The proposed regulations by the Liberal government aiming to cap greenhouse gas emissions from the oil and gas sector could potentially result in the loss of 54,400 jobs and a 0.39 percent decrease in Canada’s GDP by 2032, as per a recent report from the Parliamentary Budget Office (PBO).
Read the report.
These regulations intend to establish a national cap-and-trade system for the sector, aiming to reduce emissions by 27 percent below reported levels in 2026, with the ultimate objective of achieving net-zero greenhouse gas emissions in Canada by 2050.
To achieve this goal, there would need to be a 4.9 percent reduction in oil and gas production from 2030 to 2032. The PBO report forecasts a nominal GDP decline of $20.5 billion, a decrease of 40,300 jobs in the economy, and a drop of 54,400 full-time equivalents.
The federal government has stated that the cap-and-trade policy will not only lower pollution levels and combat climate change but also encourage clean innovation and the adoption of technologies like carbon capture, utilization, and storage. Environment Minister Steven Guilbeault, when announcing the policy in December 2023,
emphasized the government’s commitment to maintaining Canada’s reputation for energy innovation.
In response to the report, Alberta Premier Danielle Smith
criticized Ottawa for undermining the energy sector while claiming to support it in the country’s trade war with the United States. She labeled the proposed emissions cap as unconstitutional, detrimental to the economy, and called for its abandonment by the next prime minister.
The Alberta government has announced its intention to legally challenge the regulation, citing its negative impact on the province’s oil and gas sector and deeming it unconstitutional. Additionally, the Conservative Party highlighted the energy sector’s significant contributions to Canada’s economy, including employing almost 1 million people and generating $45 billion in revenue for the government in 2022. The party also criticized Prime Minister-designate Mark Carney’s energy policies, warning of potential job losses and increased costs for Canadians.
Carney, in a previous
interview with CBC News, emphasized the need to address emissions from the oil and gas sector, highlighting its significant contribution to Canada’s overall emissions.
Following his Liberal leadership win,
Carney pledged to promote both clean and conventional energy sources and proposed replacing the federal carbon tax with a new policy incentivizing greener choices for Canadians and holding major industrial polluters accountable. He also criticized Conservative Leader Pierre Poilievre’s “Axe the Tax” policy, arguing that it overlooks critical aspects such as the disappearance of Canada Carbon Rebate checks and the need for businesses to enhance competitiveness.
