‘They are big numbers. And we were trying to make the case to Ottawa that when Alberta does well, Canada does well,’ Premier Danielle Smith said Wednesday
It’s no surprise the Alberta government and the country’s oil and gas industry fiercely oppose the Trudeau government’s incoming cap on greenhouse gas emissions from the sector, highlighted by new submissions to Ottawa this week.
But if you dive into the province’s report filed with the federal government, it includes some new economic analysis that helps explain why they’re so concerned.
“They are big numbers. And we were trying to make the case to Ottawa that when Alberta does well, Canada does well,” Premier Danielle Smith said Wednesday in an interview.
“I’m hoping that self-interest kicks in here at some point . . . There’s no reason for them to try to kneecap our industry. It just hurts everyone.”
The analysis adds more ammunition to an acrimonious debate between the federal and provincial governments over the policy, which is part of Canada’s broader climate plan to reach net-zero emissions by 2050.
That’s part of what makes it so interesting, as it’s based on the new framework for the oilpatch emissions cap released by the Trudeau government in December.
“The policy, as it’s announced right now, in our view is going to lead to significantly slower growth of the oil and gas sector, across the country and materially in Alberta,” said the board’s director of economic research, Tony Bonen.
“And it comes at a fairly high cost, in terms of the price-per-megatonne of greenhouse gas emissions that are reduced.”
While the industry can take lower-cost steps to lower its methane emissions, there would still be a gap to meet Ottawa’s goal for the oilpatch.
That would lead to reduced production growth — down about 11 per cent from the Conference Board’s base case — as oil and gas “gets left in the ground,” next decade, Bonen said.
“Some higher cost, less economically efficient, projects will not move forward in our scenario. And some that are operating now, but at a higher cost, are probably stopped. But there will still be net new wells drilled and new production produced.”
(The data is based on the board’s most likely scenario, as two other ones it examined showed a greater effect on jobs and GDP.)
Bonen estimated the costs of lowering emissions through production cuts at about $1,600 to $1,700 for every megatonne reduced through the cap.
“We are going to require substantial changes to our economic systems to address the climate crisis,” Bonen added.
“For us, it’s very important to be clear on where those impacts are going to be felt and be honest about the size of those impacts — so we can start adjusting and planning ahead for them.”
The provincial submission also called on the federal government to release its assessment of the economic effects of the cap from 2030 forward.
That is coming “and will be available when the government publishes draft (cap) regulations later this year,” a spokesperson for federal Environment Minister Steven Guilbeault said in an email.
“The fact is, a cap on oil and gas emissions is smart economic policy — it will help ensure the sector’s long-term competitiveness in a rapidly decarbonizing world.”
The oil and gas industry is the largest emitting sector in Canada. The Liberal government has introduced a series of policies — including a national price on carbon, clean fuel regulations and the incoming emissions cap — as concerns around climate change mount.
The cap is expected to be phased in between 2026 and 2030.
Canada is the world’s fourth-largest oil producer and the sector directly employed 178,000 people across the country in December.
The provincial submission says the cap will also affect the Canadian construction, manufacturing and service sectors, as well as the financial, restaurant and hospitality industries.
University of Calgary economist Trevor Tombe said there are too many unanswered questions about the cap to fully understand the economic consequences of the policy.
But he said it’s clear the effect will be significant, hitting one region of the country much harder than the rest.
“Whether it’s $600 billion to $1 trillion, as the Conference Board puts it out, or some other set of numbers, it’s going to be big — that is the takeaway from these numbers,” Tombe said.
The Pathways Alliance group, which represents large oilsands operators, maintains the cap is unnecessary and unworkable, saying it will deter investors from the sector and it risks curtailing production.
The group is working to reach net-zero emissions by 2050 and is developing a $16.5-billion carbon capture and storage network in Alberta.
“I would say (the cap) is singularly unhelpful in advancing decarbonization investment of any kind, including the Pathways project. Unfortunately, all it does is send a message to investors that Canada is not open for business,” Pathways Alliance president Kendall Dilling said in an interview.
“At this point, in good faith, we will keep our heads down, keep investing, keep working and trust that sanity will prevail.”
In its submission, the Canadian Association of Petroleum Producers (CAPP) noted emissions from the conventional oil and gas sector fell by 24 per cent, while production grew by 21 per cent between 2012 and 2021.
“We are hoping that this framework is put on ice, so that we can really look at this thoughtfully and realistically,” said CAPP president Lisa Baiton.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Press. All rights reserved.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
The Canadian Press. All rights reserved.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
The Canadian Press. All rights reserved.
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