CALGARY, AB — JANETTA MCKENZIE, director of the Pembina Institute’s oil and gas program, made the following statement in response to the Parliamentary Budget Office’s Impact Assessment of the Oil and Gas Emissions Cap:
“For years, the oil and gas industry – and the oilsands in particular – has told Canadians it is committed to net-zero emissions by 2050 and slashing emissions by 2030. Governments have worked with the sector to make this happen, and as we speak there are billions of dollars on the table, in the form of government incentives and investment tax credits, for companies that go ahead and invest in projects that would reduce their emissions.
“But today’s analysis presumes the industry does not take advantage of these incentives, and does not keep its promises. Instead, it assumes that companies choose to not produce as much oil and gas instead of investing in technology that would cut emissions in the future. To be clear, the PBO does not say that overall production will be cut as a result of this regulation – but that it will simply grow less than it otherwise would have.
“Right now, Canadians are rightly interested in government policies that will create economic resiliency and growth. In terms of jobs, the oil and gas sector has been stagnating since its peak in 2014. This is not because of emissions regulations, but because in particular the oilsands has stopped investing in new, large long-term projects, and companies are instead focusing on short-term optimizing measures, like automation and efficiency improvements. This is because the industry and investors see the same trends we do – that show the vast majority of the world is moving away from oil and gas in favour of locally produced, secure, low-cost, clean electricity to power more aspects of everyday life. As Pembina Institute analysis shows, from now to 2050 we can expect to see a net growth in jobs across Canada – 766,000 – as a result of that transition, as well as policies meant to accelerate the growth of clean industries.
“In other words, there will be a role for Canada’s oil and gas sector in our future economy, but it will be different. We are going to need a leaner, cleaner oil and gas sector geared to the needs of a market where demand for oil and gas as fuel is in decline and a greater share of Canadian oil and gas production is used as feedstock for low-carbon petrochemicals and other materials. The government has to prepare the sector for this, by taking steps now to reduce the oil and gas industry’s emissions, so that it can keep offering jobs and prosperity to Canada in the long term. ”
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Key facts
- The PBO analysis presumes oil and gas production would grow by about 11% from now to 2032. This presumed growth was also accounted for by the federal government in the design of the emissions cap. Today’s analysis from the PBO is therefore not that production will be cut by 4.9%, but that it will grow by less than it would have if the industry had implemented technologies/processes to reduce the carbon intensity of production (e.g. by installing carbon capture, electrifying more industrial processes, etc).
- The PBO analysis presumes that the sector only makes very small emissions reductions in the next few years, other than those that result from forthcoming federal methane regulations. In other words, it assumes that the oilsands Pathways Alliance project will not go ahead in any form, despite billions of dollars of federal and provincial support on offer for companies that proceed with carbon capture projects.
- The PBO is clear that without the emissions cap, oil and gas emissions will continue to grow. The growth in emissions that we are seeing year on year is from the oilsands sector specifically (see chart below).
- Pembina Institute analysis shows that, with the policies already in place today to reduce emissions and encourage the growth of clean economic sectors, between 2025 and 2050 there are net gains across Canada of 766,000 jobs.
- PBO is also clear that it doesn’t account for the costs that would be felt by Canadians if nothing is done to mitigate oil and gas emissions. According to the Canadian Climate Institute, a typical storm or flood that cost roughly $8-million in the early 1970s now costs more than $110-million.
Contact
Alex Burton
Communications Manager, Pembina Institute
825-994-2558
Background
Report: Modelling future impacts of the oil and gas emissions cap
Media release: Pembina responds to oil and gas industry report on hypothetical impacts of proposed emissions cap
Media release: Oil and gas emissions cap an important element of Canada’s economic future
