Report finds net-zero target could spell disaster for Alberta if energy production were phased out

A new report that explores a hypothetical scenario on the path to achieving Canada's net-zero emissions target by 2050 is raising eyebrows among some public policy experts.

Public Policy Forum, a non-partisan, Ottawa-based think tank, released a report on Thursday exploring two pathways to achieve net-zero carbon impact from oil and gas production.

One route looked at potential results of "broad-based, sector-agnostic emissions reductions," which include tools like a carbon tax.

The other considered the economic impact of oil production ultimately being phased out gradually.

In that scenario, the phase-out of oil and gas production would amount to a $100-billion loss in Canada's gross domestic product and $60 billion of that would directly impact Alberta.

One expert suggests the report amounts to a "straw-man argument" by studying a production cap or phase-out when there is no active federal policy to do that.

"There's no phase-out going on there. There's no phase-out of the oil and gas sector either. They're talking about an emissions cap, not a production cap. And it's disappointing to see that conflated in this report," said Blake Shaffer, associate professor of economics at the University of Calgary's School of Public Policy.

"Nobody is proposing a production cap. They're proposing emissions caps. So what this is missing is the possibility of decarbonizing the emissions per barrel (and) producing oil or gas at lower emissions."

MATTER OF PUBLIC DISCOURSE

The study author said there was no argument against a net-zero strategy, and said there was merit in examining a phased-out sector because the concept is part of a serious public debate.

"Although there's no direct discussion of it, there's a lot of discussion around how we can bring down oil and gas more quickly and perhaps more quickly than demand is coming down," said Edward Greenspon, Public Policy Forum CEO.

"It's important that we don't be ideological about how we get to net-zero. ... There may be better ways and worse ways and in a democracy, if you are going to carry the people for 30 years on the way to net-zero, you should go with the least-disruptive way possible."

Natural Resources Minister Jonathan Wilkinson's office provided a statement, saying demand for oil will decline over the next decade and move away from the combustion of fossil fuels.

The statement says oil will continue to be used beyond 2050, for things like petrochemicals, asphalt, lubricants, etc.

"Countries that focus on producing hydrocarbons with ultra-low production emissions are going to be winners, while those that don't will lose market share," it read.

INDUSTRY INPUT

Some Calgary-based companies have already aligned on a platform toward a goal of emissions reductions by 2030, and net-zero by 2050, under the name Pathways Alliance.

A statement from its president, Kendall Dilling, reads:

"Recent years have exposed the essential and growing need for secure and affordable supplies of oil and gas from stable and responsible countries, such as Canada, while also meeting our climate commitments.

"Working constructively with governments to invest collectively in technologies such as carbon capture and storage, we can reduce emissions while ensuring Canada is the preferred global supplier of responsibly produced oil in a net-zero world."

The Canadian Association of Petroleum Producers also sent CTV News a statement:

"The global demand for energy is expected to grow for decades to come and any pathway to net-zero includes the efficient use of Canadian oil and natural gas. The path to a lower-emission economy can only be done by aligning environment, energy and economic policies to attract investment. Industry and governments need to continue to work together at all levels to ensure that large clean technology and decarbonization projects get built here in Canada and we can continue to supply the energy Canadians and the world need in the interim," said Lisa Baiton, president and CEO.

POLITICAL STANCE

CTV News also reached out to both of Alberta's major political parties.

The United Conservative Party says it would aspire to achieve a carbon-neutral economy by 2050.

"This will require technologies that are not viable today to come to scale. It will require attracting billions of dollars of investment and providing a regulatory and investment climate that is predictable and certain," said a UCP campaign spokesperson in an email.

"The global economy cannot reach net-zero by 2050 without government policies that simultaneously balance energy security, reliability, affordability and decarbonization. That is why we need to continue to support and invest in today’s energy system, which relies on oil and gas, while simultaneously preparing for the energy solutions of tomorrow."

A statement from an NDP campaign spokesperson reads:

"We cannot pit the environment against the economy or we will fail at both.

"The Alberta NDP will support our energy sector to reduce emissions while creating jobs and achieving net-zero by 2050.

"Our jobs and investment strategy will attract $20 billion in investment and create 47,000 jobs through investment incentives in cleantech and we will continue to advocate for more federal funding for carbon capture, utilization and storage."

CONSUMPTION AFFECTS DEMAND

One energy analyst says consumer demand would need to plummet for any phase-out to be fathomable.

"At the end of the day, consumption patterns have to change. Carbon production patterns have to change," said Bob Schulz, professor at the University of Calgary's Haskayne School of Business.

"Seems to be as if the way things are going, the companies are spending more money and more time, more effort, faster than consumers are changing their consumer consumption habits."

Schulz also says Canada's efforts are dwarfed by emissions in other, larger jurisdictions.

"If we follow the logic, Canadians will be paying more, for a higher carbon footprint for Mother Earth.”

The report also found under the phase-out scenario, Canada would become a net importer of oil.