Economy
Canada’s current climate plan is ineffective and wasteful
Article submitted by The MacDonald Laurier Institute
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Economy
Ottawa’s emissions cap will impose massive costs with virtually no benefit
From the Fraser Institute
By Julio Mejía and Elmira Aliakbari
The resulting reduction in global GHG emissions would amount to a mere four-tenths of one per cent (i.e. 0.004 per cent) with virtually no impact on the climate or any detectable environmental, health or safety benefits.
Last year, when the Trudeau government said it would cap greenhouse gas emissions (GHG) from the oil and gas sector at 35 to 38 per cent below 2019 levels by 2030, it claimed the cap will not affect oil and gas production.
But a report by Deloitte, a leading audit and consulting firm, found that the cap (which would go into effect in 2026) will in fact curtail production, destroy jobs and cost the Canadian economy billions of dollars. Under Trudeau’s cap, Canada must curtail oil production by 626,000 barrels per day by 2030 or by approximately 10.0 per cent of the expected production—and curtail gas production by approximately 12.0 per cent.
According to the report’s estimates, Alberta will be hit hardest, with 3.6 per cent less investment, almost 70,000 fewer jobs, and a 4.5 per cent decrease in the province’s economic output (i.e. GDP) by 2040. Ontario will lose more than 15,000 jobs and $2.3 billion from its economy by 2040. And Quebec will lose more than 3,000 jobs and $0.4 billion from its economy during the same period.
Overall, the whole country will experience an economic loss equivalent to 1.0 per cent of GDP, translating into lower wages, the loss of nearly 113,000 jobs and a 1.3 per cent reduction in government tax revenues. Canada’s real GDP growth in 2023 was a paltry 1.1 per cent, so a 1 per cent reduction would be a significant economic loss.
Deloitte’s findings echo previous studies on the effects of Ottawa’s cap. According to a recent economic analysis by the Conference Board of Canada, the cap could reduce Canada’s GDP by up to $1 trillion between 2030 and 2040, eliminate up to 151,000 jobs by 2030, reduce federal government revenue by up to $151 billion between 2030 and 2040, and reduce Alberta government revenue by up to $127 billion over the same period.
Similarly, another recent study published by the Fraser Institute found that an emissions cap on the oil and gas sector would inevitably reduce production and exports, leading to at least $45 billion in lost economic activity in 2030 alone, accompanied by a substantial drop in government revenue.
Crucially, the huge economic cost to Canadians will come without any discernable environmental benefits. Even if Canada were to entirely shut down its oil and gas sector by 2030, thus eliminating all GHG emissions from the sector, the resulting reduction in global GHG emissions would amount to a mere four-tenths of one per cent (i.e. 0.004 per cent) with virtually no impact on the climate or any detectable environmental, health or safety benefits.
Given the sustained demand for fossil fuels, constraining oil and gas production and exports in Canada would merely shift production to other regions, potentially to countries with lower environmental and human rights standards such as Iran, Russia and Venezuela.
The Trudeau government’s proposed GHG cap will severely damage Canada’s economy for virtually no environmental benefit. The government should scrap the cap and prioritize the economic wellbeing of Canadians over policies that only bring pain with no gain.
Authors:
Economy
Scrap the second carbon tax: Taxpayers Federation
Author: Franco Terrazzano
The Canadian Taxpayers Federation is calling on the federal government to scrap its second carbon tax following the release of government documents showing it will cost the Canadian economy $9 billion by 2030.
“This is another government report that shows carbon taxes are a big drag on the economy that Canadians can’t afford,” said Franco Terrazzano, CTF Federal Director. “The second carbon tax alone will cost average families hundreds and even thousands of dollars.”
The second carbon tax is embedded within federal fuel regulations, which took effect July 1, 2023.
The regulations require producers to reduce the carbon content of their fuels. If they can’t meet the requirements, they must purchase credits, increasing costs that are passed onto Canadians purchasing gasoline or diesel.
According to government documents, in 2030, the second carbon tax “will result in an overall GDP decrease of up to $9 billion.”
The documents were tabled by Environment and Climate Change Canada in the House of Commons in response to an order paper question filed by Conservative MP John Barlow (Foothills).
Previous analysis from Environment and Climate Change Canada shows the first carbon tax (including industrial) will cost the Canadian economy $30 billion by 2030.
The Parliamentary Budget Officer estimated the second carbon tax will cost the average household between $384 and $1,157 in 2030 depending on the province.
“Canada’s own emissions are not large enough to materially impact climate change,” according to the PBO report.
The PBO also estimated the second carbon tax will increase the price of gasoline by up to 17 cents per litre and the price of diesel up to 16 cents per litre by 2030.
“Prime Minister Justin Trudeau can make life more affordable and help our economy by scrapping his carbon taxes,” Terrazzano said.
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