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By Julio Mejía and Elmira Aliakbari
In a recent interview with CTV, Prime Minister Mark Carney said he may eliminate Bill C-69, which imposes uncertain and onerous review requirements on major energy projects, and eliminate the cap on oil and gas emissions, so energy projects can “move forward.” Of course, actions speak louder than words and Canadians will have to wait and see what the Carney government will actually do. But one thing’s for certain—reform is needed now.
Last year, when the Trudeau government proposed to cap greenhouse gas (GHG) emissions exclusively for the oil and gas sector, it insisted this was essential for fighting climate change and building a strong thriving economy. However, a recent report by the Parliamentary Budget Officer (PBO) suggests this policy—which would require oil and gas producers to reduce their emissions by 35 per cent below 2019 levels by 2030—could lead to significant job losses, reduced production in the sector, and more broadly, less prosperity for Canadians.
The PBO’s findings add to mounting evidence indicating that the emissions cap will harm Canada’s already struggling economy while yielding virtually no measurable environmental benefits.
Oil and gas form the backbone of Canada’s economy and trade. As the country’s main export, the sector contributed nearly $8 billion in income taxes to federal and provincial governments while adding $74.3 billion to the overall economy in 2024. More importantly, the oil and gas sector provides employment for more than 140,000 Canadian families, offering well above-average salaries.
Several studies have assessed the potential impact of the proposed GHG cap. While estimates vary, they all reach the same conclusion: the cap will force the industry to cut oil and gas production and, in turn, negatively affect the entire economy.
The PBO projects that, under the proposed cap, Canadian firms will be required to cut oil and gas production by 4.9 per cent between 2030 and 2032, compared to what production levels would have been without the policy. As a result, an estimated 54,000 fulltime jobs would be lost, and by 2032 Canada’s economy (measured by inflation-adjusted GDP) will be 0.39 per cent smaller than it otherwise would have been.
There’s also a recent report by Deloitte, which found the cap will reduce oil production by 626,000 barrels per day by 2030 and lead to a decline in oil and gas production of 10 per cent and 12 per cent, respectively. Overall, the country will experience an economic loss equivalent to 1.0 per cent of the value of the entire economy (GDP), translating into the loss of nearly 113,000 jobs and a 1.3 per cent reduction in government tax revenues.
Similarly, a study by the Conference Board of Canada and presented by the Government of Alberta, suggests that the cap’s negative effect would ripple across the economy, resulting in the loss of 151,000 jobs by 2030. Between 2030 and 2040, Canada’s GDP losses could total up to $1 trillion, resulting in the loss of up to $151 billion in revenues for the federal government.
Finally, a recent study found that capping oil and gas emissions would result in significant economic loss without generating measurable environmental benefits. Specifically, even if Canada were to shut down its entire energy industry by 2030—thus removing all GHG emissions from the sector—the resulting global reduction in emissions would be a mere four-tenths of one per cent, a figure too small to impact the Earth’s climate.
The available evidence indicates that the proposed GHG cap could come at a high economic cost while delivering limited environmental benefits.
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