’s GDP, jobs, revenue and incomes will significantly decline because of federal emissions policies:
- GDP: Projected to be 11 per cent lower
- Employment: Projected to be 4.1 per cent lower
- Government revenues: Projected to be 9.3 per cent lower
- Real (price adjusted) incomes: Down $3,300 (or 7.3 per cent) per person
Nationally, real GDP in Canada is estimated to fall 3.8 per cent in 2050. Canadian oil and gas production in 2050 would be 37 per cent lower, mostly due to the proposed federal oil and gas production cap.
On March 12, the independent Parliamentary Budget Officer (PBO) – following on reports from S&P Global, Deloitte Canada and the Conference Board of Canada – released a scathing report outlining the negative impacts of the proposed federal oil and gas emissions cap. According to the report, the PBO estimates that the federal government’s cap alone will in fact slash oil and gas production by almost 5 per cent, all while these required production cuts reduce nominal GDP by $20.5 billion in 2032.
The PBO report also suggests this policy will reduce economy-wide employment in Canada by 40,300 jobs and full-time equivalents by 54,400 in 2032.
Alberta’s government continues to call for the next federal government to focus on policies that grow the economy, while working with provinces and respecting the Canadian constitution.
Quick facts:
- The Conference Board of Canada scenarios assume oil and gas production grow to 9.7 million barrels of oil equivalent in 2050 with peak oil production of 9.9 million barrels per day in 2042, reflecting continued global oil demand.
- Canada’s employment is estimated to be 2.6 per cent lower, consumer prices 2.5 per cent higher, and real GDP 3.8 per cent lower in 2050 under the federal plan (compared to the baseline scenario).
- According to the report, Canada’s electricity sector would need to reduce emissions by 376 per cent below baseline in 2050, through significant investment in carbon capture and storage, to meet the federal net-zero commitment.
- The Conference Board of Canada’s realistic scenario assumes carbon capture and storage (CCS) will be deployed at a slower rate than is generally assumed by the federal government.
- Canada’s Emission Reduction Plan, released in March 2022, is a roadmap and its policies include the carbon tax, Clean Electricity Regulation, Clean Fuel Regulation, federal oil and gas emissions cap, methane reduction targets, zero emission vehicle mandates, and various other subsidy programs.
- The Conference Board of Canada’s report on assessing the impact of the federal Emissions Reduction Plan was completed prior to U.S. President Donald Trump’s administration and does not include the impacts of potential U.S. tariffs.
- U.S. tariffs have further illustrated the importance of market access to Canada’s energy security.