Two reports recently commissioned by the Alberta government — the Deloitte report and the Conference Board of Canada report — predict significant economic damage from the application of the proposed federal oil and gas emissions cap, including prospects for production cuts. I believe the Alberta government’s final conclusions may be more nuanced, however.
In January 2024, before the public release of the Conference Board of Canada report, a document prepared by or for Alberta Environment and Protected Areas (EPA), entitled Summary: Impact of Oil and Gas Sector GHG Emissions Cap Analysis by Conference Board of Canada, noted several caveats to the board’s analysis.
The analysis may overestimate the negative effects of the implementation of the federal cap by:
• Assuming that emissions reductions can only be accomplished by cutting oil and gas production instead of looking at other abatement options, including technology adoption.
• Assuming emissions efficiency decreases in the future based on past trends, instead of accounting for potential growing efficiency.
• Not assessing the Alberta sector individually. Alberta’s production and emissions efficiency profile is not consistent to the industry in other jurisdictions. Calculating the effects on Alberta’s economy by applying a share factor over the Canadian oil and gas production does not allow the distributionof the emissions reductions efficiently among provinces based on the difference in eachjurisdiction’s abatement costs.
• Overestimating the negative impact on Alberta GDP by not considering the likelihood of economic diversification that would follow from a reduction in production.
• Overestimating the negative effect on employment, as labour mobility to other sectors is not assessed.
These caveats suggest that the predicted economic damage might not be as severe as the Deloitte and Conference Board of Canada reports indicate.In fact, EPA had been conducting internal modelling of the effect of the federal cap on the Alberta economy.On Jan. 23, a PowerPoint presentation was prepared by EPA, Air and Climate Change Policy Division, entitled EPA Impact Analysis of Federal Oil and Gas Emissions Cap. Detailed modelling results were presented in the 17-page document.
Despite numerous requests over the past couple of months, EPA will not release its own modelling of the effect of the federal cap on the Alberta economy. If the internal modelling by EPA was similar to the Conference Board of Canada and Deloitte analyses, one expects it would have been publicly released as supporting evidence by the Alberta government. So what gives?
The Alberta government has a responsibility to taxpayers to release all analyses of federal and provincial climate change policies as part of a robust Alberta climate change accountability framework. If the results from EPA internal analyses differ from the Conference Board of Canada and Deloitte conclusions, possibly due to the caveats expressed by or for EPA in January 2024, shouldn’t Albertans be privy to that information?
The differences between the Deloitte, Conference Board of Canada and EPA analyses would provide a more nuanced understanding of the federal cap’s effect, assist in the Alberta government’s risk management process, and help produce more effective emissions reduction strategies that could be implemented without causing undue harm to the Alberta economy.
Lennie Kaplan spent over two decades in the public service of Alberta, including as a senior manager in the Fiscal and Economic Policy Division of the Ministry of Treasury Board and Finance, where he worked on cross-ministry initiatives evaluating the fiscal and economic impacts of federal and provincial climate change policies.