Plan to reach net-zero by 2050 will put Alberta in 'deep recession': report

Shifting away from petroleum products is the Notley view of the world — certainly not my government's view,' says Premier Danielle Smith. 'We believe we are going to reduce emissions — not oil and natural gas [production].'

Plan to reach net-zero by 2050 will put Alberta in 'deep recession': report
The Canadian Press / Adrian Wyld
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According to a new report, Alberta and Canada will not reach net zero emissions by 2050 — owing to the exuberant costs of phasing out oil and gas production. Premier Danielle Smith took Rachel Notley to task Thursday evening over her past flirtations with production caps on the industry.

"Shifting away from petroleum products is the Notley view of the world — certainly not my government's view," said Smith during the televised leadership debate. "We believe we are going to reduce emissions — not oil and natural gas [production]."

The Public Policy Forum said phasing out oil and gas would cost nearly $100 billion in lost GDP nationwide. Of that, Alberta would shoulder $60 billion.

"The cost of achieving net-zero emissions in Canada is uncertain and is not felt equally across all regions," reads the report by Navius Research. 

The Canada Climate Institute estimates emissions have declined below 2005 levels in all sectors except oil and gas, transport and buildings. According to the Parliamentary Budget Officer (PBO), the real GDP for oil and gas and transportation will fall under these targets by 10.8% and 16.2% by 2030, respectively.

"We don't have a problem with a cap on emissions. We have a problem with a cap on emissions that is unrealistic," tweeted the Alberta NDP last month. "Reducing emissions is the focus — it's not about reducing production," Notley clarified Thursday. 

"If we don't get down to work and come up with a more practical cap, we are not going to be successful in mapping out a process that will get us there," she said in a recent interview with BNN Bloomberg.

Last year, according to oil and gas executives, Ottawa published a plan to reduce sector emissions by 42% in 2030, which is only possible by slashing output.

The NDP condemned the federal government for not consulting Albertans but clarified that implementing a "very ambitious" plan that's "not super far away" from the current cap is possible. The latest federal inventory indicates the province produces about 38% of Canada's carbon emissions, with only 11% of its population.

Following her remarks, she accused the UCP leader and her caucus of pitting emissions reduction efforts against economic growth.

On April 19, the Alberta government released a climate plan scarce on details that it hopes will take the province to net zero by 2050. If re-elected, the UCP will consider using more renewable fuels and cutting methane emissions by 80% — slightly better than the federal target.

"Rachel Notley's NDP confirms they will be bringing in a job-killing production cap on Alberta's energy industry, but won't tell Albertans what it will be," the UCP war room tweeted in April. "Hundreds of thousands of jobs are now at stake."

According to a leaked federal memo, 'just transition' legislation could impact up to 187,000 workers in the province's agriculture, energy, manufacturing, and transportation sectors.

"Canadians thrown out of work by climate change programs can always get jobs as janitors," it reads. It also claims "some green jobs will not require workers with green skills to perform their jobs, such as a driver working for a solar energy company."

Despite criticizing the NDP for not committing to any short-term targets, the UCP plan contains no interim targets for reductions, spending or investment — despite scaling up carbon capture. It also fails to propose regulations or legislation to move the province toward 'net zero.'

However, emissions per barrel of oil have fallen in recent years, with oil sands operators working closely to reach net-zero emissions by 2050, according to Navius Research.

"We know with all the exciting things happening with carbon capture, utilization and storage (CCUS), and all the green technology, we can continue to have a vibrant and robust oil and natural gas sector for years to come," said Smith.

She cited using bitumen in asphalt and having LNG exports to keep "Alberta's economy strong" while reducing carbon emissions. Notley replied: "There are elements of what Smith said that I agree with," adding, "I want to create jobs producing…and upgrading our energy."

According to Public Policy Forum CEO Edward Greenspon, Canada must decide the "best way to get to net zero." He said the Navius report shows some pathways to reaching net-zero have higher costs than others.

The forum CEO admitted, "An accelerated phaseout [of oil and gas, starting in 2035] introduces economic pain with no added environmental gain." According to the report, the economy would grow 0.1% slower than a net-zero by 2050.

"This small difference compounds over time, leading to $100-billion excess lost GDP in 2050, a 3% contraction of the overall economy. This essentially amounts to a deep recession without a recovery ever materializing," he told the Calgary Herald.

Navius predicts minuscule growth of less than 1% from 2020 to 2050, which Greenspon said: "may be underestimating the severity of this impact." Absent phasing out oil and gas, the emissions targets could decrease GDP in the country by $196 billion in 2050, compared with announced policies.

The study also said the country will not achieve net-zero emissions under the 2030 Emissions Reduction Plan (ERP), which projects 31% fewer emissions below 2005 levels 2030. The federal emissions reduction plan is projected to reduce emissions by 29% that year — far less than the proposed 40% to 45% benchmark. 

"Using aspirational numbers to drive practical policy is not a recipe for success," Notley told Bloomberg. "The key is making sure that what we put in place is practical and achievable, and it doesn't become so oppressive that we find ourselves shutting in production."

"Both Alberta and Canada do best when energy policy is crafted, quite frankly, by Alberta," she said. "My first goal will be to get more money from the federal government."

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